Nonprofit tax law needs a careful policy review
Property tax problems plaguing Evergreen Aviation and Space Museum, and challenging other nonprofits, need more public policy consideration. We hope that happens in 2015, since this year’s proposed legislative fix didn’t allow for sufficient caution in the lawmaking process.
For-profit Evergreen International Aviation seems a thing of the past, but still, having an Evergreen 747 sit atop the Wings & Waves Waterpark doesn’t make the building a history museum.
Neither is it a science museum, argues Yamhill County Assessor Scott Maytubby.
Evergreen’s waterpark is the main attraction of a property tax battle with nine cases in various stages of litigation. Museum officials believe the waterpark should be 100-percent exempt from property taxes, as Oregon state law exempts science institutions from such. The assessor’s office offered a 5 percent exemption, claiming that just a small portion of the building’s activities are educational, while the rest are recreational and commercial in nature.
The question is, to what extent should Oregon tax nonprofit museums when they make money for their educational endeavors? There must be a line somewhere, but drawing that line can be tricky.
Years of appeals have tied up more than $1 million in taxes and interest the county insists is owed by the museum. Last week, with the help of State Rep. Jim Weidner, museum attorney Kevin Mannix tried to move a bill that would exempt museums showcasing history and science from property tax. The bill died in committee.
Oregon case law provides property tax exemptions for facilities actually and exclusively occupied or used in the “scientific work carried on by such institutions.” With that definition, Oregon tax appeal courts thus far have sided with Maytubby and Yamhill County.
Museum officials believe any ancillary parts of the campus that generate revenue to support the educational mission should qualify for exemption. They would include the once-planned, now-stalled, lodge development that could generate revenue for the museum.
The lodge example adds some clarity to the debate, since such lodging services would be in direct competition with many private operations not receiving property tax breaks.
Another issue involves small museum components such as gift shops and, at Evergreen, the wine bar.
The assessor’s office has exempted between 90 and 95 percent of the air museum and IMAX theater facilities in the past, saying a small portion of the property was used to promote the for-profit Evergreen company. Examples included sale of EIA merchandise in the gift shop, and a few offices populated by EIA personnel with overlapping responsibility for museum operations.
Some of that seems nit-picky, but the assessor was trying to evaluate the situation within guidelines of current law.
The Evergreen museum complex is a one-of-a-kind institution, so it is not surprising it would end up in some gray area of state law. It’s clear that the issues need more evaluation, and it’s important that Evergreen receives fair treatment befitting its unique situation.
A property-specific bill during a short session wasn’t the right solution. But a full airing, with all parties at the table, is needed at the 2015 legislative session.