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Nashville is pushing to bring a MLS team to Nashville and building a stadium helps their chances.
Video by Michael Schwab/USA TODAY NETWORK – Tennessee

As Nashville’s focus turns to building a professional soccer stadium, its most recent major public sports facility deal has not gone according to plan, according to financial documents.

Subsidies by Metro Nashville government to First Tennessee Park, home of the Nashville Sounds minor league baseball team, are expected to be greater than the amount estimatedwhen the ballpark was pitched in 2013, thanks in part to the delayed development of adjacent real estate. Former Mayor Karl Dean championed the stadium, and his key finance official stayed on to broker the soccer deal for Mayor Megan Barry.

Property tax has fallen short of expectations

Metro planned to pay off the ballpark’s $65 million in debt using property tax revenue of nearby developments, lease payments and sales tax revenues.

Nearly half of the $4.3 million annual debt payments were expected from future property tax revenues, according to city officials when the financing was approved in 2013. The team would make lease payments of $700,000 per year and remit sales tax revenue from ballpark tickets, concessions, parking and other transactions. Metro agreed to make up any difference using public funds.

Sales tax revenue has exceeded expectations, and the team has made its regular lease payments.

The public subsidy was about $1 million in Fiscal 2016 and 2017 — in line with projections at the time the deal was approved. But according to the Metro budget, Nashville expects to more than $1.4 million in Fiscal 2018.

“It’s important for people to know that Metro’s guarantee has been triggered in our most recent ballpark deal, despite everyone’s assurance that this wouldn’t happen,” said Councilman John Cooper, who voted against the MLS financing plan. It passed by a vote of 31 to six.

The higher annual cost can be traced to delays in private development around the ballpark, said Metro Chief Operating Officer Rich Riebeling. He predicts the subsidy to decrease after a mixed-use development is built by the sons of Sounds managing partner Frank Ward. 

Metro officials planned to receive $750,000 in property taxes from the residential and commercial project. But the city did not contractually require that the development be built.

Ward sold the property to his sons, Chris and Tim Ward of Ward Brothers Development. They have hit delays with and have not yet begun construction.

“The development has taken a bit longer to get off the ground than anticipated,” Tim Ward said a statement provided by the brothers’ attorney. They expect government design approval by year end, and to break ground in the third quarter of 2018.

The proposed MLS stadium deal doesn’t use property taxes to pay down its debt, but Nashville would take half of the property tax revenue from an adjacent development and reinvest it in the city-owned fairgrounds. The Metro Council essentially gifted the MLS team 10 acres of fairgrounds land for a mixed-use development next to the stadium. The other half of the revenue would go to the Metro coffers.

Under the soccer financing plan, the ownership team led by John Ingram — majority owner of Nashville Soccer Club — would pay $25 million up front and $9 million a year over 30 years to help retire Metro’s annual $13 million debt for the bond issuance. 

The Metro Council approved the plan for $225 million in bonds on Nov. 7, but Major League Soccer would still have to select Nashville for a franchise before the stadium progresses.

Baseball ballpark went over-budget with changes and public infrastructure

The Sound’s ballpark north of downtown was a key project during Dean’s second term. In December 2013, the Metro Council voted to approve municipal revenue bonds to build the $65 million stadium. But the project ballooned to $91 million, according to a recent audit. Auditors documented cost overruns, a rushed timeline, and additional charges for surrounding public infrastructure including storm drains, sidewalks and bike paths. 

Auditors found more than 100 changes to the construction plan, and changes typically translate to higher costs. To guard against budget issues involving the soccer stadium, At-Large Councilman Bob Mendes pushed for protections including an amendment that requires team owners pay for any cost overruns resulting from new city infrastructure built for the stadium.

Riebeling, the city official who orchestrated the financing deal for the Sounds ballpark, also played a key role in the MLS stadium project.

He blamed the high cost for the ballpark construction on soil contamination, bad weather, a tight construction labor market, and changes to designs. Also, Riebeling said the public infrastructure was a good investment for that growing area of Nashville.

“I think the project worked,” he told The Tennessean when the audit was released. “It’s been very successful. It’s been good for the city. And it’s been good for that area if you look at the development around it.”

Reporter Joey Garrison contributed to this story.

Reach Mike Reicher at mreicher@tennessean.com or 615-259-8228 and on Twitter @mreicher.

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