IndyCar is expected to make the official announcement Friday in Las Vegas, where the season concludes Sunday.
"We're absolutely excited," Davidson said of having the race return for the three-day weekend Aug. 31-Sept. 2, "just based on the crowd we had here for the inaugural event and the people hanging around on Sunday after the race, just enjoying the day.
IndyCar drivers also enjoyed the track and crowds at this year's race. On Tuesday, race winner Will Power praised the city when asked for his feelings about the race's returning for another Labor Day weekend.
"That track was probably the best we had all year in terms of atmosphere," Power said. "The people and the amount of activity at the track were tremendous."
Davidson, whose group has a five-year contract with the IndyCar Series, also confirmed the popular American Le Mans Series of sports-car racing will return for second time Sept. 1.
"Labor Day weekend is certainly the right weekend for Baltimore," said Ryan O'Doherty, spokesman for Mayor Stephanie Rawlings-Blake. "It is normally a slow weekend for tourism, and the event provides a big revenue boost for city hotels and downtown restaurants."
A comprehensive analysis of the inaugural race's economic impact is expected to be released this month.
"Logistically, [Labor Day weekend] makes a lot of sense because traffic volume is already lower, downtown offices are mostly closed anyway, and having the extra day to break down and get streets reopened is extremely helpful," O'Doherty added.
Davidson agreed and added that his group and city officials will look at areas for improvement, such as adding more crossover bridges around the course for better crowd movement and providing better communication so local residents realize they can still come into the city and get around in the evening without hassles.
"We have every reason to believe that year two can be bigger — and better — than year one," O'Doherty said. "The city learned a lot about traffic and pedestrian flows, and [there] will be some changes moving forward."
Davidson said the second year of the event should be better and easier on the public.
"No question there will be less of an impact, fewer disruptions on the city," Davidson said. "There will be minimal construction. The roadwork will be simply the patching of asphalt if the winter is hard, and the concrete won't be touched."
During the first racing weekend here, drivers acknowledged the roughness of the concrete on Pratt Street slowed them down.
But on Tuesday, three-time IndyCar champion Dario Franchitti, who is leading Power by 18 points going into Sunday's final, said drivers are happy about coming back.
"We're delighted," said Franchitti, who finished fourth here. "It was a fabulous event — I'd just like to do a better job next time."
Baltimore Sun reporter Julie Scharper contributed to this article.