The Rio Nuevo Debacle

Rio Nuevo Rundown


The issue of management must be addressed when considering the decisions made by the Rio Nuevo Board and the Tucson City Council and Mayor as of the TIF time period from inception to Q4 2010.

As of 2010, $230,000,000 was spent: $156,682,160 was spent as mostly borrowed cash on capital projects, of which most are grossly incomplete and another $70,000,000 was blown on other 'costs'. Future money was encumbered at an average interest of close to 50%, cutting in half the material value of the dollars invested in jobs and projects.

In 2010, Rio Nuevo spent over $15,000,000 on debt service of which $6,200,000 went for interest on five debts incurred by Rio Nuevo and passed by the City Council. The TIF revenue of $9,322,000 did not cover this payment. This huge debt payment is not covered by the total revenues of $13,000,000, even though the income from the TCC is also encumbered. Reserves of borrowed money are being used to make up the difference.

Using this train of fact, perhaps it is time to question the decision making that occurred that produced this unfortunate situation. The individuals involved were quite interested in possessing borrowed cash to pay out. They were so motivated to get the cash; they agreed that taxpayers would pay 50% interest. This reduces the value of the tax dollar by half. The moneylenders get half and the Rio Nuevo handlers get half and the taxpayers get to pay for it. Is this mismanagement?

I know the scheme was that the boom would be endless and properties would continue to escalate and the tax money would continue to flow and grow. Debts would be smaller because of increased value in equity. Instead, a recession intervened and closed the party down. Property is down only 40% if you're lucky and commercial and housing sits empty. Tucson is not booming. Tucson just turned down a tax hike for the city. Tucson has a history of real estate booms and busts. Was I the only one in town who knew this?

Poor decisions and a recession that was foreseeable by many of the cautious has put Tucson in the category of the family who just bought a new car and home and then lost their jobs. Default, anyone?

But it's not just the borrowing and spending, it's the way the cash was spent. According to the Rio Nuevo audit, the Rio Nuevo handlers played fast and loose like a sailor on shore leave with a pocket of cash. Evidently no spending plan existed beyond borrowing the future proceeds of the TIF and TCC and setting up payment plans. No attempt was made to pay for work incrementally. Everybody dreamed big but not in enough detail to actually fund most projects that were begun. Evidently, the spending was dictated by whim or friendship, instead of what could be afforded. Rio Nuevo would now need $449,530,501 and more to complete the projects they began.

This scattershot approach resulted in millions of dollars wasted. I call this mismanagement. Even if the recession had not intervened, it would have been difficult to raise enough money to finish what they started. Looney tunes seems rational compared to this.

The Rio Nuevo audit revealed that few projects were actually completed. The Fox Theater restoration was completed but the operation of the theater is not profitable. The 'Presidio' generates no income. That brings me to another consideration. Apparently the TIF spending was supposed to be an economic stimulus. Projects should be revenue generating. Projects should not be infrastructure or housing. This was not a 'living space' project where housing is created and tenants pay rent and buy needs from area stores which generates tax revenues. The Rio Nuevo was supposed to be a new arena/stadium that held important big events, raised the cultural opportunities of locals and generated fat tax revenue. However, instead of focusing on the big event facility, a series of other derailments took place, with the money going to a hokey film and other frivolities that did nothing to create revenue. The tacking on of a glassy entrance to TCC did nothing to enhance revenue but did result in a substantial debt was a bad business decision. Architects collected millions in tax money. How about paying architects as the project is built, on an incremental basis? If the structure is not built, no payee to architect. We have been taken to the cleaners. We have no new arena nor do we have a world class museum, but we now have cash happy architects and outlandish designs and an out of state filmmaker has $800,000 in tax money. Is this mismanagement?

What happened to the bid process required by law? Why was this Rio Nuevo video not put out to bid? The city and Rio Nuevo paid the bills for this film so it should have been put out for bid. If the bid process was violated, the city charter says that those responsible will be removed from office. If more laws were violated, this should come to light. It has been suggested by the Rio Nuevo Audit that the payments to the U of A were in violation of state law. Legal problems, subverting the bidding process required by law, and lack of progress point to mismanagement. The bidding process for all spending needs to be documented.

The city matching funds projects for Rio Nuevo were transportation projects, some of which seemed that there was a bond issue for some time ago. What are the cost overruns on these transportation projects? Did these matching funds projects bring in revenue to the TIF? I know the premise is that good streets generate business but did this happen? What was allowable for matching funds? The Martin Luther King housing units downtown have been eating money but generating nothing after the tenants were ousted. The debt level will ensure the rents remain high.

The modern streetcar that lacks funding has already consumed millions in Rio Nuevo 'matching funds' , another fiasco designed to need a city subsidy to operate. Already deep into transit deficit spending to set up a situation projected to require a subsidy to operate is the ultimate foolishness. As for the streetcar projects, most of them take place out of state employing workers building streetcars while Arizona's unemployment rate remains high. If the Federal funding requires that our community export jobs, then perhaps this type of funding is simply too expensive for Arizona.

The new Rio Nuevo Board has been hiring lawyers and now wants to hire employees, even though Rio Nuevo is in deficit spending. I suggest this board nominate and elect one of their own to be treasurer. I also suggest that those with financial interests in the defunct hotel project resign over a conflict of interest. As a community, we need fresh ideas on the board and we also need a board that is willing to work in a transparent manner and one that is willing to work to salvage what is left of Rio Nuevo. We have from 2011 to 2025 to work towards solvency and material achievement. A hiring freeze is in effect, isn't it?

This bum on the street corner now wants you to buy him a new car when he's flat broke. Tell him no. Tell him to get busy and do the job as Rio Nuevo Board, instead of just claiming dubious prestige for the title.

The pattern of disorganized and whimsical spending without a reasonable budget for accomplishing material gain in the form of an arena or expanded TCC or even a viable project to generate revenue was an outstanding example of mismanagement that needs a full investigation. The gambler who is forever optimistic just continues on and on until he is bankrupt.

I say it is time for the gambler to fade away and a fiscal conservative to take his place.





IF YOU WANT MORE INFORMATION:

Rob O'dell wrote an interesting factual article on Rio Nuevo and the hiring of lawyers and what they were paid out of tax money:

http://azstarnet.com/news/local/govt-and-politics/article_522148bd-131f-5d86-bb90-5ac6c3867d11.html

Joe Higgens and Chris DeSimone wrote a good opinion piece on the Rio Nuevo Audit:

http://tucsongrowup.com/2010/11/06/those-responsible-for-rio-nuevo-must-face-consequences-wut-column-for-inside-tucson-business/

Tucson Convention Center Renovation Ideas

The Convention Center Renovation


We are talking cosmetic changes at the beginning. Jobs to renovate the TCC can be created. TCC is a serviceable facility that has much to recommend it. We need projects that serve the needs of the community and that create local jobs.

Money? Is there any money at all? A $51,000,000 deficit on an adopted budget ? Should budgetary decisions be based on cutting costs to meet the budget? If so, then matching a retiring debt with a new debt that does not change payment amount in order to obtain money for jobs projects should instead go to cut the deficit.

Perhaps, but the train of thought will continue as if there were money. I would prefer to short contract pay as you go with no debt. Without the debt, maybe part of the $ could be used to retire other debt and a smaller amount would go to a fund. When that fund reaches the size required for a short term job, then hire! The improvements thereby would be on city property to city buildings by local contractors on an incremental basis.

Implementing an incremental hiring and renovation plan would require planning to meet the need to renovate TCC. After an outside tour of the TCC, I think that cosmetic renovations are needed. Maybe TCC isn't as large as some but artistic quality, ambiance etc will attract clients. If the rent prices were lowered, then possibly more acts, attractions would be able to come here. We need lower rent prices and a better looking structure.

The grounds of TCC are really nice, beautiful plants and nice brickwork. It's like a park. The grounds are a plus for the entire set of structures. Tourists love the flora.

• The structure has a nice brick facade but the older metal and glass additions could be refurbished or replaced.

• Doors need refurbishing.

• brick needs sandblasting

• cement walks need sandblasting and resurfacing. Tile would be nice but expensive.

• new light fixtures and electronic signs

• The tunnel is quite unattractive: how about bright tile mosaics or murals and better lighting? The tunnel is nice in summer. Good open air snack cart area. It seems like something really good could be made out of the tunnel. How about scenes from Arizona history done in mosaic all along the walls? There might be an art grant out there somewhere to help pay for it. Local artists make it more valuable as a tourist attraction.

• The west side is horrid, except for the plants. This definitely needs reassessment and redoing. Paint, stucco, anything. Is this what people see when they walk to the back lots? All that area could be turned into breakout rooms and the maintenance crew could be quartered in a steel building somewhere else.

• The chain link corral and chairs stacked against the walls don't do much for the decor. Ratty chairs look like a yard sale.

• The TCC could be a showcase for local art if murals are put on some of the walls. I'd love to see more sculptures by local artists on the grounds.

• The new addition is ugly. Why didn't they match the TCC when they designed it? It looks like a cheap skirt tacked over levis.

• We were over there on a Thursday. the escalators were grinding away and icy air conditioning even though it was 85 outside. Expensive choices. What is the utility bill over there?

• Solar power additions. I don't know what the roofs look like but that would be a good place for liteweight units if it's feasible.

• I have been told that the TCC needs new electronics.

These are just a few ideas from walking around the main TCC.

I like architecture and buildings. The TCC could be a showcase for local art. Jobs refurbishing the structure could be created. The ratty chairs could be reupholstered by locals, rather than replaced by chairs made in China. A good cleaning would help. The place looks like maintenance has been deferred. How much money was spent on maintenance at the TCC?

Arizona Educational Reform

Available on Kindle

School reform is a popular subject during an election year. Arizona has applied for and been denied two lucrative federal grants intended to encourage school reform in the states. Perhaps the lack of desire for change in education in Arizona was obvious in the application. The recent spate of negative statistics concerning student achievement in Arizona has begun a dialogue among many concerning the need for school reform. Arizona educators have tried testing and teaching to the AIMS test, ESL instruction for teachers, making certification more expensive in terms of time and credits for teachers, career ladders, raising academic requirements for graduation and many other fruitless gimmicks. The dropout rates remain high and the average academic achievement test scores are mediocre to terrible.


What next? I suggest a real overhaul of this 1912 educational vehicle. Changes since 1912 are apparently endless but the stars of this show are the growth of population size and the change in material technology and innovation. Immigrants have changed the cultural makeup of Arizona and a service economy has emerged. Things are different now in 2010, almost a hundred years later.

I will now address one facet of school reform that would benefit academics and sports, without sublimating either. School reform can eliminate a social emphasis that creates a hierarchy other than academic, often centering on sports proficiencies.

Both academic and sports proficiencies are important but should they be competing against each other in the public schools? On a social level, if the sports proficiencies are deemed the most important by the staff, then the students will get the message that the sports proficiencies are most important and that these people must be pleased by performing sports, which also gives social prominence.

I taught a long time and I know teachers push the academics but the social rewards are for the stars of the sports. As a preliminary to reform, the costs of sports must be separated from the total school budget and analyzed as percent of total, donation level, cost to student, income from events, cost per student participation donated and requisitioned, cost per capita student participation, etcetera... After this analysis is completed, a discussion on the distribution of funds can proceed.

I propose to separate the academic job preparation proficiencies from the sports proficiencies in the public schools, in an attempt to elevate the social status of academic proficiencies to more of a realistic level as found in later life. Create two separate entities, the academic schools and the sports schools merged with the city parks and recreation department programs. Separate these entities, while requiring passing grades for students to participate in the new City Sports Plan. Of course this would require cooperation in facilities management as the city costs and facilities are merged with those of the public schools or in partnerships with charter schools. There would be no need for additional facilities or busing to the Sports Schools; bus passes for needy students would be available through a donation program or subsidy.

I think this plan would free up money for academics.

This separation plan would also have an added benefit in that the academic facilities would be more flexible, since large groups of students of similar age need not be amassed in order to field a better sports team. Smaller schools for all ages closer to homes of students would eliminate busing costs. The Internet and Distance Learning would make available any course requirement online plus any level academic electives. On duty teachers would monitor progress and offer assistance in the upper grades, plus traditional classrooms for basic learners of any age. The possibilities are endless in a local K-12 academic school. The elimination of busing would save money. As this plan takes effect, bait the school districts with money from the state that would be spent on busing would either be lost or diverted to distance learning equipment designated for local smaller schools. Bait the universities into establishing a curriculum for generalists who can run and teach in one of these new K-12 Internet and basic skills schools.

As for the Sports Schools, attendance would be voluntary with the exception of x number credits in 'Lifelong fitness and nutrition", which would be required of all students in the Academic Schools 8-12. This requirement would introduce the students to the sports schools and thus the staff could encourage participation in Sports Schools volunteer programs. These programs would be funded on a per capita daily student attendance basis, which would encourage the Sports Schools staff to encourage more students to participate. If attendance fell below a certain percentage in a month, an immediate review of the teacher and the class would be conducted. To encourage attendance, student would be offered bus passes at a small profit. A Sports School would allow for the development of local sports stars, parental donations, recruitment possibilities and sports games for people to attend for a small fee. A self supporting program would provide jobs for concessionaires and security. Regional games could be funded as the schools fund them now. Why not a hierarchy of leagues until the big leagues take notice? We have two facilities in town plus all the school fields to use to develop local talent and we have all winter to practice. I do believe that the mandatory schooling law dictates that academic eligibility requirements be met by all Sports School volunteer programs. Community spinoffs could include sports leagues for older players.

As for Vocational Education 8-12, vocational centers would be established and programs of apprenticeships in local businesses would be developed. These vocational centers would contain various shops and trades, sewing, art, theater, electronics repair, real estate, agriculture, home gardening, small business management, business finance etcetera. As with the Sports Schools, students 8-12 would be required to earn credits here, which would expose students to career choices and the actual physical facility. Attendance would be voluntary and funded on a per capita daily student attendance basis, which would reward the best most relevant teachers. After a month of low attendance, the class would be under mandatory review and possible immediate cancellation, which would save student funds for successful teachers. I have seen teachers in electives run the students off until just a few were left, which is quite a low class load while collecting similar money to the teacher teaching required courses, swamped with students. Vocational certification would be relaxed to include more life certified teachers and journeymen. Cooperation with specialized charter schools could cut presentation costs.

School reform has many facets and possibilities. The state of Arizona has a good basic curriculum, but the teaching of that curriculum is too loosely interpreted by principals, who prefer to cultivate a non confrontational attitude towards teacher management. Perhaps that is the easiest row to hoe, but the curriculum as it applies to the success of a child in the system must be presented to all children, who will understand at the level the teacher is able to impart to them. Some students will have the native intelligence to understand the material without instruction, but those are few. In this era of electronic instruction of factual material, the concept of mastery learning must be revisited, rather than strict adherence to the grade level system. In a K-12 school, the concept of students proceeding at their own pace would be much easier to implement and would free the students to proceed through the required curriculum at a reduced or accelerated pace. Given the various maturity levels of students in any age group, this system might be a relief to many.

To create liquidity, If the school facilities are too large, then divide up the facilities and rent them out to other government agencies first at a nominal rate, then to private enterprise: child care, clinics, therapy centers, and other health related businesses. Get some cash flows and use the money to fund academic competitions and travel. How about awards dinners and travel for academic stars? The Science Fair is an excellent example of how to run a creative competition and exposition.

I was gratified to hear that Mr. Huckleberry of Pima County is fielding a plan for a local sports complex, where traditional sports and sports not taught in the schools will have a venue. I support the idea of this complex and would suggest that the Sports Schools plan could cooperate with the county in use of these facilities, sharing in educational efforts, utilities and maintenance costs.

School reform is a complex issue that must be addressed with practicality and creativity plus realistic views of the academic and social needs of students. Today's job market is tough and students will become motivated to learn how to make a living and exercise voting rights. The job of the schools is to prepare students to earn a living and function lawfully within our society.

City of Tucson Budget Crisis

Mind Set and the Economic Crisis




Another tax hike will cut commercial spending, which is an undesirable outcome even though the city would then have more money to spend. Take from the many to give to the few. I think it is time for new ideas.

An analysis of city spending needs to be made. I will begin with SunTran.

How often do the routes run?

What is % ridership? If it is 25%, then four too many buses are being run.

How much is this transit management team being paid? They are producing nothing.

How much federal funding does Tucson get for transit?

How many actual runs would serve the needs of the riders?

At forty cents a ride, maybe a little inconvenience is worth it. If SunTran cannot afford to run so many buses due to low ridership, then it would save money to cut the number of buses. Preserve the routes but not the frequent pickup times. People who ride the bus will plan ahead to continue using the service. If these excess runs are being demanded by the union in order to create jobs, this point must be negotiated. The money is just not there for them to spend. The taxpayers are subsidizing their jobs with no increase in productivity.

The ticket subsidy should remain the same if SunTran cuts the bus runs. This is the sacrifice asked of the people who ride the bus to the budget crisis. They cannot afford to pay more. The 'executive staff' giving up their free cars and cell phones might be a nice gesture. How about they get a free bus pass?

This plan will cut personnel costs and might result in layoffs, unless the drivers want to get together and share the actual available work. This plan would cut personnel insurance costs. Fewer buses would be running, so the bus fleet would last longer. Running huge empty buses is a waste of machine hours, fuel, insurance, street surfaces and productivity. This is like a teacher giving sixth graders scads of third grade work to keep them quiet. It works but there's no productivity. Those handicapped transit vans could run when full by appointment, with a driver on call, not just to pick up one person. You know, like the shuttles to Nogales from South Sixth.

This is a right to work state. The unions have no right to demand that the city fund excess bus runs in order to maintain their membership dues payments.

An analysis of the mindset that asks Don't you think that this worker is worth $100,000 or $50,000 or whatever? The question they should be asking is: What is the amount we actually have to pay workers? Figure that out and then cut payments and city funded benefits to workers to what the city can actually afford to pay. If these workers feel slighted, then they can move on. In this job climate, applicants at a lower pay will be legion.

This brings me to somebody's saying that each department will be cut X%. This screams assumption that each department is equally important, not top-heavy, overstaffed or even competent. An analysis needs to be made on each department. Some departments could be eliminated entirely, others remain more intact. Maybe some departments can be merged into others. I know it's easier to leave it all intact, but I question the efficiency of spending in some instances.

How about the city visit one of those agencies that do debt consolidation and renegotiation? I know this has already been done, but perhaps something could be gained. Has the city considered 'clawbacks' of money paid out with little received in return? It happens on Wall Street why not here? I am awaiting the Rio Nuevo Audit. Possibly charges can be filed? Excess indebtedness has eroded the value of the tax dollar to $.60 with $.40 going into the pockets of the moneylenders for years and years to come. What about default? What are the options?

According to a verbal report, the Fed wants to keep 3-4% inflation rate, which helps pay off the exorbitant Federal debts run up in the last 10 years. If that happens, that means we pay higher costs for everything, while unemployment continues and the people have less to spend. Higher taxes on top of that will simply put more of the money supply in the hands of government for distribution to that select group of workers. This is onerous when reorganization has not be achieved. Reorganization of city departments should result in lower taxes, not higher. Excess indebtedness has eroded the value of the tax dollar to $.60 with $.40 going into the pockets of the moneylenders for years and years to come. What about default? What are the options?