General
When the State took control of Rio Nuevo in 2010 it added a statutory safeguard of requiring a triennial performance audit by the Arizona Auditor General. These audits have since been performed by Johnson Consulting for 2010, 2013, 2016, 2019, and now 2022. Johnson Consulting’s team presented their 2022 audit findings during the Rio Nuevo meeting on November 15, 2022.
Charles Johnson, lead auditor, informed the board that since the convention center’s recent performance has been exceptional and is forecasted to improve even more with the total renovation, they have elevated Tucson into a competitive group of cities with much larger, more popular venues. For benchmarking purposes, the Tucson Convention Center is now in a group that includes Austin and San Antonio, Texas as well as, San Jose, Long Beach and Irvine, California. Prior comparisons had been to El Paso, Palm Springs and Albuquerque — smaller, less successful convention markets.
Mr. Johnson also showed and discussed with the Board the public/private financial leverage chart illustrating that for every dollar of state money invested by the Rio Nuevo district, private developers have invested nearly ten times the amount. For the three-year period just ended, Rio Nuevo spent $37,817,200 on developer incentives. In turn private sector partners spent $350,423,218, a 9.3 times leverage ratio.
The auditors made two substantive recommendations: They encouraged Rio Nuevo to plan for the next 12 years at the end of which it will no longer be entitled to a portion of state sales taxes. They also recommended the Board produce a Master Plan for the entire district as well as a succession plan regarding Rio Nuevo’s assets and management after the 2035 sunset. Additionally the auditors made technical recommendations to address the timing and reporting to the state legislature.
The Rio Nuevo extension legislation added an annual requirement of submitting a capital projects report no later than October 1st. Given the delay in tax collection data from the Arizona Department of Revenue, this year’s report could not be produced until October 22nd. Chairman McCusker acknowledged that the District will work with state leadership to refine the reporting deadlines to allow for timely reporting..
“We are pleased that the Auditor General continues to recognize Rio Nuevo for our stewardship of state tax dollars” stated Chris Sheafe, Rio Nuevo treasurer. “We know our incentives attract private sector investment and ten times leverage is about as good as it gets. We will get after the recommendations regarding future planning quickly,” Sheafe concluded.
Monier
In other action the Board agreed to extend a promissory note payoff deadline related to the Monier project on the Westside. Rio Nuevo loaned the developers $2,400,000 in 2018 to allow the project to proceed. This was to be repaid on a date certain or when the project was refinanced. While the date certain has passed, that refinancing is now underway but will not close until 2023. Because the Monier developers advised the board that the residential portion of the project as well as the 13,000 square feet of retail are fully leased the Board agreed to extend the repayment deadline. This project would not have advanced without Rio Nuevo assistance and is a good example of public/private partnering to produce net new sales taxes; Rio Nuevo’s mandate.
The total project cost was $34,000,000 and spurred significant development in the so-called “Mercado District” at the western edge of Rio Nuevo’s TIF boundary. This is where fifty-five shipping containers were affixed to vacant land that now hosts dozens of shops, cafes and entertainment venues, all paying sales tax. In addition, this is adjacent to where Rio Nuevo helped relocate Caterpillar to Tucson from Illinois by building Caterpillar’s nearby national headquarters.