LOUISVILLE, Ky. (WDRB) – Churchill Downs Inc.’s annual tax payment to Jefferson County Public Schools nearly quadrupled this year – netting the school district an additional $705,224 – after reporting by WDRB News led to a nearly five-fold increase in the tax value of the company’s iconic Louisville racetrack.
WDRB in 2018 highlighted how the racetrack’s official value for tax purposes had remained $20.4 million since at least 2002 – despite more than $250 million that the company has spent renovating and adding to the facility’s footprint during that time.
Ordinary property owners in Jefferson County typically get higher assessments – and thus, bigger tax bills – when, for example, they add square footage to a house, or build a garage. Even without improvements, homes are re-valued for market changes at least every four years.
Yet, that wasn’t happening for Churchill Downs’ historic racetrack at 700 Central Avenue.
Former Jefferson County Property Valuation Administrator Tony Lindauer said in 2018 that his office neglected the racetrack’s value because of the property’s unusual circumstances. The track is technically owned by Metro government and tax-exempt, but Churchill Downs still makes tax payments to the school district each year.
PVA Colleen Younger, who was elected in 2018 to succeed Lindauer, raised the assessment of the racetrack real estate to $117.2 million earlier this year.
Churchill Downs wasn’t happy about the change, which dramatically increased the company’s year-end tax bill to JCPS. The company tried to persuade JCPS to accept a 41% discount on the payment, according to documents obtained under the Kentucky Open Records Act.
In a September memo to JCPS, the company called the $117 million assessment “erroneous” and said it “substantially overstates” the racetrack’s actual market value. Churchill Downs did not provide an alternative estimate in the correspondence with JCPS.
After the school district declined to grant the discount, Churchill Downs relented, cutting a $968,272 check to JCPS in November. The company would have owed only $263,049 had the PVA changes – primarily the dramatic increase in the racetrack’s value -- not occurred, according to WDRB’s analysis.
Churchill Downs has never commented on this issue. For this story, it would only confirm that it paid the bill owed under the higher assessment.
The extra money isn’t much within the context of the school district’s $1.8 billion annual budget. But the adjustment to the racetrack’s tax value was “well overdue,” JCPS Superintendent Marty Pollio said in an interview last week.
“We have homeowners and business owners paying property taxes all over the community, and I think it’s just important that we make it fair for everyone to support our kids,” Pollio said.
The additional funding will likely be used to replenish the district reserves, which have been reduced this year as JCPS continues to foot the bill for its early childhood programs after giving up federal Head Start funding of about $15 million a year, Pollio said.
The racetrack and dozens of properties around it are technically owned by Metro government and exempt from taxes as part of a 2002 arrangement to help Churchill Downs raise money through municipal bonds. The company will put the properties back in its name in 2032 when the bonds are retired.
Churchill Downs pays no property taxes on the racetrack to Metro government or to the state because of the bond deal. But city leaders didn’t want the deal to deprive JCPS of tax revenue.
So, in 2002, Churchill Downs agreed to keep making tax payments to JCPS each year in the same amount it would otherwise owe had the racetrack and surrounding parcels remained privately owned.
The contractual payments are technically not taxes but called "payments in lieu of taxes" and are calculated identically.
Lindauer said his office was never told about the private contract between JCPS and Churchill Downs, so the PVA was unaware that the racetrack’s official value had any practical consequences.
Lindauer noted that JCPS never complained about the assessment.
Churchill Downs will owe the dramatically bigger tax bill each year unless the company formally challenges the $117 million assessment, which it reserves the right to do, according to the correspondence with JCPS.