Mayor Barry proposes $250M deal for MLS soccer stadium in … – The Tennessean
The Nashville investor group bidding for a Major League Soccer expansion franchise in Music City unveiled preliminary designs Monday for a 30,000-seat stadium that would transform the aging Metro-owned Fairgrounds Nashville.
Ayrika Whitney/USA TODAY NETWORK – Tennessee
Nashville Mayor Megan Barry on Monday proposed an estimated $250 million Major League Soccer stadium project in which Metro would borrow to pay for most of the construction costs and a private ownership group led by businessman John Ingram would cover the majority of the city’s debt.
The plan, which Barry made a rare visit to the Metro Council to unveil, calls for Metro to issue up to $225 million in revenue bonds — for anticipated $200 million in work — for a new, 27,500 seat soccer stadium at the Metro-owned Fairgrounds Nashville.
Metro would borrow an additional $25 million through general obligation bonds to make infrastructure improvements at the fairgrounds property. Metro would also contribute the land. The Ingram-led investor group would commit to a $25 million cash payment for the project.
The proposal is designed to put Nashville in play for one of four cities that MLS intends to award expansion franchises. The first two will be announced in December. Metro’s bond transaction would not go through unless Nashville is awarded a team.
Barry, addressing the council, called her proposal “a more fully realized vision” for the fairgrounds property following Nashville voters’ approval of a 2011 Metro Charter amendment to keep the fairgrounds’ functions intact.
“John Ingram and his fellow investors at MLS2Nashville are committing hundreds of millions of dollars, their own dollars, to secure a franchise, building a stadium and making sure they’re safeguarding taxpayers in the process,” Barry said.
“Make no mistake: This is a tremendous benefit to our city and the community of Nashville,” she said, adding that it will give the city another professional sports team to rally behind. “I think we are absolutely ready for this. Nashville is a soccer city.”
Owners would pay $9 million a year toward debt; Sales tax from stadium to go to project
Under a 30-year lease between the ownership group and Metro, the team’s owners would make annual $9 million lease payments to the Metro Sports Authority that would go toward $13 million in anticipated yearly debt. Metro would own the facility.
Sales tax generated by the stadium would help retire the additional $4 million in debt following approval last year of state legislation allowing the use of sales tax revenue in this way. In addition, Metro would impose a $1.75 tax on each ticket sold at the proposed stadium that would go toward bond repayments.
If sales and ticket tax revenues fall below $4 million for the first five years of operation, or $3 million in years six through 10, Metro would be on the hook to make up the different from non-tax revenue sources.
Private development from Nashville’s Turner family proposed by team
In a transaction separate from the stadium lease, a development team led by Nashville’s Turner family, founders of the real estate firm MarketStreet Enterprises, would enter into a long-term ground lease of 10 acres of fairgrounds property for a mixed-use private development.
MarketStreet Enterprises, founded by Steve Turner and led by son Jay Turner, helped with the development of the booming Gulch neighborhood a decade ago. The Turners have minority stake in the Ingram-led MLS ownership group, which also has involvement of the Wilf family, owner of the NFL’s Minnesota Vikings.
Complete details of the mixed-use project are unclear, but Barry has said it will include an affordable housing component. The developers would have the rights to profits from what is built.
The mayor’s office plans on filing the bond resolution with the council this week, which could put the bond resolution to an up-or-down council vote on Oct. 17. Barry wants a deal approved by early November. Her administration will also ask the Metro fair board to approve a ground lease to the Metro Sports Authority.
A joint fair board and sports authority meeting is set for Thursday morning for the mayor’s office to introduce the proposal. Both bodies would need to approve the transaction.
Three other pieces of legislation — allowing the demolition of existing faigrounds buildings, the $25 million in general obligation bonds for infrastructure, and rezoning for the Turner project — would also need approval.
Mayor’s office says they’ve sought to minimize financial risk for Metro
The mayor’s office is framing the project as different than past Nashville stadium deals — Nissan Stadium, Bridgestone Arena and First Tennessee Park — where the city has incurred larger shares of debt payments.
Because the ownership group and tax revenues generated by the stadium would take care of the $225 million debt, Barry is touting the project as 90 percent funded by either the ownership group or revenue generated by the stadium.
The stadium would sit on eight acres, valued at $1 million an acre, that is in addition to the 10-acre private mixed-use development.
“We think we’ve ended up with a really attractive package for stadium financing for the city, which we think will then support their application to get an MLS franchise, hopefully before the end of the year,” said Rich Riebeling, Barry’s chief operating officer.
“We have done everything there is to minimize any potential (financial) downside to the city,”
Top critic from council already scrutinizing soccer stadium proposal
But At-large Councilman John Cooper, who has criticized past Barry proposals involving city-owned land, took aim at the proposal. He said part of the vetting process will be “sorting through what’s real and not real,” pointing to Metro’s significant up-front payment.
“At the end of the day, it’s not really a public-private partnership as much as it’s a big-time bond issuance,” Cooper said. “I think it’s not correct to say it’s a ’90-10 public-private partnership.’ It feels a lot more like ’95-5 public and then private’ is probably just as accurate a way of portraying it.”
Ingram, controlling owner of Nashville Soccer Club, a United Soccer League franchise set to play next year, who has led the city’s MLS pursuit, began his remarks at the council by rejecting a report that circulated from a blogger on Twitter Monday that Nashville had been awarded a team by the league. MLS also issued a statement rejecting the report.
“We’ve certainly listened very closely to the advice that MLS has been giving us, and they’ve said unequivocally that no city would be considered without a viable stadium plan,” Ingram said.
“Other cities have failed at moments like this and in other ways. I feel very, very strongly that if we can come to an agreement on a stadium proposal, then we have a very good chance of being selected in December.”
Barry’s office has been working under a time crunch to secure a stadium proposal this fall, considered a requirement for consideration by MLS in December.
MLS Commissioner Don Garber has spoken highly of Nashville, saying the city has moved “pretty high on the list” of 12 cities vying for a franchise.
Major infrastructure improvements planned for fairgrounds as part of proposal
If approved, Nashville’s MLS team would play one year at a temporary site in 2020 before moving it the new fairgrounds stadium in 2021. Construction on the new stadium would begin late 2018.
Vanderbilt University announced last week that the school will not be part of a proposed shared-stadium concept with MLS in which its football team would play off-campus in the stadium. Ingram sits on Vanderbilt’s Board of Trust.
Riebeling said most of the $25 million in fairgrounds upgrades would go to expo and state fair buildings that would need to be torn down and rebuilt. Barry last year pumped $12 million into the fairgrounds, which includes a process to convert some of the property into a city park with recreation soccer fields.
The plan is for all existing uses, including flea markets, the annual state fair and auto-racing to remain at the fairgrounds — although the state commission that operates the fair has discussed leaving Davidson County.
Fairgrounds director Laura Schloesser said the design of the revamped fairgrounds footprint, including the new buildings, would give promoters of the facility’s some 250 regular events more flexibility. She said the fairgrounds is also planning improvements of the property’s auto-racing.
“All of the improvements will contribute collectively to the enhancement of the property,” she said.
Council members to get final say on project
During a brief question-and-answer session, multiple council members expressed interest in the project but made clear they plan to dissect it. Several pressed the administration on the inclusion of the 10-acre private development to be led by the Turner family.
At-large Councilwoman Sharon Hurt said she wants to ensure minorities and low-income Nashvillians benefit from employment opportunities at the stadium.
“The best of us must take care of the rest of us,” Hurt said. “And so I have questions asking how can this project help individuals who cannot afford soccer games.”
Councilman Steve Glover raised the sudden convergence of multiple, expensive Metro projects, noting how the mayor is soon planning to propose a referendum on funding a mass transit project that could cost billions.
“At some point, we reach a time where we can’t handle any more expenditures,” Glover said. “That’s the part that concerns me. We are opening ourselves for additional debt dangers.”
Councilman Colby Sledge, who represents the surrounding Wedgewood-Houston neighborhood near the fairgrounds, praised the ownership group in a prepared statement, calling them “very proactive in engaging residents and answering questions.”
“Given that site work would not begin until late 2018, we are at the very beginning of what I hope to be a mutually beneficial relationship between the ownership group and neighbors,” he said.
Mayor’s office touting economic impact of project
Ingram’s ownership group would be responsible for operating costs under the proposal. Metro would be entitled to use the stadium for 20 days a year.
To address additional stadium capital needs and repairs down the road, the ticket tax would increase by 50 cents after year six of the deal and by another 50 cents after year seven for those purposes..
In making their case for MLS soccer, the mayor’s office is touting a University of Tennessee economic impact study that claims the team and stadium would create 1,886 new jobs and $77.7 million in new personal income. The same study says construction and development of the stadium would create 3,572 jobs and $139.2 million in new income.
Reach Joey Garrison at 615-259-8236, firstname.lastname@example.org and on Twitter @joeygarrison.