Nothin' Doin'

Despite Millions Spent, Grandiose Plans For A Downtown Tourist Center Currently Amount To Zip.

By Dave Devine

WHEN THE TUCSON City Council meets on Monday to talk about the status of downtown revitalization efforts, the sorry saga of the long-delayed Regional Visitors Center won't be a major topic of discussion. But after spending millions of dollars to acquire land and prepare detailed plans for a project which has no tenants, it should be.

A Regional Visitors Center has been in the planning stages since 1991. The original idea evolved into a "gateway" project at the southeast corner of Congress and I-10. It was to include office space for the U.S. Forest Service and the Metropolitan Tucson Visitors and Convention Bureau. In addition, plans called for a separate building to promote the many attractions of southern Arizona to visitors and residents alike.

While some might argue this is just another city subsidy of the low-wage tourism industry, those involved have high praise for the concept. Diane Maxwell of the Forest Service thinks "it's a great idea" which would allow her agency to better serve the public than it can now from the bunker-like downtown Federal Building.

Currents To implement the idea, two years ago the city turned over management responsibility to the Business Development Finance Corporation (BDFC). The city liaison with the organization was Kendall Bert, director of the city's Office of Economic Development and a member of the BDFC board of directors.

In its almost two decades of existence, BDFC is best known for funding for many of city government's "creative-financing" schemes. To avoid state and locally imposed debt limitations, BDFC was used to supply money to construct several municipal buildings.

The agency's reputation is mixed (See "Special Pals," TW, March 6,1997). Some of those who've worked with BDFC defend it, while others, usually privately, complain about its performance record. However, its close working relationship with the Tucson City Manager's Office, called "incestuous" by one local elected official, has prevented much public criticism.

In 1989 the city had purchased the Pioneer Paint business near Interstate 10 for $1 million from Martin Bacall, local bigwig in the Democratic Party. City officials intended to turn the property into a parking lot for the Tucson Convention Center.

But then the plans for the Regional Visitors Center emerged, and city officials acquired other adjacent parcels for millions more. They demolished a Sizzler steak house and a Texaco service station on the site to ready it for new development.

But there were plenty of problems associated with the property--environmental cleanup concerns along with drainage issues. And officials also sought a nearby piece of land, owned by the Southern Pacific Railroad, for the project.

Compounding the property's problems was the local Visitors Bureau's rent situation. They'd agreed to relocate to the new facility from their current space on Scott Avenue, but their lease was expiring at the end of 1997. Thus, in August of 1996, Visitors' Bureau officials told the City Council the new center had to be completed by the end of December 1997.

At that same meeting, the Council approved a $400,000 interest-free loan to BDFC to pay for architectural and management services. The loan was to be repaid, "prior to June 30, 1997, from the proceeds of permanent financing obtained by BDFC."

Securing that financing was dependent upon completion of a lease agreement with the General Services Administration, managers of federal property and the Forest Service's landlord. City bureaucrats told the Council that negotiations with the feds were progressing smoothly, and the whole thing could be resolved in September.

But that date came and went and talks continued. Meanwhile, architectural plans for a building which had no secured tenants were already being drawn up.

In January of last year, the president of BDFC, Gary Molenda, wrote of his discussions with GSA: "It is mandatory to conclude negotiations within the next two weeks to maintain the project schedule." A month later, even without a finalized lease, he insisted the project could still be completed by the end of the year. But by springtime it was obvious that wasn't going to happen, and Visitors Bureau officials were forced to sign an extension on their Scott Avenue lease.

By September, talks between BDFC and GSA were still going on. The City Council was told, "The GSA Lease has been negotiated and is in its final stage of review with the GSA's attorney." Then things really fell apart.

According to GSA spokesperson Mary Filippini, "After looking at the possibilities, we were unable to find a way to do the project economically for the taxpayers." In the agency's opinion, she said, it doesn't make financial sense for the Forest Service to vacate its present space.

While the lease negotiations dragged on, plans and specifications for the building were being finalized. Line & Space Architects of Tucson was paid more than $230,000 for their work. In addition, BDFC took $94,000 for management services, and other costs accounted for $65,000--all for a project that had no guaranteed tenants.

Both Molenda and Bert defend this expenditure of city funds. Bert said that preparing the plans was "the only way to meet the deadlines. We did exactly the right thing."

"GSA required plans and lease prices," Molenda says. "Without the plans, we would have been making a commitment without possibly being able to fulfill it."

GSA's Filippini says her agency didn't require the plans to be prepared. They don't expect developers to spend money until a lease is signed, she added.

Two local business people who develop commercial real estate agreed that the city's preparation of the plans before the finalization of the lease with GSA was unusual, but not unheard of. One said, "That's rarely done in the private sector." The other simply noted, "It was stupid on the city's part."

ALMOST ALL OF the city's $400,000 loan to BDFC has been spent, yet the Regional Visitors Center still has no tenants. Will the money, even without interest, be repaid? If the project ever proceeds, it will be.

But what happens if an agreement can't be reached with GSA? According to Bert, the financial arrangement between the city and BDFC shouldn't be looked on as a typical loan. "This wasn't a loan in the conventional sense," he said. "It isn't any different than if the city did the project management themselves. The idea was to move the project forward."

For many months the negotiations between GSA, the city and BDFC have been at a stalemate. GSA's Filippini says, "As the situation now stands, we did tell the city that there was no way financially we could afford it. They asked us to look at other possibilities, and we agreed to do that. We're willing to talk, but we can't see what could be done."

The BDFC's Molenda calls that a negotiating posture. He adds that another proposal has been submitted to GSA. According to Filippini, GSA will be responding to it shortly.

In its attempt to save the project, the city went so far as to offer to lease space in the existing Federal Building from GSA so the Forest Service could move out. An interesting concept, especially given the recent proposal to build a new City Hall a few blocks away.

Diane Maxwell of the Forest Service doesn't think GSA is seriously considering the city's offer. She believes the only way to get the project implemented is through the Congressional political process.

Meanwhile, Visitors Bureau officials are negotiating to buy the building they currently occupy. They might be interested in moving the visitor information portion of the organization to the new project--if it should ever happen--but they're in no rush to make a decision.

There's still hope among its supporters that the Regional Visitors Center will someday be a reality. If that happens, BDFC officials will have to oversee the construction of the building without additional payment--since they've already spent almost all of the money provided under their project-management agreement with the city.

While they could go back to the City Council and ask for more money, Molenda promises to complete the task without doing that.

Despite the millions that have been spent so far, the land for the Regional Visitors Center project remains vacant. Someday, something certainly will happen on the site. Maybe the parking lot which city officials originally talked about.

Whatever happens, Kendall Bert's statement to the City Council almost a year ago has more than a twist of irony in it today: "The public/private partnership which has been formed to carry out this project, and the project itself when completed, will provide a valuable model for other cities and metropolitan areas to emulate." TW

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