Mayor hitting the road to pitch convention center bonds

Thursday, April 1, 2010 at 11:45pm

If all goes as planned, by the morning of April 21 “some $600 million will be wired to a bank account,” and Nashville will have capital to bankroll its new convention center.

That’s how Metro Finance Director Richard Riebeling describes the culmination of the next three weeks, as the mayor’s office prepares to hit the road to meet with investors interested in purchasing bonds to fund the $585 million Music City Center.

Debt service accrued from the four different series of bonds are to be paid off from a combination of fees and taxes that target tourists, a plan approved by the Metro Council in January.

Addressing the nine-member Convention Center Authority on Thursday, Riebeling said the bond issue — in the form of a 256-page preliminary offering document — was finalized Tuesday and has been sent to investors. The bond offering, underwritten by Goldman Sachs Group, is featured on a Web site that’s been made available to investors.

“That is out in the marketplace now,” said Riebeling, adding that 15 to 20 major investment firms have already linked to the site.

But the real sales pitch for the bond issue begins next week, as Riebeling, Mayor Karl Dean and others fly to New York, Philadelphia, Boston and perhaps Chicago to visit several large firms that could be in the market to purchase Music City Center bonds. Meetings will also take place via telephone.

“Our financial advisers think because of the size of the deal — it’s a little unusual because of the structure — that we ought to go meet with them individually so they understand the importance of the deal and to really explain the structure, so they get comfortable with it,” Riebeling said.

Earlier this week, Dean and Riebeling sat down and produced a 20-minute audiotape in which the two summarize the convention center project, offer some insights into Nashville and discuss the financing timeline.

“It just gives [potential investors] a little more flavor for the deal,” Riebeling said of the tape.

By April 12, a retail order period will begin, which officially allows investors to buy $27 million worth of tax exempt bonds. The project’s taxable-bonds are to be priced the next day. Formal closing on the sale of bonds should come by April 21.

“I have confidence we’ll have a very successful sale,” Riebeling said.

At Thursday’s meeting, the Convention Center Authority also unanimously voted to set a guaranteed maximum price of $415 million for construction to be carried about by the joint team of Nashville’s Bell & Associates Construction and Bethesda, Md.-based Clark Construction Group.

“This means the construction of this project is locked in,” Riebeling said.

19 Comments on this post:

By: MusicCity615 on 4/1/10 at 11:33

Great! Hope the offering goes well.

By: dnewton on 4/2/10 at 4:14

Anyone who thinks that a construction project can be guaranteed with respect to maximum price lacks experience in construction and the law. That could mean that the project already has 20% fat in it or it means that both parties have highly accurate crystal balls.
Generally speaking it is not wise to ask the contractor to become your insurance company also. Courts have let stand some pretty unfair contracts but once the result begins to benefit one party over the other, the law usually allows relief. Even if the contractor goes out of business trying to comply, I have never seen a contractors bonding company with an identical death wish. The result is a law suit with the bonding company that guarantees performance.

By: govskeptic on 4/2/10 at 4:33

There must already be some reluctance toward these bonds if
the underwriter "Goldman-Sachs" has already had to call out
for the Mayor to go on a roadshow to convince the reluctant
buyers. Usually there is a pre-subscription for most of these
type bonds if there is enough safety behind them!

By: TITAN1 on 4/2/10 at 4:57

When your screen name has skeptic in it, nothing else needs to be said.

By: idgaf on 4/2/10 at 5:20

May he fall on his face when he "hits the road".

By: TITAN1 on 4/2/10 at 5:30

Or your name could stand for "I don't give a ****" and then whine about everything.

By: trtay2004 on 4/2/10 at 7:15

Thank goodness we have a hard working mayor that strives to bring business into our city. Thank you so much Mr. Mayor!!!

By: Dragon on 4/2/10 at 9:39

I'll come visit Nashville when they get rid of the punitive "tourist" tax. It's bad enough when I have no choice but to stay the night.

By: gruntz on 4/2/10 at 9:50

Dragon is the proof in the pudding. The more you tax something the less you will get of it. The more you tax tourists the fewer will come here, convention center or no convention center.

By: producer2 on 4/2/10 at 10:06

This is an article published this week. Dragon is the exception to the rule. Nashville is doing just fine, thank you...

Wednesday, March 31, 2010, 2:51pm CDT
Nashville hotel rebound projected to outpace nation

The performance of Nashville hotels is predicted to outpace the national average in 2010, according to a report released today by PKF Hospitality Research in Atlanta.

Revenue per available room, or RevPAR, a key industry metric, is predicted to grow 3.3 percent in Greater Nashville. RevPAR is predicted to shrink 1.4 percent in the nation as a whole. Nashville’s growth will be driven by a 1.8 percent increase in revenue and a 1.5 percent increase in average room rates, according to PKF.

If the projections hold true, Nashville will see its first annual increase in RevPAR since 2007.

The RevPAR increase “currently forecast for Nashville is very similar to the 3.3 change forecast 90 days ago, indicating that local market conditions are stabilizing,” Scott Smith of PKF said

By: sidneyames on 4/2/10 at 11:20

: trtay2004 on 4/2/10 at 8:15
Thank goodness we have a hard working mayor that strives to bring business into our city. Thank you so much Mr. Mayor!!!

And trtay, when we, the taxpayers, have to pony up the "maintenance and upkeep" money to keep the convention center afloat, will you take up my slack and pay my portion.

By: producer2 on 4/2/10 at 11:06
This is an article published this week. Dragon is the exception to the rule. Nashville is doing just fine, thank you...

Yeah, producer, we are doing great, especially if you don't ask the low income metro school employees who lose their jobs; or ask the homeless advocates who are begging for help for the countless thousands who have lost their jobs. Oh, yeah, we're creating jobs. BETCHA the contractors and employees are not even 50% local.

YEAH, we doing just fine, as long as it's Karl's way.

By: producer2 on 4/2/10 at 12:00

One has nothing to do with the others, unless you expect folks from out of state to pay for your school system! YOU have never ponied up money for upkeep or operations of the Convention Center. It always comes out of the tourism coffers, Did you see a bill from Metro that says as much? When you know the facts and can post them here then we will talk. I provided you with an article from an out of State firm, not solicited by anyone from Nashville that shows a positive uptick in our economy. Leave it to you to make something negative out of it...

By: dnewton on 4/2/10 at 2:29

According to the latest construction numbers, manufacturing and lodging are taking the biggest hits and construction has rolled back to the 2002 level. If lodging construction falls, average room revenue should logically rise. I guess this means that not building the big anchor motel was a good idea because it raises average room rates? People with a choice will tend to go to places where the rates are not rising unless the incremental difference is worth the incremental cost.
The mayor trolling for bond money is somewhat similar to the governor going to jawbone the credit rating agencies to preserve the state's credit ratings a few years back. These are the same folks that said that Fannie Mae and Freddie Mac were doing fine. Once your credit rating creeps down, every activity accomplised with borrowed money will cost more including the basics like schools and pubic safety.

By: richgoose on 4/2/10 at 7:22

If the bonds are not tax exempt you can expect at least a 7.5% interest bearing bond. I the bonds are tax exempt you can expect at least 5% unless they are not insurable then you could get 6 to 7%.

By: JeffF on 4/2/10 at 7:26

this is what happens when an "industry" is incapable of supporting itself

Hard times send hotel industry into 'survival mode'

By: TITAN1 on 4/2/10 at 8:15

People the sky is not falling, Nashville will continue to thrive. Stop your whining about a done deal and get along with your lives. Some of you look for things you don't like then whine forever, Try being positive for a change.

By: richgoose on 4/3/10 at 7:18

Remember this people. You can get only about 2 to 2.5% interest at the bank and you have to pay income tax on that portion.

Now Karl Dean is going to sell his folly to the New York boys and ultimately to each of us. You can determine how ridiculous this CONVENTION CENTER is by how much interest will have to be paid to the investors, The higher the risk the higher the interest.

Keep your eyes on the interest rate that these bonds yield beginning April 21,2010.

The categories are (1) tax exempt portion (2) taxable portion (3) The portion that may be insurable.

By: slzy on 4/3/10 at 6:24

titan1 you seem to know everything.

how would you go about getting our schools in a position where they did not need uniformed police on campus?

By: govskeptic on 4/13/10 at 7:05

It's good to be skeptic when someone is guaranteeing a cost
maximum of $415 million on this project. The cost of the
Bridgestone Center was assured at 125 million, yet cost
was closer to 175 million. This type assurance is worth
about as much as a bucket ot spit!