In 1999, Tucson voters approved Rio Nuevo as an engine to crank up Downtown redevelopment.

The plan was to draw a district within which half the increase in sales tax funds would get diverted into to bankroll a major Downtown makeover. The boundaries ran down East Broadway to include El Con and Park Place malls.

Oh yeah. Let the rocking revenues of Dillard’s and Sears fill the coffers for fixing up the city center.

Great plan. One problem: the certainty of unforeseen events.

Somewhere in Seattle, an online bookseller had it in his head that he could destroy the global brick and mortar retail industry.

Jeff Bezos launched Amazon into the retail space in the 2000s and then the Great Recession hit. The walls came down as stick-built shops started failing. 

Tucson ranked 7th nationally in the number of lost retail stores between 2011 and 2020. Just under 19 percent of these business vanished from the local landscape.

Now, Rio Nuevo investments are starting to creep along East Broadway past Williams Center and clear out to Park Place. Along the “Sunshine Mile” of midcentury storefronts, places like Rocco’s Little Chicago are getting a boost from loans to flesh out expanding businesses.

During the latest Rio Nuevo Multipurpose Facilities District Board meeting, a plan was temporarily pulled that would have used funds usually associated with Downtown redevelopment to help buttress the mall.

The idea to develop retail space along the east side of the mall isn’t dead. It’s just being fleshed out better for future board consideration.

However, during the same meeting, the board agreed to give a $125,000 infusion to Copal restaurant in Williams Center. The owners don’t need the money to open. They want help expanding with lighting, kitchen facilities and patio service.

Also, the board’s master plan for the district includes a project that would build multi-family homes in the Park Place parking lot. Why not use the land for needed housing, so long as the retail outlet isn’t gonna need the acreage for customers.

The entire polarity has reversed. Money from Downtown is now working its way East.

Rio Nuevo Chairman Fletcher McCusker gets the irony of Downtown development starting to fuel mall redevelopment. And he’s willing to go along with it.

“We are starting to hear from people up and down Broadway,” McCusker said in an interview. “Anytime we can build something with incremental revenue we help out.”

By “incremental revenue,” he means a project that will add to the sales tax base.

Rio a go-go

Rio Nuevo is doing well.

It generates two kinds of money. Tax increment financing dollars, which come from that sales tax split and non-TIF dollars, which pour in from rents and fees the district charges on its properties. Interest also adds to the pile.

In all, Rio Nuevo budgets about $1.35 million a month in TIF dollars collected and spends about $1 million every 30 days. The revenues are currently coming in over the budget. So it’s possible the agency will be swimming through $5 million of black ink by year’s end on top of the $9.4 million already in the bank.

Non-TIF money will add up to $12 million available this fiscal year. 

Money returned from sales taxes can only legally be spent on public infrastructure.

Non-TIF dollars don’t have those restrictions and tend to be distributed to businesses starting up or needing to expand.

Businesses show up to the board’s monthly meetings to make a pitch for cash.

The show is kind of entertaining. The process plays out kind of like Shark Tank, where entrepreneurs explain their business concepts and crack open their books to justify the ask.

Applicants tend to work with lawyers or the Rio Nuevo team ahead of the meeting to know what the board can do and what it can’t.

And just as an aside, no other public sector outfit gets the metaphorical bang for the proverbial buck than Rio Nuevo does with its two-person staff. The annual payroll for the entire operation runs $88,000.

If the goal is to raise the tax base, Rio Nuevo is a smashing success.

The district’s got off to a rough start for, oh, about 12 years. Then the Arizona Legislature did something right when it took over Rio Nuevo and appointed a new board chaired by McCusker. Hey, the folks at the state Capitol complex sometimes get lucky.

Since fiscal year 2012, the TIF revenues have increased from $9 million to $18.6 million as business has taken off.

A Rio runs. Is it through?

So, this raises the question I’ve been toying with for a few months now: Has Rio Nuevo outlived its usefulness?

The district isn’t set to expire until 2035. Should it just go away, when the time comes?

I’m coming down on “no” and I’ll start with a totally cynical reason.

I don’t want the Legislature to get its grubby mitts on one more single dime of Tucson-made sales tax revenue than is legally required.

Seriously, lawmakers only want to cannibalize it for tax cuts and giveaways to the rich. Brophy College Preparatory kids now get a subsidy as part of the universal voucher system. Awesome. The spoiled brats I went to college with needed even pricier cars to have shoved in our faces.

The Legislature is reducing the amount of state-shared sales tax revenues with local governments. Tucson is expecting to lose $27 million in state money in the coming years. 

Stay away. It’s ours. You can’t have it, Mr. State Lawmaker.

Ummm. OK. Actually, the Legislature can remove the tax increment financing district from the books and make whatever the hell law it wants on the subject.

Crap.

So let’s come up with another reason – one they can understand.

Open for business

This is economic development of the smart variety. It’s helping launch, expand and retain local businesses. Economic development too often exists in the popular zeitgeist as efforts to catch a whale. Land a massive employer to pay thousands of workers great salaries, so long as they don’t dirty up the air or water.

Well, I want a pink and polka-dotted pony that sneezes fairy dust.

If Rio Nuevo provides help to five businesses a month and those stores create 10 jobs a piece, then that’s 600 jobs a year in a single strip of Tucson’s geography.

That kind of work doesn’t come with banner headlines or photo ops with giant scissors or golden ground-breaking shovels. Retention and expansion work is the day-to-day slog required to improve a homegrown economy.

Would I prefer efforts to foster higher-paying jobs than restaurant and retail work? Sure. But losing those jobs is a worse outcome in a time when businesses can struggle against the Bezosian Empire.

“Retail is down all over town,” McCusker said. “It’s up Downtown.”

Something is working.

Rio Nuevo at some point became synonymous with a Democratic boondoggle. I’m not going to parse this, but it’s only partially the case.

Voters approved Rio Nuevo the same day they elected Republican Bob Walkup as mayor. Both wins were seen, at the time, as victories for the business community and the local GOP.

I know this because the next day, I was ordered to write a story called “Tucson: Now Open for Business.” Conventional wisdom read Rio Nuevo as a setback for the environmental community, but no one actually told me that when the reporting started.

One pitch to the Legislature would be “it’s a smashing Republican success.” 

Sometimes the best method of persuasion is to keep convincing someone they were right all along.