Texas Comptroller Holds Back $25M as F1 Hopes Fade

DALLAS — Plans to hold a Formula 1 race near Austin are in doubt after Texas Comptroller Susan Combs announced plans to withhold $25 million in taxpayer subsidies for construction of the track.

Combs, previously a supporter of the race, said she decided not to hand over the money to promoters because of contract disputes and the announcement of plans to hold a competing Grand Prix in Weehawken, N.J., in 2013.

The New Jersey race, across the Hudson River from Manhattan, would diminish the appeal of an annual event near Austin, where construction of a $300 million track called Circuit of the Americas has been halted, Combs said.

“Recently publicized disagreements between the race rights holder and the circuit developers have prompted speculation about whether the Austin race will even occur,” Combs said in a statement.

While no bonds have been issued for the event, Travis County was considering a tax-increment finance district to issue hotel tax-backed debt for roads and other infrastructure near the track in Eloy, southeast of Austin.

The New Jersey race requires resurfacing Weehawken streets and erection of barriers but no major construction, according to promoters.

Austin’s race would have begun in 2012 but was expected to continue in following years. Formula 1 racing, held at venues around the world, has not occurred in the United States for several years.

The breakdown in plans to hold the race left the state comptroller in a defensive position.

“Combs got fooled once on this deal, being upstaged by folks in New Jersey who are getting an F1 race without throwing in a bunch of state money, as Texas committed to do,” an editorial in the Austin American-Statesman asserted. “Her efforts resulted in an agreement that provides F1 organizers $25 million a year for multiple years that would be paid from the state’s major events trust fund.”

“Let me state clearly: we have not paid out any money for the Formula 1 event,” Combs said in her written statement. “The only dollars that can be spent on the United States Grand Prix are tax revenues attributable to the successful running of a race. The state of Texas will not be paying any funds in advance.”

Combs’ decision to withhold advance payment for the event played a role in halting construction of the track and in snarling contract negotiations.

Formula 1 chief executive Bernie Ecclestone gave the Austin race promoters until Dec. 7 to sign a contract for the race in November 2012. Ecclestone cited problems with letters of credit and up-front payments required for a contract to hold the race at Circuit of the Americas.

State Sen. Kirk Watson, D-Austin, co-authored 2009 legislation that paved the way for projects like Formula 1 to receive state support. Texas has awarded subsidies for other major sports events that were seen as economic stimulus.

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