Is the proposed convention center in the bag?

Sunday, December 13, 2009 at 10:45pm
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After months of sturm and drang about a controversial new $585 million convention center for Nashville, the largest capital project in Tennessee history seems to have the assured support of the Metro Council.

Though the recent unveiling of the project’s long-awaited finance package lacks financing for a hotel -–– a component viewed almost universally as crucial to the facility’s long-term success –– lobbyists and Council members on both sides of the issue all seem pretty confident that the Council, the ultimate arbiter on the question, will approve the so-called Music City Center come Jan. 19’s critical final vote.

Mayor Karl Dean and his administration have fielded some pointed questions about the enormous capital undertaking, most consistently from a cluster of circumspect Council members such as Emily Evans, Eric Crafton, Mike Jameson and Jason Holleman. But the arguments against committing dedicated sales taxes and hotel-motel taxes to bankroll the project — which include the notion that investing in a contracting convention market nationally might be folly — don’t seem to be gaining meaningful traction in terms of projected opposition votes.

Moreover, the Council has already signed off on several significant incremental project phases that include predevelopment and land-acquisition work and the appointment of a nine-member Convention Center Authority to oversee the development.

Project supporter and Council Budget and Finance Committee chairman Ronnie Steine said he is “very optimistic” the body will green-light the convention center, adding that it would fall short of majority support only if Mayor Dean “backtracked from the promise” of not using “property or undesignated sales tax dollars” to fund it.

Even project skeptic Jameson, though bemoaning the lack of early, sustained and nuanced debate about the civic bargain, seems to predict its ultimate authorization. “I’m not betting on it not passing. But it would have been nice to see it preceded by more thoughtful debate,” he said.

While skeptics question the project’s viability and proponents trumpet its economic impact, the issue boils down to a political game of votes and number crunching. With Councilman Carter Todd, a Gaylord Entertainment Co. executive, expected to abstain from voting because his employer competes with Metro for conventions, 39 Council members at most will have a say.

A simple majority requires 20 votes on either side. So it’s all about the math.


Posturing paints murky picture

Unlike state and national elected officials who often toe party lines and vote according to political or ideological allegiances, Metro Council members aren’t always as easy to read. It’s customary for the city’s representatives to be reluctant, especially publicly, about pledging their support — or lack of it.

“I’ve come to this with an open mind,” At-large Councilwoman Megan Barry said. “My mind is still open, and I want to make the best decision for Nashville.”

Barry’s politic remark is typical of common neutral posturing among Council members. But like any legislative battle, stakeholders are constantly pigeonholing legislators as proponents or opponents of Music City Center. Counting votes on the pro-convention center side are registered lobbyists working on behalf of the Nashville Convention & Visitors Bureau and the Music City Center Coalition. And project adversaries have formed Nashville’s Priorities, a nonprofit group that has received at least some funds from Gaylord Entertainment Co.

Paid boosters claim as many as 28 Council supporters, with only six sure-fire votes against it, leaving only a handful of undecided members. On the other side, attorney Kevin Sharp, president of Nashville’s Priorities, believes both the yes and no columns number around 10 apiece, with a large pool of “undecideds.”

The discrepancy found by competing lobbying arms seems to paint a murky picture, but Council members themselves attest to the finance plan’s strong support. One member — albeit a supporter — has tallied between 27 and 29 votes of approval, with another backer projecting the figure could reach 30. But even an opponent forecasts the number of supporters to be 23, with only seven definite nay votes.

Another stakeholder who would naturally be counting heads is the Mayor’s Office itself, which has made the convention center its signature issue. Rather than skating by with a narrow victory, the Dean administration would certainly prefer a mandate to avoid backlash.

“If you look at history, history says that we’ve received strong votes on this project since the Council’s been asked to consider it on several different occasions,” said Metro Finance Director Richard Riebeling, stopping short of engaging in a vote-guessing game.

Hotel may be a game-changer

If the Council does approve the Music City Center’s financing, it’s not because members haven’t raised alarm about what’s at stake. And if there’s a game-changer that would jeopardize the convention center’s passage, it would most likely be the uncertainty of an adjacent hotel.

Evans, perhaps the most vocal critic of the convention center, believes the absence of such a deal has forced some of her colleagues to rethink their positions. “It’s hard to know what will happen,” she said. “It’s a long time between now and Jan. 19.”

The plan recently unveiled by the Dean administration aims to pay off the project’s annual $40 million debt service through a combination of sources, including hotel-motel taxes, visitors fees and dedicated sales tax revenue from a so-called tourism development zone. Non-tax revenues from Metro’s reserves would back up a portion of the debt.

Despite acknowledging the necessity of a convention center hotel, Riebeling said it was absent from the finance package because of the difficulty landing a private hotel developer during a time of depressed capital markets. Experts have said the hotel should include 750 to 1,000 rooms and could cost $300 million to build.

“We will have a convention center hotel,” Dean told Council members as he unveiled the plan earlier this month. “This proposal may come in the spring, it may come much later next year, but I’m confident it will come.”

The administration’s plan is to continue negotiating with hotel development veteran Phelps Portman in hopes of inking a deal that would allow the hotel and convention center to be completed simultaneously for a February 2013 opening. Though private financing would be preferable, administration officials have said, there’s no guarantee they won’t ask that public dollars underwrite the hotel.

“The thing I didn’t hear the other night was that there would not be any public financing of the hotel,” said Councilman Jim Gotto, who months earlier passed a non-binding resolution that asked the convention center and hotel plan be presented together. “That door was left open. I’ve got a problem with that.”

As does Evans, who notes that there hasn’t been a privately financed convention hotel built in the United States in a decade “because the convention business continues to contract.”

Signing off on the center, both Jameson and Evans worry, could bind the Council to approve a hotel at a later point when the economics aren’t certain. Jameson said he doesn’t doubt that private hotel financing at the moment is next to impossible, but it shouldn’t be about taking anyone’s word at face value.

“It’s simply economic analysis,” he said. “This has nothing to do with how I feel personally about anybody or their judgment or their character.”

Meanwhile, Councilman Bo Mitchell, who “if pushed” is leaning toward supporting the convention center, said the hotel remains his main concern. “For the success of the convention center, I think you need the hotel,” he said. “We need those additional hotel rooms … to attract the type of conventions that we’re looking to attract.”

Representatives of First Southwest Co., a firm that provides financial counseling for Metro, say the city can pay off the project’s debt even without revenues from a convention center hotel. The finance structure, they contend, is sound and self-supporting.

Steine said Council members should understand experts wouldn’t risk their reputation by providing erroneous numbers and they should have confidence the finance package is solid.

“If you, on the other hand, are just generally skeptical of all numbers and have at least a skeptical view of Nashville’s future and our ability to grow and to continue to generate interest and visitors, then you would naturally be skeptical of all this,” Steine said. “That’s just two basic fundamental points of view about the future of our city.”
What does the public want?

Frustrating for some Council members is the absence of any scientific polling throughout the debate that could provide at least a hint of how much public support exists for the project. Short of an independent phone survey conducted by Nashville’s Priorities, which some characterized as a skewed push poll, Council members have been left to gauge support on their own.

Councilman Sam Coleman, who said he’s undecided, estimated half of his constituents in his Antioch district support the project.

Meanwhile, Jameson, who lives in East Nashville, says he senses that “the average guy on the street is at best skeptical of this.”

Even Metro Councilman Rip Ryman, a supporter, says public input to the Council is overwhelmingly opposed.

Between now and the final January vote, many Council members are scheduled to hold community meetings to bring the case to their constituents to measure support.

The City Paper has confirmed at least five such meetings, most to be held jointly by several members.

And then there is a Jan. 11 public hearing at the Council.

“Obviously, I want to vote how my community wants me to on specifically this issue,” said Metro Councilwoman Karen Bennett, who’ll be co-hosting a Jan. 12 gathering in East Nashville. “For them to make an informed decision, they need to hear both sides of the issue.”

By that point, Council members hope the constant lobbying and vote counting won’t seal the project’s fate. But for his part, Jameson’s not so sure.

“Right now there’s a ton of psychological warfare by the proponents with just the votes counts, and that’s being used wrongly to influence the vote on the 19th.”

35 Comments on this post:

By: Kosh III on 12/14/09 at 9:49

Yes. It's a done deal and has been for some time.

The one thing proponents will not answer is how to replace the $14 million in sales taxes that will go to this project. This amount is already being paid, for instance, 7 milion is an annual welfare check to the Predators. How will it paid when the money starts going to the convention center? No one will give an honest answer.

By: producer2 on 12/14/09 at 9:59

I am sure the honest answer is it goes back to the General Fund. This money has only been available for a few short years and became available because they current CC was paid off ahead of schedule. The Purcell administration made it clear when they began using these funds that it was a temporary move.

By: AmyLiorate on 12/14/09 at 10:24

That's is a LOT of money for one project. How many jobs will it really create in the long run?

By: airvols on 12/14/09 at 10:29

Finally a news story that speaks the truth! Good job on reporting the facts of the MCC. The project should have already been approved and construction started. "Build it they will come", and Nashville will a better destination city.

By: border collie on 12/14/09 at 10:40

maybe the children from the rat infested schools, leaking roofs, etc. will get to have class inside this convention center??? now there is a thought! when the rats bite a child at MLK.....then we can send all those kids to the nice, new convention center to have class while we decide what to do about the rats. they would love that!
and bordeaux elementary kids can go to class there as well until someone determines they deserve to have DRY HEADS! who is going to pay for the mold clean-up that needs to be done now at bordeaux. check out the CDC website for mold concerns!!!! it can kill some people.
the convention center , i am sure, will be a nice, up to date, state of the art, first class facility. that is what we want for our kids so they can go there. i am sure there will be available rooms. OH I FORGET, who cares about the little snot-nose suckers.......they cannot generate any money to the big political pot......sorry kids...maybe you will have to take your chances with the rats.....politics, money, and resumes come first!

By: BigPapa on 12/14/09 at 11:03

Maybe this will be as successful as The Preds, Karl Dean's first big act as Mayor. LOL

By: Wild Bill on 12/14/09 at 11:19

Wild Bill

"With Councilman Carter Todd, a Gaylord Entertainment Co. executive, expected to abstain from voting because his employer competes with Metro for conventions, 39 Council members at most will have a say."

What in the world is Metro doing competing with private business. In fact a business (Gaylord and other convention hotels) that pays big time motel hotel taxes and city sales taxes.

The real problem with this project is not the financing and the lack of a hotel partner, although those problems should be screaming stop, but the whole reasoning behind putting the Davidson county tax payer on the risky hook of the convention center business. If it is such a great deal, why don't we have a hotel partner and for that matter why don't we have a hotel willing to build the convention center itself and then reap all of the profits?

It's because with current economy there is too much risk. But hay, you guys will be out of office in a few years and they won't be foreclosing on you personally.

If any of the council is reading this I hope that you will consider the very fundamental problem with this and consider the extra unexpected cost from LP field and the GEC.... Oh yeah, that GEC thing didn't really work out.....

By: Kosh III on 12/14/09 at 11:29

"I am sure the honest answer is it goes back to the General Fund. This money has only been available for a few short years and became available because they current CC was paid off ahead of schedule."

Thanks for at least trying to answer but that still doesn't say where the money will come from unless you mean that the General Fund will be the source of funding.
Or are you suggesting we stop paying 7 million to the Preds, stop providing 3 million for MTA etc.

So in effect, the taxpayers are paying for at least a portion of this deal.

I think Wild Bill has the best solution " If it is such a great deal, why don't we have a hotel partner and for that matter why don't we have a hotel willing to build the convention center itself and then reap all of the profits?"
Funny how capitalism isn't the answer for this. A Socialist Convention Center? Horrors!!! (sarcasm)

By: frank brown on 12/14/09 at 11:31

I am hoping against hope that a miracle happens and the CONVENTION CENTER is not built.

By: Walter Sobchak on 12/14/09 at 12:02

Well WILD BILL, isn't it obvious why Metro has chosen to compete with this private business.? Gaylord has long been robbing the city to the tune of a quarter of a billion dollars per year, conservatively. Gaylord wants a monopoly on the convention business, and has had it. Shouldn't our city come before a private company that makes a business of sequestering tourists and funneling those dollars away from local businesses?

By: Walter Sobchak on 12/14/09 at 12:41

Correction: Gaylord is a publicy-traded company. Not private. My Bad.

By: DustyU on 12/14/09 at 12:59

Interesting arguments but the truth is in this new economy there isn't enough large convention business to support another behemuth. But Dean will continue to manipulate the numbers until he gets his monument to himself. Then as I said before, the chickens will come home to roost well after he's out office and the council will get the blame for "their" financial irresponsibility.

DustyU.WordPress.Com

By: Anna3 on 12/14/09 at 1:06

Ronnie Stein never met anyone else's money he would not risk. What a corrupt nutbag....and its probably Bo Mitchell holding Steins jock full of cash! Let's be honest....most of these folks have been bought off.

By: CitizensWin on 12/14/09 at 1:23

For those who oppose this behemoth blunder: Please note that council has not voted on anything other than agreeing to look at the financing on January 19th. That's all. This article assumes this is a 'done deal' when it is not. It may as well been written by one of the numerous publicists and advocates for the Music City Center Coalition. The City is finally getting what it has paid so dearly for: FREE PUBLICITY. 

Let's face it folks, conventions are are a dying business. According to their own studies, more cities will be losers when it comes to overbuilt convention halls. Convention Centers are the worlds' fair of yesteryear, the buggy whip factory after the model T, the telegraph after the telephone, the newspaper after the internet. Convention centers are backward looking and not forward thinking. The City disappoints with a the myopic vision of the future being contained in a million sq. feet of trade show artifacts. 

This community has yet seen anything but a 'Convention Center' proposal. As far as I know, there has not been one single proposal offered to the mayor and the council as an alternative of what to do with acres of downtown property and a billion dollar budget. Which is a shame, when you consider that the arbiters of taste in this matter are the least likely ones with any. Just look at their resumes. Law, business administration, journalism, phys ed,  etc etc. There is not a designer among the entire group, yet they are making urban design decisions for the ages. Hard questions exist. 'Do you put a lawyer in charge of urban design?' And the easy answer is 'No'.

Sponsors of this architectural anachronism have some very large money to chase and they are not inclined advocate against it regardless of it's many glaring fault-lines. It's like making a movie. When Hollywood comes  to town, so comes the money and the budgets, certain services are in immediate demand. But when it's all wrapped up, that money ends. The problem is when this proposed center is 'wrapped up', the city is left with an ongoing challenge to book the place and keep the lights on. Because you can't just put a million square feet on the shelf and forget about it. This is a commitment that has decades of consequences. One way or another...

 'If you build it , they will tax you'.

By: Walter Sobchak on 12/14/09 at 1:31

Dusty, I'd certainly like to see a list of historic major conventions that did not happen in 09 due to this "new economy". I know my business was solicited to attend the same major and regional shows that we attend every year. Some of them, by the way had record turnouts. If anything it's been the smaller, less-established conventions that have taken a hit. These are the conventions that anchor our current sad excuse for a convention center. It's time to take the fight to Gaylord and bring those and other tourist dollars into OUR ECONOMY where they belong.

By: Blanketnazi2 on 12/14/09 at 3:46

I heard something on the news the other night about a bunch of companies already wanting to book the convention center even though it's not yet built. Did anyone else see that segment and what do you make of it?

By: JeffF on 12/14/09 at 4:13

because of the oversupply in the industry most meetings are being contracted at below cost, some even receiving money from room rebates and such. Nashville had to beat a lot of other cities already priced at "free" or "less than free", some with new centers and brands of their own. Meeting planners seeing that the CVB was desperate to book meetings for political purposes probably extracted some incredible concession. Further it appears that the CVB quit booking the current paid-for center since a good number of the meetings are in the size range of meetings currently housed in the current asset.

By: Wild Bill on 12/14/09 at 4:15

Wild Bill

Well Walter, Gaylord is robbing the city of a quarter billion dollars a year? If that is true let's see the proof. Also, if that is the case then march right down to the attorney generals office and give him this information so that those responsible can be charged tried and convicted.

"Take the fight to Gaylord". It is not the business of Metro government to be in a fight with a legal business. If they are doing something illegal then the fight is on but otherwise let some other hotel fight it out with Gaylord. Or, better yet, if it's such a good idea run down to the bank and tell them you are ready to fight Gaylord and you want to borrow $500,000,000. You want all of Nashville to risk their money... well leave me out.

Two other things. About this time last year Gaylord dropped plans to add an additional 600,000 square feet of convention space. Why, because people who are really in the business know how hard it is to get a return on those dollars in this economy. Second, Gaylord is in Metro Nashville and pays property tax and sales at it's location provide sales tax dollars to Metro Nashville. Many local businesses provide materials and services to Gaylord. It is a non starter to say they are "funneling" money away from local businesses. I am not sure what "funneling" is. It sounds very scary....... but it is just not true.

By: Blanketnazi2 on 12/14/09 at 4:18

Thanks, Jeff. Didn't think of that.

By: NewYorker1 on 12/14/09 at 4:26

Build the b!tch.

By: Walter Sobchak on 12/14/09 at 4:39

First off, I call BS on JeffF. Do you count The Southern Baptist Convention and the final four among those events that could be held in the current excuse for a Convention Center.? His response is pure specualtion.

Wild Bill - When you have a fully enclosed, all-inclusive monster of a resort within the city limits, of a first or second tier city,. ITS BAD for the CITY!, It steals revenues from the city., sequesters tourists within it's walls., FUNNELS dollars away from private business owners and is tantamount to a MONOPOLY on the convention/tourism business within that city.

and I argue your point that it's not Metros business. It IS Metro's business. Metro understands that Nashville's future hinges largely on it's reputation as a destination city. WE need the 250 million/year in Opryland profits funneled INTO our city, not away from it. Who gives a crap about their tax rate? we want the whole nut!

By: JeffF on 12/14/09 at 4:53

Seeing as how the Southern Baptists have already been in the current facility, yes.

As far as "stealing" revenue from a city, as long all taxes are collected then the government should not care which business it is coming from. Government is not supposed to endorse one business over another. That is part of the ethics laws and rules. Like it or not, Gaylord is just as evil and just as private as other businesses in Nashville. Walter you are also not a person with a degree which required an elective or two in Economics. Before a business can be deemed a "monopoly" it must control a majority of a product or service. Gaylord is the biggest hotel in town, but they fall far short of having 50% of the rooms in Nashville. They would have to control probably at least 2/3 of the number of rooms to be in control of the market.

Your writing indicates that you are one of the myopic people who think that Downtown is the only true "Nashville". That's okay because the mayor thinks the same way as does the people who designs the public transit system. I would love to hear your theory on where that $250 million is getting funneled to. Apparently you are excised that it is not going to downtown?

For the record, there are "destination cities" where the primary draws are not just in downtown, but are not even in the city limits. Orlando and Las Vegas are both destinations without lifting a finger to build public "draws". They both did none the less but their primary destinations are trampling all over what their piddly government efforts.

By: JeffF on 12/14/09 at 4:55

I will add that the NCAA was paid to select Nashville for that Women's Final Four. If you look you will see that all facilities are gratis and NCAA officials and teams will receive payment for selecting Nashville.

By: JeffF on 12/14/09 at 4:59

plus free hotel rooms. Woo hoo what a win. Millions of dollars out for three basketball games and not everyone pays for hotel rooms. What you want to bet that a lot of fans stay outside the wall in Donelson.?

By: JeffF on 12/14/09 at 5:03

maybe we can put special dye on the money being spent in Donelson and the other non-real areas of Nashville to see where it is going since it is being "funneled" away from Nashville. Use the same stuff for contract x-rays or what they put in water to look for leaks?

By: JeffF on 12/14/09 at 5:07

its after 4:00, the government employees have gone home. Sleep well and drive safe.

By: Walter Sobchak on 12/14/09 at 5:17

JeffF- The word is you work for the opposition., and it certainly seems obvious when you lie.

The Southern Baptist Convention WAS here in 05 but was held in the GAYLORD entertainment center. The convention has outgrown our current convention diggs, and were thrilled to hear of the plans for our new center.

AND there you go again, attempting to put the MCC within the context of a "business". Wrong again. Convention Centers are typically municipal money machines, City Owned. NOT an independent business. Therefore the city can and should endorse this facility over Gaylord in bids to host conventions, even if that means Gaylord loses out.

AND you should never attempt to wrap the facts in samantics. Gaylord has over 600,000sf of convention space, The downtown center? 113,000sf. And you're telling me that Gaylord doesn't currently have a MONOPOLY on conventions too large for our current center? Again, I'm forced to call BS.

where does the 250 million go? GAYLORD OPRYLAND. I'll outline it for you once again: Tourists/Conventioners get off of their flights, Into taxis, are dropped at Opryland and never leave. They usually never have the opportunity to see our fair city and SPEND, SPEND, SPEND. The money stays right there, on Gaylord property.

By: Wild Bill on 12/14/09 at 5:18

Wild Bill

Gee Walter did you go to school with Fidel and Che?

I have been there a few times and I did not see anyone from Gaylord holding a gun to the guest and preventing them from leaving the hotel to go somewhere else in Nashville.

If Gaylord is operating a MONOPOLY them you need to go to the Federal AG and share with him the antitrust violations that Gaylord is committing. You see Walter, and all you other big government types, we have laws on the books to address the abuses by BIG BUSINESS. You don't go into competition with them using the resources of the public. When government goes into business they are the ones who are most able to create a monopoly. Yes, businesses can create a monopoly but eventually they will deliver poor products, poor service, or technology advancements will overtake them. Then someone in a garage will start a business to compete with them, best done without government help, and the monopoly will crumple under it's own weight.

Just let the free market work. I know that sounds as scary as "funneling" money, but it really works. If Gaylord is a monopoly then in time they will crumble. However, with the current low occupancy rates and all the special deals they are currently offering on their room rates I don,t think they have a monopoly. Someone must be competing with them.

By: Walter Sobchak on 12/14/09 at 5:26

Wild Bill- On a federal level we agree. On a municipal level we disagree.

How is using tourist tax dollars to build a municipal structure "not letting the free market work?"

I am a total free market advocate, own businesses. All I'm advocating is that we give our city the tools neccessary for businesses to compete with Behemoths like Gaylord. AND stop subsidizing them for Christ's sake.

By: JeffF on 12/14/09 at 5:32

the USPS is a great example what happens when the government does something that the private world does better while making a profit.

When I was referring to Gaylord not having a monopoly I was talking about hotel rooms genius. You know the thing that CC supports say will make us back our money while they sell conventions at a loss. Would love to sell how much the SBC got from NAshville in kick backs just to be used as leverage in this debate. No doubt free rent, but I would bet that they will have extra center days gratis as well as room rebates from the CVB and free rooms for the organizers not already living here in their home town. Memphis lost a simlar gathering this year because the room rebates to that church group weren't as great as those offered by every other city competting. Maybe you can refresh us on the magical multiplier and the effect free stuff has on it.

By: JeffF on 12/14/09 at 5:34

stop subsiding someone and build me a facility. thats funny.

By: JeffF on 12/14/09 at 5:39

Property taxes that a convention center will pay. Zero
amount of money taxpayer will pay annually to subsidize this non earner. $14 million plus $2 million in operating losses
sales taxes will be used entireley by the entitiy, utilities will be at government rates, employees will be on city insurance and retirement plans

amount of property taxes from Gaylord: millions, guaranteed, expected
taxpayer money subsidizing: zero
Plus sales taxes going to general fund, utilities, etc. no one on taxpayer benefits. But they employ a lot of illegals.

By: Walter Sobchak on 12/14/09 at 5:44

That's right. You have to stop subsidizing the competition at some point. Of course the millions in tax breaks were just a lame attempt to keep Gaylord out of the fight. Nobody said Metro isn't dirty. And it's not build ME a facility, It'll be a municipal facility.

By: Walter Sobchak on 12/14/09 at 5:50

Who's willing to gamble $22.80 of their own personal annual income that this thing makes money for the city? I'm in.

And JeffF, How is giving an $84 million tax break to Gaylord NOT an eventual taxpayer subsidy?

By: producer2 on 12/14/09 at 6:31

JeffF,
Call it a day dude, he is handing you your lunch...