Efforts to persuade two banks to forgive a $19.1 million loan to the city of Charlotte that helped build the NASCAR Hall of Fame appear to have made progress, with City Council members set to hear about “proposed amendments” on Monday to that agreement.
On Friday, Deputy City Manager Ron Kimble wouldn’t talk about the proposed amendment or the negotiations, saying council members needed to be updated first on the so-called sponsorship loan and another agreement concerning NASCAR royalties.
But an agenda item that Kimble wrote for Monday’s meeting suggests that some agreement has been reached, with council members hearing the proposed changes. They won’t take action until their Jan. 12 meeting.
In November, the Observer reported that the city and the Charlotte Regional Visitors Authority, which manages the racing museum, had begun negotiations with Wells Fargo and Bank of America to forgive the loan. Growing to $21 million with interest, it was supposed to be repaid from the sale of sponsorships and commemorative bricks. Yet money from those two sources hasn’t come close to paying off the loan.
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When the hall opened in 2010, NASCAR was supposed to get royalties on such items as tickets, T-shirts, and food and drinks – but only if the museum was making money.
The facility has lost money, according to the CRVA. It lost $1.4 million for the fiscal year that ended in June, and $1.6 million the previous fiscal year. But CRVA leaders are hopeful that the hall’s finances are stabilizing with attendance essentially leveling off.
Still, no royalties to NASCAR have been paid.
Kimble wrote as background in his agenda that the city, CRVA, NASCAR and the two banks have discussed “strategies by which the financial performance of the Hall of Fame could be enhanced through mutual participation of all parties.”
He declined to elaborate Friday.
But Wells Fargo spokeswoman Elise Wilkinson said the bank is working “closely” with the city “to reach a solution with regards to the sponsorship loan.” She said the bank continues to support the hall.
Bank of America spokeswoman Nicole Nastacie said the bank doesn’t typically comment on client relationships.
There is precedent to such loan restructuring. Four years ago, the U.S. National Whitewater Center persuaded banks to forgive much of its $38 million in construction debt.
Most of the $200 million hall is being paid for by a special 2 percent hotel/motel occupancy tax. However, the city and CRVA got the sponsorship loan and a second $20 million construction loan that is backed by the revenue from expected sales of city-owned land near the hall. Sale of that land near Interstate 277 stalled during the recession, but the city has started selling some parcels, including a 3.6-acre parcel across from the hall.
The discussions with the two banks about forgiving the sponsorship loan began last April, when Kimble emailed a now-retired Wells Fargo executive Carlos Evans to ask if the bank would consider the request. Kimble wrote that he hoped they could agree on “extinguishment of the sponsorship loan” before the executive retired.
A week later, Evans wrote a reply that he and others had discussed options for resolving the debt.
“We realize the hall is a problem,” Evans wrote. “We are willing to do our appropriate share in helping put the hall on an even financial footing as we realize the hall benefits this community on many different levels.”
He said none of the bank’s proposals involved “a full forgiveness of debt. ... That would tilt the scales too far with the banks doing way more than others in a situation where we all need to be sharing the pain.”
Staff Writers Steve Harrison, Eric Frazier and Rick Rothacker contributed.