The Circuit of the Americas shaved more than $14 million from its property tax bill over three years after a settlement with the Travis Central Appraisal District reduced the track’s assessed property values during those years, county tax office figures show.
COTA and the appraisal district in February agreed to settle a lawsuit brought by the circuit that contended the district overvalued the track and was assessing a tax bill that was larger than the property merited. The settlement agreement, signed by a state district judge last month, lowered the appraised value of the Formula One racetrack by more than $180 million for 2015 alone and retroactively lowered the track’s appraised value for tax years 2013 and 2014.
Prior to the settlement, COTA’s combined property tax bill for 2013, 2014 and 2015 would’ve been about $21.7 million, according to figures provided by Bruce Elfant, Travis County’s tax assessor-collector.
After the settlement lowered the track’s assessed value, the property tax bill for those three years ended up being $7.4 million — more than $14 million lower than the original assessed values would have required, figures show.
COTA has already paid its tax bills for the lower tax values reached in the settlement for 2013-2015, Elfant said. The amounts COTA paid were based on values not in dispute for those years, and those amounts were sufficient to pay the levy due after the tax office values were updated with the settlement amounts, he said.
“They pre-paid nondisputed taxes, and that’s where the settlement ended up,” Elfant said. “We’re not owed money, and they’re not owed money.”
The amounts paid were $2.7 million for 2013; $2.2 million for 2014; and about $2.4 million for 2015.
The original taxes owed were $7.3 million for 2013; $7.1 million for 2014; and $7.2 million for 2015.
Elfant confirmed COTA’s lower tax bill on Wednesday — the same day COTA filed a document with the U.S. Securities and Exchange Commission reporting a fundraising round of $81 million. The securities filing classified the transaction as an “issuance of Series D cash flow subordinated notes.”
The form’s filers also checked a box that indicated it was done in connection “with a business combination transaction such as a merger, acquisition or exchange offer.” The securities filing also said the money would be used for “general working capital purposes.”
Bobby Epstein, chairman and CEO of Circuit of the Americas, called the securities filing “a formality.”
“The company simply converted debt into equity,” Epstein said by text message. “No new money changed hands and nothing is different. It’s done to strengthen the company.”
Elfant said he agreed with the adjusted lower values based on evidence COTA officials provided.
“Everybody was stunned how little (the track) is worth, but based on the evidence we saw, that’s what it’s worth,” Elfant said. “The Appraisal District Board and its attorney examined all the evidence in this case and felt like the settlement was fair.”
Last month, Sandra Griffin, an attorney for the appraisal district, said COTA and the appraisal district arrived at mutually agreed upon values, “relying on their respective independent appraisers and seeking to limit the cost and uncertainty of further litigation.”
The state of Texas has committed to paying COTA millions of dollars a year in support of the Formula One event, based on its economic impact to the state.
The state paid about $25 million a year in 2012, 2013 and 2014. But weeks before last year’s race, the state informed Epstein that it was reducing the amount from $25 million to $19.5 million. Epstein and Bernie Ecclestone, Formula One’s chief executive, said that could jeopardize the race’s future in Austin.
Bill Aleshire, a former Travis County Judge and former Travis County tax-assessor collector, continues to be a critic of the state dollars COTA receives.
“I’ve never wished bad luck or bad business on COTA. I just don’t think they should be getting public funds… I never did believe they were legally entitled to any public money and I don’t think they should have gotten any,” Aleshire said.
Aleshire also takes issue with the appraisal district for settling with COTA over its property value. He said the district should have taken the lawsuit to trial so COTA’s evidence would have been publicly disclosed.
“Even if (COTA) won, you would have had a transparent, open, public trial and you would have seen what the evidence was,” Aleshire said. “The way they settled that case, I don’t think they (the appraisal district) could have done worse losing in court.”
Despite its new round of funding, COTA continues to face financial questions.
Earlier this week, the popular Summer X Games confirmed June would mark its final event at the track after three consecutive years of showcasing the world’s best action sports athletes in Austin. The event drew nearly 300,000 fans the first two years combined and had an estimated $172 million economic impact, ESPN has said.
However, Epstein said the event forced the track to close for four to five weeks, costing COTA other major racing events.
Last year’s three-day race weekend was hit with heavy rains and delays. Epstein told the American-Statesman the track suffered “a financially devastating weekend for the company” and was still losing money.
Attendance fell 6 percent last year to 224,011 from 237,406 a year earlier.
“We lost millions on concessions,” Epstein said. “And we suffered from some fans having such a bad experience they won’t be back, though I hope we can change their mind.”
Editor’s note: This story was updated to add comments from COTA chairman and CEO Bobby Epstein.