Crafton changes mind on GO bonds

Friday, August 14, 2009 at 11:50am
Eric Crafton believes general obligation bonds are the only fiscally responsible way to finance a new convention center now, but earlier this year he filed a memorializing resolution stating the opposite.

The District 22 Metro Councilman filed a nonbinding resolution, which stated it was Council’s intent to not use bonds backed by property taxes, which general obligation bonds essentially are.

Eventually Mayor Karl Dean’s administration amended a piece of state legislation, which authorized the creation of a new Convention Center Authority, to state that Metro would not use a property tax pledge to back bonds issued to finance the estimated $635 million project.

But before that happened, Crafton filed a memorializing resolution stating, “That the Metropolitan County Council hereby goes on record as expressing its intent that the proposed downtown convention center and convention hotel be funded solely by revenue bonds that are not backed by the full faith and credit of the Metropolitan Government. Specifically, the Council desires that a Convention Center Authority be created to issue the bonds, and that revenue bonds, as opposed to general obligation bonds, be used to construct the convention center and hotel.”

Crafton withdrew his resolution before it was voted on by Council, but before doing so he explained Metro should only use revenue bonds, which would be derived exclusively from revenue streams created to fund the project. Metro Council created a series of tourism taxes and fees, along with a surrounding Tourism Development Zone, to pay for the proposed convention center.

“My thought process was if this is a good deal, then the revenues from the project should be able to pay for the project, not our property taxes,” Crafton said in February. “So what I’m asking is that the Council go on record and say we can support the convention center but if and only if the revenues from this convention center and associated activities can pay for the construction of the convention center and all the upkeep.”

However, the Dean administration has filed a new resolution to officially create the Convention Center Authority, which would oversee development of Music City Center. Crafton said he was against creating such a board, because it would effectively block a potential voter referendum on the convention center.

Voter referendums are possible for projects using general obligation bonds, but Metro has already committed to not do so by way of the new state law.

“The only fiscally responsible way to finance this project is with general obligation bonds and they’re not going to do it because they’re afraid of a referendum that they know has a better than 50 percent chance of failing,” Crafton said earlier this week, pointing out that the debt service for general obligation bonds would be about $10 million cheaper annually than for revenue bonds.

Crafton said he plans to oppose the administration’s resolution to create the Convention Center Authority.

 

 

11 Comments on this post:

By: govskeptic on 8/14/09 at 12:38

Convention center authority is bad idea. If you like having absolutely no say in the city owned NES, then this will be exactly the same or worse. NES does have revenue. This project will have plenty of expense but revenue is extremely shaky and over projected.

By: pandabear on 8/14/09 at 2:21

Nate:
I know what you're trying to say, but
Intelligent minds change with new data and new ideas.

You should try it.

By: airvols on 8/14/09 at 2:35

Stop giving this clown a forum!

By: idgaf on 8/15/09 at 12:43

STOP SPENDING MONEY untill you get this approved preferably by the voters who will have to pay for this folly.

By: bfra on 8/17/09 at 3:10

Guess Dean's "legal buzzards" have come up with another way to bilk the taxpayers! I agree with idgaf, since it is our money, put it to a vote.

By: Time for Truth on 8/17/09 at 10:55

I am somewhat confused by Crafton's flip-flopping, perhaps it is because he is confused. Did he just now figure out that GO bonds require a referendum, and revenue bonds don't? For that matter, is he aware that this potential massive money loser is not a strong candidate for revenue bonds? I think Crafton's heart is in the right place this one time but he should think things through before he jumps on his soap box. And he needs to show up for MCC votes.

Yes, this thing needs to go to a referendum. This is a massive swindle, a pork project that will possibly be obsolete the day it is finished, and a project that does nothing for the citizens of Nashville at a time when funds are short. Dean and his pushing the MCC is the equivalent of a head-of-household going out and buying a Hummer when there isn't enough money for groceries.

Referendum now! C'mon Eric, get off your soapbox and start the petition drive!

By: JeffF on 8/17/09 at 2:00

I think that he really did just figure out that supporting a GO issuance is the only way to get a easy referendum. Sad really that it took this long.

By: producer2 on 8/17/09 at 4:33

yes because there will be a new Convention Center Authority by Wednesday morning...

By: JeffF on 8/17/09 at 4:53

yet no funding authority. hmmmmm. I am going to guess that the board will be filled with nothing but proponents. Maybe even a Tennessean publisher. If this thing had died down a little sooner a partner at MPF would have been on that board. But alas, 65 employees will be looking for another misguided cause.

I wonder if the council has a list of all the contracts the MPF has with Metro agencies and commissions.

By: producer2 on 8/17/09 at 5:15

mr. deflecto at it again. MPF is of little or no concern. Seems the budget committee just unanimously passed a resolution for the authority. Seems you have played right into their hands...

By: lisaleeds2008 on 8/18/09 at 10:18

Time to stop this madness

Dear Elected Official,

It is time to stop this madness do not build the Music City Center...

Vote against RESOLUTION NO. RS2009-881

http://www.nashville.gov/mc/resolutions/term_2007_2011/rs2009_881.htm

We need to stop this madness now. We the people of the city of Nashville do not need this high priced Music City Center.

Kind Regards
Lisa Leeds