Abbott says he can't resolve dispute over racing funds

By Jessica M. Karmasek | May 21, 2012


AUSTIN, Texas (Legal Newsline) - Texas Attorney General Greg Abbott, in an opinion issued last week, said he cannot resolve a "factual dispute" between two state officials over funds going toward Formula One races held in Austin starting this year.

Jerry Patterson, commissioner of the state's General Land Office, requested the attorney general's opinion in November.

Patterson questioned whether Texas' Comptroller of Public Accounts, Susan Combs, had the authority to commit to support an event with the state's Major Event Trust Fund, or METF, without first receiving a request from a local government or nonprofit, or without first determining the incremental increase of tax receipts attributable to the event.

In his three-page request to Abbott, Patterson noted that his office manages land dedicated to the Permanent School Fund, or PSF, at the direction of the School Land Board, or SLB.

The value of a "significant tract," he explained, may be affected by the way in which the comptroller utilizes the METF.

In May 2010, Combs sent a letter to Formula One World Championship Limited affirming that its Grand Prix race will be held in Texas starting in 2012 and that full funding of the entire sanction for 2012 will be paid to Formula One no later than July 31, 2011.

Combs also explained that in subsequent years of the race promotion contract -- from 2013 to 2021 -- the State will be sending $25 million to Formula One by July 31 of each year preceding the actual race event.

Patterson argues that no local organizing committee, endorsing municipality or endorsing county had submitted a request to determine the incremental tax increase that would result from the event, and that the market area that is likely to experience "measurable economic impact" had not been established.

In July 2010, months after Formula One announced a race would be held in the state annually, it was announced that a proposed track also would be constructed, on which the race would be run, southeast of Austin.

"An approximately 650-acre tract, dedicated to the PSF, is located in the immediate vicinity of the proposed track," Patterson wrote the attorney general. "The market value of the PSF tract will be greatly affected by the planned track, which may also depend on whether the Comptroller's commitment is consistent with her authority under the statute."

In a brief opinion Friday, Abbott said the dispute did not involve an interpretation of state law.

"Before undertaking any of the responsibilities or duties set forth in section 5A of article 5190.14 of the Texas Revised Civil Statutes regarding the expenditure of funds from the Major Events Trust Fund, the Comptroller of Public Accounts is required to follow the precise procedures described in section 5A," he wrote. "Whether she in fact did so requires a resolution of facts not amenable to the opinion process."

Abbott explained that section 5A of article 5190.14 describes the process by which the comptroller may expend funds for an "event."

The process must be initiated by either a county, a municipality or a local organizing committee that is "a party to an event support contract," defined as "a joinder undertaking, joinder agreement or a similar contract executed by a local organizing committee, an endorsing municipality or an endorsing county, and a site selection organization," the attorney general wrote Patterson.

A "site selection organization," in this case, includes the national governing body of the sport recognized by Formula One.

"The Comptroller is required to base the determination of the incremental increase in tax receipts 'on information submitted by the local organizing committee, the endorsing municipality or endorsing county, and must make the determination not later than the 30th day after the date the comptroller receives the request and related information.' Thus, the statute requires the Comptroller to perform a substantial economic analysis before funds from the METF may be committed to an event," Abbott wrote.

However, the comptroller may not undertake any of the responsibilities or duties set forth in section 5A unless a request is submitted by the municipality or the county in which the event will be located. The request must be accompanied by documentation from a site selection organization selecting the site for the event, the attorney general noted.

"Whether the Comptroller undertook any of the responsibilities or duties set forth in section 5A is the subject of a factual dispute," Abbott wrote Patterson.

"Briefing submitted to this office argues that the Comptroller's May 10, 2010 letter was 'merely an effort to indicate broad support.' In contrast, your request letter suggests that the Comptroller's letter improperly committed funds to the event.

"Consequently, the facts upon which this office has been asked to opine are disputed, and contested issues of fact are not amenable to the opinion process."

According to the Austin American-Statesman, both Patterson and Combs have said they plan to run for lieutenant governor in 2014. Both are Republicans.

From Legal Newsline: Reach Jessica Karmasek by email at

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