Council signs off on Omni Hotel financing

Tuesday, October 19, 2010 at 10:33pm

In January, nine Metro Council members voted against publicly financing a new $585 million convention center. Concerns were beat out by 29 others who voted for Mayor Karl Dean’s signature project.

Now, with construction on the 1.2 million-square-foot Music City Center well underway, the entire council has decided it’s in the city’s best interest to anchor the building with a convention center headquarters hotel, voting unanimously Tuesday night to approve a public-private deal to pay for a $287 million Omni Hotel on Fifth Avenue South.

“I think everyone knows that we needed a hotel,” Metro Finance Director Richard Riebeling said of the council’s resounding approval. “I think everyone is comfortable that we’ve gone in a direction that is good for Nashville.”

Design and development issues are now the final kinks that project leaders must work out to allow the new 260-foot tall hotel to open by June 2013, a few months after the projected opening of Music City Center. Riebeling said he projects a groundbreaking “sometime next year,” perhaps next spring or early summer.

The project’s architectural team –– led by Dallas-based HKS Architects Inc. –– is in the process of converting conceptual plans released earlier this month into final schematic designs. The team must bring final designs before the nine-member Convention Center Authority by Nov. 15.

Project leaders have also established a mid-November deadline for executives of Omni and the adjacent Country Music Hall of Fame & Museum to work out a potential physical connection between their two structures.

Riebeling said he’s “very optimistic” Omni and the hall will strike a deal and that representatives of the two groups met last week.

“My understanding is they left the meeting in a very good place,” Riebeling said, adding that they agreed in concept, but now have to put it in writing. “They see the advantages of it. They see how it’s great for Nashville. And they’re moving in that direction.”

Under the now-approved financing, Metro is to pay Omni $25 million in tax increment financing in 2011, and another $103 million over 20 years from revenue generated by the hotel through tourist-targeted taxes. Omni would cover the rest of the costs.

Omni is also set to receive a 62.5 percent property tax discount for 20 years after the new hotel opens, an incentive the council approved by voting for a separate ordinance Tuesday night.

Hotel amenities include four restaurants, 560 parking spaces, 60,000 square feet of meeting space and a spa and fitness center. It’s still unclear whether the hotel will include a fourth-floor sky bridge that would connect with the new convention center.

Riebeling said he doesn’t anticipate any more items related to the convention center that would require council approval.

“I don’t know of anything else that has to seek [council] approval,” Riebeling said. “In terms of the financing and the plan, we’ve passed the last hurdle.”

In other news:

• The council approved a bill that authorizes the presence of pet dogs in outdoor areas of restaurants.

Several Nashville restaurant owners already offer special periods when patrons are welcome to bring their dogs onto the premises. But previously, Metro law did not allow dogs in restaurants.

Animal-lover Councilwoman Karen Bennett, who represents parts of Inglewood, sponsored the bill.


 

8 Comments on this post:

By: yucchhii on 10/20/10 at 10:30

Yeah, they need a hotel to go with the convention center. Nobody wants to go to the Rennisaunce hotel, nobody wants to go to the Sheraton hotel, nobody wants to go to the courtyard, no body wants to go to the Hermatige, nobody wants to go to the doubletree hotel, nobody wants to go to the Hilton (Which is "RIGHT THERE!" DUH-UH!) Why not send the buisness people and their guests to the NASVILLE RESCUE MISSION? I'm sure they would appreciate the "HOSPITALITY" there. I'm sure they would love the "NASTY" bathrooms where the the toilets don't flush right and nasty people there sit on them time and time again, WITHOUT BEING ABLE TO "FLUSH". I'm sure they would love the "NASTY" showers that have mold in, on and around them! I'm sure they would also love the beds that are ridden with bedbugs! Yeah, High class service! Mayor Karl DINK would rather spend the money on a hotel for "HIS LITTLE BABY" the CONVENTION CENTER with a NEW HOTEL that HE WILL PROBABLY BE THE ONLY ONE using a room there!!!

By: producer2 on 10/20/10 at 10:41

yucchhii,
Your issue is real but your thought process is not viable. If Mayor Dean were to borrow $500 million to help the homeless, how would the City pay that money back? You see that is the issue here, the MCC notes will be paid back by taxes on people using the building, not taxes on the Citizens of Davidson County. I know some get on here and say that is not true but they have no real proof of this business model not working while the City has proof that it does. It already has and puts additional money into the General Fund that can go to help the homeless. You can't just borrow money with no way to ever pay it back despite what others say. You might try a different tact if you truly do want some help for the homeless.

By: airvols on 10/20/10 at 10:44

Hey Yucchhii, I have a thought! Less homeless, less need!

By: Xeroid on 10/20/10 at 12:32

Well, it must be a done deal, but where is the info for you and me, avg. Citizen, regarding occupancy rates, and or need. What about all the new/recently opened hotels in the downtown area? Are we creating another source for our tax monies while our unemployment rate still hovering in the 9-10 point range? Have our city leaders answered all the future questions as they may appear in the years down the road when the Opryland Hotel is back in full operation and the need for room occupancy may not be as great. Wonder why we always hear about the Budget when we start but not so much when the time comes to balance the "people's checkpoint"?

By: JeffF on 10/20/10 at 1:04

Correction, the note will be paid back by the few thousand people using the building PLUS another few million people who will never see the inside of the building, including local citizens.

I thought you would would appreciate the opportunity for accuracy Producer. Your welcome.

Funny thing about tourists, rental car customers, and hotel guests....very, very, very few of them are conventioneers.

By: JeffF on 10/20/10 at 1:08

Proof can be seen in the current convention center. Users of the building did not pay it's notes either. They were paid by hotel/motel and rental car taxes as well as general fund revenues. Since conventions rarely pay full freight for space (they even get refunds from hotel rooms in some cases) there is no way these building pay their own notes. They are loss leaders without having to worry about making it up elsewhere, someone else will do that for them.

Accounting, it is an amazing course of study.

By: producer2 on 10/20/10 at 2:18

JeffF (or is it James) you are again not telling the truth. No money from the General Fund was used to pay of the building debt of the current facility. You continue to put out this false info and innuendos without having to actually show proof of your claims for the facility in Nashville. You make blanket statements that don't hold water. Here is my account from an article in the Nashville Post in 2006:
By Richard Lawson

06-28-2006 3:04 AM — Two decades ago, the big hole in the ground that would become the downtown convention center had been dubbed derisively as "Fulton's Folly." But to Nashville's hospitality industry, it has been anything but a folly, crediting it with having a $1 billion economic impact on Nashville.

Yesterday afternoon, with little fanfare, the Metropolitan Convention Commission celebrated a major milestone in the convention center's history – the paying off last month of the initial $39.5 million in bonds former Mayor Richard Fulton floated to build the center.

The commission's chairman, Nashville restaurateur Randy Rayburn, noted that the bonds were all paid back through hotel tax collections, never dipping into local taxpayer funds. That is an argument Rayburn and other supporters of the Music City Center Coalition are trying to make for building a new $455 million downtown convention center.

At the end of next year, $7 million in bonds issued in the late 1990s to pay for connecting the center to the arena will be retired. For the 2006-2007 fiscal year, the commission estimated that the commission's fund balance is estimated to grow from $3.5 million to $9.2 million now that the major bond payment no longer exists and then grow to $16 million the next year. Debt service had reached $6 million per year.

By law, that fund balance is supposed to be dedicated to the hospitality tourism industry. The coalition is counting on the hotel tax revenue that retired the bonds to help pay for constructing a new facility.

The celebration wasn't quite the burning of the mortgage papers on the backyard grill. But the commission commemorated Fulton's efforts two decades ago with a memorializing resolution. Before receiving the honor, he had joked that it would be embarrassing if the motion didn't pass. Not a chance.

In his last official act as chairman, Rayburn presented Fulton with the resolution, noting that the arguments of whether or not to build a downtown convention center then are the same as those today. The questions today include whether there is a market for a new $455 million.

Rayburn said, "the real question we have to ask ourselves is where would we be" if Fulton hadn't pressed for building the convention center. "He persevered," he added. "There were long challenges that have paid off."

The amount spent on the bonds to get a $1 billion economic impact turned out to be a good return on investment, Rayburn said, especially since none of the money used to pay back the bonds came from Metro's General Fund.

"Most people didn't understand that they weren't paying for it and probably still don't understand," Fulton told the commission. "I hope you can do a better job educating than we did."

In accepting the framed resolution, Fulton made the pitch for ensuring that a new convention center would include some retail to support the new downtown residents as well as visitors to the city. He offered his assistance in helping the latest effort. "I hope you allow me to participate quietly, very quietly," he said.

During the meeting, A. Russell Willis, an attorney with Willis & Knight, was elected the new chairman and William McDonald with Cedarstone Bank's branch in Donelson was elected vice chairman. Interestingly, McDonald was chairman of the Metro Industrial Development Board and signed the documents on a Christmas Eve for floating the $39.5 million in bonds on the current convention center that have been retired.

By: NewYorker1 on 10/20/10 at 4:03

Get over it. It's done. There, problem solved. Next issue please.