Private investors won't assume the risk of the new convention center, so why should Metro government when it doesn't directly serve Nashvillians?

Blogging CM Emily Evans cuts through the finance jargon and gets down to economic brass tacks on the undue risk Nashvillians will have to assume with a new convention center:

Goldman Sachs preliminary financing structures clearly articulate how much risk professional investors are willing to take. They seem to think that the hotel and tourism revenues will only support about $200 million in debt. For the rest of the purchase price - about $400 million - risk must be transferred to someone else. In the case of the convention center, the someone else is the Metro general fund.

The hotel "best and final offer" demonstrates a similar amount of risk aversion .... they are reducing their risk to a level they find business-worthy and are not willing to assume full responsibility for the profit and loss of the enterprise. With the hotel manager/developer unwilling to take risk, someone must be found to whom we can transfer it ....

A convention center and a hotel are now for the most part deemed too risky for professional investors. They are unwilling to invest because they see the possibility that they may lose all or some of their money. The reason they would lose all or some of their investment is because the project will not produce the necessary revenues to support operations and debt service without some sort of external support .... The fact that a project like this cannot support itself makes it, by definition, not feasible.