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Updated: Friday, 14 Jun 2013, 12:56 PM CDT
Published : Sunday, 05 Feb 2012, 10:36 PM CST
AUSTIN (KXAN) - The construction countdown is on. Nine months until Formula One is scheduled to race into Austin. Still up in the air - whether state tax dollars will ever be part of the F1 funding formula.
Questions and controversy stalled the project in November, but construction is back on track for a Nov. 18, 2012, race day. However, questions remain regarding the timeline between Formula One World Championship Limited and the Texas State Comptroller's office .
It all boils down to one document: a letter to Formula One officials from Comptroller Susan Combs dated May 10, 2010. In it, she said “certify” and “full funding.” That wording has prompted a request for a state opinion, asking if the comptroller overstepped her authority.
"OK, let me just state this,” Combs said to KXAN, “a letter of optimism and support is not a contractual obligation. I think that's really important. ... They want to know that at least there's a welcome mat laid out for them."
When asked if she could have said “extremely interested” instead of “certify,” she said, "No, because it's not a legal term."
Not a legal term, but the letter also states: "With the understanding that the first Formula One… race will be held in Texas in 2012, full funding... will be paid no later than July 31st, 2011."
That was to be firm date to indicate Texas was on board with this idea and had the money to get things started. It would be an investment from the Major Events Trust Fund, attracting jobs and tax revenue - a win-win for Texas and Austin.
Pushback from another state official
But that's now how Texas Land Commissioner Jerry Patterson sees it.
"I'm not opposed to it happening,” Patterson said. “I'm opposed to breaking the law."
Patterson is asking Attorney General Greg Abbott to investigate the way Combs handled that potential funding.
"Essentially, did the comptroller have the authority to make the commitment that was made in the letter dated 10 May 2010?"
Combs replied: "I take my job very seriously. I always comply with state law."
Spelled out in statute
Sen. Kirk Watson, D-Austin – the lawmaker who wrote the bill that helped get F1 on the list of events eligible for that money – spelled out the statute.
"There's a very specific process that requires a local government or local organizing committee that has been approved by a local government to first apply,” Watson said.
Watson's interpretation suggests Combs cannot guarantee the money until organizers or the city apply for it. But those applications did not come for more than a year after she sent that letter.
"I think some people were wrong in the way they were reading that statute or they just wanted it so badly they kept talking about it,” he said, when asked about Combs' action. "She obviously made a lot of comments that I disagreed with."
F1 eventually pushed the local race back to the end of 2012. By statute, that timeframe meant organizers would have to re-apply for the money - something Combs previously said would be available to pay the sanction, the fee to even get on the F1 calendar.
Infighting endangers the deal
Squabbles between organizers and talk of another U.S. race led to more problems and fears of Austin's F1 endeavor failing.
Then two months ago, Combs made a U-turn in her support. She pulled the possibility of state funding until she sees if the first race is a success.
"Formula One is, I think, still a great international event,” she said. “I wish them well. I hope it works."
Soon, construction all but shut down, and F1 officials threatened to push the race back again - perhaps even cancel it - because organizers had not paid up. So far, they have been hesitant to blame Combs' move for their financial hiccup.
"We're full speed ahead on construction and the only date that matters relative to the milestones is November 18,” said Jeff Hahn, spokesman for the Circuit of the Americas , the local group organizing the race. “That's the one that were going to be ready for."
Back on track
They eventually found the funding to keep them going for now, but Patterson said the project almost ran off the road thanks to a false sense of hope Combs gave in that letter long ago. Her office is now asking the attorney general to ignore Patterson's request for an opinion, saying her letter was again "merely an effort to indicate broad support."
"I feel confident I have complied with the law,” she said.
Combs said clearly that the state has given no money to F1. At this time, there is no application on file for any state money.
It is worth noting that Combs has reportedly expressed interest in running for lieutenant governor in 2014, though she is currently focused on her job as the state's accountant. Patterson's has already formally entered the race for Texas' second highest position. He and another declared candidate - Ag Commissioner Todd Staples - have been openly critical about Combs' involvement with Formula One.
Putting the pieces together
an extensive public information request, KXAN pieced together the timeline of the Comptroller's connection with this multi-million dollar project:
2008 – Early show of support
Combs’ link with what would become known as F1 Austin began on April 2, 2008, with a series of more than 20 meetings over two years, mainly with a man named Tavo Hellmund.
Hellmund’s enthusiasm – along with his promotion company, Full Throttle Productions – to bring a world class sport to the Austin area sparked Combs’ interest early. The former racer and racing promoter was the biggest local champion for the local F1 Grand Prix project.
While early economic research was soon underway, within months Combs’ staffers brought to her attention the first concern of Central Texas taking on such a project – specifically questions about what might happen if another F1 race ever materialized in the U.S. The nation had not hosted two races at the same time since 1984.
“There are many articles about rumors of new locations for F1 races, rumors of locations losing races etc…” Robert Wood, director of local government assistance and economic development, said to Combs in a July, 3, 2008, email.
Still, meetings continued with Hellmund, bringing in other important faces like Paul Carrozza, the founder and CEO of RunTex, the Austin-based running store; Buddy Barfield, a political consultant often associated with Lt. Gov. David Dewhurst. Even Phil Wilson, then secretary of state, sat down with Combs to discuss the F1 possibility, according to her calendar.
By August, Hellmund had the confirmation he desired. A letter from not only Combs, but also Gov. Rick Perry expressed Texas’ interest in hosting a race for ten years, with state funding not to “exceed $25.0 million each year a final agreement is in effect.” The letter also indicated Perry and Combs would be working with the legislature to fund the first year.
2009 – Major Events Fund comes into play
The list of events awarded money from the state's coveted Major Events Trust Fund since 2003 included Super Bowl XXXVIII in 2004 and XLV in 2011, the NBA All Star Games in 2006 and 2010, and the NCAA Men’s Final Four Tournament in 2008.
Watson became part of this mission, as his office drafted Senate Bill 1515. The measure would make Formula 1 races eligible for fund. Perry signed the bill into law in 2009.
The process sped along over the next year, as Combs’ office recommended a list of consultants familiar with the ins and outs of similar trust funds. The man eventually selected to conduct the later economic impact study was someone close to Combs - a former state employee, Dr. Don Hoyte.
“The new proposed facility is expected to cost between $215 and $242 million,” Hoyte said in his initial estimate of the racetrack, the first purpose-built facility in the sport’s U.S. history.
Hoyte worked for the Texas Comptroller’s office for more than 20 years, including service during Combs’ tenure. He was the director of regional fiscal analysis, the self-proclaimed “expert in the analysis of the economic and tax impacts of variety of event trust funds.”
2010 – “Certifying” F1 funding
The following year brought more concern to Combs’ office about whether a race would work in Austin. At Combs’ request, Hellmund handed over an article about the failed French Grand Prix bid costing that country $11.3 million.
Within days though, Combs, Perry and Hellmund produced another letter, this time to racing big wig Bernie Ecclestone, an English business magnate and worldwide F1 boss. The letter once again confirmed the state’s interest in hosting the race, but also relayed that $25 million – around the reported amount Ecclestone demanded to sanction the race – had worked its way through the Texas Legislature.
Days later, the comptroller’s office and Hellmund began setting up the first meetings with both the Austin Mayor’s office and the city’s chamber of commerce.
On May 10, 2010, Combs signed another letter, one that would later spawn Patterson’s request for that attorney general opinion, which might not come until May.
The move was no doubt in an effort to satisfy Ecclestone. The F1 head is reportedly known at times for pointed decisions to pull out of a project.
“In response to the requirements of the race promotion contract for the Formula 1 United States Grand Prix in Texas, I hearby certify the following: With the understanding that the first Formula 1 United States Grand Prix race will be held in Texas in 2012, full funding of the entire sanction for 2012 will be paid to Formula One World Championship Limited no later than July 31st, 2011. In subsequent years, two though ten, of the race promotion contract, i.e. 2013 through 2021, we will be sending $25 million dollars to FOWC by the end of July 31st of each year preceding the actual race event.”
2011- F1 Austin almost breaks down
A few months after Combs’ questionable letter went out, the Circuit of the Americas – now including business mogul Red McCombs – made
its project public. However, it was not until nearly a year later – May 11, 2011 – that Austin Mayor Lee Leffingwell received confirmation from Ecclestone that his city would indeed host the race, anticipated in June 2012.
A month later, the Austin-American Statesman reported Combs as saying the first $25 million would pay the sanctioning fee to Ecclestone for the race. This is noteworthy, because the race could not occur before this transaction took place.
The first application for METF money came long after Combs’ letter said the state money would be in place. The initial request was from Austin City Manager Marc Ott on June 30, 2011, authorized by the Austin City Council a day earlier. Nearly a month later – on July 22, 2011 – the race’s organizing committee sent Combs a similar request.
However, by the end of August, the project began to face challenges. The World Motorsports Council moved the date of the first race in Austin from June 2012 to November 2012. This voided any application for METF money, as such a request legally could come no earlier than one year before the event.
“The money is still available in the trust fund, the process is still open to us, and the comptroller has been very clear that we are welcome to apply for that and be evaluated as before,” said Hahn.
Throughout the fall, several items led to speculation about the race’s success. New Jersey announced it would hold a second F1 event in the U.S. beginning in 2013, and reports of turmoil within the Circuit group brought funding questions.
“That really put us in the position of going back to the statute and saying, ‘You know, it’s discretionary to send it in advance,’” Combs said in a November 2011 interview with KXAN, adding that the state would now not give Formula 1 any money before the first race.
Records show most METF payments since 2003 indeed come after an event takes place, which raises questions about Combs’ initial aim to award some F1 money beforehand. Regardless, her most recent decision to seemingly reverse support stemmed from her worry over the project’s success, saying she aimed to protect taxpayers.
Hellmund held a press conference a day after Combs' interview, explaining his inevitable departure from the organizing group and revealing new trouble with the sanctioning fee to Ecclestone.
"My role is to bring my experience, relationships with content,” Hellmund said. “Any of you who have known me a long time know that I am sad and worried, but I'm hopeful because this project means the world to me."
Construction – already well underway at that point – almost completely shut down for around a month, as inside officials worked to secure enough money for the sanctioning fee and hammer out the details of a refined contract. Ecclestone threatened to pull the race altogether, if not further push it back to an even later date.
Organizers have not publicly blamed Combs after she removed the possibility of an advance on that sanctioning amount. Other money eventually materialized, construction resumed, and a new application for the METF has yet to happen.
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