Thursday, October 29, 2009

Convention Center booster all but says that we shouldn't be honest with Nashvillians about financing the project because honesty scares people

There were a lot of significant moments in yesterday's Tennessean-sponsored debate between Music City Center Coalition chair Ron Samuels and CM Emily Evans that have not occurred with MCCC's dominance of the convention center debate. However, I found the most telling moment to be the one where CM Evans went toe-to-toe with Samuels and challenged him to be real about how Metro funds will be used to service any budget shortfalls after construction starts. Buyer beware:

Samuels: If in fact there was a shortfall, there's a vehicle in most of these (financing deals) where you've got a debt service reserve in the package that would probably pay at least one year. You also would have at least a 10 percent coverage (guarantee above needed revenues) before they would issue those bonds. And throwing the fear out there like that is not appropriate at this time. Let's see what the package is.
Evans: I think it's clear from the administration that the taxpayers will have to co-sign the loan.
Samuels: The idea that we think we're going to go to the taxpayer right from the get-go on this is just not right. And it's just a fear kind of tactic.
Evans: Where are you going to go if there are shortfalls?
Samuels: The city can loan from the general fund, if it's available, money to the authority.
Evans: And where are we going to get that money?
Samuels: From the general fund.
Evans: OK, and where do we get the money (to put back) in the general fund?
Samuels: I agree that's the downside of this. But it's not the thing you go out there and tell people.
This is why we don't get a total picture from convention center proponents: because they believe that a bold and unflinching survey of the risks as well as the rewards will cause Nashvillians to balk at the possible loss of future revenues and and the threat of buyer's remorse.

And there are no "if's" about general fund money being available for construction phases of the most expensive capital project in Nashville history. Remember the arguments for supporting Mayor Dean's new lease for the Nashville Predators that included extra millions for the pros to stay in Nashville? People argued that Nashville had to make that deal because we were already in up to our necks with an arena, which could not sit empty if the dissatisfied team left.

The same logic will apply to a partially built convention center: of course the Mayor will have to throw good money after bad and pull funds out of other services to pay for construction shortfalls. We'll be up to our necks in the risk of seeing the project through. Right now, we're not up to our necks. But obviously the boosters of the Mayor's plan would have us believe that we shouldn't face the prospect until we are already sinking, at which point, our options will be few and far between.

And worse, they have the gall to advocate glossing, nay, hiding the financial risks in the middle of a recession, when many here already keenly feel the steely pricks of risk and loss.

Aside from the dishonesty going on in the marketing of MCCC, the possibility of raiding general funds is itself an objectionable idea. Giving the industry backers of the convention center an unfettered financial package with no assurances for obligated taxpayers is much like giving listing corporations stimulus funds from tax revenues to pay executive bonuses. The general fund serves the general public of Nashville and it should not be redirected to help promote the elite interests of courthouse and commerce at the expense of the public good.

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