Wednesday, September 15, 2010

Rialto Dischord: Rio Nuevo Board Targets Its One Successful Enterprise

Posted By on Wed, Sep 15, 2010 at 9:09 AM

There’s more trouble in downtown Tucson for our friends at the Rialto Theatre Foundation.

This time, the heat is coming from the new Rio Nuevo Board, the new gang of people who were appointed to the board by Gov. Jan Brewer and Phoenix-area GOP lawmakers.

So what’s one of the board’s first actions? Targeting the one Rio Nuevo project that has succeeded in bringing hundreds of thousands of people downtown to enjoy shows and spend money—which was the whole reason the Rio Nuevo Board acquired the theatre in the first place.

Nonetheless, the Rio Nuevo Board has threatened to evict the Rialto Theatre Foundation from the Rialto Theatre unless it kicks over hundreds of thousands of dollars in “back rent” or signs a new draconian lease that would make it impossible to stay in business.

We didn’t get a phone call back from Jodi Bain or Mark Irvin, the Rio Nuevo Board members who are out in front on this one, but we did hear back from Robert Gugino, the attorney for the Rio Nuevo Board.

Gigino tells us that the Rio Nuevo Board is meeting today to discuss the Rialto situation.

“Hopefully, there’s some common ground that can be reached,” Gugino says.

It's a complicated story, but here are the basics in a nutshell: The Rialto Theatre Foundation has a 50-year lease

of the theatre from Rio Nuevo, but it can claim credits against its monthly rent payments as long as it improves the theatre.

One of those key improvements was a sound system that cost somewhere in the neighborhood of $300,000—which the new Rio Nuevo board says doesn’t count as an improvement, even though there’s documentation that the city’s previous Rio Nuevo director, Greg Shelko, said the sound system would qualify.

In an emailed response to Rialto Theatre Foundation Executive Director Doug Biggers regarding whether the sound system would count toward a capital improvement, Shelko said: “[S]ound system as permanent, most definitely yes.”

But Gugino says that e-mail was only one part of a larger exchange and that the Rialto Foundation needed to take further legal steps to properly claim credit.

Gugino tells us that improvements to the theatre’s bathrooms would qualify as a capital improvement, but the sound system does not qualify because it can be removed from the theatre. The sound system was also financed, so it could potentially be repossessed.

Look, we’ll admit up front that we have a bias in this case (Biggers is TW’s former publisher and a Friend of The Range), but that kind of priority seems fundamentally absurd to us. If you’re going to make the theatre a successful venue, doesn’t it make more sense to improve the sound system than to improve the bathrooms?

The lawyers from the Rialto Theatre Foundation will enter another round of talks with the lawyers from the Rio Nuevo Board after today’s meeting, but if the talks don’t go well, Biggers tells us the foundation will have no choice but to enter into a bankruptcy proceeding to reorganize its debts and seek a new lease under the protection of the bankruptcy court.

That doesn’t mean the Rialto is going out of business; the theatre has a big fall season lined up and the shows will go on. But the legal maneuver does mean that the Rio Nuevo Board can’t kick them out of the theatre while they’re under the protection of the bankruptcy court.

We’re left to wonder why the Rio Nuevo Board would put so much effort into grinding down the one successful element of Rio Nuevo.

Let’s hope the Rio Nuevo Board realizes that it makes a lot more sense to negotiate with the foundation rather drive them into bankruptcy court—especially since the taxpayer will be on the hook for Rio Nuevo’s legal bill, which could end up exceeding whatever back rent that Rio Nuevo board members believe they’re owed.

Speaking of legal fees: Gugino tells us that his firm doesn’t break out the costs of dealing with the Rialto Theatre Foundation from the other costs of representing the district.

Gugino said we’d have to file a public-records request if we wanted to know how much he’d been paid to date. We’re in the process of doing that now.

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