Nashville Mayor Backs Away from Publicly Financed Hotel

Nashville Mayor Karl Dean backed away from publicly financing a 750-room hotel at Thursday night’s presentation of a new downtown convention center.

He told council members it would not be wise to ask taxpayers to pay for a publicly owned hotel in the current economy. However, Dean says a headquarters hotel will eventually be built.

”We will have a convention center hotel. This proposal may come in the spring. It may come much later next year, but I’m confident it will come.”

Dean says he’d prefer private investors finance the project, but he doesn’t rule out a city-funded hotel. Construction would take a year less than the convention center, Dean says, so the two buildings could still open simultaneously in 2013.

Meanwhile, some of the bonds Metro would use to pay for the proposed convention center depend on the city’s general fund as a backstop.

The $585 million financing package splits the bonds into thirds. One-third would be paid back with hotel/motel taxes. The other two-thirds would be paid by tourist fees, and that portion would be backed by Metro’s general fund, says finance director Rich Riebeling.

”The purpose of that pledge is to lower the interest rate and attract more buyers for the bonds.”

Revenue projections give a 10% cushion on the debt repayment, so Riebeling says the backup pledge should never be needed. But in the worst case scenario, Riebeling says the pledge would only dip into revenue that doesn’t come from taxes.

Councilman Eric Crafton says that’s just a fancy way to avoid saying tax dollars are at risk.

”In other words, it sounds like I’m walking up to a punch bowl saying I’m only going to drink out of the right half of the punch bowl, I’m not going to have the other half.”

The Metro General fund is made up primarily of property and sales taxes.

The council could vote on the convention center financing plan as early as January 19th.

For full disclosure, Rich Riebeling is a member of the WPLN board of directors.