The Rio Nuevo Board, which oversees a voter-approved development district to bring jobs and investments to Tucson, has authorized the finalization of a lease deal with Caterpillar's Surface Mining & Technologies Division and approved Sundt Construction's start on Cat's new headquarters. The Rio Nuevo Multipurpose Facilities District board on Monday voted unanimously to issue a site mobilization notice to proceed.
The Rio Nuevo group is spending $4.8 million to clean up the existing landfill on the site located west of Interstate 10 in downtown Tucson.
A spokesperson for Rio Nuevo said the new Cat headquarters should bring 600 additional jobs to the area. Cat announced in 2016 some employees will come from other company locations such as Milwaukee.
The draft lease between Caterpillar and Rio Nuevo, who paid $7 million to acquire the title to the property, has not yet been signed. Rio Nuevo's attorney assured the board that the 25-year lease would be signed by Caterpillar with a guaranteed interest rate of no more than three percent for the first ten years. The draft lease says Rio Nuevo will issue lease revenue bonds for the $43 million and Cat will pay the principle.
Caterpillar has requested Rio Nuevo to take necessary action for Cat to qualify for Government Property Lease Excise Tax (GPLET) which would require a signed lease between the two parties and a certificate of occupancy by March 1, 2019. If granted by the Tucson city council, Cat's excise tax responsibility would be abated or eight years. Arizona does not have a property tax on government-owned property and instead levies an excise tax based on the property's square footage. In the draft lease, Cat wants Rio Nuevo to reimburse the company if the CPLET is not granted by the city.
Both the lease and GPLET action will be voted on at the next board meeting.