Building Doubts

Rio Nuevo's director dispenses advice for skyscraper promoters

The head of Tucson's expensive yet sleepy Rio Nuevo downtown revitalization scheme is serving more as a cheerleader and coach than a critic of the proposed Century Tower, despite his concerns about the project's financial viability.

Rio Nuevo boss Greg Shelko, in an internal memo to Karen Thoreson, an assistant city manager who oversees downtown development, comes off more like a consultant to Century Tower promoters Bob McMahon and Don Martin than a city official demanding the project be solid and viable.

"They need to really polish the presentation in all respects, and I'll work with them on that," Shelko told Thoreson in a memo he e-mailed on June 2. "They need to thoughtfully walk the M/C (mayor and City Council) through the project details. They should also address some of the other benefits to the City and the community, e.g., increased tax base, construction and permanent jobs, alternative to sprawl and all its ills, etc.

"They need to get a constituency there before the M/C. I'm becoming a broken record on this constituency building, but the proof of need is in the Burchell story this morning ... screaming headline about controversy, but only a few made such remarks. They need to get downtown commercial property owners, businesses, downtown neighborhood folks and the TDA (Tucson Downtown Alliance) to step up to the mike and to write."

Joe Burchell, the longtime City Hall reporter for the Arizona Daily Star, covered a June 1 hearing on the Century Tower proposal. His tame story was accompanied by the even more docile headline: "Planned high-rise runs into opposition: Some want grassy, open space to remain."

Shelko both advised Thoreson of and invited her to a meeting he wanted to have "asap" with Tobin Rosen, an assistant city attorney, and Pat Griffin, an influential development and government relations lawyer who is working for McMahon and Martin. That sitdown regarded a draft of the agreement that would allow McMahon, a restaurateur who derives his fortune from the sale of his wholesale City Meat, and Martin, a manufacturer, to get their hands on the property through a no-bid, sole-source purchase. The spot is also a source of controversy; it is the grassy area southwest of the Joel D. Valdez Main Library on Stone Avenue and Pennington Street.

Shown a copy of Shelko's memo, Councilman Steve Leal, a four-term Democrat, said Shelko "crossed the line, again."

Perturbed by ardent advocacy for another project--the city bailout of the Fox Theatre renovation--Leal told Shelko and Thoreson: "When you lobby me, you cross the line. Your job is to provide me with information, not to hustle me."

Shelko said he is not advocating for McMahon and Martin, but rather demanding that the two provide the best information in the clearest, most understandable manner.

Of his admonition that McMahon and Martin and their backers rally support to impress the council, Shelko said: "It would be unfair of them to think we'll speak for them."

His memo to Thoreson also indicated that he would work to blunt criticism by having city Parks and Recreation provide an inventory of green and open space downtown and by commenting on alternative locations.

"There are but a few suitable locations," Shelko told Thoreson. "And further, the market drives location and not just availability of acreage or pads."

Shelko, on board in the $120,494-a-year job since June, 2004, disagreed that his remarks seemed better suited for a paid consultant to McMahon and Martin.

McMahon already is a lightning rod. He thrust himself into the biggest of City Hall issues earlier this year when he signed a letter and guest opinion in the Arizona Daily Star that demanded the national search for a city manager be scrapped in favor of luring Mike Hein from his job as a deputy Pima County administrator.

Hein does not know McMahon well and said this week that he only spoke to Martin about Century Tower.

Hein said Shelko was doing his job, serving as an information resource for the businessmen and doing what he expects other city officials to do.

"I think staff is a resource for the entire community, for all sides," Hein said. "I'm not worried. I'd be worried if he (Shelko) said the votes are there for it. The votes aren't anywhere. There is much more work to do on the pro forma and business plan before I think it is a viable project."

Still, Hein said that although he made it "clear that they should expect no public subsidies," McMahon and Martin were the only people interested in a sizeable downtown project.

"No one else has been knocking on our door," Hein said.

Shelko was critical and skeptical of the figures McMahon and Martin have tossed around: that the tower could be built for $60 million to $70 million and that 100 investors--so far hidden if existent--would put up $50,000 each. Condos in the tower, McMahon and Martin have said, would go for $250,000 to $400,000.

"It would be foolish for a developer to have a report cooked up, as that appears to be at least CM Leal's concern, because they'd end up flushing what is likely to be several hundred thousand dollars in predevelopment expenses for something that never gets built," Shelko said in his memo to Thoreson.

"If the reports are done by qualified entities, quite frankly, we should accept the conclusions w/o extraordinary analysis on our part; they will be looking for equity investors to the tune of $30 million, and, looking for construction loan in the neighborhood of $70 million ... there will much more serious underwriting that we could ever apply to the deal. I'm only guessing at the cost; I don't think they can ever build this for the 60 to 70-mil they state And they can never build it w/o losing their shirts--make that never get financing unless the unit prices start being talked about in numbers much greater than the $250k-$400k per at present, and the retail spaces are occupied by other than predominantly local startup in this kiosk/'department store' fashion they envision."

Hein said there is no rush. There is no clear proposal and the site also may be used, as discussed in the last two decades, for a new City Hall.

"I don't think there's any sense of urgency," Hein said. "The project needs to ripen. Why get the community all agitated if it might not be going to happen?"

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