Metro Council’s first informational meeting on the Nashville Predators last Thursday night raised a few eyebrows among supporters of a new downtown convention center.
The eyebrows weren’t raised at perhaps some inane question a Council member asked about the deal Mayor Karl Dean’s staff negotiated with the local group.
No, they did a little double take when the Richard Riebeling, the new Metro finance director, identified the source funds that would cover the city’s investment in the team — money that’s earmarked for a new downtown convention center.
“I think the important thing is that [local] taxpayers can be assured that no taxpayer dollars — no property tax dollars — are being used to cover the additional cost of this transaction. It’s coming from hotel, motel tax,” Riebeling said in response a question from Councilman Charlie Tygard.
Yep, looks like supporters of the convention center are going to have a wee bit tougher time wrestling the money back from Metro to pay off bonds if a new center is ever built.
Interestingly, the same group pushing for keeping the Predators here is substantially the same group pushing for the convention center. It’s pretty much the Nashville chamber crowd along with downtown merchants supporting both causes.
In a way, pushing for the short term of saving the Predators may have hampered the ability to have the full funding sources for a new convention center. Yet, they didn’t have much choice — forgoing one, the Predators, to ensure success of the other, the convention center.
Center supporters have former Metro Finance Director David Manning to thank for setting it up this way. For several years, as the hotel motel tax fund grew, dollars were being used to cover part of the arena’s operating loss.
That operating loss ran upwards of $5 million or so depending who was calculating it and hotel taxes were paying about $1.5 million each year. This year, $4.8 million of the fund was budgeted for the team’s operating loss, with only $818,000 coming from property taxpayers to fill out the $5.6 million budgeted subsidy.
Technically, it qualifies as valid tourism use of the dollars. The Predators draw people from outside the county as do concerts… wink, wink. Some of the money went other tourist attractions as well such as the Adventure Science Center.
A revenue stream of several million dollars opened up when the bonds were paid off for the current convention center. Left untapped for several years, the fund would have built a hefty reserve on top of the 1 percent increase that is in place for the new convention center. Plans call for all of that money along with other sources covering the note for a $455-million center. That’s an old number and probably will go higher but that’s the gist and sharing the revenue stream may still be kind of a problem.
Supporters say they are confident that they can secure the revenue stream. One said a new convention center probably wouldn’t be opened for five years; so not having that stream is acceptable for the time being. In five years, the supporter said, the city might not be supporting the team any longer.
Of course, one way the city wouldn’t be supporting the team is if it moved after losing a bunch of money. Another way is if the team and the arena with a new lease became so wildly successful under the new ownership, the city no longer needed to pony up the extra cash for the operating subsidy.