Formula One Deal on the Bubble

Late last week, it appeared the proposed Formula One racetrack deal with the city had turned its tightest corner – who would commit the $4 million in up-front money that would trigger the $25 million from the state's Major Events Trust Fund? On Thursday, Council Member Bill Spelman told the Chronicle that the local organizing commit­tee (acting on behalf of race promoters Full Throttle Productions) had agreed to provide or guarantee the annual $4 million for the full 10 years of the proposed contract – an arrangement later confirmed by Mayor Lee Leffingwell. Both officials emphasized that the agreement had not yet been prepared in contract form, and there were many additional questions to be answered before council could vote on the proposal (scheduled for this Thursday, June 23), but that in their judgment the primary obstacle to a deal had been removed. Leffingwell said, "This confirms what I've been saying all along – that the city would be contributing no up-front money, and that the city would not be [financially] at risk." Spelman said that while he couldn't speak for other council members, if the deal were to be finalized in the form currently proposed (including the 10-year financial commitment from F1), "I'm for it."

Mayor Pro Tem Mike Martinez tweeted his approval of the deal that evening, and over the weekend told the Chronicle: "They're basically asking the council to endorse and to co-host the event here in Austin, and there's no reason why we shouldn't do that. If the local events committee is going to put up the $4 million to apply to the Major Events [Trust] Fund, we should support it." Asked if he had misgivings about the state delivering $25 million to the Formula One Group in England for the franchise hosting fee, Martinez said, "That money's allocated – [the state doesn't] ask us for our permission."

With three council members now leaning strongly in its favor, the F1 proposal appears to have caught a tailwind. Nevertheless, early this week it was not certain the votes would be there to approve the city's participation in the last meeting before council takes its annual summer break. In the June 9 meeting, Council Member Sheryl Cole had raised numerous questions about the proposal, and she said Monday that she was still reviewing voluminous documentation (e.g., the economic impact study and draft contracts) and not yet ready to vote. "I can say that I'm pleased that Formula One has met the initial items that I requested, specifically the up-front $4 million for the term of the contract," Cole said Monday. She said she particularly wants to make certain that the payment and any future reimbursements to the city are contractually confirmed and don't rely simply on reassurances by Comptroller Susan Combs or the promoters. "My concern is that the document legally matches what we're telling the public – that's the crux of the matter – and I'm just not there yet," she said. "I don't have anything to complain about; I'm just not there yet. ... The deal merits careful scrutiny of the documents. I am pleased that we are making progress."

Over the weekend, Council Member Chris Riley said he was working on a term sheet addressing potential environmental conditions (which he broadly described in a Tuesday Statesman op-ed) for endorsing the project. "Whether the organizers of the Circuit [of the Americas, as the track is named] will be able to agree to everything on it I don't know. The next few days are going to be interesting." Riley continued: "We're lending our name to this race, and if we're going to do that, it needs to be aligned with the values of the community and the environmental aspects of that. I'm hopeful they'll see the value in it."

On the evening of the Place 3 run-off, Council Member Randi Shade said she also wanted to see more details before any decision. "There were still definitely questions that need to be addressed," she said, noting the 21 pending questions raised by council for staff review. "In theory, it's working in the right direction ... but I still have a lot of questions – [especially] what the city's cost might be associated with the event."

That leaves Council Member Laura Mor­ri­son, who earlier this month asked why the race organizers had "gambled" on the requisite city approval when they made their initial $25 million agreement with the comptroller. On Tuesday evening, she called the accelerated time line "a huge challenge," and said she was particularly dubious of the city being put in the position of enabling state funding: "They need our participation to unlock a quarter of a billion dollars [over 10 years] in state funds." She noted Sen. Kirk Watson's misgivings about currently skewed state budget priorities, adding: "Here we are, laying off people all across the state, and cutting our health and human services funding. It's worrisome, and that may supersede everything." At a minimum, she said, it's fair to say "I'm not yet ready to vote."

By a very informal count, that's three in favor, four not sure (at least). As Riley said, the next few days are going to be interesting.