Coronado Conundrum

For almost two decades, the historic Coronado Hotel at Fourth Avenue
and Ninth Street has provided 42 units of affordable housing to
low-income people. But in October, the property was put on the market
by its co-owner, the Downtown Development Corporation (DDC), with bids
being accepted through Dec. 10.

The DDC is paying the Downtown Tucson Partnership $2,500 monthly in
management fees, meaning that Glenn Lyons, CEO of the partnership, is
handling the sale for the corporation.

Lyons has some regrets about the way the controversial Coronado
proposal has played out.

“It would have been good to have had more discussions about what the
future options would be,” Lyons says of downtown affordable housing in
general. “If we had talked about that instead of the Coronado, we might
have actually made up some ground.”

Conversely, outgoing City Councilman Steve Leal thinks there’s
another big-picture item that deserves some attention: The fact that
private organizations like the Downtown Tucson Partnership receive
large sums of taxpayer money.

Referring to these groups, Leal remarked at last week’s City Council
meeting: “When you have complete anonymity, that’s when you have
problems. … A lot of these folks are happy being invisible.”

In order to ensure these organizations comply with City Council
standards, Leal asked his colleagues to consider amending their master
operating agreements with the city. “Or are we just going to mouth
principles and pieties?” he asked.

The Downtown Tucson Partnership has a multifaceted board of
directors that supervises Lyons. The organization writes that it
“represents the interests of businesses and the greater downtown
community in the downtown revitalization process.”

This year, the partnership has a budget of more than $1.5
million—and more than 55 percent of those funds are supplied by
the city of Tucson through a variety of mechanisms.

Traditionally, the city has provided the partnership with annual
operating support. This year, that includes $280,000 to help fund the
group’s efforts to keep the downtown area clean and safe, and another
$32,720 for entertainment events such as the upcoming Parade of Lights
and First Night celebrations.

On top of those sums, the City Council earlier this year awarded the
group a $525,000 contract to supply services to ParkWise, the city’s
parking program. (See “Not So Wise,” May 14.) From this amount, Lyons
will be paid $375 weekly for three hours of work.

“It saves the city about $100,000,” says Lyons, who refused to be
photographed for this story, about these contractual services that once
were handled by city staff or consultants, “and makes (the partnership)
about $80,000 which we can plow back into our programs.”

The partnership also gets free office space immediately adjacent to
the ParkWise staff in the city’s Pennington Street garage.

Concurrently with the adoption of the ParkWise contract, City
Manager Mike Letcher proposed Lyons as the leader of his new
downtown-planning team. One of the listed tasks of this group is to
“coordinate affordable housing downtown.”

In response to Letcher’s suggestion, the council, by a 6-1 vote, in
September allocated the Partnership up to $73,000 for consulting fees,
which would cover such items as negotiating agreements between the city
and private developers.

Assuming Lyons is paid $125 per hour under this contract, that means
he’s working on the city’s tab up to 12 hours per week.

Leal, who is retiring after 20 years on the City Council, opposed
this proposal. “I thought it was a bad idea,” he says. “They have a
conflict of interest in shaping opinions (about downtown). It’s clear
some council members and city administrators are interested in grabbing
as many resources over time (as possible) and lateraling them to the
partnership.”

Leal adds about the partnership: “They’ve shown real indifference to
the city’s visions and values … but they think they’re untouchable
and unaccountable, since they keep getting more resources.”

Concerning the conflict-of-interest charge, Lyons says he doesn’t
expect problems, but says he must pay attention to possible conflicts
and talk to involved parties.

However, Lyons says allegations that the partnership sees moving
poor people out of the downtown area as vital for revitalization are
“patently ridiculous.”

City Councilwoman Regina Romero has expressed displeasure with the
partnership’s handling of the Coronado situation. At last week’s
council meeting, she remarked: “I wish we hadn’t ended up in this
position at this moment.”

However, Councilwoman Karin Uhlich declared at the same meeting:
“Glenn Lyons is an important resource for us.” In an earlier interview,
she said the partnership provides “a strong voice to make sure downtown
attracts private investment.”

While Pima County officials have indicated that the county will bid
on the Coronado in an attempt to keep it as affordable housing, Lyons
says the whole debate troubles him.

Even as he repeatedly declares that he wants to see much more
affordable housing downtown, Lyons says of the Coronado: “It’s an
80-year old building that offers spartan accommodations and requires $1
to $2 million to bring up to acceptable standards.”

However, architect Corky Poster believes the building could be
upgraded for much less. After a walk-through of the Coronado, he told
Pima County representatives, “With a budget of about $700,000, the
building could be vastly improved as an efficient living accommodation
for its current residents.”

Whoever wins the bidding—the minimum price is
$670,000—Lyons says the Downtown Development Corporation will
receive one-third of the proceeds from the sale. Those funds, when
combined with other money the DDC is in the process of obtaining, will
provide the corporation with $600,000 or more.

That capital, Lyons says, could be enough for the DDC to get
involved in developing a project downtown, something it did
successfully until the early 1990s—but not since.

As for the future of the Coronado, Lyons writes: “The DDC has a
fiduciary responsibility on behalf of its limited partner to obtain the
highest price that the market will bear for the property.”

When asked what will happen if two similar bids are
submitted—one to maintain affordable housing, and the other
proposing a different use—Lyons hesitates for a moment before
answering.

“Truthfully, I don’t know,” he replies. “We’ll have to address that
when the time comes.”

This article appears in Dec 3-9, 2009.