Dean administration promises no property taxes for Convention Center

Amid grumblings from Metro Council members and growing concerns from the general public, Mayor Karl Dean’s administration promised Tuesday that the proposed new Convention Center would not be financed with property taxes.

The administration amended a piece of state legislation that would authorize the creation of the new Convention Center Authority. The amendment states that “ad valorem (or ‘according to value’) property taxes can not be contributed or pledged to the project.”

One of Dean’s top aides said the amendment to the state legislation should be viewed as a promise that property taxes would not be used to back bonds issued to fund Music City Center.

“I think we’ve said all along property taxes will not be used for it and now it’s expressly prohibited,” Metro Finance Director Richard Riebeling said. “It pretty well states the case.”

The step by Dean came after Council members like Emily Evans, Michael Craddock, Eric Crafton, Jason Holleman and Phil Claiborne, among others, said only revenue bonds should be used to finance the proposed new Convention Center, which will likely carry a price tag of close to $635 million.

A financing package will be presented to Council in the coming months, Riebeling said. As it stands now, the Convention Center will be funded with the tourism taxes passed by Council last year, along with sales tax from within the newly created Tourism Development Zone around the SoBro area.

Revenue bonds put at risk the financial institutions that purchase the bonds, whereas general obligation bonds put at risk the taxpayers.

“If we believe in this project, and we do, and we think it can pay for itself with these taxes, then let’s just take this off the table,” Riebeling said.

Crafton proposed a nonbinding memorializing resolution stating it was Council’s intent to pay for Music City Center with revenue bonds not backed by the full faith and credit of Metro.

Crafton did not attend Tuesday’s Council meeting, but instead drafted a letter asking for deferral. Councilman Jim Forkum tabled Crafton’s proposal and the resolution was defeated by Council.

Forkum said Crafton’s resolution was unnecessary after the administration’s promise to not use a property tax pledge to pay for the center.

Two Council committees recommended the memorializing resolution be defeated.

“I think there’s no use in really letting anything hang out there over our heads to come up again,” Forkum said. “It was defeated in two committees soundly, so I don’t see the need for it.”

The state legislation would allow Metro to create a Convention Center Authority to acquire land, manage operations, hire an executive director and pay back debt issued for the project.

The legislation (HB1347, SB1082) was sponsored in the House by Rep. Mary Pruitt and in the Senate by Sen. Thelma Harper.

The legislation will be considered in the Senate subcommittee today and in the House subcommittee next week.