DALLAS - Tucson's plan to refurbish its downtown with $454 million of bonds along with private capital is the culmination of a decade of planning for the project known as Rio Nuevo.
The City Council last week approved the financing, with $277 million of bonds expected to be issued by 2010 and the rest issued by 2014. The debt would be backed by a special sales tax that city officials expect to quadruple by 2025.
Financed largely through a sales tax-increment financing district, Rio Nuevo combines housing, commercial property, tourist attractions, and an expanded Tucson Convention Center linked to a new hotel.
The TIF district board expects to also leverage more than $1 billion in private investment.
Tucson voters approved Rio Nuevo in 1999, and the financing was authorized by the Arizona Legislature in 2003, with an extension passed in 2006. Some lawmakers complained about the city's inaction on the project. Rio Nuevo director Greg Shelko said that the approval of the bonds should be seen as a real step forward.
District officials say that earlier estimates of $500 million in sales tax revenues through 2025, the life of the district, were too conservative. They say actual collections will be closer to $961 million.
Some of the projects to be funded include construction of the Tucson Origins Project, University of Arizona Science Center, Arizona Historical Society Museum and Arizona State Museum, Tucson Arena, and others. Rio Nuevo is authorized to finance public improvements, infrastructure, parking, and attractions, while promoting private investment in housing and commercial activity.
The plan sets aside $65 million for the science center in 2009 and another $60 million in 2014. The arena's first $10 million would come next year, followed by $50 million in 2010 and $40 million in 2014.
The San Agustin Mission is scheduled for $3 million in 2008, $11 million in 2009, and $11 million in 2010. The Historical Society would get $3 million in 2008, $2 million in 2009, and $40 million in 2014.
The plan provides $10 million for the convention center hotel. Shelko said the convention hotel would also be financed separately through bonds backed by hotel revenues.
Projects already completed using the TIF funding include renovation of the Fox and Rialto theaters, the construction of El Presidio San Agustin del Tucson, the Tucson Convention Center box office, and a series of landscaping and environmental projects.
A four-mile-long modern streetcar is expected to arrive in 2011, connecting the University of Arizona and its Health Sciences Center to the Mercado District at Menlo and other attractions. The streetcar will be funded separately.
Tucson carries general obligation bond ratings of AA from Standard & Poor's, Aa3 from Moody's Investors Service, and AA from Fitch Ratings.
The Rio Nuevo district in 2005 issued $5.8 million of junior-lien excise sales tax debt for renovation of the Fox Theatre. Standard & Poor's upgraded the bonds March 26 to A-plus from BBB. Moody's rated a 2002 issue Aa3. The district does not carry a Fitch rating.