Monday, January 18, 2010

Newspapers Endorse Music City Center: Two More Reasons to Worry About This Project

Posted By on Mon, Jan 18, 2010 at 7:56 AM

click to enlarge Emily Evans
  • Emily Evans
The Tennessean and The City Paper both have printed editorials endorsing the Music City Center. And if that's not enough reason to give the Metro Council pause, maybe Ben Cunningham's threat is. The anti-tax crusader offers his assistance to any citizens who might like to recall their council members for voting for this project. It's a "very straightforward and easy to follow" process, he points out. In their editorials, the newspapers embrace the arguments of boosters: The new convention center will grow our economy and benefit everyone. A rising tide lifts all boats, etc. We can't spend this money on anything else, so why not let it fly? But on her blog, councilwoman Emily Evans makes a cogent case against the project. She points out a couple of inconvenient facts: (1) we are redirecting $14 million from other purposes, such as the Adventure Science Center, the Country Music Hall of Fame and police overtime for special events; (2) we are piling up debt that will inevitably choke other capital projects. So maybe it's not worth it, given this project's estimated economic impact. Here's Evans' cost-benefit analysis:
* We will borrow $650 million and for that we will get about a 4% increase in room night sales to convention and trade show visitors. We will do little or nothing for leisure and cultural tourism. * The economic impact for this project is estimated at $135 million. For our $7.5 billion economy that is a less than 2% improvement. * The estimate increase in tax revenues is about $12 million - a mere .8% boost and not enough to cover the $14 million we will redirect from other activities to the convention center. * These low returns on our investment suggest we will not significantly improve our tax base. * Without a significant improvement in our tax base, borrowing $650 million will "crowd-out" borrowing for other things. In order to keep debt ratios at the necessary levels and avoid rating downgrades, we will borrow less for other things. Alternatively, we will ignore debt ratios, continue to borrow for those other things, watch our bond rating drop, pay higher interest rates which in turn means we will borrow less. When we borrow less, the basic infrastructure of our city suffers.
h/t Kleinheider

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