Tuesday, April 22, 2008

TIF for TAT 2006

Tucson, Arizona. The original TIF district was created in 1999, a ten year State sales tax increment financing project expected to generate $60 million (matched equally by local money) to generate $120 million in public money for downtown development projects. City manager James Keene’s "pal" Karen Thoreson became downright giddy with the influx of cash to serve as "seed money" to attract something like a billion dollars in development.

Before seeing a cent of TIF funds, the city paid $600,000 to consultants to create a master plan. Talk spiraled upon talk (cloth) and the projected figures kept escalating. In July 2003 they got the faucet running, and it was a nice faucet quickly reaching $600,000 per month. As an increment over the July 1999 base, each year produced additional revenue to create an estimated $124 M over the ten years, an opportunity for the well meaning, but also one sweet trough for the swine. One might imagine the cloth frenzy that ensued regarding all that was about to occur.

To get the thing "kick started" (don’t ask), they had to spend some money on a key component (don’t ask either) and selected the TCC Box Office. For $800,000 they built it with some signage you can’t see from the road. Before we get into the cloth, let’s acknowledge the purchase and refurbishment of the Rialto Theater. Dollar figures coming soon, but the Rialto was solid bang for the buck that put the facility on public turf and produced a viable venue that generates multiple events every week and adds to downtown value. For things Rio Nuevo, we just noted as good as it gets. In fact, The Rialto Block Project continues.

While spectacular, The Fox Theater ran $13 million dollars! The city used federal tax credits to LOAN the theater $5.6 million, strapping Executive Director Herb Stratford with massive debt, That’s how you kill an Executive Director, and sure enough, Herb announced his resignation recently. His inferior replacement yet to be announced will probably be another suit already in the mix.

The first TIF phase, "the Thoreson era," consisted of hyper-cloth nonsense of little substance. Remember the Rainbow Bridge? In December of 2005, ConsultEcon (bet that's a productive bunch!) said Rio Nuevo needed a feature on par with the St. Louis Arch or the Guggenheim Museum in Bilbao, Spain (Tucson Citizen, August 2, 2006). We were going to put Cleveland on top of I-10.

The community responded with a noble effort on the part of a group of developers, downtown agencies, and other business interests. They called themselves THE CONGRESS STREET STAKEHOLDERS and met every Friday morning (Tucson Citizen, Teya Vitu, July 18, 2006). The article listed names:

Don Martin, Competitive Engineering
Donovan Durband, Tucson Downtown Alliance
Roger Karber, Hotel Arizona
Doug Biggers and Tom Powers, Rialto block and Depot Plaza
Jim Campbell, Plaza Centro
Richard Oseran, Hotel Congress
Ross Rulney, Julian Drew Building and Tiburon Apartments
Peggy Noonan, Presidio Terrace
Bob Vint, architect for Presidio Terrace and Plaza San Agustin
Evelyn Alvarez, Long Realty
Brian Corbell and Maurice Destouet, Riverpark Inn
Jerry Dixon and Adam Weinstein, Mercado District of Menlo Park
Michael Keith, Franklin Court
Ron Schwabe, 44 Broadway Lofts
Oscar Turner, The Post
April Ortiz, Santa Rita Hotel
Phil Lipman, Ice House Lofts
Steve Farley, trolley and downtown advocate
Diana Rhoades, Sonoran Institute

To pay the $350+ million for the colossus over the freeway, Thoreson sought a 30 year extension of the legislation. One might imagine the enthusiasm in Phoenix. Well, it did get through the House at 12 years but stalled in the Senate. The Stakeholders did agree an extension was required to reach critical mass, and they used their own money to hire a lobbyist. In May 2006 they headed to Phoenix, and asserted that despite the lack of progress so far, Tucson now had a new city manager (Mike Hein) who would get things done. The "Thoreson era" was over. They convinced AZ Senate President Ken Bennett that the "cloth" would not squander the funds on trips to Sweden, consultants in Ohio, or Cleveland on I-10. They would not shut down productive agencies, squash noble efforts, or spend six figure sums to produce glossy documents stating the obvious. In sum, the stakeholders convinced Phoenix that they would insure rationality of the expenditures. Bye bye, bridge. Bye bye, Karen.

The time had come for intelligence to prevail, and it suggested the acceleration of projects that generated economic returns (commercial development). There’s spending money that makes money, and there’s spending money. Well, as above so below. The Bush administration has no interest in what the nation thinks, and our tenth floors have similar dispositions. Don Rumsfeld captured it perfectly, "The president was correct, whatever it was he said."

The tenth floors (add cloth and you more or less have the SG) had little enthusiasm for the intellect of the Friday morning group. Egos didn't help. How does one squash a group? Create another one on top of it and use the word "consolidate." Create the other group to get the contract, public funding, and political support. That’s how the assassination works. Bye bye, stakeholders. Bye bye, transparency.

Looking at TIF reality we see nothing close to a billion dollars. Through FY 2007 (all figures are in millions) we have:

REVENUE:
-TIF Sales Tax Revenue: $41.6
-Bond Proceeds: $5.6
-TCC Games (don’t ask): $24.1
-Other: $2.3
Total Revenue: $73.4

EXPENDITURES:
Overhead/Administration:
-Staff: $3.3
-Consultants: $9.3
-TCC Games (ties to $24.1 revenue save a $3.3 loss, leave it): $27.4
-Other Administration: $1.3
Total Overhead: $41.3

Projects (green means completed):
-The Fox Theater: $11.6
-Mission Site/Origins Park: $5.6
-Merc/Avenid: $4.2
-Presidio Stabilization / Heritage Park: $4.1
-Citizen Auto Exchange Property: $3.1
-Rialto Theater: $2.2
-Mission Landfill: $1.6
-TCC Box Office: $0.79
-Northwest Lots-Church/Stone: $0.75
-Civic Plaza: $0.73
-The Post: $0.69
-Civic Parking Garage: $0.66
-Congress Streetscape: $0.34
-Drilltrack Improvements: $0.24
-U of A Science Center: $0.23
-Other Projects: $0.17
Total Projects: $37
TOTAL EXPENDITURES: $78.3

Extracting the TCC, we get revenue of $49.3 M and expenditures of $50.9 M. Of the expenditures, we have $13.9 M in overhead and $37 M in projects. After almost a decade and five years since the faucet started flowing, we have four completed projects.

The Press Headline for November 7, 2006:

2007 WILL BE A BANNER YEAR FOR RIO NUEVO!!

We'll get to 2007.

9 Comments:

Anonymous Anonymous said...

UN F'N BELIEVABLE!! Nice work x4mr! Please, please, keep going. As a rational person trapped in this insane city hall, I thought this day would never come!!!!

{Minor footnote as your steam builds:

By "consultants," I presume you mean people like architect Corky Poster, who took away $1,000,000 of Rio Nuevo money just in the Hargreaves JV alone. He's the same Charles "Corky" Poster who served as Regina Romero's campaign co-chairman and has received dozens of downtown and other "assignments" for Tucson and Pima Co, running several hundred thousand dollars apiece.

Rob O'Dell, do you need help filling out city and county FOI's for all payments/contracts involving Corky Poster? Just compare payments to him against his political endorsements/contributions and ask which of his designs have actually led to buildings being built.

Few people sell ink and air to local govt more often, and at higher prices, than Corky.}

4/22/2008 6:21 PM  
Anonymous Anonymous said...

Why isn't Rob O'Dell doing this kind of work? He certainly seems snarky enough?! Is he protecting Hein?

And x4mr, where do you get all this stuff? I've never seen any of these Rio Nuevo numbers in either newspaper. They could surely get this stuff with a single phone call.

Are you just amazing, or are the dailies in this town seriously derelict in performing their job as the Fourth Estate?

Probably a little of both.

4/22/2008 9:54 PM  
Anonymous Anonymous said...

Doesn't the nonprofit sector consider ratios of more than 15% of expenses spent on administration or overhead unacceptably inefficient? Because the IRS scrutinizes them to make sure they spend most of their money on the exempt purpose?

It's tempting to say that Rio Nuevo spent $41 mil on overhead and $37 mil on projects, but it looks like there must be some kind of accounting game going on with the "TCC Games" where the income and expenses from TCC are a wash.

So let's give them the benefit of the doubt, and throw out that $27 mil from the expense side, because that doesn't look real. That leaves a ratio of $14 million in overhead to $37 million in projects.

That's still pathetic! That's almost 30% overhead!

If x4mr is willing to do what the daily newspapers aren't, I can't wait to see the list of consultants and what they got paid for. x4mr, you should be able to string that out for a long time. You could do a separate post for each exorbitant contract that led to nothing.

It sounds like scrutinizing this Corky Poster guy could keep this blog busy for a few weeks!

4/22/2008 10:07 PM  
Blogger x4mr said...

Anon #1,
Associate and I were talking today, and he also zeroed in on the extraordinary contractor and overhead expenditures. Your post explains one of the swine at the trough. No doubt there are others. I have not yet satisfied myself with contractor specific level data. If you have any, it is most welcome.

Anon #2,
You would be amazed what is published online if you know how to get access. Annual reports. Memorandums of disclosure. The list goes on.

Now, of course I would never hack or utilize cyber-tactics to obtain information. That's against the law. Besides, I don't know a thing about computers.

4/22/2008 10:13 PM  
Blogger Robish said...

x4mr, I believe that there was some coverage here of the lies that Karen Thoreson told some other cities about her Tucson exploits, when she was looking for city manager jobs in those cities.

Maybe it was the Weekly that covered it. It must have been. I remember someone mocking her, must have been Nintzel. I seem to recall she was claiming that she had led the revitalization of downtown Tucson, and brought in some ridiculous amount of private sector investment.

She made it to finalist at some city in Colorado, and then in Flag. Thanks to the internet and the local pols making phone calls to Tucson, they found out she was full of it and gave the jobs to people who were actually qualified.

4/22/2008 10:19 PM  
Anonymous Anonymous said...

On news coverage:

I suspect that you would find that the newdailies, and our alternative, are somewhere up an orifice of folks on the tenth floor.

4/23/2008 11:16 AM  
Anonymous Anonymous said...

Follow the money.... and the Poster Boy. He has been on the take for a full decade. His 'non-bid contracts" have been turned in to the Attorney General's Office for a "look and see." Stay tuned for the update. The last true investigative reporter; Dan Huff, was on to this arrogant SOB's game. No one has followed up.

4/24/2008 1:20 AM  
Anonymous Anonymous said...

Regarding the Fox Theatre project, the City did loan the project $5.6 million, but not from tax credits. The source of the loan was from the TIF. Historic preservation tax credits generated a few million dollars in additional financing. But you are absolutely correct that, in the end, the project was set up for default. In fact, pols and bureaucrats (and most likely Herb Stratford, as well) knew going in that the Fox would never be able to generate revenues to service upwards of $300,000 per annum in debt repayment (and were overhead saying as much).

4/25/2008 8:19 AM  
Anonymous Anonymous said...

you all really don't know what you are talking about. Mike Hein was the enemy of downtown re-igintion.

4/04/2014 8:25 PM  

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