Convention center revenue stream in question

Thursday, December 31, 2009 at 10:22am

Metro’s hotel-motel tax is fueling more debate on the proposed $585 million Music City Center, with project opponents maintaining its revenues could be spent elsewhere and proponents arguing the dollars are inherently tied to a new convention center.

Kevin Sharp of Nashville’s Priorities, an advocacy group that opposes building Music City Center, believes proceeds from Metro’s hotel occupancy tax, half of which is dedicated to a new convention center, could be used for other purposes, potentially by changing a state law that outlines the way the city must use those funds.

“I’m not saying we take that money and go, ‘OK, we’re going to put it into sidewalks in some particular part of town,’ ” Sharp said. “Using the dollars to boost tourism here is an admirable thing to do with it. I’m just saying it doesn’t have to be a convention center.”

But Walt Baker, CEO of the Tennessee Hospitality Association –– an ardent supporter of Music City Center –– sent a letter to Council members Tuesday that called redirecting funds “fiscally irresponsible” and a breach in trust with the hotel industry, a group he claims has supported the tax since it was first enacted more than three decades ago.

“If anyone is looking at the hotel occupancy tax for revenues to fund initiatives other than those specifically legislated, and without involving the hospitality industry in those discussions, we suggest they look somewhere else,” the letter reads.

Under Tennessee state law, municipalities can levy taxes on occupants at hotel and motel lodgings to collect proceeds for tourism development. The rate in Nashville, which has changed over the years, currently stands at 6 percent, 3 percent which would help pay off an estimated $40 million annual debt service to build a convention center south of Demonbreun Street under a finance plan put forth earlier this month by Mayor Karl Dean. (The project would also collect money from a $2 hotel room tax, rental car taxes, an airport taxi and departure tax and sales tax from a tourism development zone.)

With the state’s authorization, Metro’s hotel occupancy tax is currently allocated in the following way:

  • 2 percent is designated for the direct promotion of tourism, which funds a contract Metro has with the Nashville Convention & Visitors Bureau
  • 1 percent is deposited into Metro’s General Fund
  • 2 percent is to be “maintained … exclusively for the purpose of modifying, constructing, financing and operating a convention center,” which currently supplies a $7.4 million subsidy to the Sommet Center/Nashville Predators. Under the proposed finance plan, this would be reallocated to the Music City Center.
  • 1 percent is reserved for “tourist related activities,” which currently funds organizations such as the Adventure Science Center and Country Music Hall of Fame. Under the proposed finance plan, this would also be reallocated to the convention center.

“Two percent of the 6 percent tax is specifically allocated to the convention center, with an additional percent being eligible for use toward the funding of a convention center,” Metro Council attorney Jon Cooper wrote in a legal opinion last month. “Thus a state law change and Council ordinance would … be required to use this 2 percent for purposes other than ‘modifying, constructing, financing and operating a convention center.’ ”

Given the tax’s broad aim to fund tourism development, Sharp said he isn’t sure allocating revenues for uses other than the convention center actually requires changing the law, but added, “it can be done.”

“I’ve talked to a couple of folks in the General Assembly, who just go, ‘We just want to know what Metro wants to do,’ ” Sharp said. “So, there’s not any magic going on over there. They’re creating those laws and what the money gets spent for based on what Metro has asked them to do. So, if the Council asks them to change it, they will change it.”

Asked if adjusting the law could gain traction, state Sen. Joe Haynes (D-Nashville) –– who openly supports the convention center –– said “absolutely not.”

“I don’t know how they’re going to change it,” Haynes said. “It would be affecting Davidson County. I can’t speak for Sen. (Thelma) Harper, Sen. (Douglas) Henry or Sen. (Jack) Johnson, but I wouldn’t be in favor of it.”

But Councilwoman Emily Evans, a critic of the Music City Center, pointed out that while it’s true some of the tax streams are specifically set aside for the convention center, one penny on every dollar could continue funding the Sommet Center, while another percentage point is simply reserved for “tourist-related activities” and could benefit the city’s parks, the Nashville Zoo or the Schermerhorn Symphony Center, for example.

“That’s clearly legal and appropriate,” she said.

“I wish (the Tennessee Hospitality Association) were as energetic about raising revenue for other purposes except the ones that serve their self-interests,” Evans said. “We’ve got a lot of needs in this city.”

12 Comments on this post:

By: modern4life on 12/31/09 at 12:31

I just love how the title for this article, "Convention center revenue stream in question" is immediately followed by the headline, "Prosecutors say despite safeguards, financial scams remain prevalent"!

By: idgaf on 12/31/09 at 12:48

This elephant is going to cost closer to a billion then the 585 they are saying.

Remember they droped the guestimate by 100 million when they met resistance.

By: JeffF on 12/31/09 at 2:12

There is apparently a two to three month delay between my keyboard and the minds of government leadership. I suggest looking at the MP&F invoices and it takes 3 months before a journalist finally does it. Would have taken longer to have an elected official do.

I have no doubt in my mind that a semi-outside representative like Jack Johnson would carry the load on the necessary retasking of these revenue streams. I also thing Henry would be happy to introduce the measure if that is what the council requests. The others still worship at the false altar of "What is good for downtown is good for everyone." The state representatives do not write these bills they introduce on behalf of the local boards, it is a courtesy.

It would be fun to see the court rule in favor of a binding vote then have the elected representatives try to hold the pot of money on behalf of the tourism overlords until they can find a way to sneak around our intent. How do you go on record doing that?

Still three weeks until the mayor shelves this project rather than risk hearing from the public.

By: JeffF on 12/31/09 at 2:58

I am sure that the convention center proponents would not make the grisly mistake of openly admitting to owning our delegation to the state capital. That would be too funny. They have worked too hard not admitting to which council members they have in their hip pockets to blow it on the this.

By: Floyd2 on 12/31/09 at 4:05

Jack Johnson is really a Williamson County senator. He has no clout in the Davidson Delegation. Sen. Henry is a strong support of Mayor Dean's. He won't go against the project.

Kevin Sharp is a liar. He has no support in the Davidson Delegation to change this law, especially since Joe Haynes opposes him. This move is dead.

By: JeffF on 12/31/09 at 5:55

Interesting that you would say that. To get things passed in the New Tennessee Senate and House one does not need to be a friend or support of Dean but a Republican. Johnson is a Nashvillian, representing a few thousand other Nashvillians, and is a member of the party in control of both houses. I would think that he could not care less what the Mayor and Old Man Haynes wants if the people of Nashville decided they wanted this changed regardless of the foot stomping by the "leadership".

By: JeffF on 12/31/09 at 5:57

I would think that the rest of the Republican state reps and senators would probably enjoy taking a toy away from our Democratic mayor if the majority of Nashvillians wished it.

By: TITAN1 on 1/1/10 at 7:26

Not sure who is dumber, diehard democrats or diehard republicans. Neither one can actually think for themselves. Common sense escapes both.

By: Floyd2 on 1/1/10 at 10:11

Only a blind partisan would argue that Johnson would screw one of his counties just because "the Republicans" would want to screw Nashville's Democratic mayor. Maybe that's the silly garbage you see in Washington, DC, but Jack Johnson isn't that irresponsible.

Bottom line, no one in the Davidson County delegation will support this unless the mayor and the Hotel Association support it. The MCC opponents are simply throwing around more lies.

By: idgaf on 1/1/10 at 11:28

5 councilman are going to hold a meeting thurs the 7th at 7 pm at the hERMITAGE pRECIENT.

Is that place big enough?

By: JeffF on 1/1/10 at 8:41

There is a bi difference between "screwing a county" and screwing the leaders fighting their own constituents. If the people of Nashville want to reprioritize the use of these revenue sources then they will be the ones getting screwed when the mayor and the hotel lobby chooses to ignore them.

Right now it looks an awful lot like convention center proponents are desperately trying to hold back the majority barbarian horde using as many PR and procedural tricks as possible. They know that hearing from the public officially means this thing dies. But they also know they need the fiscal backing of the people they need to keep silenced. The mayor will shelve this project in a couple of weeks in order to let things cool off and to hopefully find a way to make these things pure revenue bonds. If he pushes too hard now he will permanently lose. If he retreats he can keep the revenue streams coming in from going to important government services thus keeping his bosses happy. If he pushes then there will be courts throwing out the Tennessee state interpretation of "moral obligation bonds"and opening the door for a referendum and then having the state reps read what the citizens want with these revenues. A withdrawal also means keeping the land and not allowing anyone to touch it that he does not approve.

By: govskeptic on 1/5/10 at 7:50

Just because the proponents got such a head start on the opposition doesn't
mean their facts are right or the cause as popular as they would like for
everyone to think. The difference between what and size of conventions
a new MCC will bring and continuing to use the existing one is much more
marginally than the proponents want to happen. I suspect that all these
new taxes will in fact drive the non-convention regular tourist to stay and
eat on the fringes outside of Davidson County. This "Brand" that keeps
being thrown around only goes so far. Someone convinced our neophyte
Mayor that it's as popular as "Disneyworld or Las Vegas". "Build it and they
will come" may have worked for Kevin Costner but won't work for our
good city!