Monday, May 11, 2009

A Cautionary Tale on Municipalities Purchasing Private Property for Large Projects

Now that the Mayor's Office has telegraphed its intentions to borrow $75 million in order to buy private property Downtown for a new convention center, it may want to pay attention to what happened in Arlington, Texas with the purchase of land for the new Dallas Cowboys stadium.

Arlington officials originally projected land acquisition costs at $60 million. Because of property owner disputes (17 of 62 are still outstanding), the actual cost is $80 billion million, which doubles the original estimate based on local tax appraisal figures. That's some huge inflation that should be taken account as the Metro Budget office ostensibly projects local costs of $75 million in offers to Nashville property owners.

Fortunately for Arlington, there is a contractual cap that requires the pro football club to assume increasing costs of outstanding disputes in the future. In a convention center build here in Nashville I don't see a third party present to absorb skyrocketing costs.


  1. Mike,

    I think you meant $80 Million. $80 billion would certainly be some big inflation.

  2. Projected land acquisition costs at $60 million, coming in at $80 million represents a substantial increase, but it wouldn't be double

  3. Dear frequently anonymous spellingchecker: you'll have to take that up with the news dept. at the Dallas Morning News. For my part, even though that info was unclear I was charitable and assumed that they meant that the original appraisal was $20 million less than the $60 million eventually budgeted. Arlington officials would have been really short-sighted if they only budgeted for the original $40 million appraisal without allowing latitude for the higher expenses due to property owner disputes.

    Hence, the point of criticism is not that the $80 million is twice as much as the original appraisals, but that the $60 million was not a forward-looking-enough estimate of actual expenses in light of the appraisals. But again, if you are not willing to give the math the benefit of the doubt that I am, then those you should be holding accountable are the journalists in Dallas.