Last week, with redevelopment of downtown Tucson at a dead-stop, the City Council voted to sell the first $78 million in bonds to try to get Rio Nuevo moving.
Two weeks ago, a community-wide discussion on land-use planning ended with the approximately 400 attendees turning the matter over to the Pima Association of Governments (PAG).
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Unfortunately, economic conditions being what they are right now, even the nation’s most successful developers can’t get their hands on money to do projects.
That’s not the city’s fault, nor is it the fault of developers. But it is fact.
So in the downtown redevelopment game, the City of Tucson has the bat and ball.
Considering what interest rates are these days, when the bond package goes to sell either today (Dec. 15) or Tuesday, the city should find relatively eager buyers as investors look for less risky places to put their money. (An example of that came last week when at one point yield for Treasury notes went to zero interest — and certain short-term notes went negative. In other words, investors were willing to invest their money in the U.S. government and expected no interest in return.)
Municipal bonds aren’t considered quite as safe as Treasury’s which is why places like the city of Tucson have to pay at least some interest. But comparable 15-to-20 year bond packages in recent days have been marked at 6 percent or less.
That’s good news for the city of Tucson and promising for Rio Nuevo.
But there is reason for concern. It starts with the city’s ability to repay the bonds through revenues it will collect from the Rio Nuevo tax increment financing district. Sales tax revenues are down significantly. Statewide, they’re off by 12 percent.
Exacerbating the situation is that the kinds of things to be financed through this first bond sale won’t do much to change declining sales tax revenues because the money will mostly go to pay for work on public venues, infrastructure improvements and to start design work on an arena and three museums — for the Arizona Historical Society, University of Arizona Science Center and the Tucson Children’s Museum.
Obviously sales tax revenues will only come from attracting consumers to actually spend money in the Rio Nuevo area. None of the projects do that.
As for the land-use planning discussion, the centerpiece was a program used in the Salt Lake City area called Envision Utah in which author Robert Grow emphasized the need for a private-public participation in a vision for the future.
Turning the matter over to PAG — remember that "G" stands for government — is exactly opposite the thought-process attendees were told made Envision Utah successful.
For now, though, government has the upper hand in these matters. It’s in the city of Tucson’s hands for Rio Nuevo and it’s in PAG’s hands for land-use planning.
If they fall into the trap of thinking they alone know how best to get their tasks accomplished, they’ll fail. We wish them good luck but both should remember the quicker they include meaningful participation from the private sector, the better their chances will be for success.
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