Archive for May, 2009

Garfield Traub Proposal Not In Tucson’s Best Interest

In another apparent attempt to show the Legislature in Phoenix that there is some positive movement in Rio Nuevo, the Tucson City Council has voted to approve the development agreement presented by Garfield Traub.  The Counsel has a history of taking precipitous steps which unnecessarily cost taxpayers money. The bond sale last year that took an extra $18 million in interest debt from citizens’ pocketbooks is a prime example. Now they have voted to guarantee a $240 million debt without a final guaranteed maximum price (GMP) or a funding model that will be in effect once that GMP has been determined. Fiscal prudence, especially while wrestling with a significant budget shortfall, would indicate the wisdom in deferring this decision until Garfield Traub was in a position to better identify the true cost of the project, identify a specific funding model and allow the City to assess whether gambling on the proposal with taxpayer guaranteed debt made sense.

In April 2007 the City Council received completed studies and endorsed a redevelopment plan as a new energy for a new place. Greg Shelko (downtown development director) described the committment. “The mayor and council have bought into building these buildings (the arena, hotel and TCC expansion). The issue now is not revisiting the projects, but how to finance them.” (May 2008)

That plan involved a process that included prestigious consultants, local business input and neighborhood involvement.  It clearly laid out a concrete vision and method to achieve the “Big Three” – hotel, arena and convention center.   Years (and millions of taxpayer dollars) later that plan has been pushed aside in favor of a new idea.   No new energy and no new place.

What makes this vote even more curious is that it is taken while there is a “shovel ready” project sitting, ready to go, that would put the taxpayers at no financial risk. That is the remodeling of the Hotel Arizona.  It is anticipated that that project would be profitable to the City nearly immediately, would not force the City to guarantee long term debt on behalf of the taxpayers, would provide remodeled rooms under a major hotel name brand at approximately 1/2 the room rate the Garfield Traub project is requiring, and would have those rooms remodeled in time for next spring’s Gem & Mineral show.

The Garfield Traub proposal admits to the need for “additional revenues” in order to make their own projected debt service (the comfort of a 1 1/2x debt service level of support). Those additional revenues will come from a 6% transient tax and a 2% surcharge on guests at the Sheraton. That money would otherwise be available to the City to fund core priorities such as public safety, road maintenance and transit needs. In a time of tight fiscal constraints, giving away general fund money on a real estate deal that is based on uncertain final costs is unsound financial management. This proposal may make sense in the future but with current market conditions it is doomed to failure.

Unlike the plan presented three years ago, the Council is now relying on quick, one-shot successes. To revitalize downtown the leadership of Tucson needs the entire downtown region needs to be viewed in a holistic plan going forward. We sit atop ancient water and sewer lines. We have no plan upon which to base the eventual capacity requirements. We have no plan upon which to determine where and to what extent we will need power, telephone service, fiber optic, water, sewer – where will there exist aesthetic water elements that will call upon more capacity, where will we build the wide, well-lit walkways with drought resistant foliage to provide shade and to support artisans, and families who will visit such a well thought out entertainment district? Will we install the modern street car tracks on top of our present infrastructure and later be required to tear out those tracks in order to upgrade the systems now in place?

If presented with such an holistic plan, the Legislature in Phoenix would see that the City is finally moving forward with a plan, phased appropriately, has taken the mid-stream step of remodeling a moderately sized hotel to anchor further business development in the downtown area, and on that basis provide sales tax revenue to fund the cultural elements of Rio Nuevo going forward.

It is not too late to rebuild downtown Tucson.  Now more than ever Tucson needs Leadership.  The Council vote to embrace a risky, poorly-financed hotel deal is a step in the wrong direction.

Steve Kozachik, Ward 6 City Council candidate.

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Don’t Rock the Leaking Boat

By Donovan Durband

Two days after State Representative Frank Antenori warned the Rio Nuevo District Board not to rock Rio Nuevo’s boat by obligating Rio Nuevo or its TIF revenue stream to any contracts or projects prior to the Legislature’s passage of the State budget—which would include an amendment pertaining to the disposition of Rio Nuevo—an article in the Arizona Daily Star demonstrated the precariousness of Rio Nuevo’s position in the State Legislature.

The Star article told of a proposal in the House Appropriations Committee to redraw the TIF district’s boundaries to exclude the area containing its two cash cows—Park Place Mall and El Con “Mall”.  The proposal was roundly criticized by Southern Arizona legislators from both parties and from both houses of the Legislature.

Rep. Antenori vowed that the proposal was an error that would be fixed with an amendment to be offered by Senator Jonathan Paton of Tucson.  It would need to be fixed if there is any chance to capture substantial revenues to repay the bonds that Rio Nuevo has already sold or to build the infrastructure that is needed in Downtown or, more remotely, to build the museums and cultural facilities that were part of the 1999 Rio Nuevo ballot measure, the Master Plan adopted in 2001, and a Funding Allocation Guide approved by Mayor and Council in May 2007.

The Appropriations Committee scare amply demonstrates the wisdom of following Antenori’s advice to sit tight, be quiet, and do nothing that would provoke the rest of the Legislature—whose extreme disappointment with Rio Nuevo is now well-documented—into killing the whole thing.  Antenori, Paton, and Tucson-area members of both parties in the Legislature are trying to fend off those from other parts of the state that would just sacrifice the TIF (except for the future revenues needed to repay the December 2008 bonds) to the State’s ginormous budget deficit.

I was involved in the effort to secure the extension of the TIF in 2006, and I saw first-hand what a hard sell it was.  The district boundaries were a sore point then, and they continue to be today.  The Legislature did not trust Tucson city government to make the project happen then, and trusts it even less today.  Justified or not, that’s the way it is.

After the TIF extension was signed into law, I proposed that the TIF be prioritized to leverage private commercial investment through expenditures on infrastructure, so that we could grow our TIF in downtown, creating much more funding than just what the malls produce, so that we could build ALL of the projects that were in the master plan. 

Our Tucson Downtown Alliance board approved the proposal unanimously, and it was met by nods of agreement among the business community, other organizations, and members of the newspapers’ editorial boards.  The idea was not to pit one project against another, but do them in such a sequence as to make it possible to do all of the projects eventually.

While some good things are definitely happening in Downtown, and have been for years, very little of the progress to-date is directly attributable to wise investments of the TIF itself, so it is not surprising that the State would be questioning the efficacy of this investment in State sales tax dollars.  Millions have been spent teeing up projects on the West Side that were halted by the city manager in 2008.  Only the renovation of the Fox and Rialto Theatres, the construction of the TCC box office, the Presidio Heritage Park, Avenida del Convento, and a roundabout outside the TIF district boundaries on Grande Avenue are completed TIF-funded projects.  Soon the Depot Plaza garage will join that list.  See for yourself at http://www.tucsonaz.gov/rionuevo/.

I hope that by the time this magazine is printed, the Legislature has passed a budget with a Rio Nuevo amendment that leaves the TIF funding stream fully intact through its sunset date in 2025.  Almost certainly, though, for that to have happened, the Legislature didn’t get spooked again by news of Tucson leaders trying to redirect control of the project or to redirect funding to anything but a convention complex.  We have to stop denying that there have been problems, take our medicine, and hope for the best.

And, equally certain is the likelihood that the amendment required the creation of a new oversight board for the TIF that answers not to the City of Tucson, but to the State of Arizona.  Hopefully, this board will be made up entirely of Tucsonans who will demand transparency and accountability, who understand how to invest the funding strategically, and who want the best for Downtown.

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Candidates (from both parties), elected officials and news makers:

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We’ve blogged here before about the Turkin v Gordan case rumbling through the court systems in Arizona. The case is the work of the Goldwater Institute, which is a libertarian/conservative think tank and legal advocacy group out of Phoenix. The court of appeals has ruled in favor of Goldwater reversing the $100m+ subsidy to the City North development. The AZ Supreme Court has until June 1 to decide to take the case or not.

Watch the KAET Phoenix’s interview with Goldwater’s Bolick and Grady Gammage the attorney for City North – HERE

Watch some back ground on the case – HERE

LetOro Valley Excel or the L.O.V.E. Blog has been following the case because it has ramifications to the Oro Valley Market Place development. The Marketplace, which was a voter approved subsidy used to attract a large Walmart development in OV was authorized under the same circumstances as the City North case.  The council in OV has put all payments in an escrow account pending the outcome of the Turkin V Gordon.

It’s popped up on the radar in southern Arizona in reference to the Sahuarita council denying similar subsidies to a Home Depot development.

The big one that grabbed me was a statement in the Star’s May 4 article on funding challenges at Kino:

Earlier this year, Huckelberry recommended the county provide $25 million to UPH next fiscal year. However, in a letter sent to UPH administrators earlier last week, he expressed concern about whether a recent Court of Appeals decision might mean further payment to UPH — beyond the existing lease agreement — would violate the gift clause of the state constitution.

The case involved an agreement between the city of Phoenix and a developer over a parking garage both parties contended would benefit both the public and the developer.

If you haven’t seen this yet it’s worth a look.  HERE Apparently the video is being used as a teaching tool in some American schools. Is it ‘spin’ or a sobering account what our world is moving towards?

The Story Of Stuff is an online video that has been viewed over 5.5 million times. It’s a cartoon depicting the how things are produced, distributed and consumed. The premise is that we are using too many natural resources and too hooked on consumerism.

What do you think?

Tucson’s election process is under fire  
Legislative bill to seek end of partisan races for council

By Rob O’Dell
Arizona Daily Star

Tucson, Arizona | Published: 12.15.2008

State Sen.-elect Jonathan Paton believes Tucson’s City Council has become so dysfunctional that lawmakers from Phoenix need to step in and mandate changes.

What is needed, the Tucson Republican contends, is nonpartisan elections — an idea Tucson voters have rejected several times, most recently in 1993. Efforts to put the issue back on the ballot since then have fallen short.

Paton’s bill, to be introduced next month, would also abolish Tucson’s unique system where its council members are nominated by ward but are elected citywide.

That system has been in place since 1929 and has survived several public votes and failed initiative drives.

Paton, elected to the state Senate in November, will be part of a growing GOP majority in the Legislature when it convenes in January. Democratic leaders and City Council members say he is using that political clout to let Phoenix make a decision best left to Tucsonans.

Paton said his push to reshape the predominantly- Democratic city government stems from what he describes as “a general dysfunction” on the council, caused by decisions based on politics rather than the public good.

He points to the lack of progress on the Rio Nuevo Downtown redevelopment as a prime example, calling it “the straw that broke the camel’s back.”

“Ideology is more important than getting things done,” Paton said. “The city is the level where you just have to get stuff done. You need people focused on getting those things done. Partisan elections really run counter to that.”

But most Democrats called Paton’s push a thinly veiled attempt to alter the political balance of power in the city, where Democrats have a solid advantage in voter registration.

“They want nonpartisan elections for partisan reasons,” said Democratic Councilman Steve Leal.

Tucson is the only city in Arizona that still has partisan elections, after an initiative passed in South Tucson in November that eliminated them there. Nogales, another longtime holdout, went to nonpartisan elections a few years ago. More than 75 percent of cities nationwide have nonpartisan elections.

Paton contends Tucson’s odd-year elections, combined with its party primaries, push candidates on both sides of the aisle toward the party’s base and special interests. The goal of nonpartisan elections is to get more pragmatic and independent-minded people, he said.

“You get more people who are interested in getting things done than they are in party politics,” Paton said. “It would be harder for interest groups around parties to control the process.”

Mixed reaction

Most Democrats slammed Paton’s proposal.

“How do you claim partisan elections are OK for his office but not right for local elections?” asked Vince Rabago, chair of the Pima County Democratic Party. “I don’t see the logic there.”

Rabago also pointed out that Republicans controlled the council for part of the time Rio Nuevo has been languishing.

But Rabago is concerned about the prospects of the Legislature mandating nonpartisan elections, now that Democratic Gov. Janet Napolitano is moving to Washington and after the Republicans increased their majorities in the November election.

Judi White, chair of the Pima County Republican Party, was more open to Paton’s idea. But she said she had mixed feelings, too.

“Taking partisans out of the process changes the whole process,” White said. “Do people still know what party you’re from? It evens the playing field a little bit for independents.”

Does it lower turnout?

Leal and Rabago both pointed to research from former Tucson Mayor Tom Volgy showing having nonpartisan elections lowers turnout.

But local pollster Pete Zimmerman said he believed nonpartisan elections would increase turnout by boosting the number of votes cast by independents, the city’s second- biggest voter block.

“I don’t think there is a Republican or Democratic way to run the city,” or fix a pothole, said Schorr, who led an unsuccessful Southern Arizona Leadership Council effort to put the nonpartisan election issue on the 2001 ballot.

Schorr noted that the Phoenix City Council, which has long had nonpartisan elections, gave rise to the political careers of both 1964 Republican presidential candidate Barry Goldwater and current Democratic Attorney General Terry Goddard, albeit 40 years apart.

“Phoenix’s rise is due in part to the fact they had nonpartisan elections,” he said.

What about local control?

Paton’s bill would target Tucson, the only city in Arizona left without nonpartisan elections. Paton said he believes Tucson is also the only place affected by the second provision, requiring representatives be elected only by their wards or district.

Several people questioned how the state can trump the voter-adopted City Charter.

City Attorney Mike Rankin said it depends on how Paton’s bill is written to determine if it overrides the charter.

Courts generally see elections as local issues, but it depends on the bill’s language if the state law will pre-empt the City Charter, Rankin said.

Katie Bolger, an aide for Councilman Rodney Glassman, said it’s “hypocritical” for Paton and other Republicans to push for change from Phoenix.

“The Republicans are supposed to be for local control,” she said.

Rejections by the voters

Tucsonans have rejected nonpartisan elections at the polls many times, most recently in 1993. Efforts since, including an initiative drive in 1998 and lobbying campaigns in 2001 and 2003, failed to make it to the ballot. Initiative drives to change the city’s ward system have failed as well, most recently in 2007.

Council members, including Glassman, Karin Uhlich and Nina Trasoff, said they would want the change to be approved by Tucson voters.

“It is something city residents should decide rather than Phoenix dictating how we operate,” Uhlich said, adding that it’s an issue the council could refer to the committee looking at charter amendments.

But Schorr pointed out that it was the council that refused to put the issue to the ballot in 2001 and 2003, adding it’s tough for initiatives to “push the ball over the goal line.”

Paton contends that partisan elections serve the cause of special interests because council members must appeal to these groups during the primary campaigns, especially in Tucson’s off-year elections.

“It’s an environment that encourages your own ideological agenda ahead of the projects getting done,” Paton said.

Read more about local and state political news in our politics blog at go.azstarnet.com/politics

● Contact reporter Rob O’Dell at 573-4346 or rodell@azstarnet.com.

Great Comments:

Leal and the rest of them look so pathetic. They’ll do or say anything to keep their power. I think Paton is actually going to succeed in changing things.

I’m cruising through the May 8th edition of the Dandy Dime (what else should I be doing on Mothers Day?) and I run across an ad, on page two, that caught my eye. In big bold red letters reads the following:

$5000 Reward to the first person who supplies us with data leading to the arrest and conviction of persons improperly involved with Rio Nuevo monies. For security arrangements contact:

Woodrow
P.O. Box 360
Tucson, AZ 85740

Any ideas? 

Woodrow, would you mind sending over some of the stories you get? Talk about some great blog fodder!

We’ve heard Rio Nuevo was mismanaged, poorly handled and way off track but corrupt? Say it aint so.

Just in time for election season.

HERE

This can’t be good. I sure hope we aren’t following in the Brit’s footsteps.

From The Economist

The politics behind Britain’s tax changes are ugly. The economics are worse

JEAN-BAPTISTE COLBERT, Louis XIV’s finance minister, famously said that the art of taxation was like plucking a goose; the aim was to get the most feathers with the least hissing. But tax policy should aim to do more than smother protest: it should also seek to raise the most money with the least distortion to economic activity.

By this measure, Britain’s attempts to fill the fiscal gulf created by recession are a dismal failure and a lesson to cash-strapped governments everywhere. Take marginal income tax rates, announced in the British budget of April 22nd. Once national insurance is added in, effective marginal rates will climb from 31.5% to 41.5% through to 61.5% on those earning just over £100,000 ($147,000), thanks to the withdrawal of the personal tax allowance. After that, the rate will fall back to 41.5%, before rising again to 51.5% on incomes over £150,000.

Folks, when it comes to economic development, options in southern Arizona we are somewhat limited. Let’s face it, we aren’t in the running for the next Intel or Boeing.  We probably aren’t on the short list for a lot of jobs that require educated and skilled labor.

Why do you think TREO’s predecessor, GTEC, did such a great job with low skilled, low paying call center jobs?

What happened to us you ask?

Leadership Failures
We are running out of options because the past generations of business and elected leaders failed to act. We are at this spot today because they failed to plan, failed to put aside self interests, failed to look beyond the next election cycle.

Transportation Failures
We missed the boat on our transportation system (we shot down the RTA 5 times). Phoenix passed their RTA program 20 years ahead of us and have been spending $300m per year on infrastructure.

Education Failures
We have an out of control TUSD school district that resists reforms and has major admin issues. Parents are flocking away from their product because they aren’t a quality operation.

Too Many Service and Government Sector Employees
Southern Arizona has way to many service and government sector employees. We lack industries that make things, build and ship things (Raytheon is an exception but with 11,000 employees our of 1m population it’s not enough).  One service sector employee goes out and shops at another service sector business and the cycle continues. Add in the stress of maintaining a bloated government sector (our single largest employer class) and a couple construction booms and busts and you can see how it all happened.

Political Failures
The people elect candidates that promise greater perks and end up making promises they don’t keep. The neighborhoods are given all the power to stop any type of progress or vision.

Environmental Opposition
Mining, which has been an income generator in Arizona for generations, faces opposition at every turn.

Killing The Golden Goose
Tourism is probably our only real sustainable industry that brings in FRESH money. What are we doing to our golden goose? We are taxing their industry right out of town. What are we doing with the increased bed taxes?  How about a cool $900k in the form of a pass through to Tucson/Pima Arts Council.

Completely Ineffective Business Leadership
Go and check out the chart…

Now that I set the stage…… a potential game changer:

INLAND PORT! - check out Carli Brosseau’s story in today’s Tucson Citizen. HERE.

Key components of TREO’s plan involve building an I-10 bypass, setting up a larger rail yard near Marana and improving infrastructure connecting Tucson to the seaport of Guaymas, Mexico.

The report also recommends the development of food processing plants because of the tons of Mexican agricultural products shipped daily through the city.

Most of the related development is anticipated along Valencia Road.

Smallhouse said the project is realistic despite the recession and should be the domain of business owners, not government.

The inland port is the low hanging fruit, the call centers of our generation.

We are in the right place at the right time to really change the course of Southern Arizona.  This port concept could create high paying jobs. It will spin off small businesses and light manufacturing.

The port could truly be a game changer.  I’ve studied it, met with TREO, done the background, met many of the players and I got to tell you it’s one of the most exciting things I things our region has.

What’s a little concerning is that when I speak to elected officials very few understand the full impact and need for immediate and sustained action to see this opportunity become a reality.  Our business and elected leaders are busy with bus fares and rental taxes or park fees. Who’s watching out for our future?

I tell you what, if we make this too complicated or put up too many road blocks the industry will find greener pastures.

We have seen all the protests from the MTCVB and their hotel friends.  They have been at the Tucson City council meeting.  They are crying at Oro Valley Town meetings.  They have found gullible allies like the Northern Pima County Chamber of Commerce and the their “political expert” Lyra Done(arrgh!), who are setting up a royal dog and pony show for their membership on Thursday.  Other Allies include TREO(impressive), Downtown Partnership(even better) and the Southern Arizona Lodging and Resort Association(SALARA, I know another acronyn to keep track of, yeesh!). 

One thing that only a few of these folks know and that hasn’t been reported is that the MTCVB negotiated an increase in the city bed tax, without talking to the Tucson hotels!  Seeing that is budget was going to get a big cut from Tucson(last year over $4 million), CVB CEO Jonathon Walker met with Mr. Letcher and they came up with an extra $1 per night per room.  It sounds like a minute amount, but when meeting planners are bringing thousands of room nights for a conference, the dollars add up.  Mr Walker (and his staff of almost 60 employees!) have basically put the city hotels at distinct disadvantage to their competitors outside of the City.  He has especially screwed the recently opened Marriott at Starr Pass, which has the most rooms and survives on group business.  If a meeting planner with a 2000 room nights comes to town, it will cost them $2000.00 more to do it at Starr Pass than at Ventana or La Paloma.  Thanks, Starr Pass for your investment in Tucson, now we will make the now-tough hotel business even tougher for you and your hundreds of employees.

It’s another example of MTCVB watching out for themselves and not their members.  Which shouldn’t surprise anyone.