Archive for June 29th, 2009

They don’t call it the Green Room for nothin’

June 29th, 2009 by downtown

The DTDC/Rialto saga has taken another bizarre turn, as the developers of Downtown Tucson Development Company-Don Martin and Scott Stiteler-have demanded the payment of back rent for a small building on Broadway behind the Rialto Theatre used as a “green room” by visiting performers.  The amount of back rent that DTDC is demanding approaches $40,000.

Don Martin told the Arizona Daily Star’s Rob O’Dell last week, just days after the City Council voted to delay approval of the Development Agreement with DTDC, and DTDC said that it was pulling out of further negotiations, that he figured the deal he and his partner have offered the Rialto-$15 per square foot-is generous because it is only 75% of “fair market value” of $20/sq.ft. 

For a professional opinion on Martin’s estimate of fair market value, O’Dell sought the input of “Mr. Downtown”-Buzz Isaacson, who has put more downtown property under lease than anyone else in the last 25 years.  Now a first vice-president at CB Richard Ellis, Isaacson is quoted in last Tuesday’s article by O’Dell, saying that there is much variability in downtown retail rents. 

Isaacson said that antiquated retail space downtown can rent for as little as $8 or $9 a square foot, while lease rates for newer and more functional space can be $23-$25 per square foot.  Think Café Poca Cosa-type space on the upscale end.   Think “Downtown Wigs” on Broadway on the other end. 

Which end of the downtown retail spectrum do YOU think the Green Room is closer to, in terms of real market conditions-$8/sq.ft., or $23-$25/sq.ft.?

While the impact of the DTDC deal on the operations and sustainability of the Rialto Theatre has grabbed the headlines, other aspects of the deal deserve even more scrutiny and suggest important policy questions:

• Is offering free land to be developed at an unspecified time in the future the best way to incentivize current development?
• Is the value-for-value tradeoff realistic?  Is the City getting equal value to what it is giving away?  Is it important that the City get equal value?
• What assurance is there that DTDC will actually develop the properties it is being given-rather than sit on them indefinitely or flip them for a profit?
• Is there legal recourse for the City to take back the land it gives to the developers if they don’t perform in a reasonable period of time?   The last thing we need is a repeat of the Thrifty Block debacle. 

Late-Breaking Development!

In a Sunday afternoon email to his fellow Downtown Tucson Partnership Board members, attorney Michael Crawford, the president of the Rialto Theatre Foundation, asked that the DTP consider approving a resolution requesting the City of Tucson/Rio Nuevo to “attempt to purchase the 4,000 square feet the Theatre needs to perform its essential functions and if those discussions do not result in the purchase of the property or if during those discussions the owners of that property take action against the Theatre that threaten its existence, then the City should move for immediate condemnation of the property.”

This request will undoubtedly put the Partnership’s leadership group-Steve Lynn, Larry Hecker, and Glenn Lyons-in the awkward position of having to decide whether or not to honor Crawford’s request to ask the DTP board to either support the City’s intervention on behalf of the Rialto, a Rio Nuevo asset, or hold out hope that a development agreement with DTDC that might involve a resolution with the Rialto can still be salvaged.  The decision hits closer to home for DTP than just choosing between Doug Biggers, Michael Crawford, and the Rialto on the one hand, and Don Martin and Scott Stiteler on the other, however.

In effect, the decision to agendize this issue would force DTP to either support the Rialto’s position, or support the position of Council Member Nina Trasoff, which is essentially that the development agreement with DTDC as presented two weeks ago is fair and should have been approved.  Trasoff said subsequently that the Rialto Foundation was being “selfish” with its demands of DTDC. 

The awkwardness for DTP goes beyond not wishing to antagonize an elected official.  Trasoff is a non-voting member of the DTP Board of Directors and was one of the founders of the organization in 2007, and has close ties with incoming Board President Larry Hecker. 

My guess is that DTP CEO Glenn Lyons will be asked to broker some kind of deal.