Advertisement

Records show Charlotte lacks money for a new stadium

Recent NFL stadium deals between owners and cities across the country have cost taxpayers much more.
Published: Jul. 22, 2021 at 6:10 PM EDT
Email This Link
Share on Pinterest
Share on LinkedIn

CHARLOTTE, N.C. (WBTV) - Plans for a new stadium in Charlotte could hinge on how much the city is willing to contribute in taxpayer money.

A WBTV Investigation shows the Queen City’s capacity to contribute to stadium projects is much lower than what’s recently been agreed upon in other NFL cities.

Financial records shared by city staffers during a Charlotte Regional Visitors Authority board meeting show that the capacity to take on debt for major stadium construction is somewhat limited by other projects the city has already financed.

The Convention Center Fund, which generates revenue from taxes at hotels and restaurants, is the sole hospitality fund that can pay for a new NFL/MLS stadium.

In a presentation given to the CRVA, the city showed that the debt capacity, or the amount the city could borrow, for the Convention Center Fund is roughly $250 million in 2027. That’s the year the Panther’s post-tether agreement with the city completely expires.

Recent NFL stadium deals between owners and cities across the country have cost taxpayers much more.

The Mercedes-Benz Stadium in Atlanta cost taxpayers roughly $312 million. More recently, Allegiant Stadium in Las Vegas has taxpayers contributing $750 million.

“I don’t feel that the capacity is there at the moment in the existing tax structure,” District 7 Councilman Ed Driggs told WBTV.

Councilman and financial institution veteran Ed Driggs told WBTV he has doubts about the cities pot of money to pay for the deal.

“Particularly because we have a pipeline of capital projects that will probably soak up a lot of that of existing capacity,” Driggs said.

In addition to future potential projects like Discovery Place and Blumenthal Performing Arts, the city is already committed to $174 million in debt in the Convention Center fund, including more than $100 million for recent convention center upgrades.

During an interview in June, Carolina Panthers and Charlotte FC owner David Tepper said that taxpayer contribution would have to be part of the equation for financing a new stadium.

“I’m not building a stadium alone,” Tepper said.

“The community is going to have to want it. If I’m a third, and the community’s a third, and eventually in the future, personal seat license (owners) are a third, or whatever we do, it’s a partnership.”

Sources tell WBTV that Tepper’s team has not officially made an ask to the city yet to contribute to a new stadium.

Estimating a relatively modest $1.5 billion project, using Tepper’s math of one-third would require taxpayers to contribute $500 million to the project, well beyond the current capacity of the Convention Center Fund.

In a statement to WBTV, a city spokesperson wrote that staying financially responsible is the key building block of a deal.

“Mr. Tepper has made comments in the media regarding his desire for a new or significantly upgraded stadium and his hope that there will be some component of public funding for the project. The City will evaluate Mr. Tepper’s funding request, if and when Mr. Tepper submits it to us. The City of Charlotte has a history of fiscally responsible management and under no circumstances will the City agree to a funding request that would exceed the capacity of the Hospitality Fund.”

Other factors could also change the capacity equation by the time negotiations begin. If Covid-19 threats lessen and make travel more reasonable hospitality tax revenues could increase and create more capacity. The city could also structure its debt in a way to make paying for a new stadium more practical.

The city could also try to access other tools in its economic development playbook to make a deal happen.

Economist Andrew Zimbalist told WBTV that deals between franchise owners and cities that look beyond a specific dollar contribution have proven more fruitful for taxpayers.

“Cities are finding it more and more difficult to justify the expenditures as the prices go up in urban areas,” Zimbalist said.

“What we’ll do is we’ll give you the land for the stadium. Not only that, but we’ll give you some acres around it for parking lots and we’ll give you some more acres for commercial and residential development and then you can make your money off of those other things that will help pay back.”

That’s not to dissimilar from the plan currently unfolding between Charlotte and Tepper.

The City has already reached an agreement with Tepper and a developer for new soccer fields, residential units and commercial enterprises at Eastland. The city is also still negotiating with Tepper around a mixed-use/entertainment district in the area near Bank of America Stadium and the Charlotte Pipe and Foundry property, which could be crucial to the development of a future stadium.

Rezoning Pipe and Foundry and using a mixed-use/entertainment district to link it with the Gateway District, home of a future transit center for Amtrak could be crucial to plans moving forward.

Other avenues to raise money are also possible but may be less plausible.

The City could seek authority from the North Carolina General Assembly to raise revenue by increasing hospitality taxes. However, going to the General Assembly for authority to implement a one-cent sales tax for the mobility plan is still on the table.

The city could also reach out to the state for financial assistance on an economic development deal, as the state has appeared willing to help provide incentives for other companies to move to North Carolina.

The City could also try and leverage Tax Increment Grants to help sweeten the pot for Tepper but in order to access those there has to be proof the deal is a job creator. Realizing the economic impact of new stadiums is notoriously ambiguous math.

“It’s not an exact science,” Driggs said.

“We have to be able to demonstrate a relationship between the amount that we’re committing and the value that we think we’re receiving.”

Zimbalist says that these deals relatively yield a positive return for taxpayers so trying to break even is likely the goal.

“More likely than not, at the end of the day, for the vast majority of these deals, they should not be looked upon as a promoter for the economy,” Zimbalist said.

“They’re not going to raise overall employment. They’re not going to raise per capita income, and what you want to do as a city if you want to have a sports team, whether it’s MLS, NFL or NBA or whatever it might be, try to make a deal that is financially neutral.”

Copyright 2021 WBTV. All rights reserved.