In June of 2013, Rio Nuevo Board member Mark Irvin advised fellow board member Alberto Moore that he was “working diligently” with Scott Stiteler on downtown hotel options. On Monday, May 19, 2014, that hard work paid off when the Board approved a $4,300,000 deal between Stiteler and the Rio Nuevo District.
At their May 19, 2014 meeting, after a long discussion, Board members Cody Ritchie and Alberto Moore voted against the $4,300,000 request for the eventual purchase of the garage component of Stitler’s new AC Hotel project. Ritchie cited the complexity of the transaction as a reason for his vote. Jeff Hill, Jannie Cox, and Mark Irvin approved the motion while members Fletcher McCusker and Chris Sheafe did not participate due to declared conflicts of interest.
Few other developers in the area have so many advocates or friends on the Board.
Stiteler has an agreement with Marriot to develop an AC brand hotel and additional retail space on the northwest corner of Broadway and 5th Avenue, immediately behind Stiteler’s Hub and Playground projects. The $30,000,000 hotel project requires additional approvals from the Mayor and Tucson City Council. According to sources, the hope for developers and friendly Rio Nuevo Board members is that their action will force the approval by the City.
Sources say that Stiteler needs the cooperation of the City in order to secure HUD funding.
By the terms of the agreements, when the garage is certified for occupancy, the District will receive title and will pay the $4.3 million. According to a statement released by the Board, Stiteler will then lease back the garage at $80.00 per space, creating about a 3.5 percent annual return on the District’s investment.
The hotel, when completed, will employ low-wage service industry jobs.
Construction is expected to start within the year. When completed, the hotel will be known as The AC Tucson.
In 2010, the City executed a settlement agreement with Stiteler. The City granted his group dozens of parking spaces in the Depot Parking Garage, at under market value for years, to settle a City breach to Stitlers group under an unrelated Development Agreement, according to testimony offered at a Rio Nuevo Board meeting by Moore in 2012. Moore testified, “The City used Rio Nuevo assets illegally as a settlement tool without approval. And we found out about it by accident! Stiteler, who was instrumental in improving the east end of Congress Street’s historical character, ran into a District Board member. In casual conversation he mentioned his deal with the City regarding Depot parking spaces – it soon became apparent the City had made the deals on the same day with each of them.”
That garage is now under-used, according to sources. Few downtown visitors even know that it exists.
In other action, the Board amended the developing Arena Lot Request for Proposals to include a lease option and expects to release an RFP soon that could develop the 8.5 acres where the Greyhound Bus Terminal is temporarily located. The Board also indicated that they will honor the city and Allan Norville’s request to provide the approximate 1,200 parking spaces necessary to allow Mr. Norville to build a 120,000 square foot permanent exhibition hall on adjacent property for the gem show and other events.
The Board approved a $74,000 change order to the TCC renovation project to refinish all the bathroom floors in the aging arena and heard from the project manager that the renovation remains on time and on budget. The increased bathroom costs will come out of the contingency fund established when the project launched.
Contrary to the intent of the voters, which was to create a District that spurred public/private partnerships, the Board announced that it is looking into public/public partnerships with Pima County and the University of Arizona in a possible purchase and repurposing of the La Placita complex, adjacent to the TCC
The next meeting will be held at the TCC and include a tour of the arena remodel.
Irvin email:
From: Mark Irvin
Subject: Hey…
Date: June 19, 2013 2:34:03 PM MST
To: Moore AlbertoAlberto:
I have been working diligently with Scott Stitler on exploring the hotel options downtown on his controlled sites and how the District might be able to participate. I recently met with Mark Collins to go over the potential structure and would like to also use you as a sounding board. I have asked that this be placed on the agenda for the July 15th board meeting.
I would like to meet with you sometime in the next couple of weeks. Please let me know what might work in your calendar. I am happy to meet where ever. I would venture that I need about 30 minutes of your time and counsel.
Thoughts?
Mark
Please reply to:
Mark C. Irvin, CCIM, SIOR
Mark Irvin Commercial Real Estate Services, LLC
“Committed to timely and informed real estate decisions”
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