In recent months the discussion regarding the proposed Music City Center (MCC) has polarized into a debate between two opposing groups, one for and one against. One of the difficult roles for me as a Councilman, especially when the sides of an issue are fairly even, is to come to the correct decision knowing that close to half the people are not going to be pleased either way. In attempting to do that with this issue I have sought diligently to filter out as much of the emotion of the discussion as I could in order to come to a pragmatic conclusion. Whether you agree with my decision or not, I hope you will understand that I have spent hours upon hours listening, asking questions and reading reams of material in making my decision. With that said I am convinced that support for the Center is the right thing to do.

Now that my position is stated, let me take a minute to clarify one point that is widely misunderstood by those who oppose the project. The monies that are presently being collected for this project were authorized by the Tennessee General Assembly and include the following:

Current Collections:

• $0.02 of the existing $0.05 Hotel/Motel Tax
• Addional $0.01 Hotel/Motel Tax
• Convention Center Surcharge ($2.00 per room night)
• Rental Car Tax at 1%
• Airport Ground Transportation Departure Tax at $2.00

New Revenue Streams When Center Opens

• Tourism Development Zone (TDZ) Incremental Sales Tax
• Redirected Sales Tax revenues generated with the MCC "Campus"

These dollars can only be spent for the development, construction and payment for a new convention center in Nashville. If the Center was not being considered, none of these monies would have ever been collected and if the Center is not approved, the collections will stop. It is important to understand that none of these monies can be used for any purpose related to the general fund operation of Metro Government.

Recently I spent the better part of two hours with the Director of Finance for Metro for the purpose of understanding the finance package as it relates to the bonds that are to be issued for the Center. My primary concern was to see what safeguards were in place to protect against any eventual property tax liability.

The following are highlights of that meeting:

Total cost of the project is $585 million which includes a Guaranteed Maximum Price Contract which transfers construction overrun risk to the contractor.

Two types of bonds will be issued which are:

• Series 2010A Bonds. These are revenue only bonds with no Metro pledge and represent c. $200 million of the total cost. These bonds have a first lien on the revenues. These do not include any of the operating costs of the MCC or revenues.
• Series 2010 B Bonds. These bonds will carry a “back-up pledge” from certain Metro non-tax revenues and represents the balance of the total project cost. These bonds further are secured first by a $40 million Debt Service Reserve Fund that is established immediately from the proceeds of the bond sale. Protection also comes from surplus monies on deposit in the Project Reserve Fund. Once all these dollars have been tapped, and only then, would Metro be obligated to use Non-Tax Revenues to met a deficit.
• Both series of bonds are eligible for the Build America Program (which is part of the Federal stimulus program) which means that Metro will receive a 35% interest offset which translates to an annual savings of c. $5 million during the life of the bonds.

When the total debt service is compared to the projected revenue stream totals there is never a year during the life of the bonds in which there is not surplus revenue.

Many question why the current Convention Center is not good enough and why Gaylord can’t serve the need and the answer is simple. The present Center can accommodate approximate 20-25% of the existing convention business in the country. The Gaylord Opryland Center draws business primarily from the corporate market that often prefers the “all under one roof” concept. With the new Music City Center we will be able to complete for 70% of the convention market and continue to focus on association business.

The economic and fiscal impact on the city will be measurable in a number of ways based on how long a new visitor is in the city and whether they are in overnight lodging or not. National surveys show that overnight delegates spend between $200 and $500 per day on lodging, food, local transportation, recreation, and entertainment while daytrip delegates typically spend $40 to $100 a day. This is money that not only goes into the operation of the MCC but also into the local economy.

From a fiscal view the MCC will be responsible for the creation of close to 2,000 construction jobs that will last between 2 to 3 years of the construction phase and once operating, will support an estimated 1,500 new jobs related to the Center its self. Conservative estimates are that over $2.6 million in new local sales tax dollars will result from the Center’s presence as well as over $8.2 million in new state sales tax dollars.

Much has been said about the possibility of the MCC causing property taxes to increase but I would contend that the reverse is true. The operating budget for Metro is funded by three sources of revenue; property tax, sales tax and fees/license use taxes. In an economically depressed period the sales tax usually decreases and to a lesser degree so do the fees/license dollars. That puts pressure on the more stable part of the trio, the property tax. If we are to build a buffer against increases in property taxes the only way to do that is by increasing the sales and use tax base. The MCC will have that effect as it adds an estimated $2.6 million annually to the General Fund.

Additional reasons for supporting the project at this point in time include the fact that labor and materials construction costs are still favorable due to the lack of new construction and interest rates are still at an all time low. If this project goes forward and is completed in 2013 Nashville will be poised to take advantage of the national economy when it has cycled again to a more optimistic time.

If you’ve been patient enough to read this far I’d like to thank you and to assure you once again that I have taken this decision very serious. As stated previously I have spent hours and hours working through the process that has led me to support this project. You may agree or disagree with me but I have done the homework and I am comfortable with the choice.