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 a $250 million Major League Soccer stadium deal 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 — an anticipated $200 million — 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. 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 an expansion franchise. Metro’s bond transaction would not go through unless Nashville is awarded a team.
“A Major League Soccer franchise represents an incredible opportunity for Nashville to continue its growth and take its place on the global stage,” Barry said in a statement. “This stadium plan and MLS bid represents significant private investment, and it safeguards taxpayers with a truly private-public partnership.”
Under a 30-year lease between the ownership group and Metro, the team’s owners would make annual $9 million lease payments to the city 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 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 a 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.
In a transaction separate from the stadium lease, a development led by Nashville’s Turner family, founder of MarketStreet Enterprises, would enter into a ground lease of 10 acres of fairgrounds property for a mixed-use private development. The developer would have the rights to profits from what is built on the city-owned property. Details of the Turners’ project are unclear.
The mayor’s office plans on filing legislation to the council this week, which would put the bond resolution to an up-or-down council vote on Oct. 17. Barry will ask the Metro fair board approve a ground lease to the Nashville Sports Authority. 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.
Barry, who later this month is unveiling a referendum proposal to pay for mass transit, has said the proposal would be a “private-public” financial deal, with an emphasis on the private development portion.
The proposal is different from other Nashville stadium deals — Nissan Stadium, Bridgestone Arena and First Tennessee park — where the city has incurred a larger share of debt payments.
Because the ownership group and tax revenues generated by the stadium would take care of the $200 million debt, the mayor’s office is framing the project as 90 percent funded by either the ownership group or revenue generated by the stadium.
“We think this is an important milestone for the city,” Barry’s Chief Operating Officer Rich Riebeling said in an interview with The Tennessean in advance of the presentation. “We think soccer has great potential for the city.
“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.”
A representative of Ingram, who owns Nashville Soccer Club, a United Soccer League franchise set to play next year and has led the city’s MLS pursuit, said the stadium plan would put Nashville in contention for an MLS franchise.
Mary Cavarra, chief financial officer and executive vice president of Ingram Industries, called the proposal “the right thing for the city” that works for the ownership group.
“As we’ve been talking with the MLS officials, Nashville just needs a viable stadium plan, and we think that we have that,” Cavarra said.
Barry’s office has been working under an expedited time crunch to secure a stadium proposal this fall, considered a requirement for consideration by MLS in December.
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.
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.
Councilman Colby Sledge, who represents the surrounding Wedgewood-Houston neighborhood near the fairgrounds, praised the ownership group in a prepared statement.
“The MLS ownership group has been very proactive in engaging residents and answering questions, and I expect that they will continue to do so,” Sledge said. “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.”
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.
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.
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