Value for Value

The Rialto Theatre and the Warehouse District could benefit from proposed changes to a downtown development agreement

The constantly recited mantra of Tucson City Council members concerning a proposed downtown development agreement is "value for value."

So why are they considering an $800,000 giveaway of public land in exchange for a 20-page concept plan which can charitably be called obsolete?

"That's a fair question," responds Councilmember Karin Uhlich.

Among others, the Portland, Ore., firm of Williams and Dame Development helped prepare the concept plan. Using pretty pictures, the plan shows a downtown full of housing, landscaped streets and numerous amenities.

In January, Williams and Dame suddenly pulled up stakes and left town.

"We paid Williams and Dame for the concept plan," explains developer Scott Stiteler. "It was a portion of the $1.5 million they (billed) over 30 months."

However, Stiteler repeated his earlier objections to the long-term philosophy represented by the concept plan, saying, "The focus (downtown) should be on building things." (See "East Side Story," April 9.)

To accomplish that, Stiteler and his partner, Don Martin, have proposed spending $10 million on three projects. In exchange, they are asking the City Council to approve a development agreement which could give them $4 million in public land. The completed concept plan is the first performance "trigger" contained in the agreement and entitles the developers to $800,000 worth of property.

When the City Council discussed the development agreement last week, Uhlich mentioned using something besides the concept plan as an initial trigger.

Despite his objections to the plan's philosophy, Stiteler objected to that idea, saying, "We continue to spend and spend and spend." In response, Uhlich backed off.

But in a later phone interview, Uhlich again brought up the idea. She said one possible trigger could be direct benefits for the Rialto Theatre.

"Why not target $1 million toward what we want to see happen right away on the Rialto block?" Uhlich suggests as an option to using the concept plan as a trigger.

She also mentioned the possibility that the city could owe Stiteler and Martin more than $900,000 if the document isn't ratified by June 16, due to language that was included in an earlier agreement. However, that remains unclear.

That trigger issue is among many which require resolution before the development agreement returns to the City Council. Another issue: What city land will be included?

Two sites are listed in the proposal: the former Volvo dealership on Broadway Boulevard, and the Congress Street frontage of downtown's Ronstadt Transit Center.

An earlier draft contained several other municipally owned downtown properties as possibilities, including the Historic Train Depot and the proposed site for a new Greyhound bus station. But those were removed before last week's discussion, and Councilwoman Nina Trasoff says she's glad, because she won't support having either property on the list.

For his part, Stiteler indicates it's up to the city to decide what's included.

As that question remains unanswered, what is apparent is that the Volvo property is a prime piece of real estate. Appraised at $1.9 million in 2007, the 1.5-acre parcel is strategically located just west of Park Avenue.

Several market factors point to the possibility of this property increasing considerably in value. In a November e-mail message to his business partners, Stiteler predicted it and other downtown land could almost triple in price once city-funded improvements, such as the modern street car, are implemented.

On top of that, the Downtown Tucson Partnership, the umbrella organization for the area, last week released a plan called "Revitalizing Downtown Tucson."

This document points specifically at Broadway Boulevard as a key component. "Tucson's development community," the reports states, "should be far more interested in building along the Broadway corridor, because it is far less risky than downtown development is today."

The proposed agreement with Stiteler and Martin calls for the city to appraise the Volvo land again before Oct. 1. Given the presently depressed commercial-real-estate situation, the new appraised value could be lower.

To avoid the possibility of the city conveying property to Stiteler and Martin at reduced values, at last week's meeting, Councilman Steve Leal threw out an idea.

"Part of me," Leal remarked, "thinks we should have calendar (and not performance) triggers, so the property could be appraised not today, but in the future. That way, (the city) also benefits."

One group that was not benefiting much from the draft agreement discussed at last week's meeting is the Warehouse Arts Management Organization (WAMO). While a predevelopment agreement approved by the City Council last December had WAMO playing a large role, the recent proposal hardly mentioned them.

In a letter dated May 23, WAMO's board of directors unanimously conveyed its opposition. Including a long list of criticisms of the proposed development agreement, WAMO wrote: "The costs to the city of Tucson are excessive for the benefits generated."

Stiteler declares: "The (WAMO) letter shocked me. They've been participating in meetings ... and I think it was a misunderstanding. Hopefully, they'll be supportive."

That appears to be happening. Revisions made to the development agreement after last week's City Council meeting apparently show WAMO as a specific recipient of sizable future cash contributions from Stiteler and Martin. Based on that and other changes, WAMO's board gave provisional support to the agreement at its June 6 meeting.

But the main question is: Will the City Council support the newly revised development agreement?

Stiteler says he's optimistic, while Trasoff indicates she's hopeful.

For her part, Uhlich says: "The odds now are 70 percent in favor of something coming together, but it still could evolve substantially."