Rio Nuevo is considering funding renovations for two emerging wellness businesses as part of an effort to diversify its revenue sources. However, recent budget constraints have prompted board members to take a more cautious approach before moving forward with any decisions.

Rio Nuevo is a state-created tax increment finance district that reinvests a portion of downtown Tucson’s sales tax revenue into redevelopment and economic development projects. It is governed by a board of directors appointed by state leaders, which oversees how the district allocates funding.

During its Jan. 13 meeting, the board heard from Soleil Chiquette, founder of downtown spin and strength fitness studio Let’s Sweat, about her plans for expansion.

Chiquette opened Let’s Sweat at 439 N. Sixth Ave. in 2017. In 2024, an increase in the popularity of Pilates and a decline in spin memberships following the pandemic led her to open Friday Pilates in a neighboring suite.

Friday Pilates has a second location in central Tucson, and the three businesses now have about 650 members and offer 130 classes per week. They serve approximately 310 clients per day and employ 35 team members.

Chiquette plans to expand Friday Pilates’ downtown studio to include additional retail and exercise space, as well as a smoothie bar on the patio. Estimates for the total construction cost of the renovation are about $500,000. Chiquette is seeking partial funding from Rio Nuevo.

The entrepreneur emphasized the importance of community within fitness, particularly downtown. Chiquette said the new additions would attract a new demographic and encourage people to stay downtown longer, increasing foot traffic for nearby businesses.

“In my mind, more importantly than the numbers is the people that I bring downtown. You’ll see people everywhere, and it’ll be a sweet community feel,” Chiquette said.

The board also heard from Jaqueleen Larson, who presented another wellness-related proposal.

Larson’s proposal, El Ritual, is a social wellness studio focused on contrast therapy, sound, breathwork and meditation. Like Friday Pilates, Larson said her goal is to draw new foot traffic, complement neighboring businesses and give back to the community.

“El Ritual is my love letter to Tucson and the women who raised me,” Larson said.

El Ritual’s signature experience would be a 60-minute ritual beginning with a 10-minute check-in. Clients would leave their phones in lockers, change into robes and set an intention for the experience.

Participants would then alternate between a sauna, cold plunge, warm plunge and infrared heated room for 30 minutes, followed by 15 minutes of intention-driven guided breathwork and meditation.

The experience would conclude with an affirmation and time to relax in a lounge.

El Ritual’s projected revenue streams include drop-in rituals and memberships, wellness merchandise and a market featuring functional beverages. The studio is projected to generate between $600,000 and $1 million annually in taxable gross receipts.

The business would be located at 401 N. Toole Ave. in downtown Tucson. With its current occupant, Salon Salon, planning to downsize, El Ritual would take over one of its rooms.

Larson is seeking $200,000 in funding from Rio Nuevo to cover hard construction costs, which represents about 36% of the total build-out cost.

While board members responded positively to both proposals, much of the discussion focused on funding challenges amid Rio Nuevo’s current financial situation.

Rio Nuevo Chief Financial Officer Dan Myers said 2025 was a difficult year for revenue. From January to October 2024, the district generated about $16.5 million, compared with $15.1 million during the same period in 2025.

After accounting for funds already committed to projects, Myers said Rio Nuevo has about $4.4 million in available cash for the coming year.

“There’s no reason to be overly alarmed, but everyone needs to realize that we have overcommitted and we need to readjust some of our thinking in order to make sure that we never find out that we get a bill in the office and we can’t pay it,” said Rio Nuevo Treasurer Chris Sheafe.

Board members said Rio Nuevo has not typically invested in wellness businesses because service-based models do not always generate direct sales tax revenue.

“Our job is to create incremental sales tax. If there’s an issue and we don’t create sales tax, then we’ve actually misplaced our money and our energy,” said Chairman Fletcher McCusker.

The board questioned Chiquette and Larson about their plans for generating sales tax revenue. El Ritual is projected to generate $290,363 in transaction privilege tax over four years, enough to repay the requested funding with interest.

With the addition of retail space and a smoothie bar, Chiquette said she expects sales tax revenue to increase.

No funding decisions were made. The board plans to revisit the proposals at its next meeting, which will also include discussions about managing Rio Nuevo’s evolving financial capacity.

Ahva Ghazanfari is a University of Arizona student and Tucson Spotlight intern. Contact her at ahvanghazanfari@arizona.edu.

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