Mayor Karl Dean’s public-private financing plan to pay for a $250 million Omni hotel that would anchor Nashville’s new convention center cleared its first significant hurdle on Thursday morning.
The nine-member Convention Center Authority unanimously approved a preliminary development agreement that sets parameters for the hotel deal and obligates Metro to limit hotel negotiations exclusively with Omni.
“This allows everything else to move forward,” Metro Finance Director Richard Riebeling said. “We’re moving on a very fast timeframe.”
The stage is now set for a formal public-private agreement to be presented to the authority on Sept. 30 before voting on the matter on Oct. 7. The official hotel-financing plan would then go to the Metro Council for final approval.
Omni’s development budget and design plans for the new hotel –– to be built just south of the Country Music Hall of Fame between Fourth and Fifth avenues –– are also expected by the end of September.
Under Dean’s plan, Omni would cover $250 million in development costs up front. Omni would then collect $103 million in tourism tax revenues generated by the new hotel over the course of 20 years. Omni would also receive a 62.5 percent property tax reduction and take in $25 million through tax-increment financing.
Charles Robert Bone, who provides legal counsel to the authority, said the preliminary development agreement contains “90 to 95 percent” of the language that will be in formal agreement.
Besides setting the parameters, Bone said the preliminary development agreement also obligates the authority to cover up to $1.15 million in land option costs if a development agreement is not reached.
Prior to the authority’s vote, Omni executives showed authority members a slideshow presentation that highlighted the company’s plans to “localize” the new 800-room hotel uniquely for Nashville.
Authority members seemed impressed.
“I’m hearing two things,” authority member Leo Waters said. “Ya’ll think this is a good deal. The other thing I’m hearing is they’re willing to write a $250 million check. And that’s pretty damn important, too.”
In other business, the authority signed off on a $415 million construction budget for the new Music City Center. The total price tag for the 1.2 million-square-foot facility is $585 million. The financial difference is set aside for predevelopment work, land acquisition and other non-construction costs.