Friday, January 18, 2008

Metro says it can afford a $595 million convention hall

By MICHAEL CASS • Staff Writer (Tennessean) January 18, 2008 A new downtown convention center would make Nashville competitive for 70 percent of the convention market starting in 2012 under a plan released Thursday and endorsed by Mayor Karl Dean. It wouldn't come cheaply, with the price tag up almost one-third since a 2006 proposal, but the $595 million cost would be funded by taxes and fees paid mostly by convention-goers and other tourists, covering the city's annual debt on it, Metro Nashville officials said. Dean said the proposed facility, with 375,000 square feet of exhibit space, would help the city broaden its tax base by generating millions in sales tax revenues that aren't coming in now. The existing Nashville Convention Center has less than a third that much exhibit space and is considered too small and outdated to attract most major meetings and shows. "A new convention center is an expensive undertaking, but it's an investment as a city that we need to make in ourselves," Dean told Metro Council members before they were briefed on the plan. "It's the right time for this project in Nashville." The plan, written by the Metro Development and Housing Agency at Dean's request, updates a city task force's 2006 proposal for a $455 million facility. MDHA Executive Director Phil Ryan said the cost of steel and other construction materials has gone up considerably since the release of that report, which former Mayor Bill Purcell never embraced. Convention center proponents said they were grateful to have Dean's enthusiastic backing after being frustrated by Purcell's reluctance to move forward. "Having the mayor's support of any public project is very important to its success," said Marty Dickens, chairman of the Music City Center Coalition. The existing convention center downtown is no longer big enough to hold the biggest gatherings like The Passion Conferences, which once brought 18,000 Christian college students to town but left last year for Atlanta. The new report's budget includes $50 million for land acquisition and $20 million to relocate a Nashville Electric Service substation from the proposed 15.6-acre site south of the Sommet Center. Ryan said that location, which the earlier task force recommended, is the best place to bring convention participants close to Nashville's downtown entertainment district. The MDHA plan also includes $40 million for the possible funding of two 1,000-car parking garages. While that cost could push the city's overall expense to $635 million, Ryan said he hoped private developers would pay some of it. Metro Finance Director Rich Riebeling said revenue sources dedicated to the project, such as fees on rental cars, should generate $39 million a year, enough money to pay back as much as $650 million in debt, plus interest at current rates, over 20 to 30 years. Taxes and fees already in place — after approval from the state legislature — are on pace to generate $27 million a year, well ahead of the $25 million initially projected, Riebeling said. Other revenue streams would kick in after the convention hall opened. "That gives me the comfort I have now that the project is feasible," Riebeling said. Ryan said a 1,000-room "headquarters" hotel attached to the convention hall would cost another $250 million to $350 million, paid primarily by developers. The city would provide some financial assistance, as it often does on downtown hotels, by letting some of the hotel's property taxes defray the developer's construction costs, he said. A "pre-development" process of design and site studies should take 18 to 24 months and would start next month if the council approves it, Ryan said. Construction would take two-and-a-half to three years. Council members seemed receptive to the plan as a standing-room-only crowd dominated by convention center boosters looked on. "I'm entirely in favor of this," said Councilman Sean McGuire of Green Hills. Councilman Jim Gotto of Hermitage said he wanted to make sure the convention center would be built with future expansion in mind so the city wouldn't "get halfway down the road and say, 'We really should have built this bigger.' " Ryan said the planning process in the coming months would take that into account. Ryan said the plan unveiled Thursday balances the need for a much better facility with the cost of such a major project. "This was an attempt to stay competitive but not necessarily be the end-all of convention centers in our market."

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