The project in question is the Downtown Tucson Development Company’s plans to develop three acres at Sixth and Toole avenues. Among other things, it would include a downtown restaurant venue for acclaimed chef Janos Wilder.
But the original plans have been changing over the past six months. Officials from the city, Downtown Tucson Development Company and the Rialto Theatre held meetings last week to try to resolve their differences but were unable to come to do so in time to be included as part of Tuesday’s (June 9) City Council meeting. If an agreement is not reached by June 16, the city is facing a requirement to pay the Downtown Tucson Development Company $900,000 as partial reimbursement for nearly $1.5 million it has already spent on the project.
 Scott Stiteler |
Michael Crawford, president of the Rialto Theatre Foundation Board, said it was putting the cart before the horse to approve the agreement if ownership of the space isn’t turned over first. He called it a deal killer otherwise.
“They can sell it to the city or donate it to the foundation and get a tax credit,” Crawford said. “But I won’t spend the money to renovate space that is vital to the theater without owning it first.”
Scott Stiteler, a principal in the Downtown Tucson Development Company, told the council his company can’t simply give away the space for free.
Don Martin, the other principal said the meeting last week went well but awaits the Rialto board’s decision this week.
“Our predevelopment agreement says everything has to be done by the 16th, but we’re reasonable, as long as we are in front of mayor and council by the 16th and we need to give another week or two for the Rio Nuevo board to approve it, that’s fine,” Martin said. “What we aren’t going to do is drag out negotiations with the theater indefinitely while they hold our agreement hostage.”
In last week’s city council study session, Stiteler appeared upset by some of the changes over the past six months.
Councilwoman Nina Trasoff asked Stiteler and Martin to come to the June 2 session to give an update of the project and of the draft development agreement so there could be some discussion.
Stiteler told the council of the issues he has been facing, including a phone call from restaurateur Wilder who was worried that the city wouldn’t have the infrastructure in place for the project.
“I spent half an hour on the phone with him defending the city and the progress,” Stiteler said.
But using his company’s renovation of the former Martin Luther King public housing into One North Fifth as an example, Stiteler said the city is falling behind on delivering infrastructure improvements.
“Our agreement was that we did the building and the city would do the streetscaping,” he said. “We got the project done ahead of schedule and it still sits with a fence around it. Our boats need to rise and fall together.”
Although Stiteler said he believed he had calmed Wilder’s concerns, changes being made to the proposed agreement are making it less appealing to his company.
“It’s starting to worry us about the quality of the agreement,” he said. “But we’re still here.”
Pending the outcome of the negotiations for the Rialto Theatre space, the current proposed agreement lines out responsibilities for both the developer and the city. Among them, the Downtown Tucson Development Company would agree to:
• Immediately spend about $5 million for renovations, including the buildings in the block housing the Rialto Theatre and the 200 block of East Congress Street.
• Invest another $4.5 million for artists galleries and affordable housing in the warehouses along Toole Avenue and the Warehouse Arts Management Organization district.
• Donate $400,000 over four years to the youth center Skrappy’s and the city’s façade improvement program.
• Give $50,000 a year for two years to an art organization of Downtown Tucson Development Company’s choice.
For its part, the city would agree to:
• Acquire the property at 197 E Toole Ave. from the Arizona Department of Transportation and deed it within 30 days so it can be operated as a nonprofit.
• Finish street, utility and streetscape improvements in the entertainment district and Toole Avenue.
• Complete a parking garage at Fifth and Toole avenues and finish the Fourth Avenue underpass.
In exchange for the agreement, the Downtown Tucson Development Company will receive land credits from the city equal, 20 percent of which would be due immediately on signing of the agreement because the concept plan for the project has been completed.
“It’s not as though we haven’t done anything yet,” Stiteler said. “We’ve been working on this idea for 30 months now.”
Stiteler said his company has its sights set on acquiring two pieces of property from the city: the old Broadway Volvo location at 930 E. Broadway and 35,000 square feet of the Ronstadt Transit Center on East Congress Street.
At the June 2 study session, Trasoff and council members Karin Uhlich and Regina Romero had worried the city couldn’t deliver on its end of the agreement. But that was not the sentiment from Mayor Bob Walkup, who told Stiteler and Martin, “This is too important for the city to fail. The city is committed to make this work. We will deliver it to you.”
$1.7M for affordable housing
More than $1.7 million in Affordable Housing Program (AHP) grants will be coming to Tucson in awards announced last week by the Federal Home Loan Bank of San Francisco. The awards were part of $30.3 million in this year’s first-round grants awarded to 42 projects that will produce 2,558 affordable housing units in Arizona, California, Illinois, Nevada, Texas, and Washington.
The Tucson grants are going to Habitat for Humanity and La Frontera.
Habitat for Humanity will receive more than $1.4 million for a 42-home project named Casas de Cielo Azul, which will be built to standards set by Pima County’s Residential Green Building Program saving about 30 percent in energy costs and 20 percent in water costs.
La Frontera received $373,500 for 14 units in the Casa De Vida Apartments. The apartments will house very low-income homeless and seriously mentally ill individuals and is designed to support residents’ participation and integration into the community.
Whetstone isn’t abandoning project
Despite a Chapter 11 bankruptcy filing, Tucson-based Whetstone Development Co. says it is not abandoning its 13,000-home project near Benson.
Officials of the city said they met with developer Ernie Graves who said the May 18 filing was prompted by lenders calling for their money. Graves also said the company had issues with the Environmental Protection Agency and was having increased costs for a sewer system, utilities and road improvements. Those costs added to another $20 million in expenses.
“There was just a lot of improvement costs that came up, and the EPA delayed us from being able to sell some of the property,” Graves said. “The market is tough, but we will move forward and keep trying to sell the land. We are in the process of reorganizing and we will create a new plan, and work under the protection of bankruptcy laws. It was just unfortunate; we had too much debt and too many delays.”
Graves purchased nearly 15,000 acres of land east of State Highway 90 in Benson in the early 1990s with plans to build a major housing development known as Whetstone Ranch. It was originally estimated that it would become a 20,000-home project, with groundbreaking and homebuilding beginning in December of 2005.
Thelma Grimes of the San Pedero Valley News contributed to this week’s column. E-mail items for this column to jpangburn@azbiz.com. Real Estate and Construction appears weekly.
Comments
Jeb wrote on Jul 8, 2009 4:20 PM:
The sad part? If you ever criticize city council you are accused of being a right-wing nut or something. Truth is I'm actually a moderate. The Pima Democrats should be ashamed of themselves for self-aggrandizing the entire city council at their foolish house parties and meanwhlie not holding them accountable for ANYTHING they do in office.
It's such a shame. Tucson is a great city with the potential to be one of the greatest cities in America but these clowns are screwing it up. It's time we stop defending them and start holding them accountable. Especially because my property tax dollars pay for their foolish mistakes. "
madkat wrote on Jul 2, 2009 3:36 PM:
That total fools Trasoff actually thinks the $830,000 she blew on the 15 minute film clip of Tucson was a good idea.
I have a better idea throw her out of office. "