Nashville convention center project may divert school cash

New board could let Metro dilute pledged sales tax revenue By Michael Cass • THE TENNESSEAN • August 17, 2009 Some Metro Council and school board members are voicing concerns that a proposed convention center oversight board would be able to tap a pool of sales tax revenue that's meant to be used for schools if other funds didn't cover the $635 million facility's expenses. The Metro Charter requires that two-thirds of local-option sales tax revenue go to schools. But a new state law authorizing the city to create a convention center authority says Metro can help the authority with revenue from any source, regardless of other laws. "Anything that dilutes the commitment for two-thirds of sales tax proceeds to go to schools concerns me," school board Chairman David Fox said Thursday. Metro Finance Director Rich Riebeling said Fox doesn't need to worry. "There will be no sales tax pledge toward this project," Riebeling said. "The statute says there will be no property tax used, but I will say to you and to the council and to Mr. Fox that no sales tax will be used, either." The council is expected to vote Tuesday on legislation to create a nine-member convention center authority, which would oversee the facility's staff and issue bonds to pay for construction. The mayor would appoint the authority's unpaid members. Enabling legislation approved by the General Assembly this year says the authority could tap any Metro funds if it needed them to fill gaps in paying debts or operating expenses. Fox said he worries that "financial distress" for the proposed new downtown convention center could put a portion of Metro schools' sales tax revenues in play. (Fox is not related to the man of the same name whose public relations firm, McNeely Pigott & Fox, has come under fire for its promotion of the convention center project.) The school district expects to receive $179.4 million from sales tax revenue this year, making up almost 29 percent of its $620.7 million budget. Tourists would pay Mayor Karl Dean and other convention center boosters have always said they plan to use revenue from a series of taxes and fees targeted primarily at tourists to pay for the facility. But critics of the project have pointed to the economic recession and numerous cities' difficulties drawing visitors to their convention halls. Asked if he was sure a new convention center wouldn't need a bailout from sales tax funds at any point, Riebeling replied, "I do not envision any scenario under which sales tax would be pledged in any form." The convention center also would receive some sales tax revenue from the creation of a nearly three-square-mile "tourism development zone" around the center, which is scheduled to be built just south of Sommet Center. The council voted in January to approve a plan that would allow the city to use the difference between existing sales tax revenue in the zone and the amount generated after the center opens to pay off construction debt. The idea is that the convention center would be able to use the extra sales tax revenue that it helps bring into downtown Nashville. Schools exempted Schools would not get their normal two-thirds share from that pool of new sales tax dollars — or any share, for that matter — though their existing collections from the area would not be affected. Councilman Jason Holleman said the center's advocates have argued that the additional revenue would not be available were it not for the convention center itself. But with the tourism development zone stretching as far as Jefferson Street, the facility's impact on business growth throughout the area would be debatable, Holleman said. "Did those additional dollars happen because of the convention center or because the city is growing?" he said. The state has not approved the boundaries of the tourism development zone, spokeswoman Lola Potter said. But Riebeling said he expects approval "in due course.