The new Rio Nuevo Board agrees substantially with a state-ordered audit of the downtown redevelopment district released in October, the board's response to the auditor general said.
Rio Nuevo had until December to issue its response to the state audit, which found that Rio Nuevo was beset by mismanagement and a lack of financial oversight and internal controls that led a majority of its projects to remain incomplete despite more than $230 million being spent.
The $320,000 performance-type audit conducted by Crowe Horwath of Los Angeles for the state auditor found much of the Rio Nuevo money has been spent on planning or projects that stalled. Money also went to projects that - while not illegal - were not in the spirit of the tax-increment financing district's mission, the audit said.
In addition, the city's financial record-keeping was disorganized, making tracking the spending nearly impossible. The audit's findings mirrored those made in Arizona Daily Star investigations of Rio Nuevo over the past three years.
Key findings in the audit include:
• Rio Nuevo completed only two of the 15 projects listed on the 1999 ballot - the Fox Theatre and the Presidio wall.
• More than half of Rio Nuevo's projects are incomplete or on hold.
• The city's Rio Nuevo financial data on projects was "abbreviated, incomplete and confusing."
• Money was spent on projects that were not compliant with Rio Nuevo's mission.
• The city reimbursed the University of Arizona expenses related to a proposed science center that were questionable and not allowed by state law.
• The city charged Rio Nuevo excessive interest rates for the district's unpaid loan balances.
• The previous Rio Nuevo board failed in its financial oversight.
The new Rio Nuevo Board - which was appointed by the state in early 2010 after the Legislature stripped the city of control of the project - said it substantially agreed with audit.
"Specifically, the audit sets forth an excellent blueprint to the past of this TIF district for the city and the state, and should be reviewed closely by both parties," the response said.
The response either agreed with or listed how the Rio Nuevo Board was trying to comply with the 11 recommendations made by the auditors.
However, the response said there were several areas the audit did not cover that the Rio Nuevo Board would like to see addressed.
Some of those areas the board wants addressed included:
• How the city's required matching of the district's funds are calculated.
• A comprehensive accounting of Rio Nuevo spending to include hard capital expenditures, soft costs and administrative costs.
• How the 2008 money from a bond issue was allocated, used and expended.
• A review of the spending and contracting on the proposed convention center hotel, Tucson Convention Center expansion and new parking garage.
• How and why certain invoices were paid and approved by the city even though the Rio Nuevo district was not a party to the contracts at the time. Rio Nuevo was previously run as a department of the city rather than an independent district.
Contact reporter Rob O'Dell at 573-4346 or rodell@azstarnet.com
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