Have I really never mentioned the subsidy deal that Charlotte entered into in order to become home of the NASCAR Hall of Fame? Well, better late than never, so how’s that working out, anyway?
As it turns out, the $192 million Nascar Hall of Fame, with vintage cars dating to the 1940s, is drawing fewer than half the visitors forecast when it opened in 2010, leading officials last month to use $5 million of public funds to settle bank loans. The move is raising questions about how North Carolina’s largest city has financed economic development.
Here’s how the deal went down: Charlotte sold $137 million in bonds in 2009 to help pay for the monument to fiery death, to be repaid by a 2 percent tax on hotel and motel rooms. Unfortunately, the Charlotte Regional Visitors Authority also agreed to run the place, and instead of bringing in lots of new visitors, it’s been losing money hand over fist, making necessary last month’s bailout.
Bloomberg News draws the obvious conclusion, which is that sports and tourist enterprises are risky investments for cities, but there’s another lesson as well, which is: Keep your eye not only on the up front costs, but on the operating expenses. Handing over hotel/motel tax money for a venture like this was bad enough, but agreeing to cover operating losses was just doubling down on the risk. I know that tourism bureaus think it’s their job to throw money at crazy ideas in hopes that people from all over will come to town and lavish the local economy with out-of-town currency, but shouldn’t somebody be thinking this through more than “We have the money, we might as well spend it on something, what the hell, let’s see if this works?”
“The $5 million isn’t money that can pay for streets or anything else,” [city councilmember Vi] Lyle said. “It’s paid by people who stayed in our hotels.”
Apparently not. Carry on!