LOUISVILLE, Ky. (WDRB) — Churchill Downs Inc. executives hoped to impress Kentucky Derby fans earlier this month with the newest improvement to the company's historic racetrack: a $200 million renovation of the paddock area under the track’s famed twin spires.
The new paddock is the latest in a decade-long string of multi-million-dollar capital projects at the racetrack, such as the permanent seating erected around the track’s first turn and the luxurious “Mansion” area for big-spenders.
Someone else has taken notice of the building spree at the track: Jefferson County Property Valuation Administrator Colleen Younger’s office.
Last month, the PVA raised the tax value of the company’s racetrack property at 700 Central Avenue for the third time in five years.
The track — which welcomes some 150,000 people each Derby Day — is now valued at $160 million, a far cry from the $20 million assessment it carried until 2019.
The dramatic rise in the track’s tax value in the last five years is a correction of a mistake brought to light by WDRB News’ reporting in 2018.
Churchill Downs initially objected, but has since accepted the higher values, according to records obtained by WDRB News. The company did not respond to a request for comment for this story.
For more than a decade, former PVA Tony Lindauer’s office left the track’s value untouched at $20 million. Meanwhile, ordinary homeowners across Louisville faced increases in their assessments at least every four years to keep up with the real estate market.
Following WDRB’s reporting, Younger corrected the mistake in 2019 by raising the track’s assessment to $117 million — a move Churchill Downs officials said was unfair at the time.
Since 2019, the more realistic tax treatment of the racetrack has generated nearly $4 million of additional funding for Jefferson County Public Schools, according to school district records obtained by WDRB News.
School funding is the only practical consequence of the racetrack’s tax value. That’s because the real estate is technically owned by Louisville Metro government as part of 2002 bond deal that helped Churchill Downs raise money for improvements.
The 2002 deal made the racetrack tax-exempt for 30 years, but Churchill Downs agreed to continue making annual “payments in lieu of taxes” to the school district, as if the property were still privately owned.
Lindauer, Younger’s predecessor as PVA, told WDRB in 2018 that no one informed his office of the agreement between Churchill Downs and JCPS, which meant there were practical consequences to the track’s tax assessment. The school district never complained, he said. He called the situation “a real anomaly.”
When Younger raised the track’s value to $117 million in 2019, Churchill Downs was suddenly faced with owing JCPS about $970,000 instead of the previous year’s $260,000.
The company, which is worth about $10 billion and generates about $2.5 billion in annual revenue, tried to convince the school district to accept a lower payment. In a 2019 letter to the district, a lawyer for the company said $117 million “substantial overstates” the fair-cash value of the track.
JCPS held firm, and Churchill Downs made the full payment from 2019 through 2023. Last year, the company cut the school district a check for $1.3 million based on a $150 million assessment of the track and some additional real estate and personal property included in the bond deal.
Evan Westphal, a spokesman for Younger’s office, said recent increases in the track’s assessment were mainly because of construction activity. That’s typically how it works for ordinary homeowners, as building permits for improvements like an addition often trigger a higher tax assessment.
In 2032, Churchill Downs is scheduled to retire the 2002 bonds and to take back the track and surrounding real estate from Metro government, at which point the properties will be fully taxable once again.