Metro Councilman Eric Crafton says he believes Mayor Karl Dean’s administration is pushing for the creation of a new board to oversee the proposed new convention center as an effort to avoid a voter referendum on the estimated $635 million project.
Crafton pointed out that state legislation created this spring and allowing Metro to create such a board included an amendment in which Metro promised not to use bonds backed by Davidson County property taxes to fund the Music City Center.
If Metro were to use general obligation bonds, which are backed by property tax collections, the project would be subject to a referendum. The Titans stadium, now called LP Field, went before voters in such a referendum and was approved.
“The reason they’re doing the Convention Center Authority is that if they can get that done, then it takes a referendum off the table,” Crafton said.
Dean officially announced on Monday that he plans to create the Convention Center Authority. The nine-member board will oversee the development of the Music City Center and would manage the facility upon its completion.
Dean aide and Metro Finance Director Richard Riebeling pointed out that it was always the plan to have the Convention Center Authority oversee the project. The Music City Center would then be one of the first major Metro projects not under the purview of the Metro Development and Housing Agency. MDHA oversaw the development of LP Field, the new downtown library and the current convention center.
The $635 million proposed project would be financed with revenues collected from the building itself and with tourism taxes and fees established last year by Council. A tourism development zone was also created and would allow Metro to collected incremental gains in sales tax collections from the three-square-mile radius around the project and return the gains to service the debt.
Riebeling said the administration would have a financing package in front of Council for approval in the coming months.
Crafton said he expects the Dean administration to present a financing package that includes a sales tax pledge — or a Metro revenue pledge of some sort — to back the revenue bonds issued to finance the project.
“And when the revenue collections fall short, which they will, then we’ll still have to raise property taxes to make up for the sales tax that we have to give to the convention center,” Crafton said.
The second-term Bellevue Councilman also said his preliminary research shows that the debt service on revenue bonds stands to be significantly more expensive than the debt service on general obligation bonds at this point. Crafton said his estimate is that revenue bonds would cost Metro between $8 million and $10 million more annually in debt service than general obligation bonds would.
“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.