The Charlotte City Council voted 10-1 to approve an agreement with Bank of America, Wells Fargo and NASCAR to forgive more than $22 million in debt from the NASCAR Hall of Fame.
Under the agreement, the city will pay the two banks $5 million. In exchange, the banks will write off $14.1 million in principal and $3.5 million in accrued interest.
In addition, NASCAR will waive $3.2 million in royalties that it’s owed since the hall opened in 2010.
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The hall hasn’t been able to pay those royalties because the hall has lost more than $1 million a year each year.
In the future, NASCAR agreed to reduce the amount of royalties it’s owed from as much as 10 percent on hall sales to 3 percent.
The city doesn’t have to pay royalties until the hall makes $10 million in annual revenue, which hasn’t yet happened.
Republican Kenny Smith voted no.
After the 10-1 vote, Smith said the primary benefit to the city was to “end operational discussions” about losses at the hall.
Other council members defended the terms of the deal, saying the city, the banks and NASCAR all shared in the pain.
Democrat Patsy Kinsey thanked the banks for their charitable contributions to the arts and social services programs.
The NASCAR Hall of Fame’s attendance and revenues have been far short of what was projected. For instance, the hall was supposed to attract 400,000 visitors each year; last year’s attendance was about 170,000.
The $19.1 million loan in question from Bank of America and Wells Fargo was backed by the sale of commemorative bricks and corporate sponsorships.
Because brick sales and sponsorships fell short of projections, the city hasn’t made a payment on the loan for three years.
The terms of the loan were “no recourse,” meaning the banks couldn’t take any collateral other than brick sales and sponsorship revenues.
The two sides were at a standoff. The city didn’t have to pay and the banks couldn’t make them pay.
Deputy City Manager Ron Kimble told council members the city didn’t want to keep having negative “conversations” about the hall’s operating deficits.
He said it would take 40 years at the current rate of sponsorship levels to pay off the loan.
The Charlotte Regional Visitors Authority, which manages the city-owned hall, said it hopes the debt relief will bring the hall closer to breaking even each year. Steve Harrison