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The Battle Continues Over Responsibility for Much Needed Repairs
to the Tucson Arizona Convention Center

The State-Appointed Rio Nuevo Board, Demands that the City Make the
Repairs or Risk Default of its Sublease Agreement

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

Oct. 15, 2011--The fight over who has to fix up the Tucson Convention Center ramped up again Friday when the Rio Nuevo board issued a letter demanding the city do it -- or risk being in default of its sublease agreement.

The demand letter outlines a host of repairs Rio Nuevo contends the city must do within 30 days, including fixing the roof, restrooms, bleachers, parking lots, lights and the cooling system.

The fixes extend not only through the convention hall itself, but the office complexes and meeting rooms as well as the Leo Rich Theatre.

In 2002, when the city still controlled Rio Nuevo, it deeded the TCC over to the redevelopment district and then leased the facility back to itself. That agreement obligates the city to maintain the premises "in good repair, fair wear and tear excepted" and to pay "the cost of repairs and replacements" during the term of the lease.

The City Council, however, has been pushing the state-appointed district board to commit $3 million in 2008 bond funds to improve the building, which is in such a state of disrepair that it not only isn't in compliance with the Americans With Disabilities Act, but it also misses out on big shows.

After Rio Nuevo issued a demand letter to the city two weeks ago for $47 million and a host of properties it wants the city to turn over to it, the city canceled a joint task force designed to hammer out the necessary TCC repairs and who is going to pay for them.

Board chairwoman Jodi Bain said the city's decision to shut off discussions forced the district's hand, since it's a safety issue.

"It's not meant as a slap. It's more of a pre-emptive, 'Oh my God, what if something bad happens from a liability standpoint?' The district as a landlord has to say, 'You have to fix this,' especially since we're not able to move forward cooperatively."

The two entities have been at odds since the Legislature stripped control of Rio Nuevo from the city after the city-controlled downtown redevelopment district spent $230 million downtown with little to show for it. Before Rio Nuevo was taken over, the city issued $78 million in bonds in late 2008, $3 million of which was earmarked for the TCC. The legislation that stripped the city of control of Rio Nuevo last year said the new district board could spend money only on a new hotel or the TCC.

Bain did not have a dollar amount for all of the repairs listed in the notice of default, but Councilman Steve Kozachik said a list he drew up of needed repairs indicated the amount could be more than $50 million.

He said there's no way the city can come up with that kind of money in 30 days, especially on top of the $47 million specified in the claim.

Although the district has noted it paid $15 million for the new east entrance of the TCC and planning for a new hotel that has been scrapped, Kozachik said the new iteration of the district board has spent effectively "zero" on the facility.

"Maybe we ought to just hand the thing back over to them," he said. "It's a cash drag on the city right now."

But more than that, he said, "The board is doing a disservice to the taxpayers of this city" -- especially since the city offered to enter into mediation with the district just two days ago.

It is not clear what the result would be of the city being in default of its lease.

Bain said she didn't know, saying it was her hope that the notice would push the seemingly stalled discussion forward.

City Attorney Mike Rankin said he likewise hadn't had a chance to evaluate the implications.

But, he said, he plans to respond to the notice of default and contends, "The city is not in default."

He said the district board and the city each agreed to a "term sheet" in December that states the district will pay $3 million in bond proceeds on repairs.

"This is another olive branch from the Rio Nuevo board," Rankin surmised, with a touch of sarcasm.

Rio Nuevo board members contend they don't know how much money is left from the 2008 bonds, noting their auditors won't sign off on the district's books because they could not verify from city documents that all the money was accounted for.

Contact reporter Rhonda Bodfield at or 573-4243.


(c)2011 The Arizona Daily Star (Tucson, Ariz.)

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