Council approves loan write-off on NASCAR Hall of Fame

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CHARLOTTE – The City Council voted 10-1 Monday night in favor of paying Bank of America and Wells Fargo a total of $5 million in exchange for the two banks writing off $14.1 million in principal and an estimated $3.5 million in accrued interest on loans to the NASCAR Hall of Fame. The agreement, the city says, will put the venue on a more solid financial footing.

In addition to the $5 million payment, which will come from the 2 percent hotel and motel occupancy tax, NASCAR will waive all past deferred royalties on revenue from retail, restaurant, tours, gift certificates and special events, for example, and reduce the amount of future royalties to 3 percent from up to 10 percent.

The hall, which opened in May 2010 and has fallen far short of sales and attendance projections, was built at a total cost of $192.6 million. The funds came from land and sponsorship loans from BofA and Wells, as well as taxes.

The collateral for the loan due to BofA and Wells Fargo was to have come from corporate sponsorships and the sale of commemorative bricks, which did not meet expected returns. Although the city was not responsible for the loan, Mayor Pro Tem Michael Barnes said it would take the hall 40 years to pay off the loan and interest at current sponsorship rates.  By resolving the issue, the city hopes the Charlotte Regional Visitors Authority, which manages the hall, can tackle the venue’s operating deficit. The hall is owned by the city of Charlotte and licensed by NASCAR.

Although he voted for the proposal, Republican Councilman Ed Driggs of District 7 cautioned against being overzealous on the matter.

“This is not a cause of celebration,” he said. “This was a big reach from the outset. The city wasn’t liable and the banks were aware of that fact.”

Kenny Smith, a Republican from District 6, was the sole council member to vote against the proposal.