By Luke Broadwater and Julie Scharper, The Baltimore Sun
7:56 PM EST, February 15, 2012
Mayor Stephanie Rawlings-Blake said Wednesday that drafting a new contract to continue the Baltimore Grand Prix was the city's smartest move, even as others questioned why the deal didn't do more to recover losses to vendors and taxpayers from the 2011 race.
"It's in the best interest for our local economy, and the best interest of the city, that we move forward, but not move forward with any risk to taxpayers," Rawlings-Blake said during brief comments at City Hall.
Some were quick to agree with the mayor, portraying the five-year deal with new operator Downforce Racing Inc. as an economic boon for Baltimore. But others emphasized that the new contract takes no additional steps to help vendors and taxpayers recoup the debts left by Baltimore Racing Development, the previous operator of the Grand Prix.
"I'm not happy about it at all," said Janet Groncki, the president of Sunrise Safety Services Inc., which did signage, set up barriers and performed roadwork for the 2011 race. Her company has sued BRD over $200,000 in unpaid bills. "It's the same old team with a new name. It's beyond me that they're going to go forward and not help the people get their money for the last race."
City officials unveiled the contract with Downforce Racing, a group composed of an Indianapolis contractor and two former Constellation Energy Group executives, on Wednesday. Downforce is headed by contractor Dale Dillon, who is credited by city officials with pulling off the 2011 race as Baltimore Racing Development struggled with leadership issues. Felix Dawson, one of the executives, invested $300,000 weeks before that race began. Neither was considered a BRD officer, city officials said.
The contract is to be presented to the Board of Estimates for a vote next week. The mayor controls three of the five votes on that panel.
One board member, City Council President Bernard C. "Jack" Young, said he planned to vote against the deal. He opposed the race in an article submitted to The Baltimore Sun, arguing that the city's time and energy should instead be spent on activities for youth, such as recreation centers.
"He'll be voting no when the contract comes to the Board of Estimates," said Young's spokesman, Lester Davis. "His thoughts have been pretty clear. The citizens of Baltimore would be far better served by having the energies of local leaders focused laser-like on core quality-of-life issues. He is hopeful, however, that lessons will be learned from past mistakes. He is hopeful that this event is a success, but it's not the thing we should be focused on."
Rawlings-Blake said that continuing the Grand Prix provides the city, as well as vendors, the best chance to make up for financial losses caused by last year's race.
Rawlings-Blake pointed to the contract's "lockbox" provision. It calls for adding a charge to each ticket sold and using the money to pay city admissions and amusement taxes, fees for city services, and money for neighborhoods surrounding the track. The money would be placed in an account controlled by a city-appointed trustee.
"It was very important for us to put safeguards in place to protect the taxpayer," she said.
Baltimore Racing Development, which organized last year's inaugural racing festival, ran up an estimated $12 million in debts, including more than $1.5 million in city taxes and fees. The city ended the company's contract late last year.
Rawlings-Blake noted that the state comptroller is attempting to recoup about a half-million dollars in unpaid taxes from Baltimore Racing Development. Liens have been placed against the property of BRD's managers. The new contract does not require Downforce Racing to pay back the old company's debts to the city, state or vendors.
Several state development agencies said they were unlikely to recoup their funds from the last race. Baltimore Racing Development owes about $1.2 million to the Maryland Stadium Authority, $500,000 to the Maryland Economic Development Corp. and $150,000 to the Maryland Department of Business and Economic Development, which will also be forced to pay more than $225,000 on a BRD loan from M&T Bank.
"We will use whatever legal efforts we can to recover that money," said Michael J. Frenz, executive director of the Maryland Stadium Authority. "Given the very few assets they have as an entity, I wouldn't be terribly optimistic."
Rawlings-Blake said she had encouraged, but not required, the new group to seek contracts with last year's vendors.
"The current racing team… has committed to make their best efforts to work with the vendors who were used last year," she said. "They reserve the right to make sound business decisions, but they understand what they are walking into with respect to vendors and we're supporting the work that they're going to do to try to work it out."
One major vendor in last year's race said he hopes to be involved again.
John W. Bunting, owner of Upper Marlboro-based B & K Rentals, which delivers bleachers to major events, won a $284,000 court judgment against Baltimore Racing Development over unpaid bills earlier this year. He has yet to see a dime of that, but said he's eager to work with the new race team, because he still believes in the event. Bunting's company set up grandstands and private suites around the Grand Prix racecourse.
"I was my own worst enemy last time," Bunting said. "My contract called to be paid in full prior to the race being started. I was naive enough to not force the payment ahead of time, which I should have. ... I hope to have the opportunity to become involved again. It's a good venue. It will do well. With Dillon at the helm, there'll be good management."
Copyright © 2014, The Baltimore Sun