About 55% of the proposed Series 2026 issue would refinance existing debt. The rest would fund land and predevelopment, while separate construction borrowing is modeled for later years.
NASHVILLE, Tenn. — A proposed $772 million financing tied to Nashville’s Music City Center is moving through Tennessee’s debt-approval process as the Convention Center Authority prepares for a possible expansion of the downtown convention center.
But the headline number does not describe a $772 million expansion.
The Tennessee State Funding Board packet for the proposed Series 2026 bonds puts the estimated par amount at $772.005 million.
Of that, approximately $425.05 million would refinance existing convention-center debt.
The remaining $346.955 million would be new borrowing.
That means about 55% of the proposed bond issue is refinancing and about 45% is new money.
And even that new money is not intended to pay for construction of the proposed expansion.
Understanding the financing requires separating old debt from new money, land from construction and the proposed Series 2026 issue from borrowing that could come years later.
The new money is for land and predevelopment
State documents say the Series 2026 new-money proceeds would finance land acquisition and predevelopment work necessary to prepare for an expansion.
The Convention Center Authority says it does not anticipate using proceeds from this bond issue to pay expansion construction costs. Its authorizing resolution also prohibits applying bond proceeds to expansion costs without prior State Building Commission approval.
The financing plan identifies a project fund of up to $353 million, including approximately $53 million to reimburse the authority for a land purchase made in June and about $300 million for additional property, expansion design and other predevelopment costs.
That $353 million project-fund figure is not the same thing as the $346.955 million new-money par amount.
The preliminary financing assumes roughly $10.75 million in premium on the new-money bonds, producing additional proceeds before issuance costs and other uses. That is why the amount placed into the project fund can exceed the face amount of the new-money borrowing.
Under the current financing model, borrowing for actual expansion construction would come later.
State documents model additional new-money bond issues in 2029 and 2031 as part of a hypothetical future financing structure. Those issues are described as indicative, and the packet says their actual timing would depend on future cash-flow needs.
They are not completed borrowings.
The Series 2026 issue, then, is one layer of a potentially much larger expansion financing plan — not the full cost of building an expanded Music City Center.
A debt schedule that reaches 2058
The proposed structure also creates a timing question that is easy to miss in the $772 million headline.
The new-money portion is modeled to mature on Dec. 1, 2058.
One of the revenue streams pledged to the bonds — Nashville’s tourism development zone sales and use tax allocation — is scheduled to end in September 2042.
That does not mean the financing model assumes the bonds become unsupported when the TDZ allocation expires.
The bonds are backed by several tourism-related revenue streams, including hotel and motel taxes, room occupancy taxes, an airport ground transportation tax, a rental vehicle surcharge and certain sales-tax revenues connected to the convention center and nearby hotels.
The packet says Metro Nashville has irrevocably committed to levy, collect and transfer the pledged tourism revenues to the authority for the life of the bonds.
The authority projects that the remaining revenue streams will provide more than 300% debt-service coverage for the Series 2026 bonds after the TDZ allocation ends. Its model projects more than 200% coverage when the contemplated future expansion bonds are included.
Those percentages are projections.
They depend on assumptions about collections decades into the future.
The state packet therefore establishes that the financing model anticipates sufficient pledged revenue after the TDZ allocation expires.
It does not establish what hotel stays, vehicle rentals, convention activity or other pledged revenue collections will actually produce in the 2040s and 2050s.
The $1.45 billion number
The preliminary financing tables contain another number considerably larger than the proposed bond principal itself.
Under the assumptions presented to the state, projected aggregate debt service on the Series 2026 bonds totals approximately $1.451 billion over the life of the financing.
The model divides that into approximately $813.02 million in debt service on the new-money portion and $637.94 million on the refunding portion.
That $1.45 billion should not be described as Nashville’s construction cost for the expansion.
It is projected debt service across the proposed Series 2026 financing, including debt used to refinance obligations from the existing Music City Center.
And it is not yet a final figure.
The financial schedules explicitly state that they are preliminary and subject to change. They use interest-rate assumptions from Aug. 3, and the authority anticipated a negotiated bond sale around Sept. 24.
That creates a straightforward test once the bonds are priced: compare the preliminary estimates with the actual par amount, interest rates, maturities and total debt service.
There is another structural detail in the documents.
