There’s a phrase some people use when describing those who stand in the way of Tucson’s progress.
Those people want to “keep Tucson (crappy),” local boosters sometimes say. Except, of course, they use a more earthy word.
Arizona Daily Star columnist Tim Steller
I heard that phrase a couple of times last week, as the debate continued over a controversial downtown redevelopment proposal. The multinational entertainment corporation Live Nation wants to put a comedy club called Punch Line at 119 E. Toole Ave., at a cost of $2.1 million in public money from the Rio Nuevo district to the landowner.
That alone has some people angry, not just because of the subsidy but also because the club would then potentially compete with other downtown venues. And what really raised hackles initially was the fact that two local businesses would be displaced by the project: Borderlands Brewing and the children’s activity center Playformance.
When the news came down about Borderlands, especially, it plucked a raw nerve, even though the story people heard at first wasn’t the full truth. Borderlands, apparently, has been a business in decline for some time, as my colleague Cathalena Burch reports in the Star.
What the incident nevertheless brought up is lingering suspicions about the direction of downtown development and the public entity that drives it, Rio Nuevo. It’s a tax-increment financing district, which means it is funded by a portion of the sales-tax revenue created in the Rio Nuevo district, an area that mostly covers downtown but also runs along East Broadway all the way to Park Place Mall.
Many people unsatisfied with Rio Nuevo as it has been run are afraid to talk on the record, because they worry they’ll ruin their chances for future deals or will sour key relationships. But Mellow Dawn Lund, owner of MAST boutique in the Mercado San Agustin area, told me many business owners in the downtown area share her concerns about Rio Nuevo and the Live Nation deal.
Patrons enjoy the breeze from the open doors on a Thursday evening at Borderlands Brewing, 119 E. Toole. The multinational entertainment corporation Live Nation is set to put a comedy club called Punch Line at the location.
“I do feel as though it was arrogant and rude,” she said, “and it (Rio Nuevo) has been for a long time.”
Herb Stratford, who led the redevelopment of the Fox Theatre and is now renovating the Teatro Carmen in Barrio Viejo, said he worries some about competition from the new entertainment mega corporation landing in town and installing a 300-seat venue. But there’s a more esoteric concern in the background: “One of the things I’m worried about is we’re losing our soul by selling out.”
Some would view that as wanting to keep Tucson crappy.
The same few property owners
Among the concerns about Rio Nuevo mentioned by Lund, Stratford and others:
— The same few property owners and developers get most of the benefit from Rio Nuevo;
— Some of the businesses the district has helped ended up failing relatively fast anyway;
— The Rio Nuevo board’s longtime chair, Fletcher McCusker, exerts too much control;
— Existing small businesses don’t get much support from the district compared to new ones.
This last issue has been on Lund’s mind after a recent round of grants to small businesses that were supposed to be as much as $25,000 each but ended up being no bigger than $2,500. The money is appreciated but doesn’t make a huge difference for these small retailers and other businesses struggling to thrive, she noted.
“If you lose those businesses that have been busting their butt for so long, and you don’t take that into account in your bigger picture, you’re going to regret it,” she said.
Instead, it tends to be the bigger projects and restaurant/bar deals that get done, either through grants, tax rebates or other forms of financial support. Even one bar owner, Rebecca Safford of Tap and Bottle, told me she doesn’t want to see a monoculture of bars downtown.
Regarding Playformance being pushed from its location, she said, “I don’t want those pieces to be pushed out by restaurants, bars and clubs. A vibrant downtown should have things for kids.”
Whatever the projects downtown, they have tended to involve developers or property owners such as Ron and Patricia Schwabe of Peach Properties, Scott Stiteler and partners Rudy Dabdoub or Don Martin, and Zach Fenton. The same names have been coming up for 15 years in deals such as the AC Marriott, the Rialto block, the Chicago Store, and the 1 North Fifth mixed-use redevelopment.
Stiteler, for example, recently opened the first stage of the Corbett block redevelopment, with Rio Nuevo pitching in tax rebates worth $5 million and a $500,000 grant awarded in 2022. On Tuesday, he’ll go back to the board seeking Rio Nuevo assistance to resume the plan to build a Moxy hotel on North Fifth Avenue downtown.
Challenging political balance
When I asked McCusker, the Rio Nuevo board’s longtime chair, why so many of the same players get so many of the deals, he said, “It’s an easy answer. They own a lot of property.”
“Stiteler bought blocks of properties long before there was a Rio Nuevo. Peach has a bunch of properties. Anybody who owns multiple properties has the opportunity for multiple deals.”
“If somebody has multiple properties, and they continue to present deals that increase tax revenue, yeah, we’re going to invest in it,” he said.
That means Ron Schwabe, of Peach Properties, has entered various different deals with Rio Nuevo, from local restaurants to a Starbucks takeaway location.
“We’ve incubated more coffee roasters and brewers than probably anybody,” Schwabe said. “We’ve incubated tons of things, but we get characterized like we’re just about Starbucks and Live Nation.”
Sales-tax revenue is the guidestar of the Rio Nuevo district, which was extended by the state Legislature to 2035. It invests largely in projects that increase that tax revenue.
But over time, it has also delved into less remunerative projects: Buying the Sosa Carrillo House, for example, and helping build the Mission Garden.
McCusker noted that in 2018, “The Republican governor and Republican Legislature extended us, not because we were doing socially appropriate investments.”
Striking a balance between the Legislature, still controlled by Republicans today, and politically progressive Tucson can be a challenge, he said.
“We can’t just flip to supporting a liberal agenda. The appropriation comes from the Legislature.”
And the Legislature could take it away.
Enriching Ticketmaster
Even many of Rio Nuevo’s critics acknowledge its successes. While downtown still has a lot of empty storefronts, it could be worse.
One of the best changes Rio Nuevo contributed to: The establishment of multiple new hotels downtown, a process that began when Stiteler developed the new AC Marriott, which opened in 2017.
Sales tax collected in the Rio Nuevo district from lodging increased from $262,673 in 2015 to $2,232,185 in 2024, state records show.
But while these hotels feature national brands like Marriott and Hilton, there’s something different about subsidizing Peach Properties to bring Live Nation into downtown.
This is the company that owns Ticketmaster, already hated for its exorbitant fees, and is being sued by the Justice Department for trying to monopolize the live entertainment industry.
“Why put any money into a business who has billions of dollars to do this themselves?” asked Maria Elena Pakulis, an activist who has begun a letter-writing and petition campaign over Rio Nuevo. “It will enrich Peach Properties and extract money from our economy.”
That’s why I don’t dismiss the criticisms of Rio Nuevo over this deal, even though they were a bit misplaced in protesting the displacement of a brewery in decline. Prioritizing the maximum sales-tax revenue is a simple logic, but it leads to Hard Rock Cafes instead of Borderlands breweries.
Objecting to that logic doesn’t mean you want a crappy Tucson.
