Coronado Conundrum

One of the few downtown-area affordable-housing properties is up for sale

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."

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