Rio Nuevo Board member raises questions about City and Irvin

The new Rio Nuevo District Board meeting held Friday mid-afternoon was scheduled to minimize public input, and it did just that. However, the nearly empty room was still filled with drama.

As with all good dramatic productions, there were the protagonists, and the antagonists. The big bad Rio Nuevo District Board against the small and selfless City of Tucson. If everyone stayed on script, and in their character, all would have right in the world.

Alberto Moore, one of Tucson’s most well-respected community leaders strayed off the script provided to Board members from City Hall and a car lot across town, and addressed the public and his fellow Board members:

“I have a few comments to present to the board regarding the second Forensic Audit Report, but everyone can relax – it will only take a few minutes. However, like my remarks from the previous Board meeting, they will be forwarded to the Governor.

The District has received the second Forensic Audit Report and it continues to uncover a disturbing pattern of fiscal negligence, possible corruption or a combination of both by the City of Tucson as was demonstrated by the first Forensic Audit Report.

Twelve Rio Nuevo Westside Projects are included in this second of the three Forensic studies requested by the District. Though the report is 111 pages long, the results can be seen on a single sheet of paper entitled Exhibit E.

Over eighty-five per cent of the $38.5 million dollars spent to date on these Westside projects are questionable or unsupported by documentation.

In the last week, Tucson City Councilman Steve Kozachik stepped up to plate and demanded that City Finance Director Kelly Gottschalk provide an accounting for the expenditure of the $33.8 million dollars noted as questionable or unsupported by documentation in the second Forensic Report.

The Finance Director indicated it would take six weeks or longer to formulate a reply. Note, she didn’t say it would take six weeks “to deliver the complete records.”

The reconstituted Board waited for well over two years for Finance Director Gottschalk, City Attorney Michael Rankin and then Assistant City Manager Richard Miranda to explain and account for where a quarter of a billion dollars went under the City’s stewardship of Rio Nuevo.

We need to point out, it is not Rio Nuevo’s job to pay to exonerate the City of Tucson when they had every opportunity to provide the information requested over many months. The City Finance Director’s blame game will not work.

In fact, the reconstituted Board as chaired by Jodi Bain did formally request the information and materials for these forensic reports multiple times from the City. The initial letter by the office of the forensic auditor was ignored.

A follow-up letter by the District’s attorney was sent which was responded to with thousands of pages of documents. Thereafter, emails were exchanged without much success at obtaining more information. The reconstituted Board did not prevent correspondence or communication with the City. The City failed to respond to them – once again, misinformation by the Arizona Daily Star.

A final effort was made to confirm that the forensic auditors had received any and all documentation from the City regarding the 12 projects in this second Forensic Report. In late April 2012, the District’s attorney sent a follow-up request letter to the City Finance Director. Again, the City did not respond.

Now, it appears that the City is going to make information available. From where? Why now?

As we wait for the third Forensic Report on the Garfield Traub/Turner/Sundt Hotel Garage project to be completed we are left with questions. These are questions that the taxpayers deserve to have answered. Questions on why the City was not forthcoming with the documentation on the various forensic examinations. And answers that the Board needs to know as we attempt to move ahead in a productive manner.

1. Why didn’t City Finance Director Kelly Gottschalk give the full financial, accounting and project records to the reconstituted Board when we first requested them? Was she stalling? What else is out there that they don’t want us to know?

2. Why didn’t Kelly Gottschalk and City Attorney Michael Rankin realize that the accounting and record keeping for Rio Nuevo Funds distributed by the City was apparently almost nonexistent?

Why didn’t they exercise basic due diligence? One might wonder, do all the financial, accounting and project records of the City of Tucson need to be audited by the State of Arizona?

3. Why does it appear the 2008 Rio Nuevo Revenue Bond proceeds have all been spent and yet, the City claims to have remaining funds of over $5 million dollars?

Perhaps the City is now willing to cooperate with the Board by complying with our requests for information. Unless of course, the City is hiding more than financial negligence and incompetence -which is presumably why Arizona Assistant Attorney General Michael Jette and the FBI are looking into the situation. Though some feel that Jette’s friendship with Michael Rankin might cloud his judgment.

There is a final, very serious issue we must address. It concerns the Board itself.

I spoke yesterday with Nancy Eatros at Wells Fargo to get the names of the persons authorized to discuss financial issues of Rio Nuevo with the bank. She gave me three names that had been authorized. Mark Irvin as Vice Chair, Alberto Moore as Secretary and Jodi Bain as Chair. It is true, according to a document provided to Wells Fargo as of September 21, 2010 that Mark Irvin had authorization.

However, I have a document from September 28, 2011 that clearly states that the authorization had changed. As of that date Mark Irvin’s authorization was removed and Treasurer Jeff Hill was added as an authorized Board member to interact with Wells Fargo. Mark Irvin no longer had any authority to discuss Rio Nuevo issues with Wells Fargo.

Not only was Wells Fargo aware of the change in authorization, but Mark Irvin was also aware he no longer had any authority to discuss or conduct any transactions with Wells Fargo.

Yet, on June 26 or June 27 of this year Mark Irvin apparently represented himself to Wells Fargo as a signatory and that had the authority to tell Wells Fargo to provide records to Michele Bettini.

His exact words are, “Please consider this as my authorization for Wells Fargo to provide Michele Bettini with copies of the monthly statements of the Rio Nuevo accounts for which you are the trustee…”

Mark Irvin had no authority to do anything. As a real estate broker he should have at least known he was expected to offer full disclosure of his status.

Therefore, I want our counsel; Sean Brearcliffe to investigate this matter, because I believe this is a serious violation of Rio Nuevo processes. We need to know how this violation occurred and what motivated Mark Irvin to represent himself as a signatory authorized to request information from Wells Fargo or to direct them to do anything. Also, are there other instances where Mr. Irvin has misrepresented his authority? We need to know if this misrepresentation to Wells Fargo requires the removal of Mr. Irvin from the Board.

All of this having been said, I have a final question: Mr. Irvin – who gave you the authority to discuss Rio Nuevo issues with Wells Fargo, and authorize Wells Fargo to do anything? Because it certainly wasn’t the Board or me.”

The Rio Nuevo District was, from one minute after the voters gave their approval for it, a big piggy bank for the City of Tucson, to be looted at will by politicians and bureaucrats in the service of themselves and their buddies.

In the process, some people have been villianized, some people have been teflonized, and almost all Tucson have been victimized.

Board members Jodi Bain and Rick Grinnell have been dragged through the mud in an effort to set-up a simple minded but highly effective good versus evil plot.

Mark Irvin, whose real conflict-of-interest should have precluded him from even being within ear shot of any Rio Nuevo Board member, has slid past the slings and arrows from the Arizona Daily Star and Inside Tucson Business, like fried egg on a Teflon pan.

Irvin’s antics have fostered the us-versus-them atmosphere on the Board for the past two years in order to perpetuate the Democrat developed paradigm of City-good, Rio Nuevo-bad, and maintain the City’s control of the money.

To that end, Irvin and powers-that-be have been effective.

What have not been effective are Fletcher McCusker’s attempts to look like a proponent of accountability and transparency, while challenging Moore’s questions about Irvin.

McCusker claims he thought Moore’s questions about Irvin’s actions would be better handled behind the scenes rather than exposed to the public. The public has been told countless lies about Grinnell and Bain, spread by their fellow Board members, but McCusker doesn’t believe that it is appropriate to share the truth about Irvin in a public forum.

That being said, McCusker was nominated as the Board’s Chair by Alberto Moore, as a result one could conclude, that McCusker was exercising the better part of valor. Perhaps McCusker was trying to avoid the public embarrassment of Irvin. One could conclude that, but only the naive would.

Rick Grinnell addressed the Board during the budget’s Public Hearing portion of the meeting. As former Treasurer of the District Board, Grinnell implored the Board to adopt a conservative and realistic budget.

Grinnell advised the Board that he and Bain had spent thousands of hours, over two years, developing a budget that was based on real numbers, not the City’s unreliable figures. He implored the Board to “do the right thing” as he and Bain had done and rely on real not reckless accounting.

At one point, it appeared as if new Board member, Christopher Sheafe ,was trying to remove or reduce funding for the audits. If so, he was unsuccessful in that effort….. for now.

The new Board ignored Grinnell, and voted to adopt a budget that was over 20% more than the Bain/Grinnell budget. However, according to McCusker, “The budget approved last night is higher because we added a CFO position to bring some accountability and transparency to the organization. Also, we nearly doubled the auditing budget and authorized the auditors to complete their projects.”

McCusker says that Grinnell was right. “I intend to take Rick’s advice on working with the auditors to get a clean audit.”

The new Board hopes to take what little money they have and make careful investments. Before that occurs, they say the “intend to put procedures and protocols in place before any investments are made, partly to increase the view on creating additional sales tax through our investment efforts.”

That investment would most likely require a change in the law, which was something Kozachik and the powers-that-be tried to accomplish quietly this last year. It is unclear whether the public would support that change. The new Board would need to let the public know about it first; if they hope to be credible.

Kozachik, writes in his newsletter this week, “The history of Rio Nuevo is all too familiar: quietly drawn up deals, poor public disclosure, sloppy records keeping, and most recently political interference from Phoenix.” He complains about the interference which was trying to icrease accountability, not his own efforts to get rid of Bain and Grinnell, or his changes to the law, which would give the powers-that-be more “flexibility.”

The residents of Tucson can only hope that because McCusker is a Democrat, the City will be unable to play the Republicans-bad, Democrats-good game and stop avoiding responsibility. It is up to the public to ensure that happens.

“McCusker claims he wants to increase accountability and transparency,” said one Board watcher. “If it is true, Irvin should be asked to resign. Anything short of that, would force the public to arrive at the conclusion that the public is out of luck once again.”

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