On Thursday, the Arizona Senate passed Rep. Mark Finchem’s bill, HB2456, which will extend the life of the controversial Rio Nuevo taxing district. The bill passed on a 21-9 vote.
Gov. Doug Ducey, who played a role in its passage according to claims made in recently obtained emails, is expected to sign the bill.
Those same emails, as well as financial documents show that the District is now forced to borrow money to fund new projects, and will not fund the projects promised to voters.
The devil is in the details and emails
Supporters of Finchem were stunned when they discovered that he had sponsored a bill to extend the largely unpopular Rio Nuevo. Finchem, a salesman who has claimed in the past to be a fiscal conservative, sold HB2456 hard.
Finchem aggressively fought and killed an amendment offered by Rep. Bob Thorpe, which would have forced the District to pay off its bills and prevent it from incurring more debt.
Rep. Pam Powers Hannley had some success rallying progressives in opposition to the bill, but House Minority Leader Rep. Randy Friese and Rep. Daniel Hernandez were working behind the scenes with McCusker to keep the southern Arizona corporatists happy.
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McCusker focused much of his time and talking points during HB2456’s trip through the Legislature on Supervisor Ally Miller. In his emails to and conversations with legislators, McCusker claimed that Miller was relying on numbers from old audits to disparage the District. Contrary to his claims, Miller and others were relying on the most recent financial audits that were paid for by Rio Nuevo.
In her testimony, Miller told members of the Commerce Committee that as of June 2017, the District had accumulated $100 million in debt and commitments. Miller told senators that on page 20 of the 2017 financial statements, it is noted that the District will issue $45 million of debt on top of the $2 million in relocation expenses for Caterpillar. Caterpillar’s lease payments are expected to match the debt service.
Paton resorted to smear attacks, and intimidation. He went so far as to confront Dr. Jo Ann di Filipo after she had testified in Smith’s committee about his lobbying fees. His body language as he spoke to the diminutive woman in Senate hallway raised eyebrows and questions as to the level of desperation behind the bill’s passage.
After ensuring it would sail through the Senate Commerce and Public Safety Committee, Sen. Steve Smith joined the handful of fiscal conservatives and voted in opposition when it came before the whole Senate.
Rep. David Farnsworth tried to inform fellow legislators of Rio’s realities, but with senators Worsley, Smith, Farley, and Cajero Bedford acting as ushers and cheerleaders, his efforts were valiant but fruitless.
They own it now
Prior to 2010, the City of Tucson controlled the Rio Nuevo TIF (Tax Increment Financing) district. From the time voters approved the TIF in 1999, until the Legislature took control in 2010, over $230 million was wasted, disappeared, or spent on little more than insider deals. It was hoped that once the Legislature took control that would change.
The Legislature has engaged in virtually no oversight. According to legislators, Rio Nuevo’s lobbyist, former legislator and Rio Nuevo Board member Jonathan Paton, has run interference for the district. As a result, the promised scrutiny by legislative watchdogs never materialized. In fact, just prior to the 2010 changes, two of the Board’s watchdog members, Jodi Bain and Rick Grinnell, were replaced by Fletcher McCusker and former Rio Nuevo Board member Chris Sheafe. The remaining watchdog, Alberto Moore, resigned in frustration with the business as usual practices of the “newly reconstituted” TIF in 2014.
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“The Board serves at the pleasure of our appointers, another huge safeguard. If we are just a shill for the county as Ally suggests we can easily be replaced,” McCusker wrote to Friese in reference to Miller, “but why would the legislature let the city of Tucson regain control. That is what happens when we sunset.”
It appears that Friese and others did not question McCusker’s claim. There is no evidence that anyone other than Thorpe, Powers Hannley, and Farnsworth attempted to secure real control and oversight by the state.
More astonishing is the fact that no one seems too concerned that the District is incurring more debt. In the case of Caterpillar, the District is assuming massive debt because Pima County can’t.
Without oversight, Pima County administrator Chuck Huckelberry has been able to work with the Rio Nuevo Board to use the Gift Clause exemption the TIF enjoys. The exemption allows the County to fund “economic development” deals that would otherwise be prohibited by Arizona statute.
The Arizona Daily Star reported after the bill’s passage in the Senate, McCusker, chair of the Rio Nuevo Board, “was optimistic that Ducey will sign the legislation.” McCusker noted “that Ducey and other state lawmakers have recently toured downtown Tucson to see firsthand the progress the district is making,” according to the Star.
“Rio Nuevo plans to become self-perpetuating long before 2050”
In October 2016, McCusker said he was going to seek an extension to 2050. “We are about 50 percent of where we want to be to declare ourselves done,” McCusker said in an article published by the Arizona Association for Economic Development. “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.”
As part of his sales pitch, McCusker arranged tours of the District. Seeing only what McCusker wanted them to see, legislators bought the District hook, line, and sinker.
However, skeptics question whether Ducey and legislators, who must show some economic success in southern Arizona this election cycle, took a tour of the District’s books. Those skeptics argue that had the leaders taken the time, they would have discovered that Rio Nuevo is nearly broke.
So strapped in fact, it has abandoned the promises made to voters and is borrowing money to build new projects.
After the vote, Miller, who has been a student of Rio Nuevo since she began her career in politics, stated, “I was shocked that Rep. Mark Finchem sponsored this bill and it is clear that the majority of those who voted to approve this District have not read the 2017 financial reports nor did they understand the stated intent of the district which is to sufficiently fund Tucson Convention Center. Based on the emails from Rio Nuevo Board Chair, Fletcher McCusker it is clear the Board doesn’t intend to fund the Tucson Convention Center. Another important aspect the representatives didn’t understand is that voting “no” would have caused this TIF district to simply sunset as originally intended by the voters.” Miller concluded, “This is a sad day for the taxpayers of Arizona.”
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