Wednesday, January 11, 2012

Mayor's debt refinancing deal quietly coming to council

The Nashville Business Journal put it best when it said that Mayor Karl Dean is not only staving off cuts to the Metro budget by seeking to refinance Nashville's debt, but he is buying time in the hope that the economy will improve. The Mayor's plan to refinance finally comes to the Metro Council on Tuesday on the consent agenda, which means it stands to be approved with other first reading bills with no debate unless a CM pulls it off for discussion [see correction below]. As far as I can tell, no CMs have raised any questions about it and the press seems to be ignoring it.

As the plan proposes the refinancing of up to $280,000,000 as "in the best interest of the citizens of the Metropolitan Government," it is fair to ask how much the refinancing is going to cost us in the short-term. For instance, how much will the Mayor pay Metro's identified Financial Advisor, First Southwest Company, to pursue refinancing? What other costs or fees will Metro incur, and from what part of the General Fund will those costs or fees come?

These are lean budget times, but the Mayor did not help the our situation when he embarked on the largest capital project in Nashville history (Music City Center, which directly serves tourists, but not our local communities). For the time being he is paying for that construction with tourists taxes previously designated for the Nashville Predators. To compensate the hockey club, he has shifted money from our General Fund.

I have a hard time believing that the risk we face with current debt structuring is any greater than the jeopardy the Mayor put us in by embarking on the Music City Center project. Regardless, the refinancing proposal needs more consideration than either council members or news media is giving it.

CORRECTION: CM Emily Evans pointed out to me that this bill is actually a bond resolution, which means it will go on 1 vote rather than on a consent agenda for 3 votes. What that means to me is even less chance for council debate.

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