Sound familiar?

...Nashville...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...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...“It just doesn’t seem like a good bet to me.”

...The $415 million Music City Center will enable the city to compete for larger meetings, add 1,524 jobs and generate almost $135 million of new annual spending by 2017, according to a study by HVS Convention, Sports & Entertainment in Chicago on Jan. 6. The facility is forecast to yield almost $12 million in new tax revenue beyond tourism levies dedicated to the $40 million-a-year of debt service, said consulting firm HVS.

Attendance Down

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.”

...A new facility was needed to attract conventions, said Marty Dickens, chairman of the convention center authority, in a phone interview.

...‘Untested’ Projections

...“We realized the city feels it will be vital to increasing the desirability of downtown,” said Amy Laskey, an analyst at Fitch, in a phone interview. “The city already operated on a thinly balanced budget, so the debt does increase the risk for the general fund.”

Darrell Preston
Bloomberg, April 13, 2010