On Monday, the Arizona Commerce and Public Safety Committee passed Rep. Mark Finchem’s HB2456, which will extend the life of Rio Nuevo. The bill passed exactly one week before a scheduled fundraiser for Smith’s congressional run by Rio Nuevo supporters.
|Roger Score, of Tucson, records the comings and goings before the hearing of HB2456|
Exactly one week to the day, Tucson car salesman Jim Click, and Rio Nuevo Board member Edmund Marquez, along with current and expected beneficiaries of Rio Nuevo are hosting a fundraiser for Smith’s Congressional District 1 race.
While Click was able to meet with Smith prior to a hearing of the bill, Smith advised opponents of the bill that they would have one minute and a half to express their concerns with the highly controversial bill.
When it was clear that the bill would pass, Smith cast the final vote. He was able to vote no to appease opponents momentarily, but will surely change his vote to a yes if needed for passage on the floor.
Hurry up about it we have donors to hear from
Arizonans have grown accustomed to being mistreated by their elected representatives, so when Smith declared that speakers would only have a moment to address the Committee, few attendees were surprised. As evidenced by the video of the hearing, most speakers tried to accommodate the important panel.
Kevin McCarthy of the Arizona Tax Research Association ATRA
Dr. Jo Ann di Phillipo of Pima County Supervisor Ally Miller’s office addressed the Committee with her concerns about the abuse of taxpayer dollars for lobbying services.
|Rio Nuevo payments to lobbyist Jonathan Paton|
|2013 19-Aug||25,000.00||Paton & Associates||RN Legisture Consultant|
|2014 29-Jan||20,000.00||Paton & Associates||RN Legislator|
|2014 14-May||20,000.00||Paton & Associates||RN Lobbyists|
|2014 14-Oct||45,000.00||Paton & Associates||RN Lobbyists|
|2015 8-Apr||20,000.00||Paton & Associates||RN Lobbyist|
|2016 7-Mar||45,000.00||Paton & Associates||RN Legislative Consulting|
|2016 9-May||20,000.00||Paton & Associates||RN Legislative Consulting|
|2017 20-Jun||41,500.00||Paton & Associates||RN Legislative Consulting|
|2018 11-Jan||50,750.00||Paton & Associates||RN Legislative Consulting|
|Total||287,250.00||Paton & Associates||RN Legislative Consulting|
Sen. Catherine Miranda bristled when di Phillipo raised the issue of the over $280,000 spent on lobbyist, former failed CD1 candidate, Jonathan Paton. Miranda’s body language betrayed the cozy us-vs-them relationships legislators and lobbyists have forged over the years. The fact that Paton was a former legislator seemed to add one more barrier between the public and their public servants.
Smith appeared to be particularly eager to shut down the testimony of Rep. Bob Thorpe and Supervisor Ally Miller.
Rep. Bob Thorpe
Pima County Supervisor Ally Miller
Smith rearranged the list of speakers to ensure that Rio Nuevo chair Fletcher McCusker would have the last word. McCusker was denied that honor by Click who rose to offer praise for McCusker and the legislators, who had and would vote for the extension of the most expensive failed experiment paid for by Arizona taxpayers in the state’s history.
Rio Nuevo Board Chair Fletcher McCusker
Tucson car salesman Jim Click
On Friday, June 26, 2015 Rep. Mark Finchem, the Rio Nuevo bill’s sponsor, sent an email to House Speaker David Gowan:
From: Mark Finchem [mailto:MFinchem@azleg.gov]
Sent: Friday, June 26, 2015 6:38 AM
To: David Gowan; Steve Montenegro
Subject: Fwd: RIO NUEVO CONSIDERS REFINANCING ITS BOND DEBT
Good morning Mr. Speaker. I am concerned that there does not appear to be a watchdog to hold the Rio Nuevo Board accountable for their performance? This entire affair has been plagued with the appearance of misappropriation and misbehavior.
Mark Finchem, Representative
Arizona’s Legislative District 11
1700 W. Washington, #337
Phoenix, AZ 87005
Finchem’s email was sent in response to news reports that Click’s good friend Marquez was appointed to the Rio Nuevo Board. Since then, the only substantive change to the District was made a few days before the appointment of Marquez; the Arizona Attorney General, in response to a question from Senator Bob Worsley, issued an opinion that the District is exempt from the State’s gift clause.
Since that time, Rio Nuevo has become a vehicle through which Pima County officials can dodge Arizona’s Gift Clause as well as a taxpayer funded lending institution.
In February, after HB2456 was passed in the House, the Arizona Daily Independent reported that Pima County administrator Chuck Huckelberry, in multiple memos, refers to the Gift Clause dodge as an “economic tool”… “not available” to the County.
One of Finchem’s selling points for the bill was crafted on the basis of a Huckelberry memo in which he discusses using Rio Nuevo to contract with Dunn Construction to build a large office building that he claimed would be a “game-changer” for southern Arizona. In his memo, Huckelberry claimed that the attention from a world-class contractor like JE Dunn was a coup of sorts. Finchem has repeated that claim.
In October 5, 2016, the Arizona Association for Economic Development published “A Case Study on the Impact of TIF Districts.” Angela Talbot of JE Dunn sits on the Arizona Association for Economic Development 2017 / 2018 Board of Directors.
In the article, McCusker discussed Rio Nuevo:
The Rio Nuevo TIF sunsets in 2025, the Board is going before the Legislature this fall to propose an extension to 2050. “We are about 50 percent of where we want to be to declare ourselves done,” McCusker said. Also in proposal will be a request for an advance of $70 million to pay off the existing bonds. McCusker believes if they can pay off the current debt, they will be able to bring in eight times the advance. With 50 percent of every new dollar from sales tax being contributed to the TIF, Rio Nuevo plans to become self-perpetuating long before 2050.”
Thorpe tries to torpedo crony capitalism
In the House, Thorpe offered an amendment in alignment with the recommendation of Kevin McCarthy. Thorpe’s amendment would end new Rio Nuevo construction, and use the annual $14 mil in tax collections to pay off the $60.3 million Rio Nuevo owes in bonding debt. Thorpe’s amendment would also divest management obligations by October 2019 and dissolve the Rio Nuevo TIF charter upon repayment of outstanding debts.
Thorpe, a Reagan fiscal conservative who rejects both Democrat and Republican crony capitalism, has said he believes that prosperity flourishes when government gets out of the way of the private sector, and that it stagnates when taxpayer dollars compete with private business — to build empty hotels and bridges to nowhere.
Thorpe argued that Rio “never fulfilled the promises made to the voters in the referendum, to build a convention center, a hotel and an equestrian center.” And it has no intention of doing so now.
In fact, the very feasibility study conducted of one of the latest hotel projects shows that it is not viable without subsidies. The study of the now vacant Arizona Hotel owned by Humberto Lopez, a host of Smith’s fundraiser, was conducted as part of the pitch to the Rio Nuevo Board.
According to the proposal by Hotel Arizona’s owner HSL Properties (Humberto Lopez), HSL and its investors will invest $20 million to renovate the hotel, which has been closed since 2012.
This week, the Tucson Police Officers Association revealed that staffing was now at the same level as the force was in 1988. As the most dangerous city in Arizona, Tucson has had a difficult time attracting the very tourists which are supposed to be drawn to the area by Rio Nuevo’s amenities.
As a result, the businesses that had once popped up due to the promise held by Rio Nuevo have gone away. One of the oldest down town retailers shut its doors in December.
The situation has grown so dire, that Rio Nuevo was forced to become a lender this year. In August, the Rio Nuevo Board unanimously approved lending as much as $250,000 to the Flores family’s Flores Concepts, “which plans to assume control of one shuttered nightclub and one operating club, along with an adjacent vacant building,” according to a Rio Nuevo press release.
Carlotta Flores sat on the Rio Nuevo board for years.
According to the press release, the Flores “negotiated an agreement to buy out the lease interest of the H2O Discotec at 61 E. Congress St., Zen Rock nightclub at 121 E. Congress, and the former Betty Gay building at 125 E. Congress. Flores Concepts intends to renovate, rebrand and reopen all three establishments.”
H2O and Zen Rock were part of the hopeful wave of food and beverage establishments developed on Congress Street in 2010.
“The Board authorized the Rio Nuevo Multipurpose Facilities District’s executive officers to negotiate and finalize a loan of up to $250,000 to Flores, the repayment of which would bear interest and be secured by a pledge of assets and a guaranty,” according to the press release.
Related article: Rio Nuevo Debate Heated, Bill Passes In House