Every effort has been made to establish a fair property valuation for Heartland Motorsports Park, including hiring an outside appraiser to value the property, the Shawnee County appraiser said this week in response to accusations the racetrack’s taxes are too high.
“I don’t set taxes,” said appraiser Steve Bauman. “We appraise. Taxes are based off of that appraisal.”
Bauman said racetrack owner Chris Payne, through his attorney, stipulated to the track taxes after appealing the amount to the Kansas Board of Tax Appeals. The stipulation of value dropped the taxes from $10.4 million to $7.5 million for tax year 2017.
“That means we all agreed to that value,” Bauman said.
Payne has opposed the county’s valuation of the property since he purchased it in 2016, and this week he said he was considering ending the fight by moving the facility to the Kansas City area and razing the Topeka track.
At 2018 valuations and property tax levels, Payne pays more than $28,600 per month on Heartland and more than 25 properties — mostly vacant land — he owns around the racetrack, according to information on the Shawnee County appraiser’s website.
Bauman said there are three primary ways to appraise properties. The cost approach focuses on what it would cost to replace the building with an equivalent structure. The income approach takes into account the revenue generated by the business or a consideration of what the property would rent for it if were being leased out, he said.
The comparable sales approach, which is the method Shawnee County used for Heartland, compares sales of similar properties.
It is tougher to determination valuation, Bauman said, when there aren’t multiple properties to compare to, as would be the case in the sale of a home.
For that reason, the county hired an outside appraiser for “assistance in getting the value right” when Payne purchased the property, he said.
“We did that and they did the appraisal, and we negotiated a little bit off of that because they still had some deferred maintenance for the property,” Bauman said.
At the time, he added, it seemed Payne was in agreement with that initial value, which in 2016 was negotiated to $5,712,000, he said.
Bauman said Payne may have thought that was high because Payne paid significantly less than that. In previous Topeka Capital-Journal articles, Payne said he paid $2.55 million for the racetrack.
But valuations on properties don’t take into account sales that occur under duress, Bauman said.
Instead, the value is based on what would be considered a typical scenario.
“It goes on the market, and it’s marketed for a reasonable amount of time — for a house, it may be two months. For a property like this, it would be probably a year or a year and a half,” he said. “We would expect that he would be able to sell it for what we have it appraised.
“Just like every other house, just like every other commercial building, that’s the market value we’re trying to achieve, without any of those undue stress factors, such as bank foreclosures, divorces.”
The Kansas Department of Revenue’s Office of Property Valuation examines the performance of every county’s appraiser office, determining whether property does indeed sell at close to the valuations.
“They’ll look at what our appraisal values are versus what properties have sold for, and that comes up with a ratio,” Bauman said. “That’s how we’re judged. Sale prices are very important. They carry a lot of weight.”
The 2016 state report, the most recent one found on KDOR’s website, indicated the county scored well on its coefficient of dispersion. That is a common measure of uniformity in sales ratio studies, and a low COD is associated with good appraisal uniformity. Other ratios in the report also indicated the county met state standards.
Shawnee County Commissioner Bob Archer emphatically supported the work done by the county’s appraiser.
“I will state that I have tremendous confidence in our appraiser’s office,” he said. “You can talk to property valuation at the state and they’ll tell you the same thing.”
Archer, however, did agree with Payne.
“Property taxes are too high,” he said. “The problem we’ve got in Topeka and Shawnee County is that so much property is tax exempt — all the state, all the federal, all the churches, all the nonprofits.”
But his opinion on tax rates aside, Archer said, the goal of property valuation is to be consistent. The state annual report shows consistently that Bauman’s office achieves that goal, he said.
Archer agreed with Bauman that Payne may have expected lower rates because he got a “fire sale” on the Heartland racetrack.
“I’d like lower taxes on my house, to be honest with you. Wouldn’t you? Wouldn’t everybody?” Archer said. “But no, I’m not going to treat one property favorably over others, because somebody has to pick up the slack. It’s not fair.”
Losing Heartland, though, would be a concern, he said. Archer pointed out that any business can approach GO Topeka, or the Greater Topeka Partnership, to work with the existing business division and see if there are options for support.