CHARLOTTE, N.C. -- The state’s lobbying group for restaurants and hotels on Friday criticized the city of Charlotte for not holding an “open public debate” about possibly raising a local restaurant and bar tax to pay for renovations at Bank of America Stadium.
The Charlotte City Council met in closed session Monday night to consider a request from the Carolina Panthers for $125 million in public funds to help renovate Bank of America Stadium, which opened in 1996. City staff has proposed paying for the renovations by raising the local prepared food and beverage tax from 1 percent to 2 percent.
Council members gave an early endorsement to the proposal, voting 7-2 in closed session to see if the General Assembly would approve the tax hike.
In a letter to Charlotte Mayor Anthony Foxx, the chair of the N.C. Restaurant and Lodging Association, Brad Hurley, said his group opposes the idea of using a meals tax for the Panthers.
Hurley also criticized the way the city has so far considered the idea.
“By acting in closed session, the City Council has endorsed a plan which excludes both the industry and citizen input,” Hurley wrote. “There are many unanswered questions, including the analysis of total cost and the possible sources of funding. There should be an open public debate.”
The city’s proposal would increase the prepared food and beverage tax inside the city of Charlotte. The current 1 percent tax — which is dedicated to the Charlotte Convention Center — is levied throughout Mecklenburg County.
Council members have declined to speak publicly about Monday’s closed session meeting, citing the sensitivity of negotiations with the team.
If the tax hike were implemented, the General Assembly would have give its approval. The Charlotte City Council would likely then take a vote in open session to enact the tax.
In his letter, Hurley said a meals tax impacts locals.
“Unlike occupancy taxes which are paid primarily by visitors to the area, meals taxes are just the opposite — a majority of the revenue comes from local citizens who either eat out or pick up a prepared dish at the store.”
Hurley suggested the city of Charlotte consider levying a quarter-cent general sales tax countywide to pay for the stadium improvements.
Foxx couldn’t be reached for comment Friday. He has previously declined to comment on negotiations with the team.
Council members often meet in closed session to consider economic incentives to bring companies to Charlotte or to keep a business from leaving. They then vote to approve the incentives in open session, once an agreement has been struck with the business.
But it’s much more unusual to consider incentives in closed session that would be paid for with a tax increase. The City Council did that for the NASCAR Hall of Fame, which was paid for with a 2 percent increase in the hotel/motel occupancy tax.
That tax increase had the support of local hotel industry, who believed it would pay off in new tourist business.
The countywide 1 percent prepared food and beverage tax generates about $24 million a year. The city has told the Observer that a 1 percent meals tax inside the city limits would bring in about $20 million annually.
If the city gave the Panthers $125 million, it’s unclear how Charlotte would finance the debt. Craig Depken, an UNC-Charlotte economist, estimated the city could finance that debt over 15 years for about $11 million annually.
He said the city could ask the General Assembly to dedicate all of the tax revenue to paying off the debt for the Panthers. As soon as the debt was retired, the tax could sunset, Depken said.
He said the city of Arlington in Texas increased its sales tax to pay for a new baseball stadium for the Texas Rangers. When the tax generated more revenue than expected, the tax ended years earlier than the city projected.
Depken said if the city increased the prepared food and beverage tax by 1 percent, “it seems to generate more revenue than is required for the debt.”
Council members have said city staff have told them the new tax dollars could fund other projects in addition to the work at Bank of America Stadium.