Charlotte Pol: Undervaluation of Panther stadium saved team TONS in property taxes

The Charlotte City Council’s vote to give the owners of The Carolina Panthers $87 million to renovate Bank of America Stadium has raised some hackles in the grassroots.

Did the Carolina Panthers avoid millions in Charlotte city taxes as a result of an unusually low valuation of the team’s stadium by city officials?    Edwin Peacock, a former councilman running for mayor of the Queen City, says he’s done research suggesting THAT is exactly what has happened.

We obtained a raft of emails between Peacock and some other current and former Charlotte / Mecklenburg government officials discussing Peacock’s theory.

Peacock wrote to former councilman Don Reid and  current county commissioner Bill James in late March:

I prepared this comparison of the City of Charlotte & Mecklenburg County taxable real estate values found on the Mecklenburg County website.    It compares the tax valuation of the Panthers Stadium LLC in  2003  to their valuation in 2011.  I then looked up values of their nearby neighbors.  Panther’s representatives have stated that they pay 2,000,000 in property taxes.  That is correct.  However, if their  property were appraised on the same basis as their corporate neighbors, they would be paying a lot more.

Peacock built on his argument in a later email to commissioner James:

 

Bill, 

 

The issue with the Panthers’ property valuations is that since the stadium was completed in 1996 the Panthers have had a huge bargain because the stadium has been significantly undervalued for tax purposes. 

 

In the 1998 revaluation the stadium was valued at $134,158,592. The stadium was initially valued for $134,158,592 even though the total “cost” was  just under $300,000,000.  This is only the stadium valuation and not the 34 acres of land leased by the City to the Panthers.

 

In 2003 the stadium was revalued for $150,363,584. In 2011 the “depreciated cost” was reset at $134,990,496 which is where it is today. 

 

If the county had correctly revalued the stadium in 2011, then the property probably would be valued about $450,000,000 – $500,000,000.

 

NC General Statutes require that property be revalued at “market value”. The current valuation is not reasonably close.

 

Under the statutes, the County may use any of the generally allowed appraisal methods to value the stadium.

 

In the next countywide appraisal, I suggest the County hire outside appraisers from another part of theUnited States and use the income and/or other methods to revalue the stadium.  

 

A more thorough, fair and comprehensive tax revaluation will likely require additional outside forensic accounting assistance as the accounting for the multiple Panther related entities will be difficult to follow.  

 

A correct appraisal has important public policy implications of fairness.

 

The stadium is owned by Panthers Stadium LLC and leased to Panthers Football LLC. There are other interlocking entities such as Richardson Sports LLC, etc. Generally the County will need to completely understand the ownership and interlocking nature, the cross payments and allocation of expenses to get a complete picture. Various individuals and trusts own different ownership interests in the various entities.

 

As an added note, last year the Panthers lobbied the General Assembly to eliminate the wording from the Machinery Act that permits taxation of the 34 acres of property in the leasehold estate with the City. That effort was repulsed on the advice of the NC Department of Revenue. I’m told that a less robust effort was initiated this year and repulsed by the General Assembly. I suggest the county stay alert at all times on this issue. 

 

Thanks!

 

James, a CPA by trade, picked up this ball and ran with it — in an email to interim Mecklenburg county assessor Bobbie Shields:

Bobbie –

I got this from Ed Peacock (former Charlotte City Councilman and candidate for Congress). He points out something of interest – namely that all of the property owners in uptown (around the Stadium) had their values increase over 2003 but Panthers Stadium went down in value.

I have to admit, this doesn’t make any sense to me.

While I understand that buildings will depreciate with age that can also be said of the Observer building (practically a relic in architectural terms) and others. If the income method is used I would think values would be higher because the Panthers have higher ticket sales than in 2003.

In any event, it is a question that I think should be answered as part of the revaluation and deserves a second look considering the question about the request to the City Council for additional renovation funds.

No doubt a ‘stadium’ is a unique asset with limited uses but I would think that the income method combined with the value of the land would pretty much prevent the asset from dropping in value since 2003.

They may be a simple answer but I think the question should be asked.

Happy Easter to everyone.

Bill

Shields wrote back , suggesting that the matter is not nearly so sinister:

Commissioner James,

The simple answer is that since the City owns the land, the reduction in the stadium’s value is due to eight additional years of depreciation.  The other properties on Mr. Peacock’s list include land.  The assessed value of the City own exempted land associated with the stadium is $62,974,200.  The Assessor’s Office does not value “business operations” but the lease potential of a property when using the income approach.  The stadium is a special purpose property that is best valued using the cost approach.  Let me know if you have other questions.

Regards,

Bobbie Shields

James countered by suggesting that the city’s deal with the team will cost local governments significant tax revenue:

I read the attached article about Panthers Stadium (version 2.0). While I get that the City wants to help them, I still remain concerned about the manipulation of the tax base to achieve additional money for the Panthers.

As I understand the attached article; the City plans on doing the improvements for the benefit of the Panthers (stadium boards, and other improvements) so that the tax base (and the taxes paid) of the Stadium do not increase from these improvements.

I have concerns about this, not the least of which is that the City and Panthers appear to be colluding to deny the County taxes due from these improvements which will generate revenue for a private enterprise (the Panthers). These items are designed to make the stadium more ‘attractive’ and ‘functional’ and insure that individuals buy tickets and attend games (for the sole benefit of a private corporation).

Combined with the concerns over assessment of the Panthers stadium in the first place (and it’s strange current assessed value); it would seem that the revised deal (version 2.0) allows collusion between the Panthers and the City of Charlotte to avoid legitimately owed taxes. These improvements that will benefit the Panthers represent  process that is not granted to citizens in general or businesses.

If the stadium should really be assessed at a higher value; this current proposal to hide additional tax value in plain sight (from improvements paid by the City) seems suspect.