After seven months of negotiating, the Charlotte City Council voted 10-0 Monday to approve giving the Carolina Panthers $87.5 million to help renovate Bank of America Stadium in exchange for a six-year hard tether to keep the team in Charlotte.
The Panthers, who will contribute $37.5 million to the stadium project, plan to install escalators, new video and ribbon boards and make other improvements to the 17-year-old stadium.
The terms of the agreement are the same as those approved by the councils economic development committee Wednesday.
But in an interview with the Observer on Monday, the city acknowledged the deal has complicated provisions designed to lessen the teams property tax bill.
Charlotte City Attorney Bob Hagemann said the Panthers are concerned that the improvements could cost the team hundreds of thousands of dollars in new city and county taxes.
To help the team, a deal was reached: If the citys money is used to build new escalators or video boards, for instance, the city of Charlotte would own that property, making it tax-exempt. The city would then lease the property to the Panthers at a fair-market price, which isnt taxable. The city would then pay the Panthers a fee to maintain the property.
The citys payment to the Panthers cant exceed the amount of the lease payment, Hagemann said.
It will be close to a wash, Hagemann said. We cant pay more than they pay us.
Last year, the Panthers paid $1.7 million in city and county property taxes on their stadium, which is now valued at $135 million by Mecklenburg County. The team also pays property taxes on its $1-a-year land lease with the city because the lease is considered below-market value. The county assesses $326,000 of taxes on that lease.
The Panthers have long contended that taxpayers got a good deal when the team came to Charlotte. The public spent $60 million on land and infrastructure for the $187 million stadium, which was paid for by Jerry Richardsons ownership group and the buyers of Permanent Seat Licenses.
Many other NFL teams play in publicly owned buildings and dont pay property taxes. And the Charlotte Bobcats dont pay property taxes on the city-owned Time Warner Cable Arena, which was built with public money.
The Panthers have said they pay millions of dollars annually in state and federal taxes, mostly in income taxes from their players. The team has cited a University of South Carolina study that estimates its annual economic impact at more than $600 million.
Hagemann said the local property tax arrangement is a small part of the agreement. The ultimate goal is the tether, Hagemann said.
A dozen people spoke Monday night about the Panthers proposal. Most were in favor of the deal, and a number of people including Charlotte Chamber President Bob Morgan wore team jerseys to the meeting.
Morgan said the city has had success attracting companies like Chiquita and MetLife because they see Charlotte as a city that invests in its future, and plays in the big leagues.
He added the tether is important.
We have lost a professional sports team before, and it was expensive, Morgan said about the NBAs Hornets moving to New Orleans.
Sid Smith of the Charlotte Area Hotel Association urged council members to approve the deal. He noted that the money from the Convention Center fund from a hotel/motel tax and a prepared food and beverage tax cant be used for regular city services.
Richardson, who attended the meeting, thanked Mayor Anthony Foxx and council members for considering the financial assistance. He said he has never considered moving the team, nor would he move the team.
But Deputy City Manager Ron Kimble said that Richardsons will calls for the team to be sold within two years of the 76-year-old owners death. He said the team is ripe for another city, possibly Los Angeles, to convince a new owner to move them.
Others spoke against the deal.
There is no need for these improvements, said Christian Hine of Fort Mill, S.C., who said he is a diehard fan. And if there is, they can pay for them themselves.
The Panthers original plan was to spend $250 million on stadium renovations. The city would have spent $125 million on improvements, and the state would have paid $62.5 million. The Panthers would have spent $62.5 million.
In exchange for that public money, the Panthers would have agreed to a 15-year tether to the city.
But the General Assembly rejected the citys plans to increase the prepared food and beverage tax from 1 percent to 2 percent for 30 years. Instead, legislators only gave the city permission to use money from the citys Convention Center fund for the Panthers. Gov. Pat McCrory and legislative leaders also rejected the teams request for state money.
The plan approved Monday calls for the city to spend $75 million in stadium improvements. The Panthers will spend $37.5 million.
In addition, the city will pay the team $1 million a year for 10 years for stadium maintenance. The public will also pay $250,000 annually for traffic control on game days.
The Panthers have agreed to give the city and the Charlotte Regional Visitors Authority five rent-free days a year from January to June. That is valued at $250,000 per event.
The tentative deal says that if the Panthers attempt to leave before the end of the 2018 season, the city is entitled to seek an injunction before a Mecklenburg Superior Court judge. If the injunction is not granted and the team leaves, it would pay a penalty.
That penalty would be $75 million if the team leaves leave after the 2013 season. It would decline by $7.5 million after each additional season through year six.
In years seven through 10 of the agreement, the Panthers would have to pay the city $37.5 million to leave. That penalty would again decline by $7.5 million after each season. Or instead of a financial penalty, the city would have the option to buy the stadium for $1.
Mayor Pro Tem Patrick Cannon, who is an executive of a company that manages parking lots, was recused from the vote due to a possible conflict with the Panthers.
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