Bill To Cut Nashville City Center Funding Calls Into Question Tax Plan For New $2.2B Titans Stadium
Image Credit: Senator Jack Johnson / Facebook
The Center Square [By Jon Styf] –
A proposed new bill in the Tennessee legislature not only proposes cutting some of the state tax funding to pay debt on the Music City Center, but it also calls into question plans to build a new $2.2 billion Tennessee Titans stadium.
Senate Bill 648, filed Thursday by Sen. Jack Johnson, R-Franklin, on behalf of Lt. Gov. Randy McNally, R-Oak Ridge, would change the way taxes flow to Metro Nashville to pay debt from the Music City Center, which opened in 2013. The bill does not yet have a House sponsor.
Bonds were initially issued for the downtown convention center with a fund created to pay off the project using a 3% hotel/motel tax, $2 per room occupancy tax, $2 airport ground transportation tax, 1% vehicle rental tax and both state and local sales taxes from the area surrounding the convention center called the tourism development zone.
“Nashville has been afforded certain tools for the express purpose of encouraging convention tourism to the city,” McNally said about the bill. “Over the last year, Metro has made it clear they are no longer interested in aggressively recruiting top-tier conventions to Nashville.
“That message has been received loud and clear by the General Assembly. If Nashville wants to prioritize political posturing over prosperity for its people, that’s their prerogative. But the state does not have to participate. If Metro has no interest in properly promoting convention tourism, they no longer require the special tax authority granted to them for that purpose.”
The comment is believed to reference a Metro Nashville Council vote against playing host to the Republican National Convention in the city. The convention will be in Milwaukee.
The proposed bill would cut, starting July 1, the authorization for the additional hotel/motel tax, the $2 per room tax, the $2 airport ground transportation tax and the 1% car rental tax.
The city took on $625 million in debt to build the convention center with $425 million of that backstopped by Metro Nashville’s budget, meaning the city is responsible for payments if the taxes don’t pay the bonds.
“Whether the Tourist Development Zone (TDZ) revenue is capped or killed, if the state passes this law, the Convention Center Authority would not be able to pay both the debt and operating expenses for the Music City Center,” Metro Nashville Council Member Bob Mendes said.
The concern from some council members, then, is supporting building a $2.2 billion new Titans stadium and relying on state funding in the process, including sales taxes, to pay the debt with the state proposing to back out of the city center funding before bonds are paid off.
“Aside from gutting MCC financing, the very act of filing this bill should scare the heck out of anyone looking at football stadium financing,” Mendes said. “If the state can renege on sales tax & hotel occupancy tax for the convention center, they can do the same for a football stadium.
“The mayor’s office has claimed they’ll do football stadium financing without needing Metro to back the bonds. The time of death for that promise was last Friday when news of this convention center bill broke. Metro will need to back stadium bonds now, for sure.”
Metro Nashville’s council is expected to receive final documents on the new Titans stadium in March. The plan includes a tax fund similar to that of the city center, which is projected to collected $2.9 billion in taxes over the life of the new lease to go toward paying off revenue bonds and paying for future capital expenses and stadium repairs.
“Anyone looking at the proposed stadium deal and considering the state’s beneficence as a key factor should probably update their risk analysis,” said Council Member Freddie O’Connell.
About the Author: Jon Styf, The Center Square Staff Reporter – Jon Styf is an award-winning editor and reporter who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies. Follow Jon on Twitter @JonStyf.
