Evergreen angling for legislative relief
A dispute over about $400,000 a year in property taxes, currently being fought in the Oregon Tax Court, has moved into a new arena — the Oregon Legislature.
State Rep. Jim Weidner, R-Yamhill, whose district encompasses most of Yamhill County, has introduced a bill designed to exempt McMinnville’s Evergreen Aviation & Space Museum complex from property taxes. Elements of the nonprofit complex already have exemptions ranging up to 95 percent, but County Assessor Scott Maytubby has resisted Evergreen’s bids to also exempt its wine bar, cafeteria, gift shop and — most importantly by far — multi-million-dollar water park.
Evergreen considers the water park educational, but Maytubby argues it is commercial. The museum considers the other commercial components ancillary to and supportive of its overall educational mission, but Maytubby has also classified them as commercial, and commercial ventures don’t qualify for exemption.
The museum has been filing annual appeals and getting rejections for several years. This year, it is appealing to the Oregon Tax Court, and holding up payments in the meantime.
Evergreen is being represented by former Republican legislator and gubernatorial candidate Kevin Mannix, through his longstanding legal practice. The state and county are being represented by the state Department of Justice.
The government agencies maintain the water park should be about 5 percent exempt and the rest of the complex about 95 percent exempt. The museum maintains the entire complex should be 100 percent, because it is educational in nature.
Weidner’s House Bill 4106 opens a new front that is political rather than judicial in nature, but seeks the same result — 100 percent exemption.
Evergreen is proceeding on two tracks in court. It in the early stages of an appeal on its Waves & Wings Waterpark and the late stages of an appeal on the rest of its Highway 18 museum complex.
The state Tax Court’s Magistrate Division rejected the museum’s initial challenge with regard to the main part of the complex. The museum is now appealing to the court’s Regular Division, which has the final say.
Legislative action would pre-empt the courts, making the judicial appeals moot. And it would pre-empt them for all nonprofit museums, not just Evegreen’s Highway 18 complex in McMinnville.
“Essentially, this bill would allow museums to continue to operate as they always have, free from commercial taxation,” Weidner said. “Right now, nonprofits are not subject to property taxes. They never have been.”
He suggested Maytubby was applying stricter standards than other assessors, obviating the Legislature to step in to ensure a level playing field.
“The zoo, for instance, holds concerts,” Weidner said. “Should that high-value land be taxed as well? Something like that would prohibit the nonprofit from new exhibits.”
Though the legislative move was initiated by Mannix on behalf of Evergreen, Weidner said, “This is much, much bigger than Evergreen.”
He said it would set a dangerous precedent, threatening nonprofit educational enterprises across the state, if Yamhill County were to prevail it court. He said his legislation, which he is dubbing the “The Museum Protection Act,” is designed to prevent any such disruption to the status quo.
“If we allow Evergreen to lose its tax-exempt status, 250 museums in the state would be subject to taxation,” Weidner said. “These places of learning need to be protected because they preserve our history and provide educational opportunities.”
He cited the Tillamook Air Museum, Sea Lion Caves, Oregon Museum of Science and Industry and Oregon Zoo as examples, saying, “They make enough to get by. The coffee stands, food carts and gift shops support the non-profit entity.”
But critics say the bill has been crafted from top to bottom with Evergreen in mind, and they say its case raises unique issues.
Gil Riddell, policy director with the Association of Oregon Counties, objects to numerous elements in the bill. He takes particular issue with a provision aimed at overriding any judicial rulings on appeals commenced on or after July 1, 2011, potentially rendering moot nine such appeals currently in play at two levels in the Evergreen case.
“Legislation that is property-specific very rarely makes good public policy,” Riddell said in testimony before the House Revenue Committee.
He went on to say, “Those appeals of Yamhill County’s denials, with the backing of the Department of Revenue, amount to $400,000 of taxes for public services.
“The property tax system is already cut, capped and limited to the benefit of the property owner. Under Oregon’s rate-based property tax system, a new exemption, deferral or special assessment does not shift the tax burden. Rather, it causes a straight loss of revenue for education and public services.”
Riddell said AOC was also troubled by sections of vague language in the bill. He said that had the potential to trigger new litigation.
He said the bill exempts not only the land museums actually occupy, but also “open land not in agricultural use,” without limiting the acreage or providing a definition. He said it goes on to exempt property used “in conjunction with the public displays of the museum,” which he suggested is aimed at Evergreen’s water park, but remains too ambiguous to avoid legal challenge, and theaters hosting “presentations about history or science, which he suggested is aimed at Evgreen’s IMAX theater, but also raises troubling ambiguities.
The deadline for work sessions is Thursday, because the Legislature is limited to just 35 days. Weidner said he was giving it a 50/50 chance.
Meanwhile, the relationship between the for-profit Evergreen International Aviation and its nonprofit Evergreen Aviation & Space Museum progeny, which operate on opposites sides of Highway18, remain under investigation by the state Department of Justice.
The underlying issue is whether the operations are truly separate, as required by law. Any co-mingling of funds would constitute a violation.
DOJ opened the probe in November 2012. It has refused to discuss its progress or findings to date.
Weidner said he wasn’t getting involved in that issue.
“The courts will have to handle that,” he said. “I’m just after protecting the museums as places of learning.”