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City releases F1 economic impact study as Riley looks to ‘green’ the race

Tuesday, June 21, 2011 by Michael Kanin

According to an economic impact study prepared for the local organizers of the Formula 1 Grand Prix race, the city would gain $4.57 million in tax revenue if the event were sited in Austin. The study, done by economist Don Hoyte, suggests that as many as 120,000 people – 94,684 of whom would travel in from outside of Texas – would attend the event.


In Fact Daily obtained a copy of the report just before 5pm on Monday afternoon. It was dated June 19 (Sunday). Hoyte served in the Texas Comptroller’s Office for 20 years before starting his own firm. His web site,, says Hoyte “pioneered the administration of Texas’ Event Trust Fund statutes, approving more than $35 million in event funding for some 18 events.”


Council members knew little about the document as late as early Monday afternoon. Indeed, an absence of economic figures and specific contract language brought some hesitation to City Hall about a proposed deal with the group behind the Formula 1 effort. That agreement will trigger a 10-year, $250 million state investment in the event, slated for the currently-under-construction Circuit of the Americas track in southeastern Travis County.


Council Member Laura Morrison said that she hadn’t had enough time to digest the report. She added that it was one of “many, many pieces of information” that would go into a decision about the Formula 1 deal.


Morrison noted that with a large agenda for Thursday’s meeting, and a host of Council and subcommittee commitments today, that it would be a “challenge” for her to give the report the sort of attention it might need.


Meanwhile, Council Member Chris Riley remains engaged in an effort to ensure that an approval of the deal would come with solid environmental standards. Public Citizen Executive Director Tom “Smitty” Smith confirmed that something was in the works.


“Chris is taking the lead on a series of initiatives,” he said. Smith wouldn’t comment further.


In his report, Hoyte estimates that a Formula 1 race would bring the State of Texas $26.6 million in additional tax revenue. He adds that the region could see as much as nearly $270 million in direct spending.


Hoyte suggests that indirect spending – a calculation of the broader economic impact of an event on a region – could extend area gains to more than $450 million.


Local economist John Hockenyos reviewed the report for the City Managers’ Office. In a letter to Assistant City Manager Sue Edwards and city Chief Financial Officer Leslie Browder, he seems to validate the findings. “Since the intent is for the city to assume no financial risk, the benefit seems evident,” he wrote.


Riley’s office declined comment on his environmental efforts. However, his action will come in the form of a separate resolution. Item 101 on the agenda for this Thursday’s Council Meeting calls for “discussion and possible action” on an as-yet unspecified “term sheet describing environmental standards regarding the Circuit of the Americas.” Mayor Lee Leffingwell and Mayor Pro Tem Mike Martinez are named as co-sponsors.


A greener deal would likely include efforts to mitigate any concerns over such negative environmental effects as the exhaust from both race participants and spectators. It could also include some formalization of Austin Formula 1 commitments to environmentally friendly automobile research and development. The technological portion of the deal could include research on electric vehicle batteries and alternative fuels.


Some speculation about the specifics of the compact suggests that it may also include a cap on the number of private automobiles that are allowed to travel to the track on race day.


Riley addressed his concerns in an editorial that appeared on the American Statesman’s web site on Monday evening. “Even if hosting the event makes financial sense for Austin in the short term, we need to consider how endorsing this event squares with our city’s long-standing efforts to be a worldwide leader in sustainability, he wrote.“ We also need to consider the event’s impact on air quality and the potential costs associated with ensuring that we remain in compliance with air quality standards…If Austin is going to host Formula One, we need strong commitments in place to ensure that the event is as green as it can be.”


He goes on to say that he expects the event to be carbon neutral. He also notes that the city will “need to keep a close eye” on the emissions brought by the race, and writes that the track should “be expected to participate in Austin Energy’s GreenChoice program.”


In addition to all of that, he calls for the site to “earn at least four stars from the city’s green building program” and writes that race organizers “should also be asked to commit to ongoing collaboration with the city to ensure that the Circuit of the Americas is green in practice as well as in design.”


Later Monday evening, three environmental organizations – including Smith’s Public Citizen — issued an email calling for stricter green regulations for the track.


Should a vote on the item be postponed, it would give Council Member-elect Kathie Tovo a chance to weigh in on the matter. Tovo defeated Place 3 incumbent Randi Shade in a run-off election on Saturday. She put her opposition to the Formula 1 deal front and center throughout the campaign.


The next regularly scheduled City Council meeting is July 28, but Mayor Lee Leffingwell could call a special meeting before that if he can figure out when the entire Council will be in town. Tovo will take her seat on June 28.


Leffingwell said that he’s been “working under the impression that it’s a deadline situation.”


“If it’s not done soon it’s not going to happen,” he added. “Whether that’s brinkmanship, I have no idea.”


He added, “The major event fund…they could fund (F1) anywhere in the state. In that situation the state would still pay for it and we would get to help pay for it and we wouldn’t get any benefit from it.”


But Morrison would still have some qualms. She said, “I still have the big looming question of unlocking the access to the state’s quarter of a billion dollars and so that’s something else I’m wrestling with that would sort of override the rest of it.”

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