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Rio Nuevo Board Puts Future of $190 million Convention Center Hotel
Back in City of Tucson's Lap

By Rhonda Bodfield, The Arizona Daily Star, TucsonMcClatchy-Tribune Regional News

Oct. 09, 2010--The Rio Nuevo board has a message for the city of Tucson about a $190 million convention center hotel: Tag, you're it.

The board told the city Thursday to go ahead and build the convention hotel if it wants to -- and detailed, in general terms, what it's willing to throw in if the city proceeds.

The offer came after weeks of back-and-forth between the city and the board about which one will be responsible for taking the lead in the development of a Sheraton hotel.

After the city spent $250 million on downtown redevelopment with little actual construction to show for it, the Rio Nuevo board was created and tasked by state lawmakers with getting a downtown hotel built.

Among the items in the complex, new, multipronged offer:

--The district would offer free lease on the land for the first five years. After that, the city would pay market rate, although it's unclear what that rate would be.

--The district would give up all tax-increment financing for 10 years generated at the hotel site, reducing that to 50 percent over time.

--The city would buy existing hotel plans from the district worth $10 million.

The board also wants the city to review whether the meeting space and parking are adequate.

Several City Council members said they hadn't evaluated the response, but one characterized the offer as a "poison pill."

"They gave us something they knew we would not be able to accept," said Councilman Steve Kozachik.

The board's offer was unresponsive to four specific requirements detailed by the city in September, he said -- for the board to take the lead on the project, drop the guaranteed maximum price and developer's fees, hire more local subcontractors and get additional monetary guarantees from the hotel operator.

Councilwoman Shirley Scott said she hadn't seen the offer, but she'd be disappointed if it did not match the city's demands.

"I think we sent over a pretty straightforward list that would allow us to talk turkey," she said.

Jodi Bain, who chairs the Rio Nuevo board, said it was important to lay out the parameters of the partnership, if one happens, but she stopped short of fully endorsing a hotel. "We really don't know if it can be afforded because we don't have the final finance plan," Bain said.

Rick Grinnell, one of two Rio Nuevo board members to vote against the plan, said he doesn't think the city is equipped to handle the project. "The city doesn't belong in the development business," he said, adding that he doesn't believe the project pencils out.

City Finance Director Kelly Gottschalk said the city staff is still interpreting the offer. She said the staff will present a summary to the City Council on Wednesday but doesn't expect the council to take formal action.

Project advocates are pushing for approval by Dec. 31 to take advantage of low interest rates under the Build America Bonds program.

Gottschalk said she remains hopeful the project can be worked out by then.

Contact reporter Rhonda Bodfield at 573-4243 or rbodfield@azstarnet.com

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To see more of The Arizona Daily Star, or to subscribe to the newspaper, go to http://www.azstarnet.com.

Copyright (c) 2010, The Arizona Daily Star, Tucson

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