The Austin City Council is nearing an agreement with the organizers of Formula 1 regarding how to fund the racing event that will debut in June 2012 if the city approves the plan.

City officials say the new deal would require Formula 1 organizers to pay the entire cost and would eliminate the use of taxpayer dollars going to support the $4-million-a-year races. Earlier proposals would have required Austin taxpayers to foot part of the bill after the first year. Finalizing a deal with the city will make it possible for Formula 1 organizers to annually receive a $25 million subsidy from the state’s Major Events Trust Fund to offset development and program costs.

“This is going to be bigger than Austin City Limits and South By Southwest combined as far as economic development,” said Matt Curtis, communications director for Mayor Lee Leffingwell. “We really aren’t going to be financially intertwined with Formula 1, and we would still reap the benefits of hundreds of millions of dollars in direct and indirect profits.”

The new track, named the Circuit of the Americas, is currently under construction in southeast Travis County and will host the Formula 1 United States Grand Prix race for 10 years. According to the Circuit of the Americas website, the track is expected to attract an estimated 300,000 fans during race weekends and generate $400 million in revenue through events such as concerts and motorcycle races.

Curtis said the Major Events Trust Fund has only been tapped a few times, and putting it toward the races would be a smart investment. He said several other cities are eager to take advantage of Formula 1 as an economic opportunity if Austin turns down the deal.

He said the city will be required to pick up costs such as extra security and trash pickup as it does with any large event, but these costs are miniscule compared to the revenue generated by tourism.

“These events bring in a lot of people from out of town, and the majority of them don’t bring cars,” Curtis said. “They’re spending a lot of money here, and this is the best kind of money. It’s tourism dollars, which means all the money stays in our economy.”

Tavo Hellmund, Formula 1 United States Grand Prix chairman and Austin native, said in an April press release the new racetrack would boost the local economy throughout
the year.

The City Council will discuss the final negotiations of whether or not the city will officially endorse Formula 1 at Thursday’s meeting.