$250M in state funding for COTA in question

[NickHolt]

$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.

[AustinF1]

Crazy.

[AustinF1]

Trouble at COTA? Texas newspaper claims $250 million in state funds may be in jeopardy:

http://www.motorsport.com/f1/news/trouble-at-cota-texas-newspaper-claims-250-million-in-state-funds-may-be-in-jeopardy

the problem cited in the Express-News story appears to be a technicality-based argument that claims, in essence, that the proper legal application for the money – which includes data supplied to and by Formula One chief Bernie Ecclestone – may not have been in compliance with Texas regulations.

The story quotes Land Commissioner Jerry Patterson as saying: “The process was botched from the beginning ... it was clear then and it’s even clearer now, the statute was not complied with.”

An attorney for the state comptroller’s office, which is most directly responsible for administering the funds, said that even if a proper written application was not made, it is possible that “the application to Formula One Management Limited was oral, not written, so that a public information request would not elicit a copy,” which would seem to raise a whole new area of concern, if paperwork is not required for portions of a request that could result in millions of taxpayer dollars spent.

No luck with interview requests

The story said that neither Ecclestone, nor Bobby Epstein, head of COTA, has responded to requests for interviews. The track’s public relations officer resigned in June, and her replacement resigned in September, so Motorsport.com hasn’t been able to contact the track for a statement. Motorsport.com did contact Tavo Hellmund, who created and developed the project until he departed following disagreements with Epstein and other investors, but he declined to comment.

The $250 million sited in the story’s headlines is what could be paid by the state over a 10-year-period. Reportedly COTA has received at least $60 million from the Special Events Trust Fund, and from a separate fund for smaller events. COTA has the TUDOR United Sports Car Championship and World Endurance Championship races next weekend, SVRA vintage races October 10-12, and Formula One returns on November 2.

 

 

Circuit of the Americas could face challenge to Texas state-funding for F1, according to newspaper report :

http://autoweek.com/article/formula-one/circuit-americas-could-face-challenge-texas-state-funding-f1-according-newspaper#sthash.SToCnsRf.dpuf

[HiTech]

THIS HAS BEEN A WRECK FROM THE START ..i am paying for this anyway and dont even go or will ever go to that track ..

[cblgdc]

TAX PAYER FUNDING ,THERE AINT NO STATE OR GOVERMENT FUNDING!

[HiTech]

TAX PAYER FUNDING ,THERE AINT NO STATE OR GOVERMENT FNDING!

i think the wording is all wrong //every thing should be named .T P . FUND . tax payer funding ...and maybe some lazy blank folks who live off the tax payers will realize where it comes from ..NOT. i never got a notice from the state asking me if i wanted to fund this track .....but i am sure i will receive a statement from the state saying thanks for your fund and here is a profit check ...

[AustinF1]

Profit?

[AustinF1]

Comptroller candidate calls for changes after Express-News Formula One investigation

http://blog.mysanantonio.com/texas-politics/2014/09/comptroller-candidate-calls-for-overhaul-after-express-news-formula-one-investigation/

“The Comptroller’s office should not be on the front-end of deals such as Formula 1. If the watchdog is the dealmaker, he can no longer be impartial. This is a well known business practice,” Collier said, in a statement posted to his website.

In a written statement, state Sen. Glenn Hegar, the Republican and front-runner in the Comptroller’s race, said: “If the state is going to operate these types of programs they must be transparent and provide accountability to the taxpayers” and pointed to his support of a bill last session which made some reforms to the program. He did not comment on the specifics of the paper’s investigation or state he would seek any further changes to the METF program.

Through a complicated formula, Texas taxpayers are expected to provide up to $250 million over 10 years to help support bringing Formula One races to the Circuit of the Americas racetrack in Austin, which amounts to about $25 million per race. Most of the money goes to pay the sanctioning fee for the race, the investigation found. The state has provided about $50 million for the two races that have been run so far. The next race is scheduled for November.

The money is paid to the Circuit Events Local Organizing Committee, a non-profit that essentially acts as the city of Austin’s agent in the Major Events Trust Fund process: It is supposed to apply to the site selection committee (in this case, Formula One), making a bid to bring the event to Austin as part of a competitive process. If CELOC’s bid wins the event, the non-profit then applies to the Comptroller’s Office for funding.

However, an affidavit signed by a former CELOC board member, obtained by the Express-News, states that CELOC never made the required application to Formula One, even though it claimed it had in its application to the Comptroller’s Office. That statement was buttressed by other documents obtained by the paper, which showed that the CELOC board never voted to submit an application to Formula One and that the board never discussed submitting an application. Attorney General Greg Abbott ruled in 2012 that the application was an essential part of the process and that if it is not completed, the event would be ineligible for funding from the METF.

The Express-News investigation found that both Comptroller Susan Combs and Abbott’s offices were aware of the affidavit’s contents: but money has continued to flow to CELOC; and an assistant attorney general wrote in a letter that the Comptroller’s office had little responsibility to investigate the affidavit’s statements.

http://blog.mysanantonio.com/texas-politics/2014/09/comptroller-candidate-calls-for-overhaul-after-express-news-formula-one-investigation/

In statements provided to the newspaper, the comptroller’s office said it followed the law when considering CELOC’s application for Formula One funding and declined to comment on the affidavit. The Attorney General’s office it was simply representing the Comptroller’s office in litigation related to the Formula One race track when that letter was written.

 

 

[NickHolt]

Ever since the day the money guys decided they could do things without Tavo, this deal has been on a downward slope. What a shame, too, because the track and facilities are 1st rate.

 

Nick

[HiTech]

NICK our government seems to have the same problem ...money over common sense ..but again it is not their money....we the people have no control over our investments the government takes and takes ..

[AustinF1]

KXAN: Formula One funding called into question:

http://kxan.com/2014/09/15/formula-one-funding-called-into-question/

AUSTIN (KXAN) – There’s renewed controversy about the state funding used to help pay to put on the Formula One U.S. Grand Prix at the Circuit of the Americas.

“I feel confident I have complied with the law,” Comptroller Susan Combs said two years ago, as we launched our investigation into the state funding of F1.

Now, with two races down, and million dollars of your taxpayer money already paid to the massive racing event – questions still linger about the legality of the process.

To keep this latest controversy simple: Should F1 be eligible for the funding since it might never have submitted a written application?

The state has previously said the racing event is eligible for up to $250 million over a decade, part of a select incentive from a fund used to attract major economic boosting events like the Final Four and the Super Bowl.

LIST: Major Events Trust Fund Awards

There are new reports of allegations that the application for F1 was only verbal, not written and that might not have been in compliance with the law.

KXAN Investigator Brian Collister pointed that allegation out to head of COTA – Bobby Epstein – who helped bring the race to Austin.

“The statute was created to attract new dollars to Texas, and there is no better example of that working than in Formula One. The United States Grand Prix has brought hundreds of millions to the state and local economies, created thousands of service industry and construction jobs and helped attract other events to Texas, including ESPN’s X Games. A verbal application was made to Formula One Management to host a grand prix,” Epstein said. “Dominos doesn’t just send a pizza to your home unless you call them to say you’re interested having one delivered -neither does a Grand Prix just show up.”

We checked records at the Comptroller’s office, so far, F1 has received about $50 million from the state and about $10 million from local incentives – all through this controversial process.

This issue has raised big questions for a less-talked about race in November. The comptroller oversees Texas finances. Current Comptroller Susan Combs plans to retire at the end of her term. Two men are running to fill that position: Democrat Mike Collier and Republican State Senator Glenn Hegar.

We reached out to both candidates.

Soon after, Collier said he would try to move the fund outside the Comptroller’s office, so he could be more of a watch dog.

“We know in business you want complete separation from the people who authorize payments from people who sign checks,” he said.

Glenn Hegar said he would properly administer the Major Events Trust fund, noting he voted for a bill last summer to eliminate pre-funding of events.

He says, “If the state is going to operate these types of programs they must be transparent and provide accountability to the taxpayers.”

 

 

[AustinF1]

The Express-News has done a 3rd story now, following up on KXAN's piece with Epstein:

http://www.expressnews.com/news/local/article/Epstein-says-F1-made-a-verbal-application-5760115.php

Epstein says F1 made a 'verbal application'

By Nolan Hicks

September 16, 2014 | Updated: September 16, 2014 11:27pm

SAN ANTONIO — Bobby Epstein, chairman of the Circuit of the Americas racetrack, has told a TV station that a “verbal application” was made to Formula One to bring a yearly race to the Austin facility.

The comment Monday came the day after a San Antonio Express-News investigation raised questions about the application, which is required by law to receive state funding.

A member of the board set up to file the application swore in an affidavit that board never did so, and no written application is on file with the state or the board. Failure to make an application would make the Formula One races ineligible for state subsidies — which are expected to cost $250 million over 10 years — according to a 2012 ruling by Attorney General Greg Abbott.

Failure to file such a document would make the Formula One races ineligible for state subsidies — which were approved to the tune of $250 million over 10 years — according to a 2012 ruling by Attorney General Greg Abbott.

The state has provided $50 million through the Major Events Trust Fund to the organizers for the first two races. The third Formula 1 race is in November.

“Dominos doesn't just send a pizza to your home unless you call them to say you're interested in having one delivered — neither does a Grand Prix just show up,” Epstein told KXAN-TV.

That answer didn't satisfy two government watchdog groups, Public Citizen and Texans for Public Justice.

“An applicant for food stamps or welfare has to submit a signed application and provide all kinds of proof for eligibility,” said Tom “Smitty” Smith, director of Public Citizen's Texas office. “Yet, a slickster can walk in and say 'Oh, we did an oral application, we should get a quarter-billion dollars?' It doesn't pass the laugh test.”

Andrew Wheat, Texans for Public Justice's research director, was just as harsh.

“You wonder if they're making this up as they go along,” he said. “It doesn't sound like due diligence really.”

Epstein did not respond to questions from the Express-News about the verbal application.

He did comment on the newspaper's investigation, writing: “I didn't read your story but have certainly heard it isn't something I want to read.”

He continued, “I do know that” the “statute doesn't distinguish between written and verbal” when it comes to applying to Formula One.

Under state law, the application to Formula One only could come from one of three places: the city of Austin, Travis County, or a local organizing committee selected by the local government — in this case, the Circuit Events Local Organizing Committee, Abbott ruled 2012.

Epstein's Circuit of the Americas, where the race is held, would not qualify under the statute as an entity qualified to make the application to Formula One.

In its 2012 request for the first $25 million installment of the state money, CELOC included a letter from Formula One Management Ltd. CEO Bernie Ecclestone, stating the organizing committee had submitted the required application to Formula One, which the company had approved.

But former CELOC board member Stephanie Richmond said in a sworn affidavit that CELOC never applied to Formula One.

She was one of two CELOC board members who left the committee after it made its request in 2012 for the first $25 million installment of funding from the comptroller's office, which releases the money under the Major Events Trust Fund.

The second member, Anne Smalling, wrote in her resignation letter that she was concerned about claims the group was making in its request for state funding.

Smalling specifically said Ecclestone's letter was one of the reasons for her departure.

Additionally, CELOC board agendas and minutes, obtained under the state's open records act, show there was never a vote to submit an application to Formula One or even discussion about it.

nhicks@express-news.net

Twitter: @ndhapple.

 

 

[NickHolt]

Just the tip of the Bobby Epstein iceberg, folks. This is about to get nasty.

 

Although he has had ample opportunity to lambaste the COTA management team, if that's what you want to call it, we haven't heard a single harsh word from Tavo, who was bamboozled out of his rightful position in the COTA hierarchy.

 

Tavo's a class act - unlike the current COTA big shots.

 

Nick

[AustinF1]

4 days, 4 stories...

More doubt cast on Formula One application for state funding

http://www.expressnews.com/news/local/article/More-doubt-cast-on-Formula-One-application-for-5763204.php

AUSTIN — The chief executive of the Circuit of the Americas said he was “not at liberty” to disclose which governmental organization had made a “verbal application” to Formula One to bring a yearly auto race to this city.

“I wasn't here, so I don't know that,” Jason Dial told reporters when pressed on the issue. Just prior to that, he had said, “What the statute states is it's an application, it can be verbal or written. And in this case, it was obviously verbal.”

The track's chairman and major investor, Bobby Epstein, made a similar claim to KXAN-TV on Monday. The “verbal application” claims follow a San Antonio Express-News story that raised questions about whether that application was ever completed. Failure to do so would make Formula One ineligible for state funding, Attorney General Greg Abbott ruled in 2012.

The state has provided $50 million to support the two races held so far. The subsidies are expected to total $250 million over a decade. The next U.S. Grand Prix is scheduled for Nov. 2.

Under state law, to qualify for funding, the application to Formula One could come only from one of three places: the city of Austin, Travis County or the Circuit Events Local Organizing Committee.

But statements by Austin city officials to the City Council in the first briefing on Formula One in June 2011 may complicate claims that a verbal application was made.

The briefing came after Bernie Ecclestone, CEO of Formula One Management Ltd., sent a letter dated May 11, 2011, that said Austin had been selected on the basis of an application. He did not identify who made the application.

At that briefing, city officials repeatedly said Austin had no involvement in that application process, archived video shows.

“In 2010, the Texas comptroller, the governor's office and Full Throttle Productions expressed an interest to host the Formula One U.S. Grand Prix in Texas,” said Rodney Gonzales, deputy director of the city's Economic Growth and Redevelopment Services. “The city of Austin was not a part of the bid process.”

Another city official said the site selection process was “backwards” from how things would normally work.

“One of the things that we found out was that when we were approached by Formula One, it was somewhat backwards, in that normally a city or a municipality is the one who applies ... to the state for Formula One,” said Sue Edwards, an assistant city manager. In this case, she said, state officials and Formula One approached Austin.

Ecclestone's letter also predated the creation of CELOC, which was incorporated May 31, 2011, according to Secretary of State records. And Travis County Judge Sam Biscoe said the county never submitted an application.

Ecclestone wrote another letter, dated July 10, 2012, which stated that CELOC had submitted an application to bring the racing series to Austin, which Formula One had approved. CELOC used that letter in its application for the first $25 million installment in state funding in 2012 as proof it had filed the application.

But Ecclestone's letter was disputed by former CELOC board member Stephanie Richmond, who said in a sworn affidavit that CELOC had never filed an application with Formula One.

She was one of two board members who stepped down from the CELOC board, following the group's application to the comptroller's office.

The second, Anne Smalling, wrote in her resignation letter that she was “troubled” by claims in Ecclestone's 2012 letter.

Additionally, CELOC board agendas and minutes, obtained under the state's open-records act, show that there was never a vote to submit an application to Formula One or even discussion about it.

nhicks@express-news.net

Twitter: @ndhapple

 

[NickHolt]

I have a feeling that COTA will be owing the taxpayers of the State of Texas around $50 million when all this shakes out. And I don't see the remaining $200 million that is part of this deal coming out of the state treasury any time soon.

 

Nick

[HiTech]

great nick .think we can just walk in and ask for money ....a verbal .or hand shake deals dont work like they use to ..if is not in writing it did not happen in most COURTS OR IN PUBLIC OPINION ... . ..if some one can just call and get that kinda money on a promise .we are in big trouble ..how many deals are done that way and we dont know about it and costing the heck out of us ......

 

 

AS FOR TAVO ..I BET HE IS LAUGHING HIS HEAD OFF AND THINKING TOLD YOU SO AND GLAD NOW HE IS OUT OF THIS MESS .

[AustinF1]

Here's the latest from the SAEN, from yesterday also:

Combs failed the public on Formula One

http://www.mysanantonio.com/default/article/Combs-failed-the-public-on-Formula-One-5762668.php

SAN ANTONIO — In the rush to bring Formula One car racing to Texas, Comptroller Susan Combs failed a crucial player: the public.

This has been a hallmark of her tenure as comptroller, one that has reflected a lack of core competencies in some very big ways (such as accurately forecasting revenues).

Her eagerness to make a deal on Formula One racing also raises ethical concerns about having the state's fiscal gatekeeper push deals.

As Express-News staff writer Nolan Hicks outlined through dogged reporting, event organizers for Formula One racing botched the process to qualify for state funding — and still received it.

The first step in the process calls for a local government or nonprofit organizing committee to submit an application to the event's site selection organization (a league, for example).

The problem is there is no evidence of an application. But not to worry; Combs' office has said there may have been an oral application.

Now, one could argue this is just a minor technical glitch since Formula One racing is here and many state leaders, such as Gov. Rick Perry, were falling over themselves to bring this premier event to Texas.

But not following a clear public process raises a number of technical and governance concerns. First off, it calls into question the $250 million Texas has committed to Formula One racing via the Major Events Trust Fund, which Combs oversees.

The state has already provided Formula One with $50 million from this fund for its 2012 and 2013 races.

Attorney General Greg Abbott has issued an opinion stating the process has to be followed to receive state funds.

It also raises the question of just who is looking out for the public.

“It's in the following of the process that the public gets protected,” State Sen. Kirk Watson, D-Austin, told Hicks. “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 carried the bill to make Formula One eligible for state funding.

Mike Collier, a Democrat running for comptroller, has said the Major Events Trust Fund should be moved to a different agency.

We agree. It makes no sense to have the comptroller making deals. And yet that's just what Combs was doing.

 

 

[Bobby]

I like the comparison between applying for a quarter-billion dollar project and ordering a pizza. I'll have to remember that next time I'm asked to justify the expenditure of OPM (Other People's Money).

[AustinF1]

Now the Austin Chronicle has caught onto this story, as has a French Motorsport website. Still nothing from the Statesman though. Imagine that.

 

Public Notice: Putting the Trust in Event Trust Funds?Mike Collier, COTA, and the comptroller's scandal

 

http://www.austinchronicle.com/news/2014-09-26/public-notice-putting-the-trust-in-event-trust-funds/

 

It seems like all we're talking about these days is the City Council – see forum info below and on the next page – but it's worth noting that there are some other races happening this November. The League of Women Voters just announced a forum series for the AISD board elections (Oct. 9-16; more on those later); someone will get around to talking to the Austin Community College board candidates one of these days; and, oh yeah, there are a bunch of local and statewide partisan races going on as well. Wendy Davis and Leticia Van de Putte head the Dem­o­cratic ticket, but perhaps the most aggressive campaign is being pushed by Texas Comp­troller hopeful Mike Collier, who this week leveled new blasts at lame-duck incumbent Susan Combs, whose corrupt policies would almost surely be continued under Glenn Hegar, the GOP candidate for the job.

Collier has been slamming Combs regularly for the way her office has handled the state's Major Events Trust Fund, and in particular its quarter-billion-dollar public funding of the Circuit of the Americas. He says one of the first things he'd do is work to reassign management of the METF to another agency, so the comptroller can be an impartial watchdog over the trust fund. "The comptroller's office should not be on the front-end of deals such as Formula One. If the watchdog is the dealmaker, he can no longer be impartial. This is a well-known business practice."

Collier got some extra ammunition this week from two press sources: First, the San Antonio Express-News reported on Sept. 13 that the legality of COTA's original application for $250 million in state funding for Formula One is in question, due to a lack of documentation that should reside within the comptroller's office. The second report was more like friendly fire: the motor racing publication Motorsport.com reported Tuesday that COTA's official crowd count of over 50,000 attendees for last weekend's FIA World Endurance Championship "frankly stunned many in the press room, who were guessing half that many or fewer. The track said that nearly 35,000 attended the two-day race weekend in 2013."

Why does that matter? The number of bodies is a key factor in COTA getting public subsidies. Combs has already earmarked over $250,000 in state tax dollars for this race alone, giving the track a vested interest in ensuring that attendance figures make for a believable bump in the "incremental tax" gain – additional tax revenue an event generates above and beyond what Texans would spend on any given weekend – and establishing that figure is what allows COTA to tap into several different state funds, including the METF.

In theory, a competent comptroller would ask for proof of the number of tickets sold, how many attendees came from outside the state, etc. But instead, the comptroller's website blithely states that cities who sign on to the requests for state funding are "primarily responsible for ensuring that requests for funding are free of waste or abuse." Unfor­tunately for Austin, the City Council ceded that authority to Circuit Events Local Organizing Committee, a creation of COTA itself, so don't expect much in the way of the henhouse guarding from that particular fox.

Regarding F1, the Express-News also reported that "an assistant attorney general argued in a letter the comptroller's office had little obligation to investigate ... allegations or even verify the claim that CELOC made the application." But in fact, state law does appear to give the responsibility to investigate such allegations to the Attorney Gen­er­al, who would be ... oh, right, our current GOP gubernatorial candidate Greg Abbott.

If you're interested in seeing who else is getting big chunks of public change, download the current list at www.texasahead.org/tax_programs/event_fund/payments.php. And while you're skimming it, remember that all these giveaways were authorized by the same comptroller who just announced that she wants to yank the current, relatively modest subsidies for wind power.

 

 

New controversy over the public subsidy to Austin

 

http://www.motorsinside.com/f1/2014/actualite/18630-F1-Nouvelle-controverse-autour-de-la-subvention-publique-a-Austin.html

 

Since joining the F1 calendar, the Circuit of Americas has always been at the heart of the controversy over the government subsidy from the State of Texas. The controversy was revived at the approach of the next political elections.

© Mercedes - The Circuit of the Americas will receive $ 250 million over 10 years

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The history of F1 and the United States has never been easy, and Austin is no exception. The main bone of contention is the government grant of $ 250 million, expected to cover the fee payable to the FOM.

In 2011, the Texas Senate refused payment of the first $ 25 million, before the situation is rectified a year later when the inaugural event could take place. These payments form part of the Major Events Trust Fund, which aims to attract major events within the state to promote.

Now the debate is focused on the technical aspect of the application of funds issued by the Austin circuit. Indeed, the local newspaper, San Antonio Express News , published reports that the documents needed to obtain such a grant would not have been presented, which call into question the very principle of the grant.

And Jerry Patterson, the manager of the properties held by the Texas, said: "The process was sabotaged from the start. It was clear then and it's even more clear now that the statutes were not adhered to. " So he wanted to know he was neither in favor nor opposed to the F1 but he criticized the regulations put in place were not followed.

The defense leaders of the circuit is built around the fact that the official request was not in writing but the word of Bernie Ecclestone was sufficient. Bobby Epstein, president of the circuit, thus responded through an interview with the local TV stationKXAN-TV : "Dominos Pizza does not just deliver a pizza at home if you do not have not called to tell them that you are interested in having one. Grand Prix does not just happen either. "

He has stated that the Fund's charter did not specify whether the application should be lodged in writing or orally. It therefore considers that his organization has no need to fear about the legitimacy of the request.

Such a response obviously did not calm the objectors, as shown in the statement of Tom Smith, director of the local NGO Public Citizen: "An applicant for food stamps or Social Security must submit a signed application and provide a lot of evidence to be eligible. However, an opportunist can happen and say, "Oh we have an oral request, we should receive a quarter of a billion dollars"? This is not credible. "

This case is now apparent as local elections loom. But the San Antonio Express News does not fail to note that the billionaire BJ McCombs, one of the shareholders of the circuit, is a big contributor to the campaigns of the State Comptroller Susan Combs, Governor Rick Perry and Attorney General of Texas, Greg Abbott. Thus, according to the campaign accounts published, it would have contributed $ 669,054 between 2000 and March 2014 to the various campaigns of the three personalities involved in the payments made ​​to the Circuit of the Americas.

This should not jeopardize the holding of the third edition of the Grand Prix, on November 2.

 

[NickHolt]

This from http://thejudge13.com/

 

The US Grand Prix under immediate threat

 

The Circuit of the America’s in Austin Texas is widely accepted as one of Herman Tilke’s best designs for a new F1 facility. This may in part have something to do with the passionate visionary who brought the project to life – Tavo Helmund – whose father was a close friend of Ecclestone and promoter of the Mexican GP in the 1990’s.

 

However, any house built on a foundation which is not solid, will sooner rather than later fall.

 

The budget for COTA when the project was conceived was around $300m yet a number of estimates have the cost at $4-450, which makes Austin the home of the most expensive Formula One venue ever built.

 

A recent article in The Austin Business Journal argues that this investment was a complete waste of time – given that since its completion, COTA makes a profit of just $1m. The venue has held just 11 events including three F1 weekends since it opened in 2012.

 

This profit is only possible due to a massive subsidy from the state of Texas which sees COTA receive just under $30m a year. The Texas Speedway which holds a round of the NASCAR championship amongst other motor sports events, cost the tax payers of Texas a mere $544,000 a year.

 

There has been a lot of unease in the political classes that COTA does not justify the spend awarded by the state and in fact has been declaring attendance figures artificially high, to ensure the subsidy remains the same.

 

The same Austin Journal claims that 13 temporary grandstands which were erected for the first race in 2012, were not present in 2014 and crowd numbers may actually have been as low as 50,000 on race day.

 

The more people attend the F1 race weekend, the more the state pays as these people are assumed to mostly be from out of state and are bringing economic benefit to Texas by spending their money on hotels, food and drink and entertainment.

 

Tomorrow sees Texas state Governor, Rick Perry, leave office and he will be replaced by Greg Abbot. Perry was instrumental in bringing Formula One to Texas, but it is uncertain that the man replacing him will view the spend of nigh on $30m to support a Formula One race in a similar manner to Perry.

 

Further, it is as yet unknown the impact the Mexican GP will have on the attendance at COTA’s F1 race weekend, but it is only around a two hour flight between the two locations and many domicile Mexicans who have been have been visiting COTA over the past three years, may choose to attend their own national event in 2015 instead of travelling to Texas.

 

Clearly Bobby Epstein and Red McCoombes would suffer significant losses on a Formula One race weekend were the state contribution to be reduced or cancelled.