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Council narrowly supports COTA tax incentive bid

Friday, December 11, 2015 by Tyler Whitson

Following a contentious debate about the nature of tax incentives, a fractured City Council voted Thursday to endorse applications for funds from the Texas Major Events Reimbursement Program for upcoming events at the Circuit of the Americas.

Both items – one for all future MotoGP events and one for the 2016 and 2017 Austin X Games – passed on a 6-4 vote. Mayor Pro Tem Kathie Tovo and Council members Ann Kitchen, Leslie Pool and Don Zimmerman voted in opposition. Mayor Steve Adler was absent.

Council Member Delia Garza noted that the venue is in her district. “I know there’s a lot of controversy that surrounds this facility, and I’m not here to tell you whether I agree with it ever being built or not or whether I agree with the money that they use,” she said.

“There are people that want it to fail – I don’t know if that’s the right road to go down,” Garza continued. “I, too, share concerns about incentives and whether it’s appropriate to provide those incentives, but I have to say it has provided jobs, and even though they’re not the jobs that I necessarily want members of my community to have, it has provided jobs.”

Kitchen explained why she opposed the measure and referred to Zilker neighborhood resident David King’s observation that the COTA owners have challenged the Travis Central Appraisal District’s valuation of the property. “We’re in a circumstance where we have an entity that’s asking us to approve their ability to apply for some funding from the state. At the same time, they are challenging how much they have to pay that would benefit the city,” said Kitchen. “That causes me a great deal of concern.”

The major events program, according to the Office of the Governor, is one of three state event trust funds that may provide event organizers with “local and state gains from sales and use, auto rental, hotel and alcoholic beverage taxes generated over a specified period of time.”

To apply for the major events program, an event organizer needs to be nominated by a local municipality.

The Circuit Events Local Organizing Committee, which acts on behalf of the venue, now has the city’s endorsement to apply for reimbursement through the major events program as well as the Texas Event Trust Fund, which is designed for smaller events.

The committee stands to gain more, however, if it applies to the major events program because it would be eligible, if approved, for reimbursements from sales tax collected over 12 months as opposed to 30 days.

Pool said she would prefer that the sales tax gains in question go to other funds and projects. “It may be that specific money is not coming out of the revenue accounts at the city – it still is coming from those of us who live here and pay sales tax, and I’d kind of like to see the money … go for things like public school finance, to help with facility purchases and maybe textbooks,” said Pool. “At any rate, I feel like the money should be used in a different way.”

Assistant City Attorney Leela Fireside responded to this concern. “The idea behind this fund is that, if not for the event, those increases would not exist. So if you don’t have the event, you don’t necessarily have sales taxes that could go to other purposes.”

Sylnovia Holt-Rabb, assistant director for the Economic Development Department, explained that “it’s the incremental increase that occurs that is being reimbursed” and that those increases are calculated through economic impact studies. She added that staff estimates that about $1 million would be reimbursed for each event.

Tovo raised concerns about this process. “I have concerns about the way the accounts are looked at and … how much accountability there really is for looking over those numbers that come in,” she said. “I also think we should use incentives very carefully. I think we should be careful about spending taxpayer dollars, whether those are state dollars or local dollars.”

Council Member Greg Casar weighed the pros and cons of the situation. “We’re the City Council, and we’re deciding whether or not we want these Austin events to be eligible for these dollars and the marginal good. … While it may not be the best thing, it is something,” he said.

“Otherwise, what we’re doing is letting other cities know that they can have our sales tax dollars that are getting accumulated into this fund,” Casar concluded.

Photo by Fabrizio ( [CC BY-SA 2.0], via Wikimedia Commons.

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