Monday, August 10, 2015

Dean’s $1B IOU: The cost of ‘It City’

by Scott Harrison, Nashville Business Journal, Jul 31, 2015- Mayor Karl Dean’s legacy includes skyline-altering projects that helped turn Music City into “It City.” To get us here, he’s bet big on Nashville’s growth — leaving the city with nearly $1 billion in additional 2007, Nashville had just under $2 billion in outstanding debt on its books. At the end of June, that figure had climbed to about $2.9 billion — a nearly 50 percent increase in eight years, and a far larger clip than his predecessor.

And that number doesn’t include the bond funding used to build the $600 million Music City Center, a case where repayment falls on the Convention Center Authority. Nor does it account for the bulk of $65 million in bonds the Metro Sports Authority issued to pay for the new Nashville Sounds ballpark in Germantown.

... Moody’s also suggests that if Nashville’s tax base doesn’t continue to grow, and debt burdens remain elevated, the city may have to raise taxes to pay for its tab.  .... To pay for the additional debt of the past few years, Nashville needs to keep growing.  .....The city owed $3,261 per Nashvillian in June 2014, a 32 percent increase since June 2007.  .....Since mid-2007, Metro has borrowed about $730 million to fund schools.....Charlie Tygard,.... argues that Metro is overexposed if the economy slows. (link)

My comment: I am bullish on Nashville. I do not fault Dean for much of what he has done. I supported the convention center. I would have voted for it.  I would have not supported such an investment if I were a citizen of Knoxville or Memphis or most other American cities, but I believe it was a wise investment for Nashville. I believe Nashville can be a successful convention city. In fact, considered individually, I find little to criticize about any of Nashville's major recent "investments." It is the cumulative effect that concerns me.

Also, borrowing to pay for basic consumptions, just as schools, deeply concerns me. We are like a household that is using the credit card to buy groceries and depending on continuing raises or continuing overtime pay to pay off those credit cards debts when they become due. Now is the time to step back and reduce our indebtedness and balance the budget. If we have a downturn in the economy we are screwed! I fear that if Megan Barry is our next mayor, our debt will continue to grow and spiral out of control. That is why, among other reasons, I am supporting David Fox for mayor.

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