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.