Related articles:

Don't raid Rio Nuevo; make it transparent

Other articles by Rob O'dell:

New exec: Smaller steps key to Downtown2 Rio Nuevo design firms ranked tops in profitabilityCity to close for 5 added days to save some moneyCouncil: 'Safety initiative' means huge tax hikeDevelopers want Rialto's back rentSpring training evidently near endFinal cost to city for short film: $820,000City delay may doom Downtown dealDowntown deal revamped, drops housing, arts space Electric shocks could be problem at 3 parks

Health Care
Sierra Tucson
Eating Disorders Program Coordinator Administrative & Professional
Tucson Urban League
CEO/President Administrative & Professional
Jorgensen Brooks Group
Counselor Trades/Construction
RANCHO RESORT
MAINTANANCE POSITION Mechanical
Komatsu Equipment Co
Resident Field Mechanic Health Care
Dependable Health Services
Physical Therapists Sales and Marketing
Everready Glass
Sales Reps

Tucson's half-billion-dollar Rio Nuevo Downtown redevelopment district is in danger of being suspended, or even canceled, after the Legislature convenes in January.

Growing impatience over the lack of progress, compounded by the state's $1.2 billion budget shortfall this year — with a looming $2 billion shortage next year — has lawmakers talking about pulling the plug on Rio Nuevo funding.

The 25-year tax increment financing district is funded by sales taxes diverted from the state general fund.

Legislators from both Tucson and Phoenix have criticized Rio Nuevo as a waste of taxpayer money that has accomplished little, with some citing Rio Nuevo expenses revealed in a series of Arizona Daily Star investigations this year as evidence of waste and poor oversight.

Several Maricopa County legislators expressed hostility toward Rio Nuevo, but stopped short of committing to kill it.

"Rio Nuevo is one more pet project that individual legislators have held onto that is straining the state general fund," said state Sen. Jack Harper, R-Surprise. He declined to say more.

State Sen. Barbara Leff, R-Paradise Valley, said Rio Nuevo is "still wasting taxpayer dollars and nothing has been accomplished."

"If it was up to me, it would be stopped," she added.

The danger is Rio Nuevo could meet its demise as a bargaining chip in a larger budget compromise, with the funding being cut off with little or no public discussion, said state Sen.-elect Jonathan Paton, R-Tucson, who has already drawn up a bill to reform Rio Nuevo accounting.

Paton said he doesn't want to kill Rio Nuevo, but to institute overhauls to persuade Maricopa County legislators not to take away the money.

"If the Legislature can be convinced of reforms, then they might not take it away," he said. "But if there's no effort to be more open, the city is setting itself up for a really rough session."

Paton's bill would require the city to put its accounting system into a searchable online database, with transactions and receipts posted within 30 days of money being spent. Originally targeted just at Rio Nuevo, the proposed reforms have been expanded by Paton to include all state agencies and local governments, effective in 2010.

Several Tucson officials were not overly concerned about the prospects of losing Rio Nuevo money. Councilwoman Nina Trasoff said she won't "invest energy worrying about something until there's something to actually worry about."

"We have a lot to speak about that's very positive, very substantive and very real," Trasoff said. "I think we have a strong case to make. I have confidence in their ability to see it."

City Manager Mike Hein said the talk was "speculation and rumor," and added that commenting on it would be premature.

Rio Nuevo was originally expected to draw $60 million in state sales taxes when it was approved by the Legislature and city voters in 1999.

Securing approval of a 12-year $600 million extension was a tortuous process in 2006, when Tucson Republican Tim Bee was Senate majority leader and supporter Rep. Jim Weiers, R-Phoenix, was speaker of the House of Representatives.

There were audible groans and boos from Maricopa County legislators when the bill came to the Senate floor, and Phoenix-area lawmakers were publicly jeered for voting in its favor.

Now Bee, who later became Senate president, is gone from the Legislature and Weiers is no longer speaker.

Paton said he is the lone Southern Arizona Republican remaining in either chamber who voted to extend Rio Nuevo in 2006.

"You had a friendlier Legislature" in 2006, he said. "The Legislature that is coming in is less receptive, and it was difficult enough getting it in before."

State Sen. Ron Gould, R-Lake Havasu City, who famously called the 2006 bill "Rio Dinero" on the Senate floor, said Bee's departure could hurt Rio Nuevo's prospects. "You don't have Bee as president to protect it anymore," he said.

And some legislators still resent voting for the original bill in 1999, including Leff, who said the city violated the spirit of the tax-increment finance law by gerrymandering the Downtown redevelopment district to include El Con and Park Place malls.

Tucson Rep. Phil Lopes, who was recently pushed out as Democratic minority leader, said he hasn't heard anyone but Paton talking about Rio Nuevo. But Lopes said an important unknown factor is the newly elected Republicans from Pima County.

One of those new Pima County Republicans, Rep.-elect Frank Antenori of Tucson, said Rio Nuevo would be a hard sell even to him. He said many of his constituents are asking him to cut the money off.

"I'm going to have a hard time hitting that yes button," he said. "They have bungled this from the beginning. I don't see a reason to vote yes."

Some Republicans are discussing a suspension of Rio Nuevo's ability to draw on state taxes until the state's budget crisis passes, said local businessman Bruce Ash, a party leader who has had a long-standing interest in Rio Nuevo.

Ash said the city is "playing with fire" with its recent sale of $80 million in Rio Nuevo bonds, since the Legislature may suspend Rio Nuevo state sales-tax deliveries to Tucson. That would leave the city paying for the bonds out of its own general fund, meaning substantial cuts to other city services to pay off the bonds.

Antenori also questioned the city floating Rio Nuevo bonds. "They've got to realize they could be on the hook for that," he said.

Hein downplayed the potential the Legislature would take the money pledged to the bonds. He said all of Rio Nuevo's cash flow for the next several years is pledged to the $80 million in bonds sold in mid-December.

If the Legislature were to repeal or suspend Rio Nuevo, Hein said it is likely to trigger complex legal action involving the city, the state and bondholders.

It would also set precedent statewide that any specially dedicated funding source, such as water or sewer bonds, could be pulled by the Legislature, making it impossible for any Arizona jurisdiction to float those bonds because of that risk, Hein said.

Assistant House Minority Leader Kyrsten Sinema, D-Phoenix, said she knows of no specific plans for Rio Nuevo this legislative session, but added that "you can bet on" someone trying to get rid of Rio Nuevo at some point.

Sinema said the Tucson City Council asked the Democratic leadership to try to protect Rio Nuevo funding, something it will try to honor.

"What kind of power we have to do that is another story," she said.

Paton said his accounting reforms are designed to make Rio Nuevo palatable enough that Maricopa County legislators won't pull or suspend the funding. He is also introducing a bill to create non-partisan elections in Tucson to change a council he calls dysfunctional.

The reforms are the absolute least the city can expect given the lack of progress with nearly $100 million spent on the project, Paton said.

"For most people, there would be hell to pay," if they had spent money as freely as the city did and had no results to show for it, Paton said.

Losing a half-billion dollars in Downtown redevelopment money would be a "devastating blow" for Tucson, said Si Schorr, a local lawyer and active Democrat. "One doesn't have to hold an MBA from Harvard to figure out that," he said.

George Larsen, co-owner of Larsen Baker Commercial Realty, said losing the money would be a setback for Downtown, adding that the Legislature should be able to mandate changes like accounting reform, but should not be able to suspend or cancel Rio Nuevo.

But Cotlow Co. President Dean Cotlow, a commercial real estate broker, said the city doesn't deserve any more money for Rio Nuevo, given how badly it has misspent the first $100 million. It would be understandable for the Legislature to take the money, given how it has been spent so far, he said.

Losing the money would be a blow to the community, Cotlow said, but it would force the city to own up to its mistakes and learn an important lesson.

Tucson Mayor Bob Walkup said he's concerned about the Legislature taking the money, but that he doesn't think it will happen because the city will make a convincing argument to the Legislature for keeping it.

"I think we've got a story to tell that a lot of good things are starting to happen," Walkup said. "We owe them that story."