Opinion: The public doesn’t want MCC

Sunday, January 10, 2010 at 11:45pm
Mike Jameson

If public opinion polls by The City Paper, two television stations and a local union are any indication, the public opposes the proposed convention center. While financial costs may be a primary reason, equally significant costs are rarely mentioned.

There are clear financial costs.

A new center alone will require $585 million. An additional reserve fund of $45 million brings the total to $630 million. An adjacent hotel, described as “critical,” adds another $300 million-$400 million in public debt.

(And this assumes the center and hotel are built within budget.) Payments on principal and interest over 30 years will total $1.2 billion.

In 1987, Mayor Richard Fulton built the current convention center at a cost ($50 million) representing one-third what the city was generating in annual tax revenues ($150 million). He paid for 20 percent of it with federal grants; private investors paid for the adjacent hotel; and the center opened while the convention industry was booming. Compare that to a project that costs twice what the city generates in annual tax revenues ($450 million), has no federal grants, no private investors, and faces an industry in decline.

Nashville is currently $1.7 billion in debt. Large parts of that debt result from various non-essential amenities. Every year, we pay $10.2 million for LP Field (in part by charging a little extra on your water bill.) We also pay out $9.6 million for the arena, funded by property taxes. Then we pay additional cash payments of $7.3 million annually to the Predators. The current center costs $800,000 in yearly subsidies (and the new center’s estimated operating costs total $2 million-$5 million).

And what would we get for $1 billion? The administration’s consultant (HVS) suggests we’ll see 210,000 more “room nights” over the 5 million we see today, equaling 70,000 new overnight visitors — an improvement of 0.6 percent over the 11 million we already get. That’s right: 0.6 percent. (And an official Metro Council legal analysis projects the center will lose $2.6 million by 2016.)

Then there are redirected costs.

Financing the center would redirect $14 million we currently use to fund other things — like police overtime, MTA buses and the Predators’ subsidy. A year ago, The City Paper asked how Nashville could afford the center while continuing to fund such items. The administration’s finance director replied, “…[W]hen we come up with a plan to fund the convention center, we’re going to have to answer that question and show you exactly how it’s going to be laid out.” But when asked the same question after the funding plan was announced, the finance director replied, “We’ll deal with that after we deal with the whole budget process. I can’t tell you the answer.”

Then there are accuracy costs.

Center proponents urge support because the project would “bring a million new visitors to Nashville,” create “more than 30,000 additional jobs,” and bolster Nashville’s “second-largest industry.” But administration consultants estimate nowhere near a million new visitors — not even 3 percent of that. The “30,000 new jobs” claim over-estimated the official report’s number by 500 percent. (And really, when downtown only holds 45,000 people on any given business day, you have to wonder.) And if the convention industry is really our “second-largest industry,” somebody needs to tell the Bureau of Labor Statistics. It doesn’t even rank it in the top 10.

Of greater concern is consultant accuracy. Asked for examples of its projections in other cities, HVS cited Overland Park, Kan., and Schaumberg, Ill. Guess how convention centers in those cities are currently faring? (You don’t wanna know.) Last month, HVS acknowledged “mistaken” projection assumptions (totaling $3 million in hotel tax receipts). Now company officials refuse disclosure of records.

Then there are transparency costs.

A campaign to lobby council members turned out to be tax-funded. An incremental legislative approach forced our body to decide whether to buy land and establish an operating authority months before seeing proposed financing or even feasibility studies on the center. And now the ultimate decision gets scheduled over the holidays.

But the greatest cost is opportunity.

Even assuming the center could pay for itself, its opportunity costs — its effect on our bond rating and total indebtedness — mean that if we do this, we can’t do other things (like build better schools, hire more police, pave streets). As one consultant said, “Money dedicated to a long-term project such as the convention center is necessarily unavailable for other projects that might also provide lasting value.”

What brings visitors to Nashville is not an air-conditioned box; it’s those things that make our city special, like its people. If we truly believe in Nashville, its people should
be our priority.

Mike Jameson is an attorney and Metro Councilman.

26 Comments on this post:

By: BigPapa on 1/11/10 at 8:02

Yes, small things like repairing or replacing water mains in the downtown area, building schools, repairing & maintaining the schools we have, etc... I can't believe Dean is this short sighted, or this much into the pockets of the convention supporters.

I think the "city leaders" have written off Nashville as a nice place to live and only see it as a place to commute to work, and visit. They spend the most money on these type of projects and then just toss what's left over to the schools, neighborhoods, etc..

By: JeffF on 1/11/10 at 8:25

Mike left out that HVS assured St Louis that the convention center and the convention center hotel would be roaring successes with no worries.

HVS officials did not participate in the foreclosure sell of the hotel on the courthouse steps or in the meetings where more taxpayer money was given to the hotel to try to avoid the foreclosure two different times.

By: MrWeiss on 1/11/10 at 9:15

When are the village idiots going to figure out the gates to the kingdom open inward not outward. These points are very valid. After taking office what has Mayor Dean actually accomplished so far for the betterment of Nashville. We have homeless and other more important issues that a waste of taxpayer money on this monstrocity.

We are already a world class destination folks. Nowhere on the planet does a city have a duplicate of what we offer. All convention sales are dropping like lead balloons and unless we import an ocean we are paddling upstream.

MrWeiss

By: border collie on 1/11/10 at 9:20

Ditto Mr Weiss!!! How much is it going to cost to dig up the 80 year old water lines downtown...those will need to be fixed before straining the system..right?? I hope if it is built against taxpayers wishes that every toilet overflows into the million dollar hallways!

By: airvols on 1/11/10 at 9:36

"Nashville is currently $1.7 billion in debt. Large parts of that debt result from various non-essential amenities." This sums up your opinion of the project and all projects that have been built in the past. You are a horse and buggy believer in Nashville. Change will happen, and the change that has happened has made Nashville a better place to live, work and grow. I don't want to return to the days without the Sommet Center, LP filed and all that comes with quality of life issues. Do you work for Gaylord?

"What brings visitors to Nashville is not an air-conditioned box; it’s those things that make our city special, like its people. If we truly believe in Nashville, its people should
be our priority." Sounds like your already running for Mayor in the next election. There is always a reason behind the reason. Well no thanks, I choose to live in a city that moves it's people forward by providing opportunity and change. You can keep your horse and buggy.

By: idgaf on 1/11/10 at 9:54

Excellant presentation Mr Jameson. Thank you.

By: sidneyames on 1/11/10 at 10:15

I found it almost amusing that so much work "underground" has gone unattended and un-maintained. I mean, WATER MAINS?

And what would be the result of a convention center being in use during a water main breat? I shudder to think. Much business has been lost down town and the latest I read was that people couldn't even take showers in some down town residences.

Let's get our own back yard repaired before we spend money we don't have for new horizons and promises of "more".

By: govskeptic on 1/11/10 at 10:43

Thanks for pointing out the difference in the financing and cost of the
existing Convention center and the proposed MCC. Although the
supporters use this example all the time it like comparing apples
to watermelons in it scope. Another great indebtness this city has
that is seldom mentioned is that unfunded portion of health and
retirement benefits owed to employees. Just another example of
punting or putting off a hugh number that keeps getting swept
under the rug by politiicans that want to spend more rather than
facing reality. Airvol and others like to brag and spend but pay
little in taxes or consider the future well being of the city in the
long run. Please take the responsible route and vote "NO" on this
short term mayor's project!

By: DustyU on 1/11/10 at 10:45

Howdy all. It's interesting how all of us against this $1.2B boondoggle that Dean wants to build as a monument to himself get labeled as anti-progress or hired by Gaylord. Looking at Deans latest batch of manipulated numbers all I can say is "Figures lie and liars figure."

DustyU.WordPress.Com

By: idgaf on 1/11/10 at 10:51

Sid you are right about the watermain break. We could be libal for some big bucks if the center had to be shut down with a convention in it.

Lets not forget that the intentions were/are to give it away free with a certain amount of room rentals.

There is no way this makes sense in todays reality.

By: sidneyames on 1/11/10 at 11:18

Idgaf, I have carried plans around for a new "dream home" for hubby and myself for 18 years. I asked the bank to just front me the moola. They laughed. I wish we could get across to Dean and all the "wanna builds on credit" that the future generations don't want to pay for their pet projects. And even if the bulk of building is paid for by "tourist tax dollars" is it true that the maintenance and running of it will fall on metro?

Thanks for answering that question.

By: NotDaveCooley on 1/11/10 at 11:59

Well said, sir. A stark contrast to the opposing op/ed, full of lofty/empty rhetoric and attacks on the people who have raised valid concerns with the project. You should be commended.

For those that have not signed the petition against the MCC, you can do so here:

http://www.gopetition.com/online/32923.html

-

By: Kosh III on 1/11/10 at 12:00

"And even if the bulk of building is paid for by "tourist tax dollars" is it true that the maintenance and running of it will fall on metro?"

Good question. And how much will that be?
Producer2?????

By: DustyU on 1/11/10 at 12:04

Maintenance and upkeep are always paid out of operational funds so if they don't make money yes metro will have to cover.

By: JeffF on 1/11/10 at 12:20

If a project exists only with the revenue from unrelated activities paying for it development and operation can it be truly labeled as something "paying for itself?" I would think that a business type activity would have to pay for itself with business like income. Yet when it uses money from hotels in Hermitage, Donelson, Brentioch, and Belluevue and rental cars taxes from locals with a car in the shop or tourists and business people not using the facility it starts to look more like a black hole than an investment.

When will the meetings slot machine pay off again? It hasn't even grown the economy enough to build its own buildings or cover the health insurance and retirement of what few employees it has.

By: AmyLiorate on 1/11/10 at 1:55

Excellent analysis!

The first big paragraph says it ALL!!
"In 1987..."

This plan is like drunken sailors coming into port. Only it's not their own money they are spending, it's YOUR MONEY!

Where is that Producer guy? What's his take on these facts?

By: producer2 on 1/11/10 at 3:52

My take is it is a good thing Mike says he is retiring from Government. Service. Thanks Mike we won't miss you. Council votes next Tuesday. We will await the outcome.

By: producer2 on 1/11/10 at 3:52

Actually I should say I did like his downtown code initiative so it was not all a waste.

By: idgaf on 1/12/10 at 7:31

If this project is such a good deal paid for by tourist then there shouldn't be any problem financeing it with REVENUE bonds like THEY SAID THEY would.

If they can't then listening to the bankers who won't risk their money on this project might be a wise idea.

This has scam/con written all over it.

By: gdiafante on 1/12/10 at 9:23

"What brings visitors to Nashville is not an air-conditioned box; it’s those things that make our city special, like its people."

You've got to remember that these are just simple people. These are people of the land. The common clay of the new South. You know... morons.

By: border collie on 1/12/10 at 10:52

why are we morons? because we have morals and values which are slowly slipping away across this country? simple people are usually more kind and caring....one of the pesons who gives me the most unbiased and reasonable answers to life's dilemas is often a person who cannot read or write....but her "knowledge" is such that it cannot be learned from a book.

By: Dragon on 1/12/10 at 12:02

border collie - you missed the Blazing Saddles reference.

By: border collie on 1/12/10 at 12:12

I don't watch movies often....so i suppose i did. DUH! LOL! i would rather read or listen to music....

By: Anna3 on 1/12/10 at 4:31

Great job Mr. Jameson! Everyone must remember who votes for this thing and vote for ANYONE but them in the next election! If we do not vote against them and tell all of our friends to do so as well...we deserve to be treated as an ATM machine by niwits such as Comrade Karl Dean.

By: dooley on 1/12/10 at 5:16

I voted for Dean and thought that I had helped elect a good Mayor but in view of this kind of crap I think I made a collosal mistake. He's as bad for the city as Bredesen was.

By: -dan on 1/13/10 at 8:09

Nothing will change until there are 10,000 people standing at the front door to the mayor's office demanding change. Unite, organize, and stand your ground as a people for what you believe in.