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Last week, five Mecklenburg legislators in Raleigh proposed extending two countywide tourism taxes.
One is a 1% tax on prepared food and beverages that can be used for the Convention Center, amateur sports and a football stadium for the Carolina Panthers.
The other is a 2% tax on hotel rooms that can only be used for the NASCAR Hall of Fame and the Crown Ballroom next door at the Convention Center. Both sunset at different times in the 2030s, and both would be extended until 2060.
I wrote last week about the city’s lack of transparency surrounding the taxes.
The Charlotte City Council never discussed its desire to extend them publicly. The city never acknowledged that it wanted to extend the taxes — even during discussions of its legislative agenda.
But there is another issue.
The hotel tax extension will likely send more than $1 billion to the NASCAR Hall of Fame.
That’s a huge pile of cash.
In fact, it’s more than enough money to bulldoze the Hall and rebuild it.
Does the NASCAR Hall of Fame need that much money? And could those tax dollars be used for stadium renovations for the Panthers?
Troubled history
To back up for a moment, the city-owned Hall of Fame opened in 2010.
In the first year, boosters projected it would attract 800,000 visitors. It has never met those projections. For this fiscal year, attendance is on pace to be about 170,000 people.
I visited the Hall last week. There were some students there on a field trip and a few guests scattered throughout the 87,00 square-foot building.
Many rooms were empty.
To pay for the Hall roughly 15 years ago, the state allowed the city to levy that 2% tax on hotel and motel rooms.
The Hall struggled in its first years, losing money and unable to repay some of its debt.
But the 2% NASCAR tax appears to have grown enough that the Hall is now on better financial footing.
That tax is expected to generate about $20 million in the upcoming year. The debt payment on the $160 million building is about $9 million a year, and the city has budgeted $4.6 million for a maintenance fund. That still leaves $5 million that is “reserved for future years,” according to the city budget.
The debt payments are set to expire in 2038, unless the city has refinanced since then. (The Charlotte Regional Visitors Authority declined to say when the debt payments end, referring that question to the city of Charlotte.)
To estimate how much that 2% tax will generate in the future, I used a conservative growth rate of 3.5% annually.
From 2024 to 2038, the tax would generate about $390 million cumulatively. Then the tax is slated to end.
If it’s extended, it would generate roughly $442 million from 2039 to 2049; and then $646 million from 2050 to 2060.
The CRVA, which manages the Hall, said it has “not determined specific longer-term needs. However, we do anticipate a level of growing needs in maintenance and repair as the building ages.”
Money that could be used for the Carolina Panthers
If you are thinking the money could be used for things like affordable housing or transit, that’s highly unlikely. The hospitality industry would balk at hotel/motel taxes being used for things that don’t directly benefit their business.
But why not use some of that money to help pay for renovations to Bank of America Stadium? An argument can be made that Panthers games and other events there also help fill hotel rooms.
Two City Council members told WFAE the Panthers have proposed a major renovation of the stadium instead of building a new one.
WSOC-TV reported the cost would be $1.2 billion, with $600 million from the city.
The city’s 1% tax on food and beverages can be used for the Panthers.
But using the NASCAR Hall of Fame tax could also help the city pay for the stadium — without raising taxes.
In a year or two, the tax would generate enough money to finance $100 million or so for the Panthers.
In a decade, the city could finance even more.
The problem with this plan is the city needs the legislature to not only extend the tax — but to change the language so it can be used for other things.
The language in the bill only allows the 2% hotel tax to be used for “the acquisition, construction, repair, maintenance, renovation, improvement, and financing or refinancing of a NASCAR Hall of Fame Museum facility and an ancillary and adjacent NASCAR/convention center ballroom facility.”
We've been here before
A decade ago, former Carolina Panthers owner Jerry Richardson asked the city for $75 million to renovate his stadium.
The city’s proposal was to increase the 1% tax on prepared food and beverages to pay for the stadium improvements and amateur sports.
I covered the city at the time for the Charlotte Observer. I remembered a city presentation made months earlier that showed more than enough debt capacity to pay for the renovations.
The General Assembly noticed, and refused the city’s request for an increase in the food and beverage tax.
Instead, legislators wrote new language allowing that money to be used for a football stadium and amateur sports.
The stadium was upgraded. There was no tax increase.
