Crafton: Convention center should be funded with revenue bonds

Thursday, February 19, 2009 at 8:53pm

Councilman Eric Crafton has proposed a memorializing resolution on tonight’s Metro Council agenda stating the legislative body wants the proposed new downtown convention center to be funded with revenue bonds.

Crafton said the difficult economic times mean it is inappropriate to ask taxpayers to foot the bill for the project, which if a hotel is attached could ultimately reach near $1 billion.

Revenue bonds allow for a project to be financed based on the anticipated revenues from the tourism taxes and sales tax created by the proposed new 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. “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.”

Crafton said that the market should determine whether the project is a financially sound one by whether the revenue bonds are purchased, or not.

“Make no mistake, this started as a $400 million project and now it’s a $700 million project and if you have a 1,000 room hotel attached, it will reach $1 billion,” Crafton said. “The market should decide whether this is a good project by whether or not they want to purchase the revenue bonds and say the revenue will support the financing.”

Metro Finance Director Richard Riebeling has never suggested the proposed new convention center, still in its predevelopment phase, would be funded with anything other than revenue bonds. Riebeling said it was premature for Council to consider the memorializing resolution before the administration had presented a detailed plan for its financing, which would happen in the coming months.

“I think it’s a little strange for lack of a better word that Council would act on something before they even know what they’re going to act on,” Riebeling said. “It doesn’t make much sense to me why he would want to get this issue out now. We told the Council we were going to come with a plan. It’ll be a detailed plan. When it comes, we’ll present it to Council and they can vote on it.”

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By: nashbeck on 12/31/69 at 7:00

I hope it is approved, built, and the taxpayers are safe. The Music City Center is a great way to expand our tax base without raising taxes. Now, waiting for JeffF...

By: idgaf on 12/31/69 at 7:00

At this time in this economy it is irresponsible to go forward with this fantasy. (corporate welfare)

By: shinestx on 12/31/69 at 7:00

Hey, idontgivaf, perhaps you can explain to the sane who the corporate entities are here. As I understand things, metro will own and operate this center and sell rights to a corporation to operate the hotel. I contend that if metro allowed private interests to build/operate this center, it would be profitable from day 1. Not surprisingly, while you rightly oppose this project, it's all for the wrong reasons. Confused!

By: nvestnbna on 12/31/69 at 7:00

It's probably a good idea to go ahead and make it clear to the backers of this project that there is no need going forward if, as Eric, says the market isn't going to justify through funding it being built. It's my understanding the DC CC hotel is having trouble funding the TIF financing 100+ million on it.Too often, the backers continue to proceed on this thing, and then when they make their announcement, therre is too little time for any considered counter opinion to get much oxygen.

By: JeffF on 12/31/69 at 7:00

I am laughing that Crafton is saying what people who hate him have been saying. Unless they really do not want revenue. It looks like he jumped ahead in the convention center playbook used in all the other cities and is trying to take away an argument before they even use it. The interest rate on the high-risk revenue bonds will be too high for the project to succeed on its own. The St Louis hotel and convention center twin catastrophes are looming large here. This project cannot stand on its own, it needs the tax collections from tourists to pay its way. If the center has to profit to pay for its bonds then it will be at a disadvantage to all the other cities selling at a loss or giving away convention space. Why get into that mess if there is no way to ever be in the black. No project can ever be considered paying for itself when it uses tax collections from unrelated activities. Since this center is proposed as a government activity (like the current one) the operating losses (not the construction debt Produce) will continue to be paid for by the Metro governmental funds. Making this an enterprise fund would mean that they would be required to sell at a price guaranteed to cover costs.

By: carleydale on 12/31/69 at 7:00

Woohoo! Crafton tells it like it is! If we "got no money" then how are we going to pay for this lofty project? And what tourists? How many of the millions of unemployed citizens are actually going to take a vacation this year or even next? Hello? They're already on a permanent vacation, but with zero funds to use. And conventions are down right now, across the board. My sister went to the electronic media show in Vegas in January, and it was at least 20% down in attendance as well as patrons who'd prepaid for their spaces. And that was BEFORE the massive layoffs took place.

By: idgaf on 12/31/69 at 7:00

There are only 2 CC's in the whole country that are paying for themselves and even that may be doubtfull in this economy. Orlando and Las Vegas both better destinations then here.

By: JeffF on 12/31/69 at 7:00

A good example of this industry is Atlanta. The state of Georgia and Atlanta increased debt for the center by almost a billion. Attendance has been at or below levels before the last two expansions for at least 6 years now. For a billion more dollars they may increase attendance by 150 people or so.

By: mh on 12/31/69 at 7:00

Crafton says “We can spend taxpayer dollars on a special election for my own agenda, which could potentially lose 270+ million dollars in federal funds, but I don’t want to put taxpayer money at risk for this convention center project because I can’t profit in any way”Ironically, he is right, the good ole “let the taxpayers pay for the new stadium/convention center/etc.” is out-dated, and while we all know it’s good for the city, we’re reluctant to want to let our taxes to pay for this. Unfortunately for Crafton, it’s too little, too late. We already know he only pursues agendas that benefit him directly.

By: develop12344321 on 12/31/69 at 7:00

Too bad this great idea had to come from Crafton. Despite the messenger he is right on!Riebeling knows the only way this gets done is with GO bonds. This ultimately will lead to a huge taxpayer bail out of the MCC.

By: BlueInTn on 12/31/69 at 7:00

Whay give Crafton the time of day? He's a joke.

By: Anna3 on 12/31/69 at 7:00

BlueInTn ...Wow it didn't take the Crafton haters long did it? You obviously think with the wrong end of your body.

By: Anna3 on 12/31/69 at 7:00

PS - BlueInTn...-2pts for spelling ..its spelled "Why".

By: martial123 on 12/31/69 at 7:00

The only JOKE in this town is Dean and his B--- Buddies. I can't wait till English only comes back around for vote by all instaed of the Green Hills and West End Knuckle Heads, then we will see what real Tennesseans want.

By: Funditto on 12/31/69 at 7:00

Why can't this clown stay out of the spotlight? Where was he when this was talked about for the past few years? Busy being a sock monkey for an out-of-state hate group. Go crawl back in your hole Mr. C. Your fifteen minutes are up!

By: Funditto on 12/31/69 at 7:00

Oh and I'm busy cleaning my monitor after reading Anna's "and we should elect Crafton as our next Mayor."ROTFLMAO!!!!!

By: Anna3 on 12/31/69 at 7:00

Funditto...you are so intolerant! Get a life...there is more to this issue than Crafton!

By: Time for Truth on 12/31/69 at 7:00

martial, don't advocate English Only if you can't spell in English. Your post is a perfect representation of the 'EO' viewpoint.It's good to see Crafton's conservative slant on the MCC. Since this project is developer welfare to a large extent, I imagine he will eventually support it. And I think he's a 'yes' on previous votes on this issue. I appreciate him waking up to the fact that the MCC project is likely to be a large money-sucking hole. Now if someone will wake up Mr. Dean....

By: Anna3 on 12/31/69 at 7:00

We are in the worst economic downturn in decades. Unemployment has reached levels not seen since the depression era. This Convention Center will cost by almost every estimate $1 billion dollars...that's three times what the Coliseum cost...and five times what the Sommet Center Cost. Now...Lets review the Mayors track record. The FIRST thing Dean did as a candidate even before he was Mayor was to make a pledge not to raise our Property Taxes (in his first term.) As Mayor... Dean's FIRST ACT was to give a $13 Million Dollar rent concession to the owners of the Preditors (which were close friends and supporters of his campaign) in an effort to save them from moving..so far their attendance numbers are failing to support their existence here long term...so the taxpayers took a $13 million dollar hit there. Next Dean says we should spend $2.5 million on the Parthenon..so we did..Didn't Bredeson just fix that up for $20 Million?? But I understand Dean's wife is on their board of Directors...so again the taxpayers took a hit. Next we find that our schools are continuing to degrade and slip further into state control...a situation I may add that Crafton warned everyone about THREE YEARS before it happened... and that the Mayors cronies ridiculed him for. The schools are experiencing a $90 million dollar shortfall..should this be a priority? Next I see that the Mayor has DEFUNDED a battered womens shelter (See Channel 5 broadcast on it)to save $100,000 and now he (Mr. I'm opposed to English) has defunded the Foreign Language classes for Adults in Metro to save another $45,000. Next we see he's asked the Police, Fire, and Public Works Departments(Can you say essential services?) to cut 10% from their budgets which caused Chief Surpass to say that he would have to lay off 100 officers...again the taxpayers take a hit. Mayor Dean now just asked us to raise our water bills by 10% to 15% per month (While NES is gigging us too!)...again we take another hit. And finally...in the middle of all of this, we see his new budget reflect that his HIGHEST Priority for 2009 - 2010 is a BILLION DOLLAR CONVENTION CENTER! How many of you have been in the current center more than once or twice in the past 5 years? Not many I expect. Big Corporations are not holding big conventions anymore and won't for at least the next 5 years...(It's not PC you know!)...that's why these are failing in places such as Dallas, Orlando, and St. Louis! Vegas has taken a hit of over a 38% decline in business! Did you notice that Gaylord Opryland also just cancelled their 350 room addition because ...to quote them.."There is no economic need for it in the forseeable future". This is Corporate welfare for the Downtown Hotel Crowd (Unfortunately...the solution to their problem is with OUR money!) Every corporate proponent of this project has a personal financial interest in it...and the Chamber crowd has their hand in the bid process already!) WOW! Mayor Dean...That's leadership...unfortunately its leadership taking us in the wrong direction at a terrible time. Dean should be a one termer...and we should elect Crafton as our next Mayor. Crafton has been correct EVERY time on these matters and he listens to average people. I think the "Hate Crafton" crowd will probably let their mouths overload their brains on this one. Think about this...I mean REALLY think about it...does a BILLION DOLLAR Convention Center really make sense right now?

By: idgaf on 12/31/69 at 7:00

Crafton would do us less harm then Dean is/will.

By: JeffF on 12/31/69 at 7:00

Here is the good news people: If this cannot be done with revenue bonds, then we will get a chance to approve or kill this thing. Revenue bonds are preferred by backers of projects such as these whenever there is a public outcry. Legislative bodies are the only approvers of revenue bonds. General Obligation bonds can be put on a referendum if the people choose to do so. The is why the funding details are being kept quiet here. There is a tight-rope being walked by the hotel and tourism interests. If the funding plan is released to quickly before the commissions required number of votes, then there will be plenty of time to gather the necessary number of signatures for that nasty little ballot referendum. The details have to be kept close to the vest and sprung out on us at the last possible minute. The convention center proponents need taxpayer backed debt, this center will not fly on the interest rates of revenue debt. Plus purchasers of the debt will not feel comfortable with the risk of buying bonds backed by revenue (already being divided three ways for various projects) and already not meeting promised expectations for the next few years. Then there is the promise that these capture taxes will pay operating losses guaranteed to occur? Puhleeze.Someone ask the people of Dallas about how they feel about their convention center hotel referendum being ignored by their city council. The council and supporters are hurriedly trying to start construction before the voters have a chance to vote, thinking that it would be impossible to kill something they already have spent money on.

By: nashbeck on 12/31/69 at 7:00

JeffF. Keep in mind the current convention center was funded the EXACT same way as the Music City Center is being funded. It didn't cost us a dime. Now everybody, get ready to read some stats that no one really knows where they came from or what they have to do with but are "supposed" to prove why our current convention center is a complete failure.By the way, we are 8th in the country, idgaf, in conventions. We already have 130,000 booked hotel rooms (in this economy) for a convention center that hasn't even had final approval. Get this built Nashville!

By: Time for Truth on 12/31/69 at 7:00

Ten Reasons Not to Build MCC:1. The convention industry is dying a slow death. Virtual conventions are already a viable industry. Building the gigantic MCC is akin to GM using their bailout money to bring back the Hummer H1. 2. Convention centers in general, even in good times, lose money. The bigger they are they more they cost to operate, full or empty.3. Jobs generated by this center will be low paying jobs that will benefit few taxpayers in Nashville.4. The huge footprint of this center will interrupt the viable stretch of neighborhood growing towards it from east and west. It will eliminate an opportunity to build a privately funded and more appropriate built environment.5. When empty, which I predict will be often, the MCC would attract crime and homeless panhandlers.6. We already have a convention center and other than occassional giant conventions which may or may not come come here anyway, it brings in a good share of what is available out there. Gaylord and several hotels have ample private facilities.7. 800 million dollars when our schools are 20 million in the hole? Wake up, Mr. Dean!8. Few Nashvillians will ever set foot in the MCC if it is built.9. The project is corporate welfare for the tourism and building industries and is not needed by anyone else.10. A majority of the people of Nashville don't want it. It should be voted on.

By: nashbeck on 12/31/69 at 7:00

http://nashvillemusiccitycenter.com/

By: airvols on 12/31/69 at 7:00

If Crafton is for it, I'm against it, If he is against it, I'm for it. This guy is is a sorry representation of an elected official. I still say recall this joker. He will put his finger in hole on the dyke and just make it larger. He represents the bigots of our society. (check Virginia contributions). Don't listen to this guy!

By: nashbeck on 12/31/69 at 7:00

Anna- Your first post I ever read from you was a lie- mugging that took place in the new downtown Hilton parking garage... Hmmm, hard to do that when there is no parking garage. Please clarify on the 13 million dollar "bonus" the Predators got... And by clarify I mean give us a link. You won't be able to find one, because there isn't one- you're lying again. Metro gets 50% of all the revenue made from Sommet Center events. Please tell me what tenant would come here 41+ times a year and bring in anywhere from 13700 to 17k people to our downtown??? Oh, and the Predators are predicted for the SECOND YEAR IN A ROW to make a profit after this year. Unlike you, I have proof http://www.tennessean.com/article/20090203/SPORTS02/902030342/1002/SPORTS They are also predicted to make full revenue sharing, which is 14k in paid attendance. Time to Truth states metro schools are 20 million in the hole, you however state we are 90 million in the hole. I disagree with TFT often, but I will believe him. Please post the truth, not fallacies.

By: JeffF on 12/31/69 at 7:00

I have parked in the Hilton garage for a Preds game. Elevator came out in the lobby. Also parked there for a thing at the Hilton.Being 7th on a list of meetings does not mean anything. Atlanta (GWCC) is higher and is hemorrhaging money. The whole list is made up of cities with numbers and every last one of them have public centers not paying their own way. Some of the cities are lucky enough to have large private centers boosting their city's attendance numbers (ahem Nashville ahem). What has happened is people took away the wrong lesson from the glorious listing of convention attendance. Rather than a listing which centers are doing the best, we get a listing of which cities are better at giving away room nights and meeting rooms in order to keep the numbers up for the next rounds of debt and construction.

By: Funditto on 12/31/69 at 7:00

I think Anna must be one of Craftons' girls or something. she follows him like some do jesus.

By: ACitizen on 12/31/69 at 7:00

There is a parking garage at the downtown Hilton. It's underground and has a park on it at ground level. This is right across from the Country Music Hall of Fame, yes?That said, I'm entirely suspecious of anything Eric Crapton brings up for a vote.Finally, although I voted for Karl Dean, I'm not impressed with his performance and will not be voting for him for a second term.

By: ACitizen on 12/31/69 at 7:00

Of course, I belive Eric Crapton is going to run for Mayor in the next mayoral election. His term on Council will be up, he's term-limited for a seat as Bellevue's Councilperson, and his only option is to run for Mayor or an at-large seat on the Council. I think he's just egomaniacal to run for Mayor.

By: ACitizen on 12/31/69 at 7:00

Plus, you know he "wants to help solve problems for the people of Nashville".Eric Crapton as Mayor could be even worse than Bill Boner! And we all remember how bad that was!

By: gdiafante on 12/31/69 at 7:00

By Anna: "PS - BlueInTn...-2pts for spelling ..its spelled "Why"."Oh...you should remember that famous saying about glass houses...by the way, it's spelled "Predators".On that note, you're incorrect in your assessment. The Predators attendance is UP from the same time last year.Also, schools are already controlled by the state/city. That's why they're called "public schools".It's funny how "corporate welfare" is ok unless it's in your own backyard. Hypocrite.You have the government you deserve.

By: RockStar on 12/31/69 at 7:00

First off...I wish someone would find something for this idiot to do! The proposed convention center has always been planned to be funded by revenue bonds. To make such comments to the public is misleading. As for why to build the convention center MUSIC CITY USA we need to promote our city better and allow our visitors to help us generate tax revenue. This is imperative to our sales tax strategy or our property taxes will continue to escalate. We already have groups booked for 2013 and we need to push this forward as soon as possible!

By: Funditto on 12/31/69 at 7:00

I hope crafton does run for mayor so I can sell some bumper stickers for the opposition. better get my thinking cap on.

By: Time for Truth on 12/31/69 at 7:00

Rock Star, a billion dollar barn will do little to increase sales tax revenues. Nashbeck will tell you we're already Number Eight. Factor in NY, LA, Chicago, Vegas and Orlando which will always outbook Nashville and we have potential to move up TWO POSITIONS. And the industry is dying, this facility would be viable for about five years after it's done and would still lose money during that time.

By: nvestnbna on 12/31/69 at 7:00

"4. The huge footprint of this center will interrupt the viable stretch of neighborhood growing towards it from east and west. It will eliminate an opportunity to build a privately funded and more appropriate built environment.'and southIt's disingenuous to call this design or building Music 'City Center' - another reason it needs to be rethought. You're right very few Nashvillians will ever darken the doorstep of this place. Kind of a shame.Eric Crafton, for all the crap he's received, justly or not, is probably on the right track.

By: Time for Truth on 12/31/69 at 7:00

I still think Crafton is a grandstanding dunce, I just think he's taken a prudent position here. GO bonds will eventually bite the taxpayers on the behind on this massive turkey. Count on it. Yeah, Crafton as 'mayer' would make us a laughingstock just like the days of 'Rocky Top' on Donahue.....

By: bjamesm on 12/31/69 at 7:00

The last two paragraphs sum it up as Metro Finance Director Richard Riebeling saw through the premature grandstanding by Councilman Eric Crafton. Could this councilman be desparate for some positive publicity? Crafton has done nothing but cost Metro Nashville with one failure after another, including the failed 4-way stop sign on Sawyer Brown Rd at Todd Pries Rd that cost tens of thousands of dollars a few years ago; right up to his latest, the "English Only" vote. I hope the city voters remember his ridiculous antics should he run for councilman at large or any other elected office in Nashville!

By: frank brown on 12/31/69 at 7:00

I think the proposed Convention Center is an absolute joke. However if the Metro government can sell enough revenue bonds to completely absolve the Davidson County taxpayers then let the bond buyers take resposibility.

By: Time for Truth on 12/31/69 at 7:00

bjamesm, my agreeing with Crafton here doesn't mean I'll be joining his campaign team. And you're right, his position and resolution in the grand scheme is largely meaningless. Where it is significant is it is drawing attention to the viability of the MCC at a time when Nashville can't afford to waste a billion dollars. The reason they are going after revenue bonds in the first place is to do an end run around the voters. The trick will be getting them, I see much smoke and mirrors. Unfortunately, the tourist tax might not even cover the operating costs on this potential albatross.

By: producer2 on 12/31/69 at 7:00

JeffF,Indy, St. Louis, Atlanta, any other examples you have (and continue to) list have had troubles since they over expanded their facilities. Nashville is just trying to get to a size (much smaller than those cities) that allows them to book the business that is already asking to come here. BIG difference. Check the square footage of the exhibit halls in the cities you list then compare that to what the MCC will be. Comparing apples to apples is a bit more fair.

By: boyson on 12/31/69 at 7:00

1) We are in very capable hands with Mr. Dean & Mr. Reibling. 2) No one is or will be in the dark as to how the Center will be funded. 3) The future belongs to those who prepare for it. EJB.

By: boyson on 12/31/69 at 7:00

Make that Mr. Riebeling.EJB.

By: martial123 on 12/31/69 at 7:00

Time for Lies, Apparently you must be Blind in One eye and can't see out of the other, I did spell English correctly, perhaps you need to go back to school yourself and that way you could correct people when they actually need correction. What the H--- is EO viewpoint, I guess this is some abbreviation only advanced Spelling Bee Champions can understand, like you. LOL < ; - )