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debwill posted a topic in Texas Auto RacingHere's a copy of the article from today's SA Express-News that was mentioned in a previous post. It was written by a local well-known racer and sports writer, Bruce Mabrito. Car Racetracks Roared.pdf
$250M in state funding for F1 track in question By Nolan Hicks, San Antonio Express News Austin, TX (September 13, 2014) - When local organizers applied for the first installment of $250 million in state funding to bring Formula One car racing to Texas, a letter from race CEO Bernie Ecclestone was their first exhibit. Ecclestone's London-based company, Formula One Management Ltd., had evaluated Circuit Events Local Organizing Committee's bid and selected Austin to host a race for the next 10 years, he wrote in a letter dated July 10, 2012. The language was required by law. A state statute says that unless such a bid, or application, is filed with a “site selection committee” — in this case Formula One — the event is ineligible for taxpayer money from the Major Events Trust Fund, according to an opinion issued by Attorney General Greg Abbott in August 2012. Despite Ecclestone's statement, the organizing committee never formally asked Formula One to select Texas, former board member Stephanie Richmond testified in a sworn affidavit obtained by the San Antonio Express-News. She was one of two board members to resign, stepping down in September 2012, after CELOC applied for state funding to support Formula One. The second, Anne Smalling, cited statements in Ecclestone's letter as one of the reasons for her resignation a month earlier. CELOC was unable to produce a copy of its bid to Formula One in response to an Express-News records request. The affidavit's statements are the latest controversy to beset the METF, which was established by the Legislature to help Texas compete with other states to attract major sporting events. No recipient of state support has been more controversial than the Formula One project. Critics have said the state had no business subsidizing the European-style auto races after the Legislature slashed funding for schools and social services to balance the budget. Proponents — including much of the state's Republican leadership — defended the incentives, saying the races and track would give the state a seat on the global stage. Gov. Rick Perry described attracting Formula One as “an opportunity to change Texas forever” at its kickoff luncheon in 2012. The annual Formula One race, now entering its third year, brings a signature event to the Circuit of the Americas track, which is owned by some of the most prominent businessmen in the state, including San Antonio billionaire B.J “Red” McCombs and Austin investor Bobby Epstein, who was listed as its chairman as recently as December. The 2013 race weekend brought more than 250,000 people to the track, which was valued at more than $296 million in its most recent property tax appraisal. The track has challenged its two most recent tax bills. The next race is set for Nov. 2, and the track also has hosted the X Games and concerts. McCombs, who hasn't disclosed how much he has invested, did not respond to requests to comment. Epstein has not responded to written questions that he requested from the Express-News. Ecclestone's 2012 letter was the second he sent to pave the way for state funding for the Formula One races, which are expected to last through 2021. A year earlier, he submitted a similar letter dated May 11, 2011, stating Formula One had received and accepted an application to bring a yearly race to Texas. He didn't identify who submitted that bid. CELOC included that letter in its 2011 application to the comptroller's office for state money, which it later withdrew after it became clear the race was going to be delayed. The letter resurfaced when the comptroller's office provided it to Abbott's office as evidence of an application, after Land Commissioner Jerry Patterson challenged Formula One's eligibility for state funding. The 2011 letter predates the eligibility of any entity to apply to Formula One, records show. The law mandates the application to an event sponsor such as Formula One originate from one of three entities: an endorsing municipality, an endorsing county, or a local organizing committee selected by the city or county, such as CELOC. But according to records and interviews: The Austin City Council would not vote to become the endorsing municipality and select CELOC as its agent until June 29, 2011. The City Council did not receive its first briefing about Formula One until June 7, records and archived video show. CELOC was not established until May 31, 2011 — more than two weeks after Ecclestone's letter — records from the secretary of state show. Travis County Judge Sam Biscoe said that Travis County never filed an application with Formula One. “The process was botched from the beginning ... it was clear then and it's even clearer now, the statute was not complied with.” said Patterson, a Republican and a longtime statewide officeholder. The lawmaker who carried the bill that made Formula One eligible for the funding also was critical. “This is meant to be something that helps local governments with economic development,” said state Sen. Kirk Watson, D-Austin. He said the state comptroller “attempted to take control of this ... instead of allowing the statute to work the way it's intended to work.” CELOC board secretary Wayne Hollingsworth did not respond to written questions on the matter that he asked the Express-News to submit. Ecclestone and Formula One officials did not provide comment or respond to written questions submitted by the newspaper. Response to affidavit After Richmond submitted her affidavit, an assistant attorney general argued in a letter the comptroller's office had little obligation to investigate Richmond's allegations or even verify the claim that CELOC made the application to Ecclestone. Meanwhile, the state has provided about $50 million for the 2012 and 2013 races. Most of the money goes to pay Formula One's sanctioning fee to hold the competitions, records show. In statements sent to the newspaper, the comptroller's office said it followed the law when considering CELOC's application for the funding and declined to comment on the affidavit. The attorney general's office said it simply was representing the comptroller in litigation related to the Formula One race track. “The comptroller's office received the required documentation that indicated the city of Austin and its authorized local organizing committee, CELOC, applied for and received approval to hold the United States Grand Prix in Austin from Formula One Management Ltd,” comptroller's office spokesman Chris Bryan said in a written statement. “It is important to note that the law does not establish a role for the comptroller's office in the application process between an endorsing municipality or its authorized local organizing committee and the site selection organization for the event.” He referred additional questions about the application to CELOC. Watson criticized the apparent lack of an investigation into the allegations. “The process should be followed because it's in the following of the process that the public gets protected,” he said. “And, if the process isn't followed, it raises questions about whether the public is being protected when you're analyzing the use of this kind of money.” Watson said the state comptroller should be the taxpayers' first line of defense: “That's where you would expect things to stop if the process meant to protect the public is not being followed.” An oral application? While Combs and Perry were major supporters of bringing Formula One to Texas, not everyone was on board. From his perch at the General Land Office, Patterson mounted an attempt to block funding for the race, he says out of concern the process was not being followed. Patterson had sent records requests to the city of Austin, Travis County and the comptroller's office looking for evidence that an application had been submitted to Formula One. The only document he got back referencing an application was Ecclestone's 2011 letter. In March 2012, Patterson asked Abbott to rule on Formula One's eligibility to receive the state money, arguing there was no evidence CELOC had completed the required step of submitting an application. The comptroller's office responded, arguing that Patterson's inability to find an application didn't mean there hadn't been one. In its legal brief, the office pointed to Ecclestone's 2011 letter as proof Formula One had received an application, as required. Additionally, it argued there was no requirement that the application to Formula One be in writing. “A second possibility is that the application to Formula One Management Limited was oral, not written, so that a public information request would not elicit a copy,” wrote Ashley Harden, the comptroller's office general counsel. “Neither the METF statute or the comptroller's administrative rules define the word 'application' or what type of application process a site selection committee must use.” He went on to add: “In its normal meaning, the word 'application' does not require a writing.” With the facts disputed, Abbott said he could not rule on Formula One's eligibility for state funding. Because the comptroller's office provided Ecclestone's letter as proof an application was submitted, the attorney general was required to take the letter at face value, said Joseph Larsen, an attorney and board member of the Freedom of Information Foundation of Texas who has extensive experience with attorney general opinion process. Larsen reviewed Abbott's August 2012 opinion at the Express-News' request. Abbott “has given a pretty straightforward legal opinion of what is required, so now the answer to the question should come from the comptroller's office,” Larsen said. He added: “But, for some reason, no one can come up with the actual application. That looks really suspicious to me.” CELOC's application Unlike his 2011 letter, Ecclestone's July 2012 letter named the organization that he said had submitted an application: CELOC. Richmond contradicted his statement in her affidavit. “While I was a Member of the CELOC Board, CELOC did not submit an application to Formula One Group, Formula One Management Limited, or any other Formula One (F1) entity,” she said in the sworn statement, which was notarized in November 2013. The Express-News obtained a photocopy of the affidavit, which arose from a now-settled lawsuit involving Circuit of the Americas. Richmond confirmed the affidavit's contents, as do letters from the attorney general's office, obtained under the state's public records law. “I just think some steps got a little sidestepped or blurred or perhaps not done at the appropriate time, and therefore, things were not clear anymore,” said Richmond, who described her time on the board as a “good experience.” Richmond resigned from CELOC's board in September 2012, nearly a month after Smalling had stepped down, leaving the board with only three voting members. Smalling pointed to Ecclestone's letter as a reason for her resignation. “I am troubled ... by some of the statements in Mr. Eccelstone's (sic) July letter,” she wrote in her resignation. She did not specify which statements concerned her. Smalling did not respond to repeated requests for an interview. A third CELOC member, Ford Smith, who remained on the board as of June, said he was unsure if an application was submitted and referred the newspaper to the board's minutes and agendas. “If it wasn't on the minutes and wasn't on the agenda, it didn't happen,” said Smith. “And if it was on the agenda and in the minutes, it definitely — I can just vouch that it definitely happened.” The CELOC board agendas show no vote being scheduled to submit an application to Ecclestone. Its minutes make no mention of a board discussion about such an application. The minutes from CELOC's first ever board meeting, which took place on June 6, 2011, suggest the process of selecting Austin had been completed before CELOC had been created. “The directors next discussed the timeline, the competitive process and the various agreements by which Austin, Texas was selected as the location for the Formula One United States Grand Prix,” it reads. Combs deposed Richmond's affidavit was part of Combs' deposition in a lawsuit between the Circuit of the Americas and 3fourTexasMGP Ltd. over efforts to bring high-speed motorcycle racing, known as MotoGP, to the track. Letters exchanged between 3fourTexasMGP attorney Austin Tighe and an Assistant Attorney General Jack Hohengarten offer insight into Combs' testimony. “Near the end of Susan Combs deposition, she testified that she would ask her General Counsel, Mr. Ashley Harden, to look into the statements made in the affidavit of (Richmond),” Tighe wrote. “Specifically, Ms. Richmond's testimony that there was no application made by CELOC to the site source organization for either F1 or MotoGP.” Hohengarten's response accused Tighe of misrepresenting Combs' remarks. “My recollection is that when asked about a document she had never seen before, and pressed with a hypothetical question regarding a violation of the statute, the comptroller responded that in such an instance, she would probably direct her general counsel to look into it,” he wrote. “Her answer to your question did not constitute a snap decision to launch an investigation and cannot be fairly characterized as such.” Hohengarten also argued the comptroller's office has little obligation to verify this key step of the application process had been completed. “The application is not filed with the (comptroller); nor is the (comptroller) charged with mandating its contents, approving it or otherwise verifying receipt” of the application by CELOC to Formula One, he wrote. A done deal From the beginning, it seemed like stars had aligned to secure state funding for the race. “State Comptroller Susan Combs, I think along with the governor (Rick Perry), had, sometime in 2010, talked to the principals of (Circuit of the Americas) — Bobby Epstein and Red McCombs — and said, 'Yeah, if you submit an application, this would qualify,'” said Smith, the CELOC board member. “But there's still a process you have to go through.” Both Combs and Perry signed a letter in 2008 to race organizer Tavo Hellmund, confirming “the state of Texas ... interest” in hosting a Formula One race. That document outlined key terms to be included in any eventual agreement, including “Texas funding shall not exceed $25 million,” which Perry and Combs wrote they would “endeavor to secure” from the Texas Legislature for the first year. In April 2010, Perry, Combs and Hellmund sent a letter to Ecclestone to “confirm the interest of the state of Texas.” That letter included many of the key terms in the first letter, including offering assurances of up to $25 million a year in state funding. Hellmund later withdrew from the effort in 2012 as part of a settlement, after a falling out with other investors in the Circuit of the Americas. A month after that letter, Combs sent another, certifying that “full funding” for the sanctioning fee for the 2012 race, worth an estimated $25 million “will be paid to Formula One World Championship Limited.” She committed to “sending $25 million” a year to Formula One, for each successive year of the contract after 2012. The feeling of inevitability grew after McCombs signed on as a major investor at the track in July 2010. McCombs is a major political contributor, donating at least $669,054 in cash and in-kind contributions to Abbott, Perry and Combs from 2000 through March 2014, campaign finance records show. Smith said he believed the process had been open, thorough and above-board. “I can assure you as a board member that I'm not going to do anything to embarrass myself or my reputation.” Smith added. “We've been very thorough in what we've done with CELOC.” Application process To qualify for state funding from the Major Events Trust Fund, event organizers must follow an application process outlined in state law. The METF was established to help Texas cities compete with locations in other states to land major sporting events. Failure to complete the first step would make the event ineligible for state funding, according to an opinion from Texas Attorney General Greg Abbott. Step 1: A local government or nonprofit organizing committee selected by that local government must submit an application to the site selection organization (a league, for instance) for the event. Step 2: That organization (Formula One, in this case) then selects the location for the event and sends a letter, which confirms the selection and certifies the location selection process was competitive. Step 3: The local government or nonprofit organizing committee then applies to the comptroller's office for state support through the Major Events Trust Fund program.