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Memo Questions Funding for Proposed Convention Center

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A memo uncovered by NewsChannel 5 Investigates raises questions about whether Nashville can pay for the proposed $635 million convention center with tourism taxes alone.

The memo was written by Metro's previous finance director as Mayor Bill Purcell left office and Mayor Karl Dean arrived.

Dean has been determined that tourists, not local taxpayers, will pay for the project -- which will be the most expensive in the city's history.

"We can pay for this convention center through the hotel/motel tax and other tourist fees, and this project will work. I'm confident of it," Dean said Wednesday.

But a three-page memo written by former finance director David Manning to the incoming Dean administration raised questions about whether tourism taxes alone can pay for the project.

The memo states, "It appears likely that the new taxes and growth from the established hotel/motel taxes will not produce enough money to pay for the bonds needed for the $455 million" project.

Since then, the cost of the project has gone up to $635 million. The mayor wants to cut the cost.

Read Former Finance Director's Memo (.pdf)

"What I've done is ask everyone to be smart it and identify ways to find savings and they've agreed to do that," Dean added.

Dean wanted the cost of the project to be closer to $600 million, but he did not want the cuts to impact the project. 

Manning wrote his memo in 2007, when the economy was good, and it included projections for what the tourism taxes should generate.

The economy has slowed significantly since Manning's memo, and the taxes are not generating the amount of money Manning projected.

For example, Manning projected a $2-a-room hotel/motel occupancy tax would generate $10.9 million. The tax actually raised about $9 million in Fiscal Year 2009.

Councilman Jim Gotto was undecided about the convention center. He said he has not seen Manning's memo before NewsChannel 5 Investigates showed it to him. 

Gotto said the most important thing to him was that local taxpayers do not pay for the project.

"I don't want them to be on the hook for any financing should the tourism revenues fall short," said Gotto.

Convention center supporters said David Manning and former Mayor Purcell were never supporters of the project.

Convention and Visitors Bureau president Butch Spyridon said several times during a debate earlier this year that former Mayor Purcell was "not an advocate of building a new convention center."

Construction contracts obtained by NewsChannel 5 showed construction for the convention center was initially scheduled to start this month, September 1, 2009.

Convention center critics question whether the delay was because tourist revenues are down and the cost of the convention center is up. 

Councilwoman Emily Evans said the Manning memo was a warning.

"I think he's giving us some great advice here which is 'Hey, maybe the building shouldn't be that expensive,'" Evans said.

Evans worked in the municipal bond industry and has also questioned whether tourism taxes alone will pay for the project.

"This is not saying, 'No.' This is saying be careful because your revenue does not match your expenditure which is a significant problem," Evans insisted.

The Mayor's office did not give NewsChannel 5 an interview about the memo.

The administration hoped to present the council with a financing package by the end of the year.  The council must also give final approval to the proposed $300 million hotel.

Back to NewsChannel 5 Investigates 

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