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JUNE 23, 2011

Anti-F1 subsidy lawsuit lodged in Texas

A lawsuit has been filed in Texas in an attempt to stop a $25m public subsidy for the US Grand Prix at the newly-built Austin circuit, scheduled for June 17 next year.

The suit has been filed in the District Court in Travis County, by Austin teacher Ewa Siwak, school board trustee Richard Franklin and accountant Richard Viktorin. It claims that Texas comptroller Susan Combs pledged the money illegally.

The Austin American-Statesman reports that the three are represented by Bill Aleshire, a former Travis County tax collector and Commissioners Court judge, strongly opposed to using taxpayer's money to support the F1 project.

Key to the issue is the region's Major Events Trust Fund, which is an incentive programme used to attract high profile events such as the Super Bowl to Texas.

The basic idea is that the programme provides funding for major events based on the extra sales tax revenue it is calculated will be derived from attending fans, with supporters claiming that there is therefore zero net cost to tax payers. Race organisers claim that the F1 race will generate in excess of $280m in increased economic activity.

It is said that in letters to F1 promoter Tavo Hellmund, Combs pledged $25m each year of a 10-year contract but the legal action claims that she was not legally authorised to do so. It also says that to qualify for fund support, the right to host the event must have been won in a "highly competitive selection process" with locations outside Texas, but that City of Austin officials did not learn about any competition until after Bernie Ecclestone announced that Austin had been picked. It also questions the veracity of figures presented by the economic impact study.

It will be remembered that Ecclestone also discussed potential projects based around New York, however seriously these were taken.