Thursday, September 11, 2014

Mayor Dean Proposes New Funding Strategy for Gulch - SoBro Pedestrian Bridge

Mayor Karl Dean announced yesterday that legislation has been reintroduced for the city to move forward with the Gulch-SoBro Pedestrian Bridge, which would serve pedestrians and bicyclists connecting two of the downtown area’s most vibrant growing neighborhoods. (The Mayor's comments began at time stamp 4:07 in the video.) 

Mayor Dean says the Gulch area is currently isolated from the rest of the city and the pedestrian bridge will fix that. He also says the pedestrian bridge will be an attraction in is own right and a destination. He explains it will be financed not through general obligation bonds, but from revenues generated from Gulch-area projects that will benefit most from the bridge, specifically seven residential and commercial developments in the Gulch.

This kind of financing is called "tax increment financing." It is often used to finance infrastructure improvements downtown in connection with new projects.  The way this works is that the city makes roadway, sidewalk, utility or other improvements which benefit a new development, and the new development generates tax revenue that would not have otherwise been realized had not the new development occurred. The tax revenue from the new project first goes to pay for the infrastructure improvements rather than into the general fund.

In this case, tax increment financing is already being used to pay for infrastructure improvements in the Gulch. To finance the pedestrian bridge, the city would borrow the money and it would be added to the debt for Gulch infrastructure improvements currently being paid off with tax increment financing and would be paid for over the next seven to eight years.

The pedestrian bridge was identified as a high priority in the South of Broadway (SoBro) Master Plan, which was developed through a series of community input meetings to address the rapidly-changing SoBro area. Legislation to acquire land for the bridge was initially filed earlier this year, but was indefinitely deferred by the Metro Council.

The bridge will be about 700 feet long, including 400 feet over the CSX railroad tracks that separate the Gulch from downtown. A single concrete tower supports the cable-suspended bridge. The bridge will be dramatic and will have park-like seating, open space and and entertainment areas.

In February 2014 the Council turned down the project voting 30-2 against it.  I applauded the council's action at the time. The city has been a spending spree for the last few years and I was concerned, and still am concerned, we are getting overextended. A few months prior to the Council defeating the $15 million Gulch pedestrian bride project, the Council had wisely defeated an effort to finance part of Metro's employee pension liability, but the council had voted to authorize borrowing millions of dollars to purchase lap top computers for the schools which I thought should have been budgeted out of current revenue rather than borrowed, assuming they were needed.  The computers were purchased to be ready to test for common core which has since been delayed.

With the $623 million Music City Center, the $17 million east bank Riverfront Park development, $65 million Sulphur Dell ball park, the $32 million ice hockey facility in Antioch and other projects, Metro has taken on an unprecedented level of debt. With proposals to build a new $40 million Riverfront Park expansion and amphitheater, a $175 million-plus AMP bus rapid transit project, there appears to be no end in sight. I was pleased when the council stopped a project. Nashville is the "it" city now and is booming. I hope that continues, but if there is an economic downturn or some anticipated development around the Sulphur Dell ball park does not take place, we the tax payers could be on the hook to pay the debt.

Now, the pedestrian bridge is back before us.  I like the project. I do not think it a waste of money. I

also do not object that it is designed to be attractive. Maybe we could build a straight functional bridge for half the price, but something esthetically pleasing and dramatic may be worth the extra cost. I want Nashville to be an attractive city. If we are going to build it; make it attractive. However, I am not sure we can afford everything we like.

On, the one hand, this new  proposal to finance the project is like paying for it out of money that will be in your right pocket rather than money that will be in your left pocket.  On the other hand,  this way of financing does not eat up debt capacity and can reserve debt capacity for neighborhood sidewalk improvements, which I understand would happen under this arrangement.

 Councilman Josh Stites has voiced strong reservations about the project saying:
I am unmoved. Basically, all we’re doing is we are delaying payments to the general fund until we pay off the bridge. It would be similar to saying, ‘Why don’t you let me take my property taxes and install a swimming pool out back?’ That’s essentially what we’re doing for these seven.
When developers in my district build something, like an apartment complex, they have to pay for the sidewalks themselves. They have to pay for the water and sewer that’s running through the project. Metro doesn’t pay for that.
Councilman Charlie Tygard appears to be warming to the project saying,  “If they’re intent on transferring this bridge money into the sidewalk fund, I think the council will be pleased,” he said. “It’s a creative way. It certainly beats denying other neighborhoods needed sidewalks for this pretty expensive project.”

At this point, I am cautiously tending to favor the project, but still have reservations and will wait to see what the discussion is in Budget and Finance before reaching a conclusion. I do not want to be sitting ourselves up for future tax increases, however downtown development brings in more tax revenue than development elsewhere. Continuing to make downtown attractive, which spurs more new development may be a wise investment.

Source of some of the above quotes and facts are found here and here.

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