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Austin track looks for millions in tax incentives

By   /   December 11, 2015  /   News  /   No Comments

After suggesting Formula One racing was finished in Austin because the state reduced its incremental tax contribution by $5.4 million, Circuit of the Americas is asking the state to restore almost half of it through another taxpayer underwritten funding method.

Photo from globenewswire.com

INCENTIVE HUNT: Circuit of the Americas is back trying to recoup tax incentives the state of Texas reduced by $5.4 million.

Less than a month ago, Watchdog questioned whether it was possible that a multi-billion dollar international industry claiming to have a nearly $1 billion economic impact on Austin would be “screwed” without an additional $5.4 million tax break.

While it has been hard to tell how screwed Circuit of the Americas might be with its penchant for keeping taxpayers in the dark about its financial affairs, it is clear the company understands the various mechanisms available to it to extract concessions from those taxpayers.

Circuit Events Local Organizing Committee, the nonprofit intermediary for Circuit of the Americas, is asking for a little more than $2.6 million, most of it in state tax incentives for what it estimates is the tax impact generated by two events it hosts: the X Games and MotoGP, officials in the office of Gov. Greg Abbott confirmed for Watchdog.

The Major Events Reimbursement Program in the governor’s office is considering the application for the X Games portion of the tax break, a spokeswoman said.

The organizing committee has asked, as required by its agreement with the City of Austin, for City Council approval to ask for local and state tax breaks for MotoGP through the reimbursement program, the spokeswoman said.

About support for the tax incentives, Cait Meisenheimer, deputy press secretary for Abbott, would say only that, “All applications to the state’s trust fund programs are reviewed on a case-by-case basis and disbursements are made provided there is sufficient supporting information to justify a payment through the program.”

It is likely the City Council will clear the way for Circuit of the Americas to ask the reimbursement program for incentives in the future. Mayor Steve Adler last month told the Austin American-Statesman he thought it in the city’s best interest to support the track and its events.

After postponing a vote to hear comment, the council Thursday voted 6-4 to approve the applications. Those who believed  taxpayers should be part of the success of the track outnumbered those who questioned whether Circuit of the Americas has presented its true economic value honestly.

Don Zimmerman, a council member so far in the minority, reiterated through staff on Wednesday his long-standing opposition to tax breaks for Circuit of the Americas. Zimmerman is well known for his opposition on a broad front to tax breaks for private businesses.

A decision is unlikely to clarify how crucial local and state tax incentives are to the future of a track in which Texas investors including Red McCombs have invested at least $300 million.

The reimbursement program has stood firm on its intention to offer $19.6 million in tax incentives to the group for 2016, down from a $25 million-a-year pledge made by the state before the track was built.

The governor’s office, which took over the program from the comptroller when Abbott took office, said its estimates of the economic impact of the Formula One race, the biggest event of its racing year, were less that calculated by the comptroller.

The reduction followed a report by State Auditor John Keel that suggested the state might have overvalued the tax impact of the F1 races in 2012, 2013 and 2014 by more than $19 million.

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Mark Lisheron was a former Austin-based reporter for Watchdog.org.