By Sergio Arellano-Oros
The City of Tucson has remained mute on the matter of the notice they received from the IRS that an audit will be performed on the 2002 Certificates of Participation issued for the Tucson Convention Center. At the same time, the Rio Nuevo District Board announced that is welcomes the audit and is gathering what information it has in order to respond to an audit request by the Internal Revenue Service of the 2002 Certificates of Participation.
The bonds were issued to Rio Nuevo, while it was under the control of the City of Tucson, for the purchase and lease back of the Tucson Convention Center in 2002.
The newly reconstituted District says that found out about the audit from City employee, Kelly Gottschalk in December. The Board sought legal advice as to their role in the audit, as the City of Tucson had controlled the finances prior to the state Legislature taking control in 2010.
The Rio Nuevo District Board notified December 17 and immediately turned the notice over to their attorneys since it was not clear who has to manage the audit, none of the current board and staff were around in 2002, and the records are all at in the possession of the City. All decisions about the bonds and use of proceeds were made by city personnel.
After the first of the year the IRS confirmed that Rio Nuevo must manage the audit as Rio Nuevo is the issuer of the bonds. The Board’s Executive Committee agreed that the public should know the audit will take place in February.
As a result the Rio Nuevo District is gathering the information from the City of Tucson and say they will make everything available to the IRS sometime in February.
“The IRS has advised us that this is a routine audit of ten year old tax exempt bonds and the use of bonds proceeds. Since Rio Nuevo is the issuer we are obliged to manage the audit even though all the records are at the city of Tucson. We will post the audit to our website as it is received”
The City has not issued a statement on the matter.
“This transaction was well before the reconstituted board was placed in control by the Legislature but we will provide them with all the information in our possession,” said Fletcher McCusker, Chairman of newly reconstituted Rio Nuevo Board. “We welcome the review.”
For years the City of Tucson used the funds generate by the TIF district to supplement their general fund. In 2010, Republican legislators from Southern Arizona including fiscal hawk Senator Frank Antenori, passed legislation taking control away from the City of Tucson. Since that time, the newly reconstituted Board has begun settlement negotiations with the City after filing a lawsuit against the City in an attempt to recoup taxpayer assets and monies.