Combs issues $29 million payment for F1 race

AUSTIN (KXAN) - Texas Comptroller Susan Combs has issued $29.3 million from the state's Major Event Trust Fund for the Formula One race in Austin.

The payment was made on Friday to Circuit Events Local Organizing Committee , or CELOC, as reimbursement for expenses of bringing the U.S. Grand Prix to Texas.  The state of Texas was responsible for $25.3 million, and the city of Austin matched $4 million.

• The complete distribution of funds.

Combs committed to that amount on Aug.12 based on economic impact projections made during CELOC's application process. Don Hoyte of TexasEconomicImpact.com presented the estimate numbers.

However, new indicators suggest the projections may have been exaggerated.  F1's finance arm, FormulaMoney, published a report comparing the Austin estimates to the U.S. Grand Prix in Indianapolis from 2000 through 2007.

The report showed that Austin's numbers were ambitious compared to the Indianapolis actuals in every category, which included airfare, hotels, food & beverage, rental car and related enterprises.

In addition, a report by Smith Travel Research showed Austin metro hotel revenue from Formula One week.  During a five-day stretch (Nov. 14-18, 2012) leading up to the F1 race, hotel revenue was $32.7 million.  That's about 3 times the revenue from the same stretch the previous year (Nov. 16-20, 2011), when hotels brought in $10.4 million.

The Texas Major Event Trust Fund is based on incremental tax gain from an event, which would be taxes from about $22.3 million for hotels in this case.  The same measurements are taken for categories like shopping & entertainment, rental cars, and mixed beverages.

Some Austin businesses did not see the same incremental gain.

"It just was not happening," said Gina McClelland of Guero's Taco Bar.  "Our business went down, kind of significantly."

The $22.3 million incremental hotel revenue is on par with the Indianapolis average of $22.7, but TexasEconomicImpact.com estimated the incremental gain to be $49.8 million.

"I think in promoting the event, and also promoting the event to produce the yield out of the Major Event Trust Fund, they just hyped [economic projections] into a zone of unreality," said Richard Viktorin, a CPA for Audits in the Public Interest.  "And, that's where the dashed expectations have now come from."

The Comptroller's Office says they will conduct a post-race study within 18 months of the 2012 U.S. Grand Prix as part of the Major Event Trust Fund statute.  They will use the findings to more accurately release funds in future Formula One events.