The Metro Development and Housing Agency will slowly relinquish control of the proposed convention center in the coming months, but the department is still in charge of acquiring land in SoBro for the $635 million project.
Already one round of formal offers have been sent to some property owners, with more to get theirs in the coming days.
“It’s too preliminary to know how the negotiations are going to go,” said MDHA Director of Development Joe Cain when asked how he anticipated the land acquisition process to go.
The proposed site for Music City Center is bordered by Demonbreun Street to the north, the proposed Korean Veterans Boulevard extension in the south, Eighth Avenue South to the east and Fifth Avenue South to the west.
The cost of land for the proposed new convention center project was estimated to be $55 million in April of this year, but the Metro Development and Housing Agency borrowed $62 million to acquire the necessary SoBro property.
Metro officials working to make Music City Center a reality said last week the project was still on schedule and under budget.
A short estimate history:
— Original 2006 estimate for land acquisition from Music City Committee: $20-25 million
— April 2009 estimate from Metro officials and project leaders: $55 million
— Council resolution allocating funds for land acquisition: $75 million
— Actual loan agreement entered into by MDHA: $62 million
Cain cautioned against reading too much into the fact the loan amount was more than initial estimates. Some of the funds will be used to clear existing buildings and for other predevelopment activities, he said.
However, the fact remains that over the span of three years the estimated cost for SoBro property acquisition has nearly tripled.
In 2006, a committee comprised of Nashville power players turned in a report to then-Mayor Bill Purcell called “The Music City Center For Nashville’s Future.”
On page 32 of the report, the committee estimated, without substantiation, that land acquisition would cost Metro “an additional $20-25 million….” The initial estimate was dramatically lower than reality, despite the fact that Metro has generally kept to the same development timeline offered by the committee three years ago.
In April when Mayor Karl Dean and other Metro officials made a presentation to Metro Council, the cost for land acquisition was quoted as $55 million.
So far, no offers have been accepted, although MDHA had already purchased one parcel in the proposed footprint.
Earlier this month, the MDHA board approved a loan agreement for land acquisition in the amount of $62 million. When Council approved the resolution authorizing land acquisition in July, the total was actually $75 million. That means MDHA could actually borrow more for land acquisition and related activities if necessary.
Soon, Dean will appoint nine citizens to the newly formed Convention Center Authority that will oversee development of the project — which needs final approval from Metro Council. The board members will have to be confirmed by a Council vote.
District 23 Councilwoman Emily Evans said she was concerned that Metro might be tipping its hand by making public how much it was willing to spend for the land. Evans said it would have been preferable to have Council approve a lump sum for financing for the entire project, instead of approving a specific amount for land acquisition first and then considering issuing bonds later on.
“It’s really hard to keep the cost of land down when you’ve broadcast to all property owners in the SoBro area what you’re willing to spend,” Evans said.
Cain pointed out that a legal condemnation process exists, which offers protections for both Metro and for property owners.
Metro Finance Director Rich Riebeling made clear last week that, despite concerns raised by MDHA over-spending on communications for the project, Music City Center was still on budget.
Recently, MDHA amended a contract with McNeely, Pigott & Fox for public relations on Music City Center. The original contract was for $75,000, but Metro had spent $458,000 as of earlier this month.
McNeely, Pigott & Fox stepped off the project and Dean has called for an independent audit of the firm’s invoices. All predevelopment spending for the proposed project will now go through the Finance Department as well.
To date, Metro has spent about $16 million on predevelopment activities.
All of the funds for land acquisition come from tourism-related taxes and fees approved by Metro Council in 2008.