With a unanimous vote, the Tucson City Council last week asked developers Scott Stiteler and Don Martin for a few more weeks to work out details in the complex downtown-development agreement they've been hammering out for the last six months.
In response, Stiteler and Martin walked away from the deal, which would have the developers rehabbing some of their own property (including the Rialto block), passing out some cash to various downtown beneficiaries (including youth-club Skrappy's and the Warehouse Arts Management Organization) and jumping through a few more hoops. In exchange, they would have received about $4 million in city property, including a former Volvo dealership on Broadway Boulevard east of downtown, and some of the Ronstadt Transit Center property along Congress Street.
A major sticking point was the future of the Rialto Theatre, which is owned by the city and leased to the Rialto Theatre Foundation.
Michael Crawford, an attorney who serves as president of the foundation's board, has been pushing to include the Rialto in the deal. Two weeks ago, the City Council, recognizing that they should protect their own asset, urged the developers to work out their differences with the Rialto Foundation, which wants "bays" on both sides of the theatre's lobby and a building behind the theatre that's used as a green room for the artists and office space for the Rialto staff.
We'll remind readers that the Rialto's executive director is Doug Biggers, the former editor and publisher of the Tucson Weekly.
That said, we believe the Rialto needed to be part of the deal, because it's easily the most successful element of Rio Nuevo and has succeeded in its mission of bringing people downtown, who then spend money in the nearby bars and restaurants before and after shows. Over the last four years, the Rialto has hosted more than somewhere around 500 shows that have lured more than 300,000 patrons through its doors.
The developers clearly recognize the power of the Rialto as a magnet. They've tried for the last six months to go into business with the Rialto, which wisely decided against entering into a financial partnership with Stiteler and Martin.
The two developers told the City Council earlier this month that they couldn't afford to include the Rialto's request for additional space in their swap with the city. But once they saw that the council was intent on protecting its asset, they capitulated and agreed to turn over the bays to the city as part of the deal. They also offered to let the Rialto continue using the building behind the theater rent-free for the next five years, with market-rate leases after that.
But in return, they wanted an easement giving them permanent access to the upstairs balcony of the theater. If they couldn't go into business with the Rialto Foundation, they wanted the next best thing: An easy way to draw the Rialto's patrons into their bar.
The Rialto Foundation was willing to discuss access to the theater, but was concerned about granting a permanent easement—especially when that request appeared without prior notice in the developer's "final offer."
More troubling was the fact that the agreement to turn over property to the Rialto was not set in stone in the document the council was asked to approve last week. Instead, the two parties had six months to work out the details. Stiteler and Martin could have walked away from that portion of the deal without the theater getting anything at all—an element that left the foundation's attorneys very uneasy about the whole arrangement.
The parties might have been able to work out their differences, but Rialto officials say Martin and Stiteler walked away from negotiations with the theater on Wednesday, June 10, saying they'd made their final offer (and evidently believing they had four votes on the City Council to approve their deal). Then they delivered a revised document to the city on Friday, June 12, with a request that it be approved on Tuesday, June 16. That didn't give council members much time to review the details and suggest changes.
So the City Council made the reasonable request for a few more weeks to work out their differences. Instead, Stiteler and Martin walked away—which suggests to us that they weren't all that interested in getting the deal done.
With the collapse of the deal, Stiteler and Martin can exercise an option in their contract with the city that allows them to collect up to $950,000 in expenses that they've racked up while putting the deal together.
Whether the city will actually owe them that much remains to be seen. As Councilwoman Shirley Scott has pointed out, the final deal that was delivered to the council bore little resemblance to the original proposal laid out when this whole mess started. Stiteler and Martin lost a partner; developer Jim Campbell split off and made his own deal with the council, approved earlier this month, to build housing and commercial spaces east of the theater and near the new Fourth Avenue underpass. And the developers fired Williams and Dame, the Portland, Ore., planners whose reputation for downtown redevelopment lured the council into the deal in the first place.
Martin and Stiteler appear to be unhappy that the Rialto Foundation blocked their deal with the city. Within days of the council's request for more time, they informed the Rialto Foundation that it would now have to start paying $4,375 a month in rent on the spaces they've been using for free since October, when Stiteler bought out Biggers' interest in the Rialto block.
As a condition to approving the month-to-month lease, the developers also expect the Rialto to pay back rent, which comes out to somewhere around $40,000. That's a ballsy request, since there had never been any agreement between the parties to pay any back rent.
It's obvious that the squeeze is on. In response, the Rialto Foundation is suggesting the city take another step to preserve its asset: Condemn the property the theater needs through eminent domain, pay an appraised price for it, and let the developers get on with whatever projects they plan to do downtown.
As we report in "Off and Running" (Page 18), Dave Croteau got knocked off the ballot as a Green Party candidate in Ward 6 last week.
But that doesn't mean that the Green Party is out of the race. Croteau tells us that his campaign manager, Dave Ewoldt, may be running as a write-in candidate. Ewoldt would have to get seven votes in the Sept. 1 primary to land a spot on the November ballot.
If he manages to do that, Democratic incumbent Nina Trasoff's left flank will be exposed as she runs against Republican Steve Kozachik.
Croteau tells us that Green write-ins may also emerge in Ward 3, where Democratic incumbent Karin Uhlich is facing Republican Ben Buehler-Garcia, and in Ward 5, where Democrat Richard Fimbres is facing the winner of the GOP primary between Shaun McClusky and Judith Gomez.
Croteau also wants his supporters to know that he'll be refunding their contributions now that he's out of the race.