Finchem Hopes To Extend Rio Nuevo District Funding To At Least 2035

On Wednesday, February 14, the Arizona House Of Representatives’ Ways and Means Committee is scheduled to consider extending the life of the Rio Nuevo District. HB2456, sponsored by Rep. Mark Finchem, will extend the life of the District to 2035 and beyond.

Rio Nuevo has been a source of controversy since the time Tucson area voters passed it into law in 1999. After squandering over $200 million in taxpayer dollars, the “revamped” District has become little more than a Gift Clause dodge for Pima County’s government. By law, government entities in Arizona are prevented from using public funds for private interests, but in 2015, Arizona Attorney General Mark Brnovich issued an opinion that the Rio Nuevo TIF (Tax Increment Financing) District was exempt from the law.

In multiple memos issued by Pima County administrator Chuck Huckelberry, the Gift Clause dodge is referred to as an “economic tool”… “not available” to the County. In one of his most recent memos, Huckelberry argues that using Rio Nuevo to contract with Dunn Construction to build a large office building would be a “game-changer” for southern Arizona. Huckelberry argues this despite the fact that there are no identified tenants for what he describes as “the largest single building built in downtown Tucson since 1985.”

[Read Huckelberry’s JE Dunn Construction memo]

House records show that Michael Gardner, of the AZ Builders’ Alliance, Andrew Greenhill, of the City of Tucson, Edward Maxwell, of the Southern Arizona Leadership Council, and Lea Marquez Peterson, of the Tucson Hispanic Chamber Of Commerce, have come out in favor of the bill. Kevin McCarthy, of the Arizona Tax Research Association has registered an objection to the bill.

Lea Marquez Peterson, a congressional candidate in CD2, is the sister of Rio Nuevo Board member Edmund Marquez.

“In the 36 years I have lived in Tucson, I have seen multiple boom and bust development cycles in downtown,” said Rep. Pam Powers Hannley. “As a result, I have more questions than answers about Rio Nuevo. Downtown Tucson has many new apartment buildings, hotels, bars, and restaurants, thanks to multiple types of tax incentives. At a Rio Nuevo meeting last fall, I learned that the four new downtown hotels are getting a 2.5% state sales tax rebate, as part of their Rio Nuevo development package. How much money are we talking about here? How long will they receive this rebate? Is this the best use of our sales tax? How many of these businesses are dependent upon tax money for their survival? Tax incentives are like Miracle-Gro. When you stop the extra fertilizer, only the strong survive. How many of these businesses are viable without the tax giveaways? I am concerned about the lack of citizen input, as well as the long-term sustainability of Rio Nuevo projects.”

“Rio Nuevo is a local control issue,” continued Powers Hannley. “Yes, it was not managed well by the City Of Tucson early on, but now the citizens of Tucson have no say in how their city is being transformed with tax incentives. Since the Legislature chooses the Rio Nuevo Board, who is really picking the winners and losers in the downtown Tucson development game? Not us.”

Finchem’s bill, which is cosponsored by reps. Todd Clodfelter and Don Shooter, will cover Rio Nuevo’s “contractual obligations incurred by the District before June 1, 2025.” Given that the Dunn Construction project is not expected to be ready for occupancy until 2020, the need for the extension of the District’s legal life is obvious.

The Rio Nuevo board is appointed by the Governor, Speaker of the House and the President of the Senate. In about 2013, the Board maneuvered through lobbyist Jonathan Paton to have legislation passed that removed key constraints that had been imposed in 2010. Those restraints were intended to ensure that the mismanagement and corruption would come to an end.  Under the current legislation Rio Nuevo will continue to spend state tax dollars committed to downtown redevelopment until 2025.

Paton is listed as a contributor to Finchem’s re-election campaign.

Fact Sheet: HB 2456: stadium district; extension; Rio Nuevo

PRIME SPONSOR: Representative Finchem, LD 11

 Provisions

  1. Continues the distribution of shared revenue to the District until July 1, 2035 or upon the completion of the scheduled debt service, whichever occurs later. (Sec. 1)
  2. Authorizes monies paid to the District to be used for:
  3. Debt service for bonds issued by the district before January 1, 2025; and
  4. Contractual obligations incurred by the district before June 1, 2025. (Sec. 2)
  5. Makes technical changes. (Sec. 1, 2)

Additional Information

The Rio Nuevo Multipurpose Facilities District was formed in 1999 through an Inter-Governmental Agreement (IGA) by the municipalities of the City of Tucson, the Town of Sahuarita, and the City of South Tucson as a tax levying public improvement district and a separate legal entity from the City of Tucson. The District receives an incremental portion of state-shared funds derived from Transaction Privilege Tax (TPT), which are collected within District boundaries to be invested in public projects. Expenditure of the funds collected is disbursed and managed by the reconstituted Rio Nuevo Multipurpose Facilities District Board of Directors who, as of 2010, are appointed by the Governor, President of the Senate, and Speaker of the House of Representatives (Rio Nuevo Multipurpose Facilities District).

Current Law

The state disburses TPT revenues through state shared revenue to stadium districts to be used for the components for a multipurpose facility that are owned by the District or that are publicly owned to pay for:

  • Debt service for bonds issued by the District before January 1, 2009;
  • Contractual obligations incurred by the District before June 1, 2009;
  • Fiduciary, legal and administrative expenses of the District; and
  • The design of construction of a hotel and convention center located on the facility site (A.R.S. 48-4204).

TPT disbursements are authorized until the earlier of either July 1, 2025 or until all authorized debt service payments are completed (A.R.S 42-5031).

Related articles:

Moore and Hill reveal the truth about Rio Nuevo (transcript)

Watchdog Moore Resigns From Rio Nuevo

Rio Nuevo maintains tradition with help of Legislature

Specter of Rio Nuevo: Closing arguments in Tucson records case today

Rio Nuevo bill sponsors a mixed bag

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