WSMV Channel 4 Changes to museum increase city's cost by $1.6M

The confetti has been swept away, and the ceremonial shovels have been replaced with heavy equipment.

Channel 4 has learned that although the city just broke ground on Thursday for the new downtown convention center hotel and expansion of the Country Music Hall of Fame, the project's budget has increased by $1.6 million and the city has not yet secured permanent financing for its portion of the funding.  

The Omni Hotel will feature 800 rooms in a location right across the street from the Music City Center. The parking lot between the future Omni Hotel and the Country Music Hall of Fame will become a 200,000 square foot museum expansion, connecting the Hall to the Omni.

Channel 4 has learned that although the city expected last fall  to contribute $59 million to the project, that amount has now increased to $62 million.

According to Charles Robert Bone,  the attorney for the Music City Center, the city's share of the Hall of Fame expansion cost increased by $1.6 million.  Bone says the cost increased when the Hall of Fame added 16,000 square feet of space to the footprint of the building.  The city will pay the extra cost, not the Hall.  

The $62 million loan the city is taking out to help finance the project will be paid back from a portion of the property taxes paid by certain downtown commercial buildings. The program is called Tax Increment Financing, also known as TIF. The Metro Housing and Development Agency, or MDHA, approves and administers the TIF program in Nashville.

City documents show the city is taking out a $62 million loan from Regions Bank.  The money has to be paid back within three years.  The interest rate is 3.8 percent.  MDHA said that it expects to refinance the loan, perhaps issuing bonds in the future.

Councilwoman Emily Evans opposed the convention center, fearing that it would end up being subsidized by the taxpayers. 

Mayor Karl Dean said it would not, but that's not the case with the Omni Hotel and Hall of Fame expansion.

"I don't think any of this is a good deal for taxpayers, you know that," said  Evans.

Evans said property taxes will indeed be used to subsidize the hotel and Hall expansion, and said, ironically, some of the businesses whose taxes are being paid to Omni are the hotels that will compete with Omni for customers.   

 "So, in a sense, it's ironic they're paying for their competition, yes," Evans said.

There are 16 businesses in an area of downtown whose taxes will partly be used to subsidize the Omni and Hall expansion. The businesses include the Hilton Hotel, the Renaissance and Courtyard by Marriott.