A significant shortage in projected hotel-motel tax revenues would force Metro to annually take millions from its general fund to bankroll a proposed $585 million convention center, according to a report released by Goldman Sachs, the would-be bond underwriter for the proposed Music City Center.
A feasibility study conducted by HVS Consulting says if revenues from a combination of taxes and fees that target tourists flow in as anticipated, Metro should soundly be able to pay off the project’s bonds over time. Still, under the proposed finance plan, non-tax revenue from the city’s general fund — dollars generated from city licenses, permit franchise fees, fines and penalties, for example — would back up those bonds.
Metro Finance Director Richard Riebeling has said he doesn’t anticipate the non-tax revenue ever being used, maintaining that it’s part of the finance package only to market the bonds to investors and lower interest rates.
But several Metro Council skeptics have raised concern over the non-tax revenue pledge, wondering at what point would Davidson County taxpayers be on the hook.
In a Goldman Sachs document e-mailed to the council Thursday, figures suggest that if 90 percent of the revenue streams were generated, then the general fund would remain untouched.
However, if only 75 percent of the projected revenues were collected, the general fund would be used for an eight-year stretch, with a high of $6.6 million used in 2019.
And if just 50 percent of HVS forecasts were met, non-tax revenues would be required for 25 years, with Metro tapping between $15 million and $18 million in general fund dollars each year during one 10-year stretch.
“In our opinion, the HVS numbers are conservative in nature, properly taking into consideration the current poor economic conditions,” Riebeling wrote to council members in a letter accompanying the report. “Their numbers also do not reflect the impact of a headquarters hotel or the Medical Trade Mart.
“Finally, we should also remember that the project is estimated to generate an additional $12 million in tax revenues for Metro Nashville over and above the tax revenues used to retire debt and operating costs of the project,” Riebeling added.
The council is scheduled to vote on a resolution to approve the finance plan Jan. 19.