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Updated: Friday, 20 Jul 2012, 6:41 PM CDT
Published : Friday, 20 Jul 2012, 10:54 AM CDT
AUSTIN (KXAN) - The committee behind the Austin area’s Formula One event has once again applied for state funding, according to documents filed with the Texas Comptroller’s Office.
The Circuit Events Local Organizing Committee – the nonprofit corporation behind the local U.S. Grand Prix – filed the application for the Major Events Trust Fund on July 13. The group’s director, Wayne Hollingsworth, wrote:
“It is my honor and great pleasure to submit this application from the Committee, as the City of Austin’s duly appointed and authorized designee for and on behalf of and binding upon the City of Austin, as the formal request…for participation in the (Major Events) Trust Fund program and a request to the Texas Comptroller to determine the incremental increase in the applicable taxes for the City of Austin for the November 18, 2012 Race Event.”
KXAN first reported in February that organizers -- Circuit of The Americas – said there were plans to reapply. Chief marketing officer Geoff Moore revealed the initial importance of the fund -- that talk of tapping it likely led to securing the event in Travis County for a decade.
“I think it was difficult to imagine Austin winning the competition to have the F1 event without the state support,” Moore told KXAN in February.
The event is still four months away, and state funding now hinges on its success. As many as 300,000 racing fans are expected to flock to Travis County over the span of one weekend this November.
“Our facility's going to be finished, and the event's going to be spectacular,” Moore promised.
Last summer, Formula One Management Limited – the international racing group behind F1 events -- pushed the local race back to the end of 2012, putting organizers' initial METF application in jeopardy.
By statute, that time frame meant organizers would have to reapply for the money. The law says the application “must be submitted not earlier than one year and not later than three months before the date the event begins.”
Upon receiving an application, Comptroller Susan Combs then has 30 days to prepare the estimate, which is evaluated with CELOC’s required economic impact study. Her interpretation of the statute:
“An application has to come in, we analyze it, and then they have to have the event,” Combs told KXAN in February. “No event, no money.”
This seeming security means the race must not only occur, but Combs also suggests it must be an economic success before she hands over the money. Past examples include the Super Bowl and the Final Four.
“We will review and analyze the request as required by the statute to estimate the incremental tax increase the event would generate,” said R.J. DeSilva, Combs' spokesman. “Any money deposited in the fund would be used after the race occurs to reimburse expenses related to the event.”
If played right, the funding – previously thought to be up to $25 million a year -- is meant to both help events like the race and attract jobs and tax revenue to Austin and Texas.
“The statute says the Comptroller has to be comfortable that the taxpayer of Texans' interest is protected,” Combs said. “I take that very, very seriously.”
Last fall, several items led to speculation about the race's success. Construction slowed down, New Jersey announced it would hold a second F1 event in the U.S. beginning in 2013, and reports of turmoil within CoTA 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 not give F1 any money before the first race.
CELOC's economic impact study predicts the following for the race weekend:
City shows support for funding
State law says the METF application must be submitted by “the local organizing committee, endorsing municipality, or endorsing county.” In this case, CELOC – which submitted the application – is the committee, endorsed by the City of Austin.
On July 5, City Manager Marc Ott sent Combs a letter requesting participation in the fund through its designee – CELOC. That same day, Ott, Mayor Lee Leffingwell and three other city officials embarked on a “fact-finding” mission to an F1 race just outside of London. CoTA paid to fly the mayor and city manager, but the city picked up the tab for the others.
Leffingwell's office confirms city officials met with worldwide F1 boss and English business magnate Bernie Ecclestone during the trip. Details have not been disclosed, but a spokeswoman
said it was a very short “15-minute” meeting.
The day after officials returned to the U.S., Ecclestone sent CELOC a letter re-confirming Austin as the site for the upcoming race. The letter was included in the group's application for state funding, as a requirement to prove site selection.
“FOML believes that Austin will be a very successful venue for the United States Grand Prix, and we are looking forward to the inaugural event in November and to many successful events in the future at the new CoTA facility,” Ecclestone wrote.
Caution after controversy
At one point, as Texas Comptroller Susan Combs came under fire for her involvement with the METF and F1, likely resulting in increased caution and heightened scrutiny when handling the fund in the future.
At issue – whether she overstepped her authority in a May 10, 2010, letter to Formula One officials by using the words “certify” and “full funding” from the state’s Major Events Trust Fund.
In addition to the “sanction for 2012,” Combs’ letter to Ecclestone said the state would send $25 million for each of the next nine years of the event.
By statute, an application and economic study must be submitted for review before Combs can approve funding. Those applications came more than a year after her letter.
“Okay, let me just state this,” Combs said to KXAN in February, “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.”
A Texas Attorney General opinion issued in May said it cannot resolve a complaint filed by the state's Land Commissioner Jerry Patterson regarding the matter.
“Whether she in fact did so requires a resolution of facts not amenable to the opinion process,” Attorney General Greg Abbott concluded in the opinion.
Combs has maintained that she did not violate the law.
"Okay, let me just state this,” Combs said. “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."
Sen. Kirk Watson, D-Austin - who wrote the bill that helped get F1 on the list of events eligible for that money - spelled out the statute earlier this year to KXAN.
"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 suggested Combs cannot guarantee the money until organizers or the city apply for it. But those first 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."
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