Real Estate & Property Law

Lying to the Press and the Community

By Alan Ackerman

On January 28, 2011, this blog expressed concern that Nashville MDHA spokesman Phil Ryan's remarks that the agency was 'protecting the taxpayers' could bias the jury in an upcoming condemnation trial. At this project's inception, the MDHA assured the Metro Council that there would be no risk to taxpayers because a tourist tax would pay back the massive bond debt. According to the article below, however, the risk to the community was not so clear cut. All too often, city redevelopment plans proceed on the premise that someone else is footing the bill. In this case, it appears the MDHA misrepresented the level of risk in selling its plan to the Council and the public. 

Bloomberg Businessweek   

Nashville, home of country-music stars such as Taylor Swift and the Grand Ole Opry, will boost city-backed debt by almost 40 percent to borrow $633 million for a new convention center three times the size of the Tennessee municipality's current one.

Bonds to be sold tomorrow by Nashville and Davidson County's Convention Center Authority through investment banks led by Goldman Sachs Group Inc. pledge general-fund revenue if hotel, airport and rental-car taxes and use of the Music City Center aren't enough to repay investors. The tourism revenue won't be adequate, said Councilwoman Emily Evans, a former municipal bond underwriter.

'It's a riverboat gamble with very little upside,' said Evans, who worked for 15 years at J.C. Bradford & Co., the Nashville firm acquired by Paine Webber in 2000. 'It just doesn't seem like a good bet to me.'

With convention center attendance down nationwide -- a 30 percent decline in Las Vegas and 28 percent in Orlando, Florida, two of the largest convention markets in the U.S. -- Nashville's taxpayers may wind up paying part of the cost if use of the new center falls short, said Heywood Sanders, professor of public administration at the University of Texas in San Antonio, who has studied convention centers.

'It's quite a leap of faith,' said Sanders, who's writing a book on convention center financing. 'It's a pretty large chunk of debt.'

Full post as published by National Eminent Domain Blog on January 31, 2011 (boomark / email).