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What has St. Petersburg taxpayers' $600K bought?

The city of St. Petersburg gives Andretti Green Promotions, the organizer of the Honda Grand Prix of St. Petersburg, an annual $150,000 subsidy in city services. The subsidy pays for firefighters, police officers, sanitation workers and other city employees needed to conduct the event.

The issue is not whether the city benefits from the Grand Prix or how to measure its success. The issue is the consideration, the value of what the city received from Andretti Green in December 2005 in return for amending the then-existing agreement to give Andretti Green an annual $150,000 subsidy in city services.

In September 2004, Mayor Rick Baker negotiated an agreement with Andretti Green, which the City Council approved, giving Andretti Green $3.6 million in capital improvements and capital assets for $1 and the right to use the city streets for three years. Andretti Green, in return, agreed to provide an IndyCar race sanction with its national and international TV distribution, a three-year agreement with Honda to title sponsor the event, and pay the city $80,000 for services provided by the city (firefighters, etc.). This was the consideration offered by both parties in concluding the agreement.

In 2003 the Grand Prix organizer for the first IndyCar race on the waterfront streets of St. Petersburg invested $3.6 million of its own capital for in-ground improvements at Albert Whitted Airport (a pit lane and connecting roads to and from the runaway and to city streets) and a new race circuit safety system (concrete barriers, fencing, fence posts, aircraft cable, pedestrian overwalk bridges, etc). In other words, the 2003 organizer risked its own money to conduct the event.

In September 2004, Mayor Baker saved Andretti Green from having to risk $3.6 million of its capital by providing a finished racing circuit and entire race circuit safety system. The consideration from Andretti Green for receiving the $3.6 million in savings was, in the words of city spokesman Kevin Dunn, "an internationally recognized event with world-class coverage" (achieved through international TV distribution included in the IndyCar race sanction agreement). The $3.6 million in savings was perceived by Mayor Baker as the consideration necessary to lure investors willing to take a chance on reviving what had been a highly successful and spectacular 2003 IndyCar Grand Prix event.

Subsequently in December 2005, Mayor Baker recommended and the City Council amended the race agreement. The city agreed to forgo receiving an $80,000 payment for city services, and to give Andretti Green an annual subsidy of $150,000 in city services. What was the additional consideration offered by Andretti Green to receive the subsidy? The city had already saved them $3.6 million in capital cost and received from Andretti Green the bargained-for world-class coverage Dunn describes as "an invaluable commodity that is hard to put a dollar amount on."

To date Andretti Green has received at least $600,000 in taxpayer money for events conducted from 2005 to 2009. So what did the city taxpayers get from Andretti Green for the additional $600,000 in city services? Wasn't the $3.6 million in cost savings Andretti Green received in September 2004 adequate to put a dollar amount on an "invaluable commodity"?

Thomas Begley, general manager of the 2003 St. Petersburg Grand Prix, initiated bringing a car race here in 1991.

What has St. Petersburg taxpayers' $600K bought? 12/22/09 [Last modified: Tuesday, December 22, 2009 11:09am]
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