On June 29, Williamstown city attorney Jeffrey Shipp sent a letter to the biblical amusement park Ark Encounter, rejecting its request to be exempted from a new safety tax because its is a religious organization.
Shipp said it was clear that Ark Encounter is a for-profit entity, which is how it has been listed with the Kentucky secretary of state’s office since 2011.
But the day before, Ark Encounter LLC sold its main parcel of land — the one with the large-scale Noah’s Ark — for $10 to its nonprofit affiliate, Crosswater Canyon. Although the property is worth $48 million according to the Grant County property valuation administrator, the deed says its value is only $18.5 million.
That’s the latest salvo in an escalating dispute between local officials and Ark Encounter, but some people are worried that Ark Encounter’s maneuver is a precursor to declaring itself exempt from all taxes, including property taxes that help finance Grant County schools.
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“I believe this is the first step,” Williamstown city councilman Kim Crupper said. “The impact would be far larger than just Williamstown.”
The council is scheduled to meet Tuesday night with Ark officials to continue talking about their differences, but Crupper and Mayor Rick Skinner said they think a lawsuit is imminent.
The council approved in April a 50-cent tax on every admission ticket sold at Ark Encounter, saying the money is needed to upgrade the city’s emergency services. Tickets cost $40 for adults and $28 for children.
Ark spokeswoman Melany Ethridge declined to answer questions about the deed, a possible lawsuit, or the theme park’s future tax status.
Instead, she provided a statement that said Ark Encounter officials “remain hopeful” that they can reach an agreement with the city regarding the safety tax.
“The Ark Encounter seeks to pay its fair share when it comes to a safety-fee assessment recently instituted by the city of Williamstown,” Ethridge said. “The Ark Encounter has conveyed that sincere sentiment to Williamstown’s leadership and will continue to work with city officials to find a fair and equitable solution regarding contributions to the safety fund.”
Like other city officials, Crupper, a 26-year council member, said he was disappointed in Ark officials’ reaction because the tax will finance emergency equipment that serves Ark Encounter, which now has a petting zoo and a zip line course.
“This ordinance was carefully thought out. This does not affect their bottom line,” Crupper said. “We have to make sure your police and fire and emergency services can assure safety. If you’re going to pay $40 for a ticket and $10 to park, I don’t think you’re going to argue over 50 cents.”
According to public tax documents, Crosswater Canyon is a 501(c)3 nonprofit, defined by the Internal Revenue Service as being exempt from taxes because of its charitable, religious, educational or scientific purposes. Crosswater Canyon’s 990 tax filing from 2014 says its mission is “to operate for the benefit or, and to support the mission and purposes of, Answers in Genesis Inc., the administrative organization of both Ark Encounter and the Creation Museum in Petersburg.”
Crosswater Canyon listed total assets of almost $80 million.
The Kentucky Secretary of State lists Answers in Genesis Inc. as a nonprofit corporation, with its registered agent being Mike Zovath, who also is the principal officer of Crosswater Canyon.
To become tax-exempt, Ark Encounter would have to apply to the local PVA, who could refer the application to the state Department of Revenue.
Ark Encounter officials worked out a series of incentives with state and local officials, including a controversial sales tax rebate under the state’s Tourism Development Incentive Program that could return as much as $18 million over 10 years to Ark Encounter. The state also pledged about $2.4 million to improve the Interstate 75 interchange near the Ark.
In addition, the city and county created a tax increment financing district for Ark Encounter. The deal means Ark Encounter gets back 75 percent of the increase in property taxes within the TIF district, encompassed by the Ark’s 800 acres, for 30 years. The property started with an assessment of $1.3 million in 2011.
This fall, Mayor Rick Skinner said, the total city and county tax bill will be about $250,000. Williamstown and Grant County will keep roughly $63,000 of that bill, and the rest will be returned to Ark Encounter. The tax break doesn’t affect property taxes paid to the county school district. Those taxes are expected to increase from $99,000 this year to $157,000 next year.
Skinner said losing all of Ark Encounter’s property taxes would hurt the city, the county, and most of all,
“it would be a huge hit to the schools.”
Skinner said he is disappointed in how the town’s relationship with Ark officials has deteriorated, but he said he would wait to comment further until Tuesday’s meeting.