The Rio Nuevo District Board will hold a meeting Monday October, 22, at 2:00 p.m. to discuss the progress of audits and recent settlement negotiations with the City of Tucson. The meeting will be held in room 222 at 400 W. Congress Street.
According to the public notice, “The focus of this meeting will be an update on conversations with the city of Tucson, bond proceeds, administrative rules, an audit update and preparing for the annual audit. All of these steps are important in order to advance any development project and are more than just housekeeping.”
“We expect the meeting to be all encompassing, touching in public on many of the deal points that have prevented the District from downtown development, including Notice to Proceed, disputed property title, bringing the audit work initiated by the Bain board to complete resolution, how to deal with the 2008 bond funds and how to resolve our internal audit challenges, said Chair Fletcher McCusker. “We are functioning as a consensus board, both old and new members, and have relied extensively on legal advice during the conversations with city. We expect a long meeting but hopefully one that is remembered as breaking the log jam.”
The District has been fighting with the City of Tucson for years as the City used the District’s tax revenue to offset its own budget and forward its pet projects. Two years ago, the Arizona Legislature wrestled control away from the City, and a new Board was installed. That Board has ordered audits to be performed in order to ascertain where $230 million of the taxpayer’s monies went, and lawsuits to recoup their losses.
According to the District Board the last two years the District has had only a qualified audit. “Independent auditors were not comfortable with the accounting and procedures in place in order to issue an unqualified opinion. One of the reasons for the past qualified opinion is the treatment of construction in process assets, where the District has claimed a value in properties it has invested in but does not own.” The District is hoping to earn an unqualified audit which is very important to its credit rating. CFO, Bill Allen, will update the board and public on the financial condition of the District and the work being done in preparation of the audit.
“We have acted in good faith on behalf of the public, on behalf of the taxpayer, in this difficult negotiation process. We have sought more power to complete the audits, and more oversight from the legislature,” said watchdog Board member Alberto Moore. “We could continue with the lawsuits, but that ultimately will not serve the public and will not serve to bring those responsible for the past waste, fraud, and abuse to justice. We will call on the legal authorities, once again, to complete their investigation and pursue legal action against the guilty.”
The ongoing forensic audits will be addressed by Susan Vos at Monday’s meeting. For the past two years, the City has delayed and denied access to many materials required to make a complete audit. Recently, under the leadership of Mayor Jonathan Rothschild, the City has been more forthcoming in materials. Due to the City’s deliberate efforts or incompetence the audits continue to drag on.
The 2008 Bond proceeds, one of the most controversial issues for City Councilman Steve Kozachik, whose false claims gave him ammunition against the watchdog District Board, will be discussed by the Board. Kozachik has claimed that the District Board sat on the bonds waiting to let them expire. Former Board member Jodi Bain has reported for months, that in fact, the District was not even aware of the bonds until the first of the forensic audits revealed them.
In 2008 the District issued $80 million dollars of tax exempt bonds for a variety of downtown projects. Some of the resulting proceeds remain unexpended.
Bain, Alberto Moore, and Jeff Hill proceeded with caution and sought counsel on whether the monies could be used despite Kozachik’s constant demands and insults. Counsel will update the board on the expenditure of the remaining funds on the 2008 Bond projects at the meeting.
The Ruo Nuevo District Board will be asked to ratify a commercial appraisal of the TCC in preparation for the audit in order to assess if the assets have been impaired. This is expected to cost approximately $5,000.00.
Controversy recently erupted when emails between McCusker and Rothschild were sent out anonymously to various news sources including the AZDI two weeks ago. Those emails contained preliminary negotiations between Rio Nuevo and the City of Tucson. While McCusker had been authorized by the Board to enter into the discussions some questioned the fact that negotiations were being conducted with the City at all. They prefer to have the lawsuits proceed and want negotiations to be held in public.
According to an article in Inside Tucson Business, City Councilman Steve Kozachik said he was glad to see the two parties trying to hash out the dispute outside of a courtroom, but was concerned the public would view it as a backroom deal. “We’re too close to getting this relationship on solid ground to be leaving even the perception of impropriety in peoples’ minds,” Kozachik said.”
However the District Board began negotiations under the Bain board and has worked to settle the lawsuits with the City of Tucson for months. The arbitrator requested that negotiations be conducted in private according to Bain. The Board will meet in Executive Session to determine if the terms agreed to between the city and the District are acceptable. The District has demanded that those terms include a cash settlement, and more power to demand materials required to do complete forensic audits.
According to the Board, “If the District board concludes that the negotiations with the city led by the Chairman and counsel are near complete the board may opt to release the terms and take public comment.”
The public will be able to address the Board in the Call to the Audience.
Related articles:
Rio Nuevo audit “res ipsa loquitur”
Moore and Hill reveal the truth about Rio Nuevo (transcript)