Apr. 5, 2010--Tucson City Councilman Steve Kozachik will call for a halt to all spending on a proposed convention center hotel because of confusion over whether the city or Rio Nuevo is in control of the project.

"Who's been keeping track of the money? Nobody," Kozachik said, adding that as a whole, the city and the newly appointed Rio Nuevo board were "completely dysfunctional" in overseeing a new convention hotel.

The freeze on funding would affect only about $3.8 million of the $17.5 million that Garfield Traub and its contractors are set to receive from building a new east entrance to downtown's Tucson Convention Center and designing a new convention hotel. The development team already has been paid the remaining $13.7 million.

Kozachik said the freeze is needed because the new Rio Nuevo board is currently lost trying to figure out what money was spent and what current contracts it has. All the while, Garfield Traub is being paid because the city is currently approving payments sent its way by Greg Shelko, the former Rio Nuevo director who is now a consultant to the new Rio Nuevo board.

Until the city and the new Rio Nuevo board -- which basically used to be a city agency but is now a separate entity because of legislation passed by the state -- can agree on a new intergovernmental agreement that defines the responsibilities between the two, Kozachik said, the hotel should be put on hold.

The current agreement between the two is outdated because of Rio Nuevo changes passed by the Legislature.

"We need to stop spending the people's money until we figure it out," he said. "I want to stop the design until we know we're going to build it. The city can absolutely do that. . . . Right now, what's being done is irresponsible."

Other City Council members and Rio Nuevo board members were noncommittal about cutting off the funding for design.

Although the council is slated to discuss Rio Nuevo in two different items on Tuesday -- one about staffing and one about a new agreement -- Councilwomen Karin Uhlich and Regina Romero said there wasn't a formal proposal, so they couldn't comment.

Romero said she agrees with Kozachik that the relationship between Rio Nuevo and the city needs to be better defined with a new agreement. She also said she shares Kozachik's position that any funding of the hotel cannot hit the city's general fund.

Councilman Rodney Glassman said he wants Rio Nuevo money to be spent on revenue-generating projects such as the hotel and a new arena, and he chided previous councils for not spending money on Rio Nuevo projects.

Rio Nuevo board member Craig Finfrock said the board is more interested in forming a coherent and workable organization, and it wants to work to potentially hire a new attorney, accountant and executive director before taking drastic measures such as stopping work on the hotel.

"We need to create our organization and then get our arms around the project," Finfrock said of the hotel, adding that he believed much of the board agreed.

One aspect that Finfrock said he would oppose was shutting down the construction on the east entrance of the TCC, which is currently in progress. About $1.5 million of the $3.8 remaining to be billed to Garfield Traub is for the east entrance.

However, Rio Nuevo board member Scott Egan said he tended to agree with Kozachik's call to freeze funding, adding that he wants to put a limit on new spending until the board determines what happened to the money previously.

Although he would like to stop hotel spending, Egan said, the contracts must be looked at to determine the costs of stopping the contract. In addition, he said, the Rio Nuevo board is in the midst of finding a new lawyer, and he said he doesn't want to freeze spending until the new legal representation is secured.

The city is waiting for a capital plan from one of its financial advisers on how the hotel would be funded with bonds and what the cost of financing would be. The city would almost certainly have to back the bonds, because Rio Nuevo's funding stream is so limited over the course of the next eight years.

Kozachik has an unlikely ally in his hotel-spending halt in liberal activist Jody Gibbs, who has been highly critical of the city's decision-making on Rio Nuevo and other planning areas.

Gibbs said the hotel will be good for the hotel developer but not for taxpayers.

"The city of Tucson will be left there standing on the corner holding the bag," Gibbs said. "For the city to put money into this is insane. I support him."

Contact reporter Rob O'Dell at 573-4346 or [email protected]

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