Crafton: Convention Center Authority is attempt to avoid referendum

Tuesday, August 11, 2009 at 6:06pm

Metro Councilman Eric Crafton says he believes Mayor Karl Dean’s administration is pushing for the creation of a new board to oversee the proposed new convention center as an effort to avoid a voter referendum on the estimated $635 million project.

Crafton pointed out that state legislation created this spring and allowing Metro to create such a board included an amendment in which Metro promised not to use bonds backed by Davidson County property taxes to fund the Music City Center.

If Metro were to use general obligation bonds, which are backed by property tax collections, the project would be subject to a referendum. The Titans stadium, now called LP Field, went before voters in such a referendum and was approved.

“The reason they’re doing the Convention Center Authority is that if they can get that done, then it takes a referendum off the table,” Crafton said.

Dean officially announced on Monday that he plans to create the Convention Center Authority. The nine-member board will oversee the development of the Music City Center and would manage the facility upon its completion.

Dean aide and Metro Finance Director Richard Riebeling pointed out that it was always the plan to have the Convention Center Authority oversee the project. The Music City Center would then be one of the first major Metro projects not under the purview of the Metro Development and Housing Agency. MDHA oversaw the development of LP Field, the new downtown library and the current convention center.

The $635 million proposed project would be financed with revenues collected from the building itself and with tourism taxes and fees established last year by Council. A tourism development zone was also created and would allow Metro to collected incremental gains in sales tax collections from the three-square-mile radius around the project and return the gains to service the debt.

Riebeling said the administration would have a financing package in front of Council for approval in the coming months.

Crafton said he expects the Dean administration to present a financing package that includes a sales tax pledge — or a Metro revenue pledge of some sort — to back the revenue bonds issued to finance the project.

“And when the revenue collections fall short, which they will, then we’ll still have to raise property taxes to make up for the sales tax that we have to give to the convention center,” Crafton said.

The second-term Bellevue Councilman also said his preliminary research shows that the debt service on revenue bonds stands to be significantly more expensive than the debt service on general obligation bonds at this point. Crafton said his estimate is that revenue bonds would cost Metro between $8 million and $10 million more annually in debt service than general obligation bonds would.

“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.

23 Comments on this post:

By: tim4wsp on 8/11/09 at 7:57

“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.

Kind of like English Only?

By: idgaf on 8/12/09 at 12:23

Dean needs to stop spending our money on this folly until/unless we vote on this.

There is no way they are going to get revenue bond financing on this.

It is foolish to spend money on something that you can't do legally.

This one issue and the way he is conducting himself should defeat him for a second term.

By: nashbeck on 8/12/09 at 1:15

I will definitely vote for Mayor Dean on his second term. He is not spending our money. People probably think the Nashville taxpayers paid for the current convention center. Well, it was funded in the exact same way as the Music City Center will be funded, and it didn't cost us a dime.

Thank you Mayor Dean for taking the lead on this issue.

By: producer2 on 8/12/09 at 6:21

JeffF, are you Craftons MPF?

By: producer2 on 8/12/09 at 6:23

Has anyone actually seen JeffF and Crafton in the same room at the same time?

By: JohnBirch on 8/12/09 at 6:47

Even if it were true (and it is not) that the last convention center didn't cost us a dime, how does fit ollow that this one won't either?
You are tripling the size of the convention space but revenues have only increased by less than 50%.

By: producer2 on 8/12/09 at 7:37

Again I am not sure where your research comes from. The current center was BUILT entirely with the funds from the Hotel/Motel tax. 100% and finished payments early. There is a operations cost which is paid out of the fund as well and that is a separate yearly line item not tied to the actual building of the facility itself.

Second, I am not sure what you are referring to in that statement but it sure seems like it would be hard to come up with current figures since we do not have a facility in place to make that comparison. What is available is information that tracks lost business from groups who have asked the city for an RFP and could not make the current center work because of its size, etc. We also have commitments from several groups for the new facility which as you know has not even broken ground.

I would think it would be difficult for you to examine the response and demand for a new facility unless you work on the front lines in some sort of capacity. If you do then you already know how far behind we are in this regard.

By: on 8/12/09 at 7:51

Pardon me for asking, but the mayor and his administration appointing the board to oversee this project sounds like appointing the fox to guard the hen house.

By: producer2 on 8/12/09 at 8:14

Not really and actually it is done for most projects like this. For example there is a similar board for the Airport, the Airport Authority. They do pretty much the same thing. Currently passengers are taxed over and above the cost of their flights and that extra fee is paying for the airport renovation. The Authority is overseeing this project as well as all other aspects of the facility. Adding more people to visit the city via a new MCC will only help this and other facilities as well.

By: pandabear on 8/12/09 at 8:20

Here's producer:

"I'm in with the in crowd and what I say is the truth."
"You're not in with the in crowd, so you don't know what you're talking about."

What a joke you are.

It's our money that's being spent.
Dean wants to spend it without our ok.
He's already succeeded in swindling $78 million
without our ok. Now he wants to continue with these underhanded tactics.

That's what it's about. We want to vote on this.

That's it.

By: producer2 on 8/12/09 at 8:25

I am not saying that at all.Is that a misstatement about the Airport Authority? I am not opposed to anyone giving factual information that is opposite of what I am giving, go ahead...but don't be surprised if I have a different opinion or give a different perspective than you. I would think that is fair, I listen to yours...

By: JeffF on 8/12/09 at 9:01

Actually as an educated reader of the Metro CAFR I will tell you that operating losses of the current convention center were not paid entirely by tourism taxes. Also, the retirement and healthcare benefits of center employees and the CVB are done through Metro taxes as well. So the convention center has eaten far more than it has produced. It has eaten the tax reveneue it supposedly created (since as we have been told convention centers are the reason anyone stays at any hotel or motel in Nashville). Now it is proposed to eat even more of that revenue as well as new revenue from higher taxes and fees as well as all the sales tax growth in a 10 square mile area (regardless of whether it was the cause of the growth or not, I am sure the store owners way up on Jefferson are expecting big increase in convention related revenue).

I would wonder what type of city Nashville would be if the government got to use that tax revenue? A billion dollars in revenue sure would help a lot of struggling schools and put a lot of buses on the road. The state legislators would be fighting to submit that legislation is it gave them a photo opportunity. All a Nashville would have to do would be to stand up for what is right and submit the request to those state leaders. Any one of them would love to improve the schools for kids rather than build just another struggling convention center and hotel for a few tourists and a couple of hotel owners. Priorities, they are out of whack when someone considers a convention center a need instead of helping the struggling people in Nashville.

Why do convention center advocates want to hurt our children with all this waste?

By: nashbeck on 8/12/09 at 9:36

Convention Center advocates want to hurt our children??? First of all, before you make another ridiculous statement like that, please know that throwing money at a school system does not make it better. Washington DC pays the highest amount of tax dollars per student, yet its public school system is one of the worst in the country. It takes a whole lot more than $ to make a school system efficient. Probably the most important key to a successful school system is family involvement. We could have our schools in Nashville's most exquisite mansions, but if the parents don't enforce and encourage their kids that school is important, it's all a lost cause.

Please stick to the topic.

Build the convention center Nashville.

By: Time for Truth on 8/12/09 at 9:42

MCC will not only suck up needed money from other areas, but it will suck up virtually all the money going to other, often more worthy, tourist attractions. Including important attractions that not only reinforce the music city brand but provide entertainment to those of us who live here. This list was shown in an article in this paper several months ago. The current convention center takes approx 450k from the tourism tax budget, but we are looking at all of it going to the giant funny-looking albatross-currently about 14mil a year. Will building the MCC double that amount of collections and 'pay for itself ' ? Hahahahaha.

I am with Crafton on this one but if he doesn't even show up to vote on MCC issues he has little credibility with me. I hope he has better luck with this one than with EO and the Titans stadium (I didn't vote with him there on either).

Dean is likely to be toast politically if this folly proceeds as sleazily as it has so far, but I think he cares less. I saw him recently and he looked like he'd rather be doing anything than running the city. He'll also be much better off financially by returning to the private sector if/when he doesn't run again or he gets the boot from the voters.

By: JeffF on 8/12/09 at 9:54

So your saying giving money to schools would be a waste then? Schools will just waste money?

Just wanted to make sure that you are on the record writing that schools are wasteful and convention centers and corrupt development fiefdoms are not. You are on record as saying the city NEEDS this thing. This would be twice as funny (or tragic).

By: Time for Truth on 8/12/09 at 10:10

nashbeck is barely out of school himself, he may have bad memories of teachers who picked on him.

By: producer2 on 8/12/09 at 11:05

You people are such children, get a grip please. And JeffF please quit misrepresenting things that you know are not true.... for example the CVB has a contract to work for the city and it's employees are not hired by or work directly for Metro so that statement about their healthcare is false or twisted to offer only a small glimmer of possible truth.... as are most of your statements..

By: pandabear on 8/12/09 at 11:28

Jeff is right on with his statements.

Producer is an obvious plant for the convention center,
who only visits these blogs when the convention center
is in the news.

Put this to a vote. It's the people's money and it should
be voted on by the people.

It's not rocket science and it's not "inside info".

Convention centers have been losing money nationally for
over a decade.

This is the worst recession since the Great Depression.

We are at record unemployment.

This is the environment that brings out the scammers and swindlers.

Use common sense. Spend this money like it's the last money we have.

When Jeff says he doesn't want to hurt the children, he means he
doesn't want to put this incredible debt on their backs.

Only the builders and land swindlers will make money on this.

They wanted to defeat "English Only" because they need the cheap
workers to build this thing. It's all been planned out, it's happening right
under your nose, and it's going to happen if you don't wake up.

Wake up !

By: JeffF on 8/12/09 at 11:51

Didn't say they worked for the City Produceman. I simply said that they are covered under the city's pension and health insurance plans. As our the rank and file at the convention center. Quit throwing up dust. It is pretty clear what I typed.

By: JeffF on 8/12/09 at 11:56

Why do you want to steal money from the children Producer? What have they ever done to you to cause you to give large amounts of money to the fat cats at MDHA and the hotel owners? Do you not know that the children are our future? Improve their lives now and make Nashville a better city for everyone.

Why do convention center proponents choose their friends in the meeting industry over all of our children. Bring the money home and build a better foundation of schools. Don't waste money on an industry that will simply want an even bigger center in a decade or so. Give it to the Children. Call your state representative today and demand that they change the destination of the tourism capture taxes. The will want to help children more than drunken Shriners or podiatrists in town on a three day bender/convention. Ask your state senator why they hate children.

By: nashbeck on 8/12/09 at 1:39

JeffF, you're seriously acting like a 4th grader.
Pandabear, I agree that times are tough, but multiply our current unemployment rate by 2.5 and then we'll be at the record unemployment, 25% during the great depression.

JeffF, I will go on record and say if I had to choose between our public schools getting more community involvement, aka our families notified if their child is missing school or underachieving, making a family effort to correct this problem, better clarifying the benefits of an education, and better knowledge of how to get college grants


no community involvement, but throwing more money at the problem...
I choose community involvement without raising taxes.

DC is a perfect proof that more money does not equal better results.

By: slzy on 8/12/09 at 6:56

what would be wrong with saving up for the despicable convention center,and not borrowing money?

the whole thing is a wash anyway,because you can't believe anything in favor of it,because somebody paid them to promote it.

By: JeffF on 8/12/09 at 7:08

So your choice is not to give money to the schools. You really should have given yourself a 3rd option. Maybe say funding schools with special programs to help those kids without a willing or even capable parent. In your 2 option world the MCC gets funded and MFP gets paid for supporting the mayor.