State senators push for more scrutiny of Texas special-event funds

Posted Sunday, Feb. 24, 2013  comments  Print Reprints
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Where has the money gone?

A sampling of events that have received money from the state funds:

Arlington

2011 Super Bowl: $31.1 million

2012 AT&T Cotton Bowl Classic: $989,728

2012 USA Greco-Roman Wrestling and Women's Freestyle Championship: $36,123

2012 U.S. Bowling Congress Convention: $45,578

2011 U.S. Karate Wado World Championship: $51,419

2011 Boys and Girls Tennis Championships: $20,090

Fort Worth

2011 Samsung Mobile 500 NASCAR Race Weekend: $1.1 million

2011 National Cutting Horse Association Futurity: $1.6 million

2012 National Cutting Horse Association Summer Spectacular: $1.3 million

2012 American Paint Horse Association World Championship Show: $174,408

2011 Reichert Celebration: $1 million

2011 Firestone Twin 275s Indy Racing League Race Weekend: $656,493

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AUSTIN -- A state tax incentive program that helped finance the 2011 Super Bowl in Arlington and other marquee events is under growing scrutiny by lawmakers and other critics who are calling for tighter controls.

Legislation filed Friday by Sen. Kirk Watson, D-Austin, would dilute state Comptroller Susan Combs' authority over the Major Events Trust Fund by adding a layer of oversight.

Sen. Wendy Davis, D-Fort Worth, is also pushing for more scrutiny, calling for a state audit to ensure that the money is being spent properly.

"We've got to do a better job of focusing on the use of these taxpayer funds," Davis said.

The fund is one of two primary incentive programs managed by the comptroller's office to help Texas and local communities attract or keep high-profile events such as football bowl games, national swim meets, all-star games and auto races.

Nearly $60 million has been used or authorized for events in Fort Worth and Arlington.

Officials in both cities say the Major Events Trust Fund and the related Events Trust Fund are vital to promoting the region as an international tourist destination.

The Major Events Trust Fund, which provided $31.1 million for the 2011 Super Bowl, "is terribly important for us to compete with other states," Arlington Mayor Robert Cluck said. "This gives the cities -- Dallas, Arlington and Fort Worth -- the financial wherewithal to be able to support those events, without which it would be very difficult to compete with other states."

The comptroller's incentive programs, which have paid out $206.5 million since their inception, are most often used in populous urban areas. But smaller communities such as Abilene and Lubbock have also tapped the funds.

In Fort Worth and Arlington, which offer giant venues such as Cowboys Stadium, Texas Motor Speedway, the Fort Worth Convention Center and Will Rogers Coliseum, the funds have been a go-to resource to attract bowl games, all-star basketball games, NASCAR races, horse shows and conventions.

Fort Worth has spent or been authorized to spend $22 million for more than 45 events, according to a review of events on the comptroller's website.

Arlington's total for 16 events tops $36 million, most of which went to Super Bowl XLV.

The game between the Green Bay Packers and the Pittsburgh Steelers drew more than 103,000 spectators to Cowboys Stadium and pumped millions of dollars into the local economy.

Sen. Kelly Hancock, R-North Richland Hills, the vice chairman of the Senate Economic Development Committee, said the funds "greatly benefit the sponsoring communities with the millions of dollars they can receive in direct spending and also give the cities valuable public relations and exposure."

But he also said there will likely be "opportunities to make alterations to the funds in hopes that they may provide more transparency and oversight."

"I look forward to reviewing these possibilities," he said in an email.

'$8 million for

a scoreboard?'

The Major Events Trust Fund came under renewed attention last week with a report by Houston's KTRK-TV that $8.1 million from the fund was used to buy a video scoreboard for the American Airlines Center in Dallas, home of the Dallas Mavericks, to attract the NBA All-Star Game to the area in 2010.

The game itself was played at Cowboys Stadium, but All-Star events including the Slam Dunk Contest were held at the American Airlines Center.

A similar amount was used to buy a video screen at the Toyota Center in Houston as part of that city's preparations for this year's NBA All-Star Game, the station reported.

Steve Letson, vice president of operations for the Mavericks, said the video screen purchase was permitted under the state program's rules and was necessary for North Texas to land the All-Star Game.

"It was critical in getting the bid to have an updated scoreboard," he told the Star-Telegram. "It's a capital improvement. It's going to be in use for years and years."

Houston Rockets CEO Tad Brown, president of the host committee for the 2013 All-Star Game, similarly defended the purchase of the video screen for the Houston arena.

"Everything we've done has been according to what needs to be done to get an event like this," he told KTRK reporter Ted Oberg.

But Watson called those types of purchases excessive and said his bill would rein them in.

"I don't think there is any question that may have gotten out of hand," he said. "I'm fighting like crazy to get $7.2 million for recovery efforts in Bastrop County [the scene of devastating wildfires in 2011], yet the state's paying $8 million for a scoreboard?"

Under Watson's SB765, structural improvements and fixtures that will stay in place for a long time could get a small amount of funding for a specific event but no more than 5 percent of the cost of the improvement.

"If it's something you're going to make money off of in the future, you can still get a little bit because you're going to need it for this event," he said.

"But the taxpayers aren't going to pay for it when you're going to make money off of it later."

Adding oversight

Watson's bill would create a three-member oversight committee composed of the comptroller, the state auditor and a representative from the local government entity applying for the funding. The local representative would be required to have experience in auditing and in fiscal matters related to the event.

The committee would assume responsibility for reviewing applications and granting incentives, which is now the sole duty of the comptroller, the state's chief financial officer.

Watson, a former mayor of Austin, said that he is a staunch supporter of economic incentives but that the programs in the comptroller's office should be subject to more internal scrutiny.

"I would have liked to have seen more skepticism about some of the reimbursements," he said. "If she [Combs] didn't already have it, this gives her the ability to be skeptical."

R.J. DeSilva, a spokesman for the comptroller, said department officials "strictly follow what is outlined in the statute, as passed by the Legislature, when administering the event trust fund programs."

In an emailed response about Watson's bill, DeSilva said: "We strictly administer what the Legislature has set in statute. If the Legislature makes any change to the current law, we would administer those changes."

Formula One flap

Combs has been criticized for her handling of funds for a Formula One race that drew more than 100,000 visitors to Austin in November.

In a letter written more than a year before local organizers made a formal request, Combs notified Formula One representatives on May 10, 2010, that they could expect "full funding" for the race.

Land Commissioner Jerry Patterson, who could face Combs in his race for lieutenant governor, said the comptroller overstepped her authority by making such funding assurances.

Combs later said that the letter was an expression of support rather than an ironclad guarantee of funding, adding that she was in full compliance with the law.

The Circuit of the Americas race received $29.3 million after local organizers formally applied.

The incentive programs are essentially a collaboration between the state and the communities that host the events.

After a local government or an organizing committee applies to host an event, the comptroller's office does an economic impact study to determine how much revenue would be generated through taxes on sales, hotel occupancy, motor vehicle rentals and alcoholic beverages.

The state then determines the amount of its contribution. Local entities put up a smaller amount of matching funds that are reimbursed after an audit of receipts by the comptroller's office.

The state's share of the 2011 Super Bowl, for example, was $26.8 million, while the reimbursed local match was $4.2 million.

The comptroller's office operates four incentive funds, but two -- the Motor Sports Racing Trust Fund and the Special Events Trust Fund -- are seldom used.

The Major Events Trust Fund is used for national or international championship events, such as the Super Bowl, NCAA basketball tournaments and Formula One.

The more frequently used Events Trust Fund supports once-a-year sporting events such as the Major League Soccer All-Star Game, as well as conventions for various associations, according to an explanation on the comptroller's website.

The funds are "one of the reasons we've been so successful," said Kirk Slaughter, Fort Worth's special-events director. "This partnership that we have with the state has been very good and very beneficial for the city."

Slaughter said the funds have enabled Fort Worth to attract and keep major horse shows that might otherwise have gone to other states. As a result of the incentives, he said, the National Cutting Horse Association has more than 60 days of events in Fort Worth.

"If it weren't for this program," he said, "some of these events could easily pack up and go to Oklahoma City or Las Vegas."

Competing for dollars

Billy Smith, executive director of the Fort Worth-based American Paint Horse Association, describes the funds as "kind of tipping-point money" that can give Fort Worth the edge over other cities trying to lure shows sponsored by his association.

"The horse show market is very competitive," he said.

"There are several venues in the United States that really make a hard charge to get us. ... What the trust money does is firmly plant us in Fort Worth."

In Arlington, leaders are looking toward landing more mega-events while pushing to keep the fund intact.

The Arlington Chamber of Commerce has made continuation of the fund one of its legislative priorities.

Hancock has filed a bill that would adjust the statute so that the NCAA football championship, which will change to a four-team, three-game playoff system in 2014, would remain eligible for funding.

Rep. Diane Patrick, R-Arlington, is sponsoring a companion bill in the House.

This report includes material from the Star-Telegram archives.

Dave Montgomery is the Star-Telegram's Austin bureau chief.

512-739-4471

Twitter: @daveymontgomery

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