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Unpacking the Nashville transportation proposal’s estimated all-in $6.9B price tag

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6 months ago

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Unpacking the Nashville transportation proposal’s estimated all-in .9B price tag

Nashville Mayor Freddie O’Connell’s proposed transportation plan will cost an estimated $6.9 billion to implement over 15 years, according to an independent audit released last week.

The “Choose How You Move” proposal would raise sales tax in Davidson County by half a cent to fund the construction of 86 miles of sidewalk, an improved 24/7/365 bus-based transit system, 12 community transit centers, 17 park and ride facilities, 600 upgraded smart traffic signals and more. The plan will head to the Metro Council for review after receiving a stamp of approval from the state comptroller.

Voters will have the final say at the polls in November on whether to implement the plan.

Metro Finance Director Kevin Crumbo in a statement described the $6.9 billion figure as “a projection of what the projects might cost if you make a best estimate about future inflation and cost-pressures.” It includes construction, operating and financing costs in addition to reserves — all in “future dollars.”

The price tag would be covered by several revenue sources:

  • $3.26 billion from sales tax surcharge
  • $2 billion from anticipated proceeds from revenue bonds issued from 2026 to 2039
  • $1.52 billion in federal and state grants
  • $154 million in farebox revenue

The $2 billion in bonds would be “issued under a new credit profile,” similar to how the Sports Authority issues debt. The bonds would not impact Metro Nashville’s general obligation bond ratios.

In today’s dollars, the cost for the entire construction period from 2025 through 2039 would total around $3.1 billion, in line with the O’Connell administration’s initial estimate. Construction costs are expected to escalate 3.5% per year, which the audit report notes is “significantly higher than historical national construction cost growth.”

The annual operating cost of the services included in the plan stands at $111 million, in today’s dollars. These costs are expected to escalate by 3% per year.

The audit report did not take into consideration other potential future revenue sources like advertising or partnerships. It did factor in a $5 million per year reduction in the city’s annual subsidy to WeGo starting in fiscal year 2026.

If the 2018 “Let’s Move Nashville” plan were to be implemented in the same 15-year period, it would cost around $14.5 billion, according to city documents. But Crumbo has cautioned against placing too much weight on comparisons to the 2018 plan.

“While this estimate uses nearly the same methodology, comparing it to 2018 has little utility because the underlying projects are different,” Crumbo said. “For example, the 2018 plan includes trains and other high-cost projects that the 2024 (plan) does not. What we know with more certainty is the 2024 plan costs $3.1 billion in today’s dollars, and $111 million in annual recurring costs.”

More: Nashville transit plan supporters launch campaigns. Formal opposition absent — for now

How a sales tax bump could impact your wallet

O’Connell said the half-cent sales tax bump would cost an average Davidson County family about $70 per year.

Davidson County residents currently pay 6.25% sales tax on most groceries (except prepared foods, alcohol and tobacco, candy and dietary supplements) and 9.25% on everything else.

Raising the local sales tax half a percentage point would bump that up to 6.75% for groceries and 9.75% for other taxable goods, bringing Nashville’s sales tax to the same level as several surrounding counties.

For a single adult, that could mean paying an extra $4 per month in tax on groceries and other household goods, based on average household costs in Davidson County according to MIT’s Living Wage Calculator. A family with two adults and two children could pay around $10 more per month in sales tax on those basics.

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