F1 Funds Handshake Deal Reached
Developers, not city, commit $4 million a year to release state funds
By Michael King,
6:22PM, Thu. Jun. 16, 2011
"Formula 1 has agreed to pay the $4 million contribution to the Major Events Trust Fund for the full 10 years." That was the word late Thursday from Council Member Bill Spelman. Shortly thereafter, Mayor Lee Leffingwell confirmed the Local Organizing Committee's proposal, moving the project closer to accessing the state's Major Events Trust Fund.
Describing the proposal, Leffingwell added, "This confirms what I've been saying all along – that the city would be contributing no upfront money, and that the city would not be at risk" financially for the project. Asked if he thought the contracts and other arrangements would be sufficiently complete by council's June 23 meeting for full consideration and potential approval, Leffingwell said, "I would hope so."
The inaugural race at the Circuit of the Americas (currently being constructed in South-East Travis County) is scheduled for June 17, 2012. Full Throttle Productions (the local group behind the project) told council last week that it planned to pay the $4 million for the first year of the 10 year hosting contract. Spelman said that today's latest decision to pay the full 10-year contribution appears to have been triggered by his declaration that he intended to move to postpone council's decision (tentatively scheduled for June 23). "I wanted to allow a full nine days for the public to review the economic study," Spelman told NewsDesk, "as we do in all chapter 380 [incentive] agreements. This is not a chapter 380 agreement – it's with the state's Major Events Trust Fund – but it's close enough that I think we needed to treat it the same way."
Spelman said that when he informed city officials that he planned a press release announcing his intentions, they contacted Full Throttle attorney Richard Suttle, who spoke to Spelman and then his clients, who ultimately decided to make the 10-year payment proposal. This would presumably mean that no city funds would be committed to the annual F1 event throughout the 10-year contract period, but the city would act only as the sponsoring municipality – but that would also trigger the $25 million annual state contribution, currently earmarked by state comptroller Susan Combs to pay the LOC's hosting fee to Formula One Group.
Leffingwell said that he believes this arrangement should resolve the main objection to the project, that no city funding should go into it – other outstanding questions raised by council and staff, he said, are the subject of the ongoing negotiations. While the mayor said he couldn't be certain what influenced the event organizers to make their proposal, he credited the "collective impression" delivered by council that if the deal was to be made, it should not include city funding. And did he think that Full Throttle's desire for the $25 million state contribution – only available if formally requested by the city and its agreement to participate – might have been a determining factor? "I think that's a fair assumption," Leffingwell said.
The agreement still must be formally concluded, and other questions remain – for example, who will be responsible for specific eligible city expenses related to the event, but both Spelman and Leffingwell said they expected those questions to be resolved by June 23. While he couldn't speak for his colleagues, Spelman said that if the deal is concluded in the form currently proposed, including the 10-year contribution from F1, "I'm for it."