As Topeka's Heartland Park racing facility nears end, here's who would get its tax revenue

Heartland Motorsports Park owner Chris Payne's refusal to pay taxes on its property has kept Shawnee Heights USD 450 from receiving more than $704,000 in revenue to which it is legally entitled, Shawnee County records show.

But the school finance formula the state has in place has prevented that from harming the district's ability to meet its students' needs, says Shawnee Heights Superintendent Tim Hallacy.

That formula calls for school districts in crafting their budgets to factor in a "delinquency rate" in anticipation that some property owners won't pay, he said.

When a large amount of property taxes goes unpaid, districts are allowed to ensure their educational needs are met by charging "a little more" to the taxpayers who do pay, he said.

And when property taxes that have been going unpaid finally do get paid — which Payne says he plans to do this year — resulting revenues "go back into the pool and lower everybody's taxes who had made up for that before," Hallacy said.

Auction of all parcels to take place later this spring

Payne — whose company, Shelby Development, LLC, owns Heartland Motorsports Park — closed its doors and ceased operations after its racing season finished late last year.

Shelby Development owes Shawnee County more than $3.2 million in outstanding property taxes and penalties, with the total continuing to rise.

For the properties involved to be sold, Kansas law requires their property taxes to be paid.

Payne told The Capital-Journal in a written statement last week that he plans to pay all of the property taxes Shelby Development owes the county but to sell off the land in a manner that would likely end its days as a racing and entertainment facility.

"Heartland Motorsports Park and all adjacent property owned by Shelby Development has been listed for sale nationwide since last year with a 'call for offers,' meaning a buyer can present any offer to the seller for consideration," Payne said. "The property is jointly listed with Kansas Commercial and CBRE, the world's largest commercial real estate sales company. As of today, no offers have been received."

Shelby Development in coming weeks will announce "an auction later this spring of all parcels, with proceeds going towards Shawnee County's ridiculously high property tax debt," Payne said.

"The auction will consist of selling individual and multiple parcels collectively," he said. "The goal is for sale proceeds to produce enough revenue to pay all outstanding property taxes. Shelby will cover any shortfalls, as all taxes will need to be paid in full to rightfully transfer ownership of each parcel to its new owner."

Heartland Motorsports Park will most likely not be purchased as an racing and entertainment facility, Payne said.

"The market is representing there's no value with its current use because of the heavy tax burden," he said. "The properties will most likely be purchased by multiple buyers for separate redevelopments."

Who gets the money if the property taxes get paid?

The specific amount due in property taxes — penalties not included — is $2,204,157.51, said a document Shawnee County provided The Capital-Journal free of charge last week in response to a Kansas Open Records Act request.

Revenue from any property taxes paid by Shelby Development is to be divided among nine taxing entities.

If the taxes had been paid in full last week, the entity receiving the largest amount would have been Shawnee Heights USD 450, which would have gotten $704,883.86, the county said in its KORA request response.

That district has an annual operating budget, excluding bond payments and transfers, of slightly more than $55.82 million, said its public information officer, Tiffanie Kinsch.

The county said the next-highest revenue amounts would have involved $666.265.28 going to Shawnee County, $535,386.25 going to the city of Topeka and $128,381.14 to the Topeka & Shawnee County Public Library.

Smaller amounts, each totaling less than $60,000, would have gone to the Topeka Metropolitan Transit Authority, Washburn University, Metropolitan Topeka Airport Authority, state of Kansas and Shawnee Center Cemetery.

How did we get here?

Payne since early 2016 has owned Heartland Motorsports Park, which hosted events that included the Country Stampede music festival and the Menards NHRA Nationals, a major drag racing competition.

Payne contended the county's appraised valuation of the Heartland Motorsports property is much higher than its actual market value, and that the facility was consequently being "taxed to death."

Overland Park-based Valbridge Property Advisors, working as a third-party appraiser for Shawnee County, appraised the property's value at $9.05 million in a report it provided in February 2023 to the county.

Payne contends the property's fair market value is close to the $2.4 million he paid to buy the facility.

He said he paid the facility's 2016 property taxes but hadn't paid them since because the county has been taxing him "to death" by appraising its value at far more than he'd be able to sell it for.

However, the county ended up winning its tax battle with Payne when the Kansas Court of Appeals ruled in its favor in July.

County commissioners said last May that Kansas law banned them from complying with Payne's request that the two sides cut a deal to resolve their years-long property tax battle.

They quoted a Kansas law that says the county cannot "release, discharge, remit or commute" past tax liability if the valuations involved have not been appealed or challenged by the taxpayer.

Contact Tim Hrenchir at threnchir@gannett.com or 785-213-5934.

This article originally appeared on Topeka Capital-Journal: Topeka racing facility plans to auction off 'all parcels' this spring