Rio Nuevo Commits $2.5M to Friedman Block, Extends Children's Museum Deal to 2029

Rio Nuevo Commits $2.5M to Friedman Block, Extends Children's Museum Deal to 2029

The Rio Nuevo Multipurpose Facilities District board approved a $2.5 million investment package for the Friedman Block development and voted unanimously to extend the Tucson Children's Museum agreement through May 2029 at its Aug. 25, 2026 meeting, while hearing discussion-only presentations on Empire Pizza's permit struggles, the El Ritual spa's extension request, and a proposed nightlife venue at 121 East Congress.

The board took up the Friedman Block item at the top of the meeting, ahead of its customary executive session — a reordering Chairman Fletcher McCusker attributed to a board member's schedule. Recapping the deal, McCusker said it commits $500,000 in immediate cash to developer Grant Krueger plus a rebate capped at $2 million. He said the developer characterized the project as a $17 million development with $6 million in equity already committed and parking arrangements in place. At board member Corky Poster's urging, the board attached two deadlines: a development package must be submitted within 90 days of project approval, and a building permit must be pulled within 75 days after that.

The district's financial picture is constrained. CFO Daniel Meyers reported $3.8 million in operating accounts as of July 31, with $713,000 reserved for debt service, leaving roughly $3.1 million available. Projecting $265,000 in monthly net revenue — up from $240,000 after a debt-service reduction on 2019 bonds from $737,000 to $712,000 — Meyers estimated $6.3 million in available cash over the next 12 months against $4.6 million in near-term commitments, a margin he said narrowed further with the $500,000 Friedman Block cash commitment. Fiscal year 2026 transaction privilege tax revenue is tracking at approximately $16.4 million, down from $19.2 million in fiscal year 2025, a shortfall of $2.8 million. The district's bank has committed roughly $700,000 in project-specific assistance. Meyers also noted the district has granted more than $50 million in rebates since inception, some of which will never be fully paid out given revenue levels.

The board voted unanimously to extend the Tucson Children's Museum economic benefit agreement through May 2029, the project's target construction completion date. Museum executive director Hillary Van Alsburg told the board the extension is needed to finalize interior and exterior construction plans for the Carnegie Library building, which carries historic preservation requirements, and to allow sufficient time to raise construction funds. Staff noted there are no interim milestones in the agreement. A board member moved approval; Chairman McCusker confirmed the vote was unanimous.

Empire Pizza's fourth extension request — needed before a Sept. 1 deadline — remained discussion-only. Staff recounted a three-year timeline of failed exterior design submissions to the city's historic preservation office, three prior board-approved extensions, and a permit finally filed in late July. An architect representing the project told the board the current plans have been informally reviewed by both the state historic preservation office and the city and are expected to maintain the building's contributing historic status. The board indicated it would consider a one-year extension as an action item at a future meeting; the chairman confirmed the extension would cover the expansion into the adjacent former Hydrospace property.

Tucson natives Fernando Minjarez, his brother Rafael Geovanny Minjarez, and Hector Marin presented their proposal for 121 East Congress — the long-vacant former Zen Rock nightclub — as a discussion-only item. Their LLC, Eleven Eleven Tucson, is seeking $355,368 from Rio Nuevo toward a total construction budget of $760,737, with the owners contributing $50,000 upfront and financing the remainder privately. The five-year revenue projection totals approximately $39.5 million in sales, with an estimated $1 million in direct city TPT returns over that period. The board did not vote. McCusker said the district would want to see a verified contractor bid, documentation of funding capacity, and a discussion of whether assistance should come as cash or rebates rather than an upfront payment.

Also discussed:

• El Ritual, the downtown bathhouse-spa project, is roughly 75% complete, with a grand opening planned for October; the operator — absent, her slide presentation given for her — is requesting an extension to Nov. 30 as a cushion, which the board said it would take up as an action item at its next meeting. McCusker said the spa has sold 70–80% of its founding memberships.
• McCusker noted ongoing interest in the Sunshine Mile, the former TUSD building, and unspecified hotel projects, and referenced a county-related redraft expected by the next meeting.