Next time, get it in writing.
That would have helped Lowe's Motor Speedway owner Bruton Smith and local officials in Cabarrus County avoid the current clash over his $80 million incentives deal.
But they didn't.
Now the two sides are far apart – by about 37 years.
Smith wants to get his money within three years, and the governments want to take up to 40 years to pay him.
That does not sit well, to say the least, with the 81-year-old billionaire owner of Lowe's Motor Speedway and zMax Dragway @ Concord.
Local officials offered the incentives last fall to make sure Smith kept operating the speedway in Concord and opened the drag strip, which debuted last week.
But when the two sides reached a general agreement in November, no one had talked about how long the deal would take to complete.
Now Smith is throwing around terms like “snake in the woodpile” and “fraud.”
And local officials are saying that if Smith got his way, taxes would shoot sky-high.
No one knows when the issue will be resolved, although local leaders have indicated they're willing to negotiate.
The ongoing controversy hurts the area's image, said John Kennedy, a longtime friend of Smith who helped negotiate the general agreement last year.
“I'm embarrassed for the community,” he said. “It's certainly put another bad image on the community, and the lack of ability of our leaders and the business community to get together and solve problems.”
It all started with the drag strip.
After Concord blocked plans for the facility last fall, Smith threatened to move his speedway complex out of Cabarrus County. Many arguments and headlines later, leaders hatched a plan the day before Thanksgiving to keep Smith happy and in town.
In exchange for incentives, he was expected to build the $60 million drag strip and make $200 million in speedway upgrades.
The city and county's two-page letter to Smith committing to the deal was short on details.
The only time reference in the letter was for the city and county to secure $20 million of the $80 million within three years if they could not get the state to provide it.
“We were under the gun,” said county Commissioner Bob Carruth, who as chairman last year was part of the negotiations. Smith had imposed a Thanksgiving deadline.
“If we had two or three months, there would have been more specificity.”
The detailed plan offered to Smith last month would pay him back for fronting $60 million for major road upgrades near the speedway. Another $20million would cover more road work and tourism promotion.
The offer was a standard economic incentive package – a grant equal to 85 percent of the taxes generated by his new investments. But instead of three years, a typical period for Cabarrus County, the payout could take up to 40 years.
The city and county developed the 40-year plan in talks after Thanksgiving, County Manager John Day said.
The governments could deliver smaller amounts over a shorter period. But raising $60million through rebated taxes would take a lot longer.
“We can't do a two- or three-year payback, or it would drive taxes sky-high,” Carruth said. “That's what's so ludicrous about this thing.”
Commissioners Chairman Jay White called the 40-year plan a starting point for negotiations. Smith said forget it. He was expecting his money in two to three years, tops.
Longer terms for incentives
Smith said last week that he no longer trusts local officials and that his lawyers are looking into potential fraud by the governments.
But David Lawrence, a UNCChapel Hill expert in local government law, said two parties must have entered a written contract before fraud can come into play. The November letter to Smith apparently was just an agreement to agree to terms, Lawrence said.
He also said incentive lengths have been growing in the state. Cabarrus began the trend about a decade ago, he said, stretching incentive deals over several years.
That helped lure Concord Mills mall, for instance. A package from Concord and the county gave the mall $18.6million in tax rebate grants over five years.
More recently, Google landed $260 million in state and local incentives over 30 years to build a $600 million computer center in Lenoir.
And in Kannapolis, the city and Cabarrus are partnering on a $168.4 million, self-financing bond deal over 25 years for the $1.5 billion North Carolina Research Campus.
More discussions to come
Smith told the Observer last week that he couldn't move his track now, but he still had bargaining chips. He declined to discuss them.
One possibility is moving a top race – perhaps the Bank of America 500 – to another of his tracks, such as Las Vegas.
Smith's counterproposal cut out wording the city and county had wanted: Keep holding three top-tier NASCAR races at the speedway, and operate it and the drag strip in Concord for 40 years.
That, by the way, was the only mention of “40 years” in last month's city-county proposal. But when officials announced details of that deal, they estimated it would take up to 40 years to pay off.
Smith said he would not commit his company to operating the speedway for a set time. Local leaders scoffed at the idea of providing vast sums of money without assurance the speedway would operate for years to come.
The county commissioners and city council may take up the issue in meetings next month.
Choices could include issuing bonds or borrowing to pay off money in the time Smith is demanding. Both likely would involve big tax increases.
Day said another option would be using a new state law, under which local officials would handle the road improvements and Smith would be assessed for the costs.
Meanwhile, Smith has continued his verbal assaults, telling WFAE-FM radio that among local officials, “I think maybe we've got a snake in the woodpile.”
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