Wednesday, August 12, 2009
40 Jealous Whores / Politics / Woods Mayor Dean Aims to Derail Referendum on Convention Center
Posted by Jeff Woods on Wed, Aug 12, 2009 at 5:14 AM
It looks like Dean hopes to finance the project with revenue bonds, even though the debt service would run the city $10 million more than general obligation bonds would.
Why would Dean do something that would add to the cost? Crafton knows the answer: To avoid putting the whole convention center issue before voters in a referendum.
You see, if the city used general obligation bonds, which are backed by property taxes, the Metro Council could require a referendum. The council did just that for the Titans stadium, you may recall. But if revenue bonds are used, then under state law the council is helpless.
That's one reason Dean is so anxious to create a new board to oversee everything. If a new board takes over, then general obligation bonds are prohibited. That's a provision of the state law enacted this spring that permitted Nashville to create such a board in the first place. Convention Center Authority = No referendum. It's as simple as that.
"The reason they're doing the Convention Center Authority is that if they can get that done, then it takes a referendum off the table," Crafton says.
And here's the kicker: While derailing any possibility of a pesky referendum, which he might well lose, the mayor also puts the lid on complaints that MDHA, which had been managing the project, is incompetent. McNeely Pigott & Fox? What's that?
"They want to get around this MDHA disaster," says another council member, who speaks to Pith only on condition of anonymity for fear the mayor will stop patching potholes in his/her district or something like that. "They're really petrified this [MP&F scandal] could spell the end of the convention center. This Convention Center Authority fixes all their problems. So they're calling in council members one at at time to give them the hot box treatment to sign off on this resolution" [authorizing the new board].
This plan of Dean's is a thing of beauty. Is this the guy who campaigned against the politics of the past? He's learning fast.
More coverage: It turns out the MP&F contract wasn't open-ended at all. No, it was capped at $900,000, WPLN reports.
Comments (6)
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Revenue bonds are indeed pricier to the issuer because they carry inherent higher risk of default (google WPPSS or St Louis Convention Center hotel). But bond investors are not stupid either. They will look at the revenue stream being dedicated and determine if they will indeed be sufficient now and in the future. Right now they are not even sufficient to cover GO issuance of these bonds since even the best of issuers are seeing high rates (Metro is far from AAA).
The mayor is indeed not wanting to hear from the citizens on this issue. But he is caught. For the foreseeable future the only revenue bonds he will able to sell would be classified as junk from the get go, making them outrageously more expensive. Metro or MDHA or whoever is in charge in Nashville hasn't even gone and got rated for this debt, they know it is just that bad. We are more then just "a few months" from getting a financing plan before the board. Yet that hasn't stopped MEtro and MDHA from spending tons of predevelopmet money hoping to make it too expensive to say no at a later date (for the board and all of us).
They are not going to have this built for that magical 2013 period. Those conventions that are being used as leverage will still come, most not even realizing that they were used to extort our elected officials. They are in a real jam but are unable to tell us.
The next step would be to have the state comptroller or legislature approve the issuance of GO without referendum. If that does not work they will ask for the exemption of "Moral Obligation" bonds from the referendum process. Keep an eye out on the state front for this flanking maneuver.
Crafton is crazy, but he is correct on this. They really, really, really fear hearing from the citizens on this one. It is one thing to bring in a grossly popular item like a NFL team, a convention center and hotel costing three times as month with no verifiable economic or community boost is another.
Failing schools, the second highest property taxes and highest water/sewer rates in the state, a foundering stormwater system, a subsidized NHL team, a thriving private convention center and an already paid-for public center will all go along way in the minds of voters during an open campaign. And in this case MPF will not be paid to run the campaign.
like
dislike
second highest property taxes
This is incorrect. Last I checked Memphis, Knoxville & Chattanooga all have higher property tax rates than Nashville.
Doesn't change the fact that the convention center is a really, really bad idea.
the Metro Council could require a referendum. The council did just that for the Titans stadium, you may recall.
Jeff, allow me a slight clarification on this. In 1996 for the Titans the council did approve G.O. bonds, clearing the way for a possible referendum, but it was only after council approval that opponents collected over 43,000 signatures on petitions to force a referendum.
(See May 1996 NY Times story: http://is.gd/2dF2p)
I was under the impression that the urban services district taxes were the second highest. The rest of Metro was after Kville and Chatty.
And BB you are correct, a petition has to be submitted to force the referendum after GO bonds are approved by the governing board. But in the case of billion dollar bonds issues, you just have to assume that the petition is a given.
Dallas and Knoxville citizens did something neat. The got a petition and a vote without getting GO bonds. Their petition simply made it illegal for their city to build, operate, or finance a hotel. Knoxville voter overwhelmingly passed it (over the dead bodies of convention blood suckers already trying to get citizens to forget the money pit that was sucking money out of the general fund). Dallas voter very narrowly dissaproved. In both cases everyone was able to see that not everyone in the tourism and meetings industry was behind the public entry into these fields.
