The District 22 Metro Councilman filed a nonbinding resolution, which stated it was Council’s intent to not use bonds backed by property taxes, which general obligation bonds essentially are.
Eventually Mayor Karl Dean’s administration amended a piece of state legislation, which authorized the creation of a new Convention Center Authority, to state that Metro would not use a property tax pledge to back bonds issued to finance the estimated $635 million project.
But before that happened, Crafton filed a memorializing resolution stating, “That the Metropolitan County Council hereby goes on record as expressing its intent that the proposed downtown convention center and convention hotel be funded solely by revenue bonds that are not backed by the full faith and credit of the Metropolitan Government. Specifically, the Council desires that a Convention Center Authority be created to issue the bonds, and that revenue bonds, as opposed to general obligation bonds, be used to construct the convention center and hotel.”
Crafton withdrew his resolution before it was voted on by Council, but before doing so he explained Metro should only use revenue bonds, which would be derived exclusively from revenue streams created to fund the project. Metro Council created a series of tourism taxes and fees, along with a surrounding Tourism Development Zone, to pay for the proposed convention center.
“My thought process was if this is a good deal, then the revenues from the project should be able to pay for the project, not our property taxes,” Crafton said in February. “So what I’m asking is that the Council go on record and say we can support the convention center but if and only if the revenues from this convention center and associated activities can pay for the construction of the convention center and all the upkeep.”
However, the Dean administration has filed a new resolution to officially create the Convention Center Authority, which would oversee development of Music City Center. Crafton said he was against creating such a board, because it would effectively block a potential voter referendum on the convention center.
Voter referendums are possible for projects using general obligation bonds, but Metro has already committed to not do so by way of the new state law.
“The only fiscally responsible way to finance this project is with general obligation bonds and they’re not going to do it because they’re afraid of a referendum that they know has a better than 50 percent chance of failing,” Crafton said earlier this week, pointing out that the debt service for general obligation bonds would be about $10 million cheaper annually than for revenue bonds.
Crafton said he plans to oppose the administration’s resolution to create the Convention Center Authority.