May 20, 2014

Rio Nuevo Advances the Marriott’s AC Hotel in Downtown

The Rio Nuevo District Board approved $4,300,000 for the eventual purchase of the garage component of the new AC Hotel project proposed by developer Scott Stiteler for downtown Tucson. The motion to approve was made by member Jeff Hill and seconded by member Jannie Cox. It passed with member Mark Irvin joining Hill and Cox in approving the motion. Members Cody Ritchie and Alberto Moore voted no on the motion. Members Fletcher McCusker and Chris Sheafe did not participate due to declared conflicts of interest.

Stiteler has an agreement with Marriot to develop an AC brand hotel and additional retail on the northwest corner of Broadway and 5th Avenue, immediately behind Stiteler’s Hub and Playground projects. Although this $30,000,000 hotel project requires additional approvals from the Mayor and Tucson City Council, the Board’s commitment was a necessary and significant step forward for the project.

By the terms of the agreements, when the garage is certified for occupancy, the District will receive title and will pay the $4.3 million. Stiteler will then lease back the garage at $80.00 per space (which is at or a little above the current rates), creating about a 5% annual return on the District’s investment. The hotel, when completed, will employ over 200 people and generate almost a million dollars a year in new TIF revenue.

Construction estimates for the garage component now exceed $5,000,000, but the District and the developer stayed with the original dollar amount presented to the board last summer.
Construction is expected to start within the year. When completed, the hotel will be known as The AC Tucson.

In other action, the Board amended the developing Arena Lot Request for Proposals to include a lease option and expects to release an RFP soon that could develop the 8.5 acres where the Greyhound Bus Terminal is temporarily located. The Board also indicated that they will honor the city and Allan Norville’s request to provide the approximate 1,200 parking spaces necessary to allow Mr. Norville to build a 120,000 square foot permanent exhibition hall on adjacent property for the gem show and other events.

The Board approved a $74,000 change order to the TCC renovation project to refinish all the bathroom floors in the aging arena and heard from the project manager that the renovation remains on time and on budget. The increased bathroom costs will come out of the contingency fund established when the project launched.

The Board indicated it expects to have about $40,000,000 to $50,000,000 to invest in downtown projects. The county and the University of Arizona spoke to the Board about being open to discussing partnerships to repurpose the La Placita complex, adjacent to the TCC

The next meeting will be held at the TCC and include a tour of the arena remodel.