I’ve been trying this week to imagine the conversation that led to Charlotte’s two big banks forgiving $17.6 million of a loan the city took out to pay for the NASCAR Hall of Fame.
Were city officials sheepish when they proposed paying just $5 million of a $22 million-plus debt? Was there any spitting out of coffee by bank officials?
It’s hard to know. Most of us have no frame of reference for that kind of conversation. Mostly, that’s because we’d never think to try.
City Councilman Kenny Smith spoke to that Monday after a council meeting on the issue. Instead of applauding how city officials got the suits at Wells Fargo and Bank of America to pick up a $17.6 million check, he wondered if it wasn’t such a good thing to ask.
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“My parents taught me in no uncertain terms it is immoral not to repay a debt,” he said.
I know. Sounds quaint, right? But maybe it’s more than that. Maybe paying your bills is about more than just paying your bills.
Let’s recap: Charlotte and the Charlotte Regional Visitors Authority owe Bank of America and Wells Fargo for principal and interest on a construction loan for the NASCAR hall. The city, with an annual budget of more than $2 billion, could move around some money and pay this loan.
But city officials had a better idea. They went to the banks and made them an offer they almost couldn’t refuse (the loan’s friendly terms don’t really give the lenders much leverage to collect the money.) The banks said yes.
CRVA chief Tom Murray calls this a “restructuring,” which makes it sound more like a common business transaction. But “restructuring” is when you change the terms of a loan so that you can pay pretty much the same amount of money in a different time frame. This was a demolition.
The upside is that the NASCAR hall is no longer choked by the loan and its interest, which now gives the hall a chance to maybe possibly perhaps break even at some future date.
Of course, the city could have accomplished the same by paying down the loan itself. But that would’ve prompted a new chorus of told-you-so’s from those who thought the Hall of Fame was a bad way to spend public money.
By getting the banks to take the hit, city officials could put off facing the failure of the Hall of Fame AND say they were saving taxpayers money.
But this is a political decision that doesn’t really work politically. It won’t stop the media reports on low Hall of Fame attendance. It doesn’t camouflage that the Hall of Fame couldn’t survive on its own. It doesn’t change the fact that the city, when it bid for the hall, miscalculated everything from attendance projections to the arc of NASCAR’s popularity.
What it does do is remind us how differently public officials see things from the rest of us.
Here’s an example: On the front page of Thursday’s Observer is this headline: “Patients get relief on hospital bills.” The “relief” is that Carolinas HealthCare and Novant will offer interest-free help on payment plans for struggling customers.
That’s a good thing for the hospitals to do. Still, if the customers have the money, the bills have to get paid. That’s what happens with bills.
But in the world of public officials, money is too often something that doesn’t come with obligations and consequences. It’s like play money.
It’s how the city and Mecklenburg County gave the parent of Carowinds about $1 million in tax breaks to do something it badly wanted to do – build a ride on land it already had purchased.
It’s how the City Council nodded yes to improvements to Time Warner Cable Arena without questioning why some of those expenses might be double or triple what they should cost.
And now, it’s why the city has asked for a $17.6 million loan forgiveness instead of facing the consequences, now and in the future, of a bad business decision.
It’s about more than just paying your bills. It’s about taking responsibility for them.
That’s something all of us can recognize.