Preds deal tapping convention center revenue stream?

Wednesday, December 5, 2007 at 2:05am

Metro Council’s first informational meeting on the Nashville Predators last Thursday night raised a few eyebrows among supporters of a new downtown convention center.

The eyebrows weren’t raised at perhaps some inane question a Council member asked about the deal Mayor Karl Dean’s staff negotiated with the local group.

No, they did a little double take when the Richard Riebeling, the new Metro finance director, identified the source funds that would cover the city’s investment in the team — money that’s earmarked for a new downtown convention center.

“I think the important thing is that [local] taxpayers can be assured that no taxpayer dollars — no property tax dollars — are being used to cover the additional cost of this transaction. It’s coming from hotel, motel tax,” Riebeling said in response a question from Councilman Charlie Tygard.

Yep, looks like supporters of the convention center are going to have a wee bit tougher time wrestling the money back from Metro to pay off bonds if a new center is ever built.

Interestingly, the same group pushing for keeping the Predators here is substantially the same group pushing for the convention center. It’s pretty much the Nashville chamber crowd along with downtown merchants supporting both causes.

In a way, pushing for the short term of saving the Predators may have hampered the ability to have the full funding sources for a new convention center. Yet, they didn’t have much choice — forgoing one, the Predators, to ensure success of the other, the convention center.

Center supporters have former Metro Finance Director David Manning to thank for setting it up this way. For several years, as the hotel motel tax fund grew, dollars were being used to cover part of the arena’s operating loss.

That operating loss ran upwards of $5 million or so depending who was calculating it and hotel taxes were paying about $1.5 million each year. This year, $4.8 million of the fund was budgeted for the team’s operating loss, with only $818,000 coming from property taxpayers to fill out the $5.6 million budgeted subsidy.

Technically, it qualifies as valid tourism use of the dollars. The Predators draw people from outside the county as do concerts… wink, wink. Some of the money went other tourist attractions as well such as the Adventure Science Center.

A revenue stream of several million dollars opened up when the bonds were paid off for the current convention center. Left untapped for several years, the fund would have built a hefty reserve on top of the 1 percent increase that is in place for the new convention center. Plans call for all of that money along with other sources covering the note for a $455-million center. That’s an old number and probably will go higher but that’s the gist and sharing the revenue stream may still be kind of a problem.

Supporters say they are confident that they can secure the revenue stream. One said a new convention center probably wouldn’t be opened for five years; so not having that stream is acceptable for the time being. In five years, the supporter said, the city might not be supporting the team any longer.

Of course, one way the city wouldn’t be supporting the team is if it moved after losing a bunch of money. Another way is if the team and the arena with a new lease became so wildly successful under the new ownership, the city no longer needed to pony up the extra cash for the operating subsidy.

Filed under: City Business
By: arkay61 on 12/31/69 at 6:00

So...Metro's financial strategy is essential a giant shell game. When the convention center is pushed through, all of a sudden THEY will realize that soaking the tourist will not cover the cost (which you can add 25-30% to the price tag)qnd they will come after property tax revenue. If the voters deny the money, Metro will lose its metaphorical shirt. Nice.

By: idgaf on 12/31/69 at 6:00

"Interestingly, the same group pushing for keeping the Predators here is substantially the same group pushing for the convention center. It’s pretty much the Nashville chamber crowd along with downtown merchants supporting both causes. "CORPORATE WELFARE

By: producer2 on 12/31/69 at 6:00

Bad reporting. The hotel/motel tax was already paying the tab, not the taxpayers and a new revenue stream was started increasing the hotel/motel tax to pay off the new facility. Nothing will change and both projects will move forward.

By: JeffF on 12/31/69 at 6:00

Please ready closer. Property Tax and hotel/motel tax money was already going toward the arena deficit. The deal in place calls for MORE hotel/motel money to go to cover Predator deficits. The MORE is coming from the increase in taxes approved for the white elephant. Metro is going to be asked to issue GO bonds for a convention center project because they will not be able to afford the interest on revenue bonds backed by hotel/motel tax. The tax is not going to cover the debt load. The convention center cannot help since it will not make enough to even cover its operating costs. This all adds up to Metro taxpayers "helping" with the debt service and "helping" again to cover operating deficits. Then on top of all this, the game plan in other cities getting hoodwinked into the convention center building boom is to wait for the center to open, lose money, then ask for more money to pay for an adjoining hotel since that is what is needed for the center to "turn the corner". So taxpayers will be asked to spend money for the benefit of a private enterprise.

By: royt5 on 12/31/69 at 6:00

The whole deal is a joke anyway. There are a few die hard fans that really want hockey here. And the new owners want a business with no risk. Nice if you can get it, and it looks like they did.

By: Nashville Voter on 12/31/69 at 6:00

The numbers are the numbers are the numbers. Hockey puts a lot more into the city in terms of hard cold cash than the current or the new deal will take out. Period. Like hockey or not, it really doesn't matter. We need to spend a little to make more. The hotel money he is talking about is money that becase available when the bond on the current convesion center were paid off. the money can BY LAW ONLY BE USED FOR TOURIST STUFF. Lawson knows this. Why he didn't write it is beyond me.

By: jasonweaver on 12/31/69 at 6:00

It appears that it was implied through in the line -- "Technically, it qualifies as valid tourism use of the dollars. The Predators draw people from outside the county as do concerts… wink, wink."

By: BigPapa on 12/31/69 at 6:00

You mean there is no free lunch? I'm SHOCKED!I'm just glad the discussion has been framed this way. Pay for the Preds or wait on the convention center, it can't be both. That is a much better place to start.

By: idgaf on 12/31/69 at 6:00

I would like to see the numbers where the season ticket holders live.

By: idgaf on 12/31/69 at 6:00

Think the council would pass the welfare if 50% of the fans were shown to live out of country? a million per 1000 fans?

By: gdiafante on 12/31/69 at 6:00

I don't know of any season ticket holders that live out of country. I suggest building a giant wall around Nashville. Not to keep others out, but the degenerates in.

By: Time for Truth on 12/31/69 at 6:00

Chambers of Commerce tend to look after their own narrow interests and have little interest in what is best for their city as a whole. In the case of the Preds deal, hockey fans like me also benefit. In the case of the Convention Center, only a few downtown businesses-and Gaylord with their unearned gift from the taxpayers- will benefit while the rest of us lose. It will be a drain on the city coffers and the area around the White Elephant will be a 'Crime Center' when not in use.

By: Time for Truth on 12/31/69 at 6:00

BigPapa, my vote (if we were given a vote on those two choices) would be "pay for the Preds". No big surprise there.....

By: Time for Truth on 12/31/69 at 6:00

JeffF, I looked at some of the material you referenced last time the WEC (White Elephant Center) came under discussion here. Albany NY's proposed costs tripled while they considered a convention center, and the latest total is still 'only' half the cost of the proposal for the WEC.

By: dnewton on 12/31/69 at 6:00

The Hotel Occupancy Fund is already like a female dog with too many pups. If the Convention Center debt is really paid off, then the $129,700 in the 08 budget for convention center debt(Abobe page 62 of the 08 Budget)could be given to the Preds. I counted 12 entities living off of the Hotel Tax. The convention center was attached to two teats, one for an operational subsidy ($1,034,000)and one for convention center debt.($129,700) How can the illusion of the tourist paying for their fun be maintained as long as operational subsidies are the prevailing mechanism that makes projects work financially? The motel tax already supports the Arts, Parks, the Nashville Arena, Country Music Association, The Science Museum and six other causes. Could someone help me understand why it is that it is OK to play games and lose money with sales and motel taxes but for some reason it is something to be avoided any time property taxes are discussed. Most activities get a blend of both flavors of taxes, property and sales taxes. I can see no firewall preventing conmingling of the two revenue streams. If the volume of dollars is diluted by too many participants in the same fund of money, the only alternative that I can see is a transfer from property taxes or local sales taxes to make up the difference.

By: theplantsman on 12/31/69 at 6:00

If given a choice between funding the Predators and the Convention Center; I will take the Convention Center every time.

By: nashbeck on 12/31/69 at 6:00

I want Nashville to keep the Preds and get the Convention Center now. We can do both. Richard Lawson is a guy that will write stuff just to start up controversy.

By: Time for Truth on 12/31/69 at 6:00

I'm beginning to think plant works for Gaylord or a downtown hotel. His normally far-right political views don't fit with massive civic projects that will cost the taxpayers, but he sure does like the WEC.

By: idgaf on 12/31/69 at 6:00

Whats really funny if you think about it, is they want to make an exclusive neighborhood down there but why would rich people want to live and share their streets with a Convention Center and drunk tourists?Usually they are built in non residential areas.

By: dnewton on 12/31/69 at 6:00

Correction: It looks like the last regular payment for debt service was $2,155,300 for the convention center. That was in 2007. The operational subsidy that year was $1,406,000. The income that year was $4,626,300. Even if ALL of the (2005) $22,238,494 Hotel tax were used to pay for the new convention center over 40 years you could not finance a building worth $455 million at 5% interest. With that $2 million dollar debt service off of their backs, the convention center operational subsidy could have been eliminated. We must not make money on a convention center, there is a moral obligation to lose money. Nobody called in to Dave Ramsey on this one I bet.