The Skinny

WHAT A DEAL!

The Tucson City Council was set to discuss a proposed downtown
development deal at its afternoon study session this week.

That discussion came after our deadline, but you can find details at
blog.tucsonweekly.com.
Meanwhile, we do have a few takeaways after looking over a draft of the
proposal between the city and downtown developers Scott Stiteler and Don Martin that was released last week.

Stiteler and Martin are proposing to spend $5 million fixing up
property that they own around the Rialto Theatre. They’d also invest
another $4.5 million on an affordable-housing project in the Warehouse
District on Toole Avenue west of the Sixth Avenue underpass. Finally,
over a five-year period, they’d contribute $500,000 to three downtown
causes.

Most of that half-million would go to the city’s downtown
building-façade program or to Skrappy’s youth club on Toole
Avenue. But $100,000 would be donated to a downtown art group—or
groups—selected by Stiteler and Martin.

In exchange for the $10 million that they’re investing, the city
would give Stiteler and Martin city-owned land worth $4 million. This
could include the former Volvo dealership on Broadway Boulevard east of
downtown, the Congress Street frontage of the Ronstadt Transit Center
and some other downtown land. As of our deadline, that part of the deal
was still being negotiated.

The agreement appears to be very generous to Martin and Stiteler.
For example, in exchange for their donation of $500,000, they’ll be
eligible for $600,000 in city land. Given the way the stock market is
performing these days, a 20 percent rate of return is pretty sweet.

Stiteler and Martin are also promising to invest $1 million in the
city-owned Rialto Theatre, but it’s not exactly clear what they’re
offering to the Rialto, although there is a mention in the agreement
about “rent relief for the Rialto Foundation.” That’s a reference to
the fact that the theater’s nonprofit operators—headed up by
former Tucson Weekly owner Doug Biggers—need some
of the property owned by Stiteler and Martin to continue running the
only part of Rio Nuevo that has actually succeeded in bringing people
downtown on a regular basis.

Speaking of Martin and Stiteler: The two developers were among those
who threw a fundraiser last week for Ward 6 Councilwoman Nina
Trasoff, who has been championing their deal.

Attending this fundraiser five days before you’re going to vote on a
development agreement has a lousy smell to it, Nina.

ELSEWHERE IN THE DOWNTOWN ARENA

The Downtown Tucson Partnership, a nonprofit funded through both
public and private dollars, is having a hard time these days, according
to a revealing report from DTP CEO Glenn Lyons.

Pima County has bailed out on the $200,000 it was going to give the
DTP. Hotel Arizona didn’t cough up $34,000 that it was going to pitch
in. The city of Tucson cut back $38,000.

That leaves the DTP struggling to raise “at least $50,000 in
additional working capital to get through to the end of the
summer.”

But help is on the way from the city of Tucson, even though it is
reducing its subsidy of the organization from $364,000 to $280,000 in
the upcoming fiscal year.

The city, which is already paying the salary of downtown planner
Teresa Bommarito for the DTP, is ready to give the partnership
two more staffers: Jaret Barr and Fran LaSala.

Barr was former City Manager Mike Hein‘s right-hand man and
is probably the only person who understands how the proposed downtown
hotel deal works. LaSala was also close to Hein and took over the
planning for the downtown streetcar some time ago.

The salaries of Barr and LaSala “will be paid for by the city of
Tucson, but they will be assigned to the partnership, identify
themselves as partnership staff, and report to our CEO,” according to
Lyons’ report.

“This is part of a reorganization of the city of Tucson’s downtown
revitalization efforts,” the report continues. “(City Manager Mike
Letcher) is giving the partnership the primary role in downtown
master planning, development strategies and agreements, interaction
with the public, etc., and he is providing the staff for us to do this
work.”

This is quite the outsourcing effort. Of course, it does raise
questions about precisely whom our downtown planners are accountable to
…

THE BOTTOM LINE

The Tucson City Council has come up with a budget plan that, on the
whole, really isn’t that bad, given the problem that they’re
facing.

They’ve jettisoned the most unpopular proposal: a 2 percent tax on
rent payments. This is a fairly common tax elsewhere in the state, but
it’s also one that gets people riled up, especially when they’re
feeling financially pinched.

The Arizona Multihousing Association was able to pack a budget
hearing with 600 people opposed to the rent tax, which showed the
council that approving it would be a dumb move, politically
speaking.

Instead, they’ve decided to increase utility taxes, which will be
passed on to city residents in the form of higher utility bills.
Council members make the point that the tax will be spread more broadly
across the community, hitting all utility-using residents instead of
just driving up costs for renters.

Some commentators—we’re looking your way, Tom
Danehy—are complaining that the utility tax is outrageous.
And we know we’re supposed to get all worked up at any sniff of a tax
increase.

But when you look at the problems the city is facing, the council is
making the best of a bad situation.

The city is looking at a drop of $68 million in what it was
anticipating to bring in during fiscal year 2009, thanks to a drop in
sales-tax revenues and reduced revenues from the state.

The city has been cutting in response to the money trouble.
Management has trimmed 400 staff positions (some of which were
unfilled) and is asking all city employees outside of public safety to
take a week off without pay. They’ve stopped repaving residential
streets and cut back on parks-and-recreation programs. (Fees for those
programs are likely to be going up, too). Outside agencies are getting
less money from the city.

Water bills are going up, mostly because Tucson Water needs to pay
its own way without a city subsidy, and the cost of water delivery is
increasing. (An increase in city taxes on the water department will
have a negligible effect.)

And, of course, the council is also hiking the trash fee 50 cents a
month, now that they’ve realized that their various campaigns in
opposition to the fee were as stupid as we always said they were.

The worst is not yet over. They’ve used $29 million in one-time
revenue and spending adjustments to balance the budget, which means
they’ve got a major hole to fill when it comes time to work out next
year’s budget. Something tells us a rebounding economy is not likely to solve that problem.

Given all of that, a few tax increases don’t strike us as
unreasonable.

Oh, and to answer Danehy’s question about how much the tanning-salon
tax is expected to bring in: $15,000 a year.

This article appears in Jun 4-10, 2009.