http://bit.ly/4K8x0p
The Negative Rating Watch reflects the potential additional fiscal strains of a planned $638 million debt-financed convention center upon an already pressured general fund beset by slim reserve levels, significant long-term liabilities and constrained revenue-raising ability.
--Long-term financial pressures include a voter-approved charter amendment that limits Metro's ability to increase its millage as well as sizable pension and OPEB liabilities in comparison to its operating profile.
--Debt levels, including the upcoming convention center financing, are above average, while amortization is below average.
WHAT COULD TRIGGER A DOWNGRADE?
--Issuance of convention center debt secured by a back-up pledge of non-tax general fund revenues could result in a minor downward adjustment to the rating, assuming the constancy of other credit factors.
SECURITY:
The GO bonds are payable from Metro's full faith, credit, and taxing power (YOU, Taxpayer). Metro has committed a debt service reserve deficiency make-up subject to appropriation as security for the district energy system bonds.
Matthews on Minority Hiring "I Trust You"
Cass has the story HERE
“would be willing to amend”
“whatever language the convention center authority adopts”
“Mayor Karl Dean asked”
“keep a close eye on the issue”
“make sure”
“participation is maximized”
“mayor’s directive”
“we are on board”
“He gave me his word,” Matthews said.
Sounds like that’s all they gave you, Lonnell – words.
“would be willing to amend”
“whatever language the convention center authority adopts”
“Mayor Karl Dean asked”
“keep a close eye on the issue”
“make sure”
“participation is maximized”
“mayor’s directive”
“we are on board”
“He gave me his word,” Matthews said.
Sounds like that’s all they gave you, Lonnell – words.
House of Cards Starting to Fall?
Just heard from a reliable source the Mayor lost another vote in the past 24-36 hours. Will there be a domino effect?
Can the Mayors Office Count?
I'm not talking about 400, 635, 585, 627, or 650 million dollars (or whatever the final number becomes). I'm talking about votes. The Mayor's office has consistently implied this thing is a done deal. They have hired every lobbyist and PR firm in town who troll the blogs and comments sections saying this is a SLAM DUNK.
But is it?
The Mayors office is now saying they have 22ish votes. Which I've learned means they have 16-17 SOLID votes, a couple of "leaners", and a few that will be getting a lot of attention in the next 5 days.
So what happened? Didn't the Mayor enjoy 30+ votes from the Council when they were authorizing money, condemning property, and moving this along incrementally? What has happened to the Mayors support? Is the Mayor's "Trust Me" M.O. losing it's effectiveness? Does anyone over there know how to count?
But is it?
The Mayors office is now saying they have 22ish votes. Which I've learned means they have 16-17 SOLID votes, a couple of "leaners", and a few that will be getting a lot of attention in the next 5 days.
So what happened? Didn't the Mayor enjoy 30+ votes from the Council when they were authorizing money, condemning property, and moving this along incrementally? What has happened to the Mayors support? Is the Mayor's "Trust Me" M.O. losing it's effectiveness? Does anyone over there know how to count?
HVS says Milwaukee, er, I mean, Nashville, is Unique
Jameson Questions Music City Center Feasibility Study
Joey Garrison
The legitimacy of a feasibility report used to justify bankrolling a proposed $585 million convention center was called into question from a Metro Council skeptic Monday night during a question-and-answer session leading up to next week’s final vote on the project.
Councilman Mike Jameson, a frequent critic of Music City Center, pointed out that language used by HVS Consulting –– a firm hired by Metro to predict the market potential for a new convention center in Nashville –– forecasts the same “rosy picture” for other cities that have paid for the group’s services, despite HVS’ claim that Nashville is positioned economically different than other municipalities.
Reading aloud from one report after another, Jameson showed that analyses (sic) HVS conducted for the cities of Sante Fe, N.M; Milwaukee, Wis.; Columbus, Ohio and Omaha, Neb. held the same claims –– word-for-word –– that a dependence on local event business “provides a partial buffer against economic cycles and continued concerns with air travel.” He went on to single out a study commissioned for Sante Fe in which HVS appeared to accidentally provide information addressed to Milwaukee.
“In that instance you weren’t just cutting and pasting, and changing the city’s name,” Jameson said. “You cut and pasted, and kept the wrong city.
Continue reading HERE
Joey Garrison
The legitimacy of a feasibility report used to justify bankrolling a proposed $585 million convention center was called into question from a Metro Council skeptic Monday night during a question-and-answer session leading up to next week’s final vote on the project.
Councilman Mike Jameson, a frequent critic of Music City Center, pointed out that language used by HVS Consulting –– a firm hired by Metro to predict the market potential for a new convention center in Nashville –– forecasts the same “rosy picture” for other cities that have paid for the group’s services, despite HVS’ claim that Nashville is positioned economically different than other municipalities.
Reading aloud from one report after another, Jameson showed that analyses (sic) HVS conducted for the cities of Sante Fe, N.M; Milwaukee, Wis.; Columbus, Ohio and Omaha, Neb. held the same claims –– word-for-word –– that a dependence on local event business “provides a partial buffer against economic cycles and continued concerns with air travel.” He went on to single out a study commissioned for Sante Fe in which HVS appeared to accidentally provide information addressed to Milwaukee.
“In that instance you weren’t just cutting and pasting, and changing the city’s name,” Jameson said. “You cut and pasted, and kept the wrong city.
Continue reading HERE
Well Said, Sir
Opinion: The public Doesn’t Want MCC
Sunday, January 10, 2010 at 10:45pm (Monday print edition)
Mike Jameson
If public opinion polls by The City Paper, two television stations and a local union are any indication, the public opposes the proposed convention center. While financial costs may be a primary reason, equally significant costs are rarely mentioned.
There are clear financial costs.
A new center alone will require $585 million. An additional reserve fund of $45 million brings the total to $630 million. An adjacent hotel, described as “critical,” adds another $300 million-$400 million in public debt.
(And this assumes the center and hotel are built within budget.) Payments on principal and interest over 30 years will total $1.2 billion.
In 1987, Mayor Richard Fulton built the current convention center at a cost ($50 million) representing one-third what the city was generating in annual tax revenues ($150 million). He paid for 20 percent of it with federal grants; private investors paid for the adjacent hotel; and the center opened while the convention industry was booming. Compare that to a project that costs twice what the city generates in annual tax revenues ($450 million), has no federal grants, no private investors, and faces an industry in decline.
Nashville is currently $1.7 billion in debt. Large parts of that debt result from various non-essential amenities. Every year, we pay $10.2 million for LP Field (in part by charging a little extra on your water bill.) We also pay out $9.6 million for the arena, funded by property taxes. Then we pay additional cash payments of $7.3 million annually to the Predators. The current center costs $800,000 in yearly subsidies (and the new center’s estimated operating costs total $2 million-$5 million).
And what would we get for $1 billion? The administration’s consultant (HVS) suggests we’ll see 210,000 more “room nights” over the 5 million we see today, equaling 70,000 new overnight visitors — an improvement of 0.6 percent over the 11 million we already get. That’s right: 0.6 percent. (And an official Metro Council legal analysis projects the center will lose $2.6 million by 2016.)
Then there are redirected costs.
Financing the center would redirect $14 million we currently use to fund other things — like police overtime, MTA buses and the Predators’ subsidy. A year ago, The City Paper asked how Nashville could afford the center while continuing to fund such items. The administration’s finance director replied, “…[W]hen we come up with a plan to fund the convention center, we’re going to have to answer that question and show you exactly how it’s going to be laid out.” But when asked the same question after the funding plan was announced, the finance director replied, “We’ll deal with that after we deal with the whole budget process. I can’t tell you the answer.”
Then there are accuracy costs.
Center proponents urge support because the project would “bring a million new visitors to Nashville,” create “more than 30,000 additional jobs,” and bolster Nashville’s “second-largest industry.” But administration consultants estimate nowhere near a million new visitors — not even 3 percent of that. The “30,000 new jobs” claim over-estimated the official report’s number by 500 percent. (And really, when downtown only holds 45,000 people on any given business day, you have to wonder.) And if the convention industry is really our “second-largest industry,” somebody needs to tell the Bureau of Labor Statistics. It doesn’t even rank it in the top 10.
Of greater concern is consultant accuracy. Asked for examples of its projections in other cities, HVS cited Overland Park, Kan., and Schaumberg, Ill. Guess how convention centers in those cities are currently faring? (You don’t wanna know.) Last month, HVS acknowledged “mistaken” projection assumptions (totaling $3 million in hotel tax receipts). Now company officials refuse disclosure of records.
Then there are transparency costs.
A campaign to lobby council members turned out to be tax-funded. An incremental legislative approach forced our body to decide whether to buy land and establish an operating authority months before seeing proposed financing or even feasibility studies on the center. And now the ultimate decision gets scheduled over the holidays.
But the greatest cost is opportunity.
Even assuming the center could pay for itself, its opportunity costs — its effect on our bond rating and total indebtedness — mean that if we do this, we can’t do other things (like build better schools, hire more police, pave streets). As one consultant said, “Money dedicated to a long-term project such as the convention center is necessarily unavailable for other projects that might also provide lasting value.”
What brings visitors to Nashville is not an air-conditioned box; it’s those things that make our city special, like its people. If we truly believe in Nashville, its people should
be our priority.
Mike Jameson is an attorney and damn fine Metro Councilman.
Sunday, January 10, 2010 at 10:45pm (Monday print edition)
Mike Jameson
If public opinion polls by The City Paper, two television stations and a local union are any indication, the public opposes the proposed convention center. While financial costs may be a primary reason, equally significant costs are rarely mentioned.
There are clear financial costs.
A new center alone will require $585 million. An additional reserve fund of $45 million brings the total to $630 million. An adjacent hotel, described as “critical,” adds another $300 million-$400 million in public debt.
(And this assumes the center and hotel are built within budget.) Payments on principal and interest over 30 years will total $1.2 billion.
In 1987, Mayor Richard Fulton built the current convention center at a cost ($50 million) representing one-third what the city was generating in annual tax revenues ($150 million). He paid for 20 percent of it with federal grants; private investors paid for the adjacent hotel; and the center opened while the convention industry was booming. Compare that to a project that costs twice what the city generates in annual tax revenues ($450 million), has no federal grants, no private investors, and faces an industry in decline.
Nashville is currently $1.7 billion in debt. Large parts of that debt result from various non-essential amenities. Every year, we pay $10.2 million for LP Field (in part by charging a little extra on your water bill.) We also pay out $9.6 million for the arena, funded by property taxes. Then we pay additional cash payments of $7.3 million annually to the Predators. The current center costs $800,000 in yearly subsidies (and the new center’s estimated operating costs total $2 million-$5 million).
And what would we get for $1 billion? The administration’s consultant (HVS) suggests we’ll see 210,000 more “room nights” over the 5 million we see today, equaling 70,000 new overnight visitors — an improvement of 0.6 percent over the 11 million we already get. That’s right: 0.6 percent. (And an official Metro Council legal analysis projects the center will lose $2.6 million by 2016.)
Then there are redirected costs.
Financing the center would redirect $14 million we currently use to fund other things — like police overtime, MTA buses and the Predators’ subsidy. A year ago, The City Paper asked how Nashville could afford the center while continuing to fund such items. The administration’s finance director replied, “…[W]hen we come up with a plan to fund the convention center, we’re going to have to answer that question and show you exactly how it’s going to be laid out.” But when asked the same question after the funding plan was announced, the finance director replied, “We’ll deal with that after we deal with the whole budget process. I can’t tell you the answer.”
Then there are accuracy costs.
Center proponents urge support because the project would “bring a million new visitors to Nashville,” create “more than 30,000 additional jobs,” and bolster Nashville’s “second-largest industry.” But administration consultants estimate nowhere near a million new visitors — not even 3 percent of that. The “30,000 new jobs” claim over-estimated the official report’s number by 500 percent. (And really, when downtown only holds 45,000 people on any given business day, you have to wonder.) And if the convention industry is really our “second-largest industry,” somebody needs to tell the Bureau of Labor Statistics. It doesn’t even rank it in the top 10.
Of greater concern is consultant accuracy. Asked for examples of its projections in other cities, HVS cited Overland Park, Kan., and Schaumberg, Ill. Guess how convention centers in those cities are currently faring? (You don’t wanna know.) Last month, HVS acknowledged “mistaken” projection assumptions (totaling $3 million in hotel tax receipts). Now company officials refuse disclosure of records.
Then there are transparency costs.
A campaign to lobby council members turned out to be tax-funded. An incremental legislative approach forced our body to decide whether to buy land and establish an operating authority months before seeing proposed financing or even feasibility studies on the center. And now the ultimate decision gets scheduled over the holidays.
But the greatest cost is opportunity.
Even assuming the center could pay for itself, its opportunity costs — its effect on our bond rating and total indebtedness — mean that if we do this, we can’t do other things (like build better schools, hire more police, pave streets). As one consultant said, “Money dedicated to a long-term project such as the convention center is necessarily unavailable for other projects that might also provide lasting value.”
What brings visitors to Nashville is not an air-conditioned box; it’s those things that make our city special, like its people. If we truly believe in Nashville, its people should
be our priority.
Mike Jameson is an attorney and damn fine Metro Councilman.
Will Voters Remember?
The Channel 4 poll says 87% of people who oppose the MCC are going to remember that going into Council re-elections. Pretty damning stuff. Someone responded in the comments of a Tennessean story that people remember. I agree, some will remember, but I believe the average voter has a short attention span. However, the MCC is like the Jelly of the Month Club (go to 2:39 HERE) "That's the gift that keeps on giving the whole year."
If Dean were to withdraw MCC - or the Council were to reject it - the average voter would forget about this debacle and most would get re-elected.
But, if the MCC passes, we'll first deal with how to make up for lost $14 million in services (for the Sommet Center (which is legally binding); the Historical Commission; Police Overtime; MTA; etc). Then we'll learn the taxpayers are funding one or two new hotels, or there is no hotel. Then we'll hear about all the eminent domain against property owners. Then we'll raise property taxes (which the Mayor has not ruled out when asked). Then the cost overruns will start. Then the delays. Then we won't meet the minority/woman owned business quota. You get the picture. Anti-MCC folks will use this expenditure as THE reason Davidson County can't meet it's budgetary and service needs (fairly or unfairly).
So to the Mayor and Council, I don't offer this as a threat, but advice - reject it and people forget. Heck, use this as a way to show your constituents you're fiscally responsible. Pass it and answer questions until the day after you lose re-election. You've seen how well the Mayor's office has done in explaining the need for MCC, and they have 7 PR firms on board. Will you be able to explain it in your re-election campaign?
If Dean were to withdraw MCC - or the Council were to reject it - the average voter would forget about this debacle and most would get re-elected.
But, if the MCC passes, we'll first deal with how to make up for lost $14 million in services (for the Sommet Center (which is legally binding); the Historical Commission; Police Overtime; MTA; etc). Then we'll learn the taxpayers are funding one or two new hotels, or there is no hotel. Then we'll hear about all the eminent domain against property owners. Then we'll raise property taxes (which the Mayor has not ruled out when asked). Then the cost overruns will start. Then the delays. Then we won't meet the minority/woman owned business quota. You get the picture. Anti-MCC folks will use this expenditure as THE reason Davidson County can't meet it's budgetary and service needs (fairly or unfairly).
So to the Mayor and Council, I don't offer this as a threat, but advice - reject it and people forget. Heck, use this as a way to show your constituents you're fiscally responsible. Pass it and answer questions until the day after you lose re-election. You've seen how well the Mayor's office has done in explaining the need for MCC, and they have 7 PR firms on board. Will you be able to explain it in your re-election campaign?
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