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A Realistic Deal to Reopen the Hotel Arizona

Credit: Arizona Daily Star

By Tim Stellar for Arizona Daily Star

Eleven years ago, it felt like a grand redevelopment of downtown Tucson’s convention-center hotel was imminent.

It was a $185M deal with the city to redevelop the Hotel Arizona, at 181 W. Broadway, which had recently dropped its Radisson branding. The existing hotel would be renovated, and new 16- and 22-story towers would be built in what was ostentatiously dubbed Diamond Rock Plaza.

That plan went nowhere. But in the next few years, a new, more elaborate deal made it all the way to the City Council before withering. That $190M plan for a new Sheraton hotel on the site would have involved the city selling tax-free bonds and guaranteeing revenue.

The city wisely decided not to expose itself to that risk. Now, with a new deal to renovate the hotel pending, we’re seeing how smart a choice that was.

Tucson’s smart decision brought blowback, though. In 2010, developer Humberto Lopez initiated a short-lived recall effort against two members of the Tucson City Council and the mayor.

Worse, as the recession’s effects lingered on, in 2012 HSL Properties closed the Hotel Arizona. As run-down as that hotel had become, that meant there were no longer any hotel rooms next to the Tucson Convention Center.

Over the years HSL has made overtures to the city about a new deal, Councilman Steve Kozachik said. They continued to involve putting city money or credit on the line.

Until now. Thanks to those years of resistance to massively subsidized deals, we’re finally down to a bare-bones project.

The Rio Nuevo Multifacilities District has approved a new deal that would get the hotel reopened.

It’s a relatively simple deal, in which HSL would do a $20M renovation of the hotel and reopen it. It will be a Hilton brand, probably a Doubletree.

In exchange, HSL is asking for a pretty standard set of incentives.

The GPLET is a program under which a project’s tax burden is reduced by transferring title to a government entity, which leases it back to the private owner. The owner pays an excise tax instead of the usual property tax, and even the excise tax can be eliminated for the first eight years.

HSL is also likely to ask for incentives that the city of Tucson provides to those redeveloping properties in downtown Tucson and adjacent areas.

Read more at Arizona Daily Star.

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