City of Austin officials say they are nearing completion of a contract with organizers of next summer's Formula 1 race that would eliminate nearly all local taxpayer support for the event, according to Austin's The Statesman
newspaper. The deal, which the Statesman
says involves having event promoter Tavo Hellmund, developer Red McCombs and their Circuit of the America's team place an estimated $4 million into a state trust fund account every year for the 10-year duration of the contract, apparently would not affect the estimated $25 million annual subsidy Texas state officials have committed to providing to support the event – if local officials agree to sponsor it. Some city council members have been reluctant to commit to this, having been promised that no Austin taxpayer funding would be required for the Circuit of the Americas track and its signature race.
Previously, the race promoters had agreed to pay the upfront money only for the first year's race, with the city expected to cover the costs for the remaining nine years. According to trust fund laws, the city's contribution was to come from "extra" sales, alcohol, car rental and hotel taxes generated by the previous year's race. The promoters say Austin stands to gain about $4m from those taxes, although skeptics called those projections "wildly optimistic."
While the rules call for much of the $4 million local contribution to the trust fund to flow back to the city to cover its costs for hosting Formula 1, critics said that amounts to a public subsidy because it limits the city's use of that money to supporting the event. To answer this objection, the new agreement would effectively allow the city to use all tax revenue gained from the race for whatever it wanted.
A city council vote on the compromise deal is expected shortly.