Former Lex. courthouse cost $32 million to renovate. Why’s it now worth $2.8M?
AI-generated summary reviewed by our newsroom.
- Renovation of historic courthouse cost $32M, current tax value is $2.7M.
- Property value based on rental income; appraisal pegged value at $3.2M.
- Courthouse generates $572K in rent annually; city provides no operating funds.
When the former Fayette County courthouse reopened in 2018 as a new multi-use building with offices, restaurant and event space, it was heralded as an achievement in historic preservation.
The final price tag for the overhaul and facelift was north of $32 million. Of that, $22 million came from the city. The rest of the funds came largely from federal and state historic tax credits.
Yet, Fayette County Property Value Administration records show the property value assessment at $2.78 million, which has been its assessment since 2022, PVA records show.
The building is run by Historic Courthouse LLLP, a limited liability limited partnership that was created so the city could receive historic tax credits. Governments are not eligible for those tax credits, which are then sold to companies or groups that need to offset tax liabilities.
According to Historic Courthouse LLLP’s own financial records, the building is worth $30 million. The Herald-Leader obtained those financial records through a Kentucky Open Records Act request.
The courthouse group has maintained it is private and not subject to the state’s Open Records Act. The newspaper sued the courthouse group in 2019 and the overseeing agency voluntarily gave the newspaper its financial records. The group also voluntarily gave the newspaper its financial records in August.
Using commercial rents to generate property value
Wes Holbrook is director of revenue for the city who also helps oversee Historic Courthouse LLLP’s finances. He said an appraisal by Valbridge, a Louisville-based property adviser company, determined the building at 215 W. Main St. should be valued at $3.2 million.
The report was completed when Old National Bank, which held the tax credits, left the partnership after those credits had been exhausted.
That number, according to its report, is based on the income the building can generate through rents, a common way to assess commercial properties for property tax purposes. Valbridge also did an assessment of comparable sales data for similar types of property.
The former courthouse — which houses VisitLex, Breeders’ Cup, Zim’s Cafe and the Thirsty Fox, and an event space run by Bayou Bluegrass Catering —is unique. There are no similar historic properties that generate commercial or market rents, said David O’Neill, Fayette County PVA.
“Most commercial buildings are assessed based on the rents it can generate,” O’Neill said.
When asked if city officials involved with the former courthouse lobbied O’Neill for the lower assessment, O’Neill said he remembered the city sent him information on courthouse rents at the time it was put on the tax rolls.
That’s not uncommon when a renovated commercial building goes on the tax rolls, he said. Commercial businesses do that too, he said.
Still, O’Neill also asked Historic Courthouse LLLP for additional information about the rents and the Valbridge report after the Herald-Leader asked questions about the assessment. O’Neill said, based on the rents, he believes the $2.8 million valuation is still accurate.
Government agencies don’t pay property taxes. The city could make the case the former courthouse is exempt from property taxes, he said.
“Since the local government wholly owns the (LLLP) that owns the property, a strong case could be made that the property should be tax exempt except for any leasehold that may result from tenants paying below market rents, which does not appear to be the case,” O’Neill said.
Still, O’Neill said he would send the data to the state department of revenue to make sure that the property value is assessed correctly.
Former Fayette County courthouse vs. other downtown buildings
A review of historic buildings surrounding the courthouse shows PVA assessments similar to the former courthouse. Many of those buildings are larger or have more square footage than the former courthouse. An accurate or comparable comparison is tricky.
The 21C Museum Hotel, at 167 W. Main St., has an assessment of $13.9 million, according to PVA records. But it’s also more than 80,172 square feet.
The courthouse is 48,161 square feet. Of that, 29,650 is rentable space. The remaining square footage is common areas.
The hotel can generate more money because a larger percentage of its footprint, the rooms it rents nightly, can generate more income, O’Neill said.
David Kloiber is an owner of the former Security Trust Building at 271 W. Short St. That building has a restaurant — Frank and Dino’s — and office space, similar to the former courthouse. But it’s also bigger — 76,363 square feet, according to the PVA. Its PVA value is $5 million, according to the PVA website.
Kloiber said he challenged his assessment and used the rents generated from the building to determine the new valuation for the building. Kloiber, a former Lexington council member who is now running in the Democratic primary for the 6th Congressional District, said using rents to calculate property rates is not uncommon.
“We went through this process recently and showed our rent rolls, and that’s what justifies the valuation,” Kloiber said.
How much rent does the former courthouse generate?
The Valbridge report looked at commercial rents for the downtown area. Courthouse rents are in line with other commercial properties with the exception of Bayou Bluegrass Catering, which runs the top floor event space, the report said.
It pays roughly $6.75 per square foot. That price “was negotiated at a lower rent to provide a financially feasible rent for a caterer/event space operator so the space could be utilized by the public through rentals,” the Valbridge report said.
In other words, Historic Courthouse LLLP wanted to keep the rent low so public groups could afford to rent the space, Holbrook said.
The other tenants — Zim’s Cafe and the Thirsty Fox, Breeders’ Cup and VisitLex — have been in the courthouse since it opened in 2018. Bayou Bluegrass Catering is the only new tenant, signing its lease in 2022.
Financial records show Historic Courthouse LLLP’s main revenue source is rents. It’s total income in 2023 was about $572,899. It’s total expenses, including property taxes of about $39,000, were $520,000. Its net income was $52,810 in 2023.
If there is money left over at the end of the year, that money is put back into the operating budget or its reserves, Holbrook said. The courthouse receives no money from the city for operating expenses.
That’s different than other buildings the city has helped renovate. The Lyric Theatre on East Third Street, which was overhauled and rebuilt using $6 million in city money, reopened in 2010. It still receives about $140,000 in operating expenses each year from the city, budget documents show.
Historic Courthouse LLLP board consists of community, city officials and former city officials. It does not report annually to the Lexington-Fayette Urban County Council on its finances.
This story was originally published September 15, 2025 at 11:38 AM.
