The collection of tourism taxes to pay off 30-year bonds financing the construction of Music City Center, Nashville’s new convention center, has outperformed projections.

“We did the financing for the convention center based on projections that were prepared by the consultant HVS (Consulting & Valuation Service),” says Richard Riebeling, Metro Nashville’s director of finance, “and for the last two fiscal years we’re running about $2.5 million above projections.”

Butch Spyridon, president of the Nashville Convention & Visitors Bureau (CVB), attributes the windfall to the city’s recovering tourism industry, which has surmounted the obstacles of a depressed economy and flood conditions during the last two months of fiscal year 2010.

“So business is good,” says Spyridon. “Leisure business has held. Tourism business has held, and we’re seeing the ability to grow occupancy and rates.”

The rate of recovery has been faster than the CVB anticipated, but Spyridon is cautious about having his organization rest on its laurels. Nashville’s tourism industry, he adds, still has a ways to go before it is satisfactorily robust.

Still, the CVB was surprised by the amount of tourism taxes and fees collected for the $455 million Music City Center, which is scheduled to open in March 2013.

“We were tracking it enough we knew we were going to outperform projections,” Spyridon says, “but the level of increase is higher than we thought.”

In fiscal year 2010, Metro collected $22,790,000 in convention center tourism taxes. In 2011, $23,639,000 was collected.

Metro Council voted to approve the tourism taxes in 2007. Former Council Member-at-Large Carolyn Baldwin Tucker was one of two council members who voted against the new taxes. She says her nay vote was due to the lack of information about the taxes.

“I didn’t have enough details that were communicated to me,” Baldwin says. “Different questions that I had at that time were not answered to my satisfaction, so I could not vote for it.”

The tourism taxes will terminate when the 30-year bonds are paid off. The taxes and fees included:

One percent added to the existing hotel/motel tax, which raised the hotel/motel tax to 6 percent. Three percent is dedicated to the convention center.

$2 occupancy tax on hotel rooms.

1 percent rental vehicle tax primarily targeting visitors.

$2 fee on shuttle vehicles, such as taxis, whenever they leave the airport.

“Those have been in place for several years,” Riebeling says. “They were put into effect even before the project was started. We’ve been collecting them now for probably three or more years.”

One-third of the tax proceeds are used for the direct promotion of tourism, while one-sixth is used for tourist-related activities, including funding the convention center, one-sixth is deposited in Metro’s general fund, and one-third goes into a reserve fund used for constructing, financing and operating the convention center.

Any excess from the tourism taxes are put into the reserve fund, Spyridon says, which will provide a cushion for economic problems that may occur over the course of the 30-year bonds.