The Charlotte Regional Visitors Authority believes it has finally solved one of the city’s most embarrassing public policy riddles: How do we plug the river of red ink drowning the NASCAR Hall of Fame’s budget?
Now it appears we have the answer – or at least a big part. It’s a commitment from Bank of America and Wells Fargo to forgive $17.6 million worth of principal and accrued interest on one of the loans that helped get the hall built in 2010.
The hall’s inflated initial attendance projections and under-performing finances are well-documented. Many Charlotteans rightfully see its troubled launch as one of the city’s biggest blunders in recent memory.
Among other things, the new deal also calls for the banks to forgo about $500,000 a year in sponsorship income. The CRVA, which last budget year choked down $1.4 million worth of red ink from the hall, says even with the sponsorship money and internal cost savings, it could still be running deficits of $200,000 to $500,000 annually.
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Still, Tom Murray, head of the CRVA, sounds confident. The hall is running 18 percent ahead of its projected budget, he says, and 12 percent ahead of where it was at this point last year.
He correctly notes that many businesses have had to restructure debt following the recession. And that the loan the banks are forgiving represents just a slice of the $195 million in loans it took to get the hall built.
And also that the city, the CRVA and NASCAR are offering financial concessions – albeit smaller than the banks’ – to make this bailout work.
That all makes sense, but one big problem remains: We’ve heard so many rosy projections and grand promises that it’s hard to trust the latest ones. City Council members, who will vote on the loan deal Monday, may not have much in the way of options.
The banks are eating a huge debt in the name of civic-mindededness (the kind underwater homeowners surely would love to see more often). It’s hard to see council members turning down this largesse – particularly since it seems to have been more the city’s idea than the banks’.
But this deal also leaves nagging questions.
The banks’ decision to forgive the loan places the city (figuratively) in their debt. Next time one of these financial giants needs a big favor from the city, will their benevolence on the NASCAR hall deal come up?
And if a $17.6 million bailout is the only way the hall can get within sniffing distance of break-even status, does the City Council have an exit strategy if Murray’s optimism about future budgets turns out to be misplaced?
Murray and hall director Winston Kelley make a reasonable case for the hall as a unique amenity that boosts the city’s ability to attract conventions.
The City Council might well approve this deal. But given the litany of past missteps, one hopes it has a backup plan ready in case this deal also proves insufficient to cure what ails the hall.