'We are legally bound by the process': Shawnee County says hands tied on Heartland Park

Kansas law bans Shawnee County from complying with a request by the owner of Heartland Motorsports Park that the two sides cut a deal to resolve a years-long property tax battle, commissioners said Thursday.

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.

In a signed statement put out Thursday, Commissioners Kevin Cook, Aaron Mays and Bill Riphahn said they are sympathetic to the situation facing Chris Payne but that he hasn't availed himself of the options available.

Payne hasn't appealed or protested the valuations for the Heartland Park property for the tax years 2018, 2019, 2020, 2021, 2022 or 2023, meaning the county can't change those valuations, the statement said.

"We are legally bound by the process set forth in Kansas law for the way to go about that," it said.

Payne may still appeal or protest valuations, and the county is willing to look at those "and make any adjustments rendered necessary," Thursday's statement said.

It came at a time when some have suggested that commissioners and Payne should work together to try to find a solution for circumstances that Payne said threaten to bring an end to Heartland Park.

Thursday's statement acknowledged Payne filed a civil suit against the county, for which the Kansas Court of Appeals is considering an appeal after a judge initially ruled in the county's favor.

"We hope that you can appreciate that we are very limited at this point regarding what we can say about pending litigation," the statement said.

Payne said he would have a public response to the county's statement later, perhaps Friday.

More: Heartland Park owner may close racing facility after rejected tax offer to Shawnee County

What is Heartland Park?

Heartland Motorsports Park opened in 1989 as Heartland Park Topeka.

It has hosted national events among many of racing's premier sanctioning bodies — including the NHRA, NASCAR, AMA, SCCA — and has been home to numerous record-breaking performances.

The NHRA has held a national drag racing event at Heartland Park every year since it opened in 1989 except in 2020, when no event took place because of the Covid pandemic.

Heartland Park since 2019 has hosted the annual Country Stampede music festival, for which performers here have included Jason Aldean, Kid Rock, Clint Black and Sawyer Brown.

How far apart are Heartland Park and Shawnee County?

Shawnee County and Payne's company, Shelby Development LLC, have been at odds over the appraisal value of the property since soon after Payne closed on the purchase of Heartland Park in early 2016.

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 last February to the county.

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

Payne paid the track's property taxes for 2016 but hasn't paid them since, he said.

As of April 26, county records showed Shelby Development owed the county $2,622,996.56 in delinquent property taxes, said county counselor Jim Crowl.

Shawnee County officials say the taxes assessed to the property are appropriate, and the courts so far have taken their side.

Here's what Shawnee County says

In Thursday's statement by county commissioners — addressed "to our community and community partners" — they said they would like to confirm their support for Heartland Park.

"We have been working hard, as well as our predecessors, at finding ways to support Heartland Park and also promote economic development in our community," the statement said.

It quoted a 2017 Capital-Journal article that told of how, after Payne was encouraged by county staff and elected officials to seek tax incentive assistance from various sources, he said: "I've never asked for or wanted a handout, including tax exemptions or abatements. I expect to do my part as a property and business owner, which means paying taxes."

Shelby Development challenged its property valuations for the 2016 and 2017 tax years, and Shawnee County then entered into an agreement with Shelby Development that set jointly agreed values for the Heartland Park property for the tax years 2016, 2017 and 2018, the county's statement said.

"The property taxes assessed are based upon valuations of the Heartland Motorsports Park to which Shelby agreed for those years," it said. "Since that time, no process to invoke a valuation review or a property tax appeal process has been sought by the taxpayer in any future year."

The statement added: "Unfortunately, for all of the parcels that currently make up Heartland Park, no payment whatsoever has been made toward the tax year 2017 going forward, even on the amount Shelby has agreed to what the track is worth. To state that the track is threatened by a 'crushing tax burden' and that the amount of taxes limit the ability for the ownership to make investments is contrary to the fact that the ownership has not actually paid said taxes."

What's happened in court regarding Heartland Park?

Shelby Development filed an 11-count lawsuit over the county's property tax appraisal in November 2019 against Shawnee County, its appraiser’s office, appraiser Steve Bauman and assistant appraiser Stacy Berry.

A Shawnee County District Court judge in April 2022 granted summary judgment in the county's favor on all 11 counts. A summary judgment is a determination made by a court without a full trial.

Shelby Development in May 2022 filed an appeal seeking to overturn that dismissal.

The appellate case was argued in court on April 11, Crowl said.

The county anticipates a decision in that case to come in two to four months, provided the timing is consistent with other pending cases, he said.

What did Heartland Park's proposed settlement agreement say?

David Holstead, an attorney representing Shelby Development, suggested a proposed settlement in an April 20 letter to the county.

The letter said Shelby Development would close, scrap and abandon the facility — once it meets its contractual commitments for 2023 — if no settlement were reached.

Payne would then accept "the loss of the undepreciated basis in the property, which (he) has determined will be substantially less than the sum of the currently assessed taxes and penalties," Holstead's letter said.

"Make no mistake, this is in no way a bluff or a threat," it said. "This is the course of action that will occur and Shawnee County will suffer the consequences of these improvement decisions related to value of the property that have been made over the past seven years."

Payne said his proposal would have arranged for Shelby Development to pay the county a collective amount of more than $1 million of the roughly $2.6 million owed while Crowl indicated in a letter to Holstead that it would have instead arranged for the company to pay $877,822.95.

In his April 27 letter rejecting Heartland Park's proposed settlement, Crowl said the county was legally required to reject it because the county's acceptance of it would expose the county and himself to civil liability under Kansas statute 79-1703, which bans the unlawful release, discharge, remission or commutation of taxes.

Crowl added that the statutory basis Heartland Park put forth for the settlement is a remnant of a past system that has had no real force or effect under the law since 1993.

In a May 2 letter sent to Crowl in response, Holstead disagreed with Crowl's assertion that the county can't resolve the legalities involved with the pending litigation.

Holstead's letter said Shelby Development at that point would "proceed to mitigate its damages in the appropriate and practical manner that is necessary for any enterprise under such circumstances."

What's happened since owner said he might close Heartland Park?

Payne told The Capital-Journal May 3 he might consider closing Heartland Park.

He said he wanted the community to know it might lose that facility and the events it hosts, including the Country Stampede and Menards NHRA Nationals.

"When the facility goes away because it gets taxed out of business, I don't want people to say, 'I didn't know that,'" Payne said. "At least they'll know now."

NHRA asks Shawnee County to help track survive

NHRA President Glen Cromwell has asked county commissioners to take whatever steps are necessary to help Heartland Park survive.

"We understand that the track’s continued existence is threatened by a crushing tax burden," Cromwell told Cook, Mays and Riphahn in a five-page letter dated May 12. "We urge you to consider the civic and economic benefit that HMP brings to Topeka, the state of Kansas, and even surrounding states, and to do whatever is possible to make the track’s continued life viable."

Shawnee County provided The Capital-Journal a copy of Cromwell's letter Thursday in response to a Kansas Open Records Act request the newspaper emailed to Shawnee County Clerk Cyndi Beck.

Shawnee County Commission vote preceded issuance of statement

Cook and Mays met behind closed doors in executive session for 25 minutes near the end of their meeting Thursday to discuss the circumstances involved.

They then returned to public session and voted 2-0, with Riphahn being absent and out of town, to release the statement the county put out later that day outlining its position.

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

This article originally appeared on Topeka Capital-Journal: Shawnee County says it can't cut tax deal with Heartland Park owner