Charlotte asked the General Assembly Wednesday to approve a smaller and shorter increase in the prepared food and beverage tax to help pay for renovations to Bank of America Stadium and keep the Carolina Panthers tied to the city.
The new request is to increase the so-called meals tax by a half-cent for 15 years. That would raise $176 million, according to the city.
The city originally asked legislators to increase the local prepared food and beverage tax from 1 to 2 percent, for 30 years. That would have raised roughly $1 billion over the life of the tax far more than the $144 million the Panthers had requested of the city.
Local legislators rejected that proposal. Instead, they filed a bill that would allow the city to use existing hospitality tax revenue to pay for stadium renovations. The citys Convention Center fund has a surplus that could fund $110 million in new debt, according to the city.
... Even if the city were to bleed every penny from those existing revenue sources away from the convention center ... the available resources would fall short and put at risk any debt service on stadium improvements, wrote City Council member James Mitchell, in a Wednesday letter to Gov. Pat McCrory, N.C. Speaker Thom Tillis and Senate President Phil Berger.
In his letter, Mitchell said he feared the inability to raise the meals tax would ultimately lead to the sale and relocation of the Carolina Panthers ...
Mitchell was the only elected official who signed the letter. Its unclear if the full City Council endorsed his plan in a full vote in closed session.
Though the city has scaled back its requested tax hike, its unclear if it will find support in the GOP-led legislature.
State Rep. Becky Carney, a Democrat who co-sponsored a bill to let the city use existing Convention Center funds, said any tax increase is a non-starter.
Thats the climate, she said. Theyve already been told theres no appetite for a tax increase for anything.
State Rep. Ruth Samuelson, a Republican, agreed.
Weve told them before that the legislature has no appetite for a tax increase, said Samuelson, who was the lead sponsor on the bill letting the city use existing money.
In addition, some legislators were already aware of the citys consideration of a smaller tax.
According to Mitchells letter, the Panthers met with some members of the Mecklenburg delegation on Feb. 18, in which the city presented the idea for a smaller prepared food and beverage tax hike.
The City Council members present came away from the ... meeting with the sense that a number of members of the delegation were intrigued by the revised proposal, according to Mitchells letter.
But two weeks later, the delegation ignored that request. Carney and Samuelson were members who introduced the bill that give the city flexibility in using Convention Center funds but wouldnt allow a tax hike.
The Panthers have asked the city for $125 million to help pay for stadium improvements such as escalators, new video boards and club and suite improvements. In addition, the team has asked the city to pay roughly $19 million over 15 years for on-going maintenance and police traffic control on game days.
The team has asked the state for $62.5 million. The total cost of renovations would be roughly $300 million.
The citys original plan for doubling the prepared food and beverage tax would be to use the money for the Panthers, but to also build new amateur sports facilities. The city also planned to save hundreds of millions of dollars of debt capacity for an expected second phase of stadium renovations in 2028 or possibly to help build a new stadium.
If the city were to adopt a 1/2-cent increase for 15 years, the amateur sports plan would be cut. There also wouldnt be any money saved for the Panthers after 15 years.
$176 million through 2028
The tax increase would generate about $176 million through 2028, according to city estimates.
Under the citys latest plan, Charlotte would still use money from the Convention Center fund to help the Panthers. In the first year of the deal, the city would spend $16.7 million from the Convention Center surplus. After that, revenue from the tax hike would cover the citys annual debt payments.
When the city first proposed doubling the prepared food and beverage tax, the N.C. Restaurant and Lodging Association was strident in its opposition, saying it unfairly punished the restaurant industry. Tom Sasser of Harpers Restaurant Group, the president of the Charlotte chapter, also said he was concerned.
Last week Sasser said he would be open to an increase in the prepared food and beverage tax, but he said the city should consider a smaller tax hike.
The prepared food and beverage tax is levied on all restaurant and bar bills. It also applies to prepared food at the grocery store, such as deli sandwiches.
The existing 1 percent prepared food and beverage tax is levied countywide. The city has proposed the tax hike only apply inside Charlotte city limits.
A Charlotte resident who spends $50 a week in restaurants or bars would spend an additional $13 a year if the 1/2-cent tax were enacted.
The Panthers own Bank of America Stadium and have no binding contract to stay in Charlotte. Majority owner Jerry Richardson, 76, has said he would not move the team from Charlotte. But his will calls for the team to be sold within two years of his death.
A move to LA?
The city is worried that a new owner would seek to move to the team, possibly to Los Angeles, which doesnt have an NFL franchise.
Last week, the website Deadspin posted a leaked financial audit of the team for the years after the 2010 and 2011 seasons. It showed the team had a net income of nearly $97 million for those two years.
The Panthers said that was a unique situation because the team was saving money due to the fact that wasnt a labor agreement with players during that time.
The team said the better indication of its profitability during those two years was its net operating cash, which was $66.5 million.
The team said that showed that it would be difficult to finance a major stadium renovation on its own, while still fielding a competitive team. Jim Morrill contributed.