Evergreen Aviation & Space Museum v. Yamhill Cty. Assessor

216 April 15, 2016 No. 24

IN THE OREGON TAX COURT

REGULAR DIVISION

EVERGREEN AVIATION & SPACE MUSEUM,

and the Captain Michael King Smith Education

Institute, dba Wings & Waves Water Park,

Plaintiffs,

v.

YAMHILL COUNTY ASSESSOR,

Defendant,

and

DEPARTMENT OF REVENUE,

Defendant-Intervenor.

(TC 5181, 5182)

Plaintiffs (taxpayers) appealed to the Magistrate Division of the Tax Court

as to exemption status of its real property under ORS 307.130. The matter was

then specially designated to the Regular Division. Taxpayers argued that 100

percent of the property at issue (a waterpark) qualified for exemption under the

statute as a scientific and educational institution. Defendant-Intervenor (the

department) argued that the primary use of the facility was for recreation and

fun, and that any scientific education was incidental to the primary use of the

facility. Based upon the stipulated facts and testimony, the court found that

from the point of view of the average visitor, the primary attraction of the water-

park was the recreational aspect of the facility rather than the scientific aspect,

and that while displays and some other features of the facility presented facts

about water and aviation, they were incidental and secondary to the primary

attraction of the waterpark, which was the enjoyment of water for recreation.

The court therefore concluded that the property at issue was not exempt from

taxation.

Trial was held August 18-19, 2015, in the courtroom of

the Oregon Tax Court, Salem.

Kevin L. Mannix, Attorney at Law, Salem, argued the

cause for Plaintiffs (taxpayers).

Daniel Paul, Assistant Attorney General, Department of

Justice, Salem, argued the cause for Defendant-Intervenor

Department of Revenue (the department).

Decision for Defendants rendered April 15, 2016.

HENRY C. BREITHAUPT, Judge.

Cite as 22 OTR 216 (2016) 217

I. INTRODUCTION

This matter is before the court after trial and post-

trial briefing by the parties. The parties have entered into

certain stipulations with respect to the exempt status of a

portion of the facility in question, the building footprint and

parking lot area and personal property.

What remains is a decision about the remainder

of a facility known as the Evergreen Wings and Waves

Waterpark (the Waterpark). The year in question is the tax

year 2012-13.

II. FACTS

The Waterpark is adjacent to facilities that have

been found to be exempt from property tax, at least in part,

by reason of being educational and scientific. The educa-

tional and scientific features of the adjacent facilities are

focused on the history and scientific aspects of flight.

The Waterpark is composed of a large building,

surrounding landscaping, a parking lot, and fixtures and

equipment for supply of water, utilities, maintenance and

operation of the Waterpark. A distinguishing feature of the

Waterpark is that the fuselage of a Boeing 747 airplane has

been placed on the roof of the facility.

Without undertaking a detailed description of the

Waterpark, it is sufficient to note that the space, improve-

ments to the space, fixtures and equipment is devoted, in

the view of Plaintiff (taxpayer) to an educational and scien-

tific operation that deserves tax exemption. Taxpayer points

to displays, information boards and other items that could

serve to educate about water and flight.

Defendant-Intervenor Department of Revenue (the

department) has a different perspective. It sees a typical rec-

reational waterpark facility primarily designed and oper-

ated for the recreation and fun of persons who use the facil-

ity. Admitting that there are some features of the facility

that could and do at times possibly serve to educate about

water and flight, the department views the primary use of

the facility as being for recreation and fun. Any scientific

education is, in the view of the department, incidental to

218 Evergreen Aviation & Space Museum v. Yamhill Cty. Assessor

the primary use of the facility.1 Other facts will be set out in

connection with the analysis of the court.

III. ISSUE

The issue for decision is whether the Waterpark

property is primarily devoted to an exempt activity.

IV. ANALYSIS

The statute in question is ORS 307.130, which, in

relevant part, provides:

“(2) Upon compliance with ORS 307.162, the following

property owned or being purchased by art museums, vol-

unteer fire departments, or incorporated literary, benevo-

lent, charitable and scientific institutions shall be exempt

from taxation:

“(a) Except as provided in ORS 748.414, only such real

or personal property, or proportion thereof, as is actually

and exclusively occupied or used in the literary, benev-

olent, charitable or scientific work carried on by such

institutions.” 2

The legal principles for decision in this case are not

unclear. Exemption is an exception to the general rule that

all property is taxable. Dove Lewis Mem. Emer. Vet. Clinic v.

Dept. of Rev., 301 Or 423, 426-27, 723 P2d 320 (1986).

In cases where the intent of the legislature is

unclear, the court will conclude that exemption is not war-

ranted. North Harbour Corp. v. Dept. of Rev., 16 OTR 91, 95

(2002).

In cases where the question is not legislative intent

but whether a property fits the statute, even in close cases,

exemption will be denied. Washington Co. Assessor II v.

Jehovah’s Witnesses, 18 OTR 409, 422 (2006). In this case,

taxpayer bears the burden of proof in establishing the ele-

ments of exemption.

1

Defendant Yamhill County Assessor (the county) and the department have

conceded that the area known as the H2O Center is fully exempt. That area looks

and, as viewed by the court, operates as would a typical science museum or edu-

cational facility.

2

Unless otherwise noted, the court’s references to the Oregon Revised

Statutes (ORS) are to the 2011 edition.

Cite as 22 OTR 216 (2016) 219

Even though the statute states that property for

which an exemption is claimed must be “exclusively occu-

pied and used,” for an exempt purpose, the use requirement

is applied testing the “primary” use. Willamette Univ. v. Tax

Com., 245 Or 342, 422 P2d 260 (1966). Any property inciden-

tal and reasonably necessary in accomplishing the exempt

function is also exempt. Mult. School of Bible v. Mult. Co.,

218 Or 19, 36-37, 343 P2d 893 (1959). Even if property is

not strictly necessary to accomplish the exempt function or,

in operation, competes with nonexempt property, exemp-

tion is available if such property substantially contributes

to the accomplishment of the exempt function. Young Men’s

Christian Association v. Dept. of Rev., 268 Or 633, 634, 522

P2d 464 (1974).

Compared with a relatively limited space occu-

pied by the H2O Center, conceded by the department to be

exempt, the features of the Waterpark that are devoted to

fun with water are extensive. Water slides and pools pre-

dominate. Persons visiting the Waterpark can experience

pools of water as well as several large water slides, orig-

inating in the airplane fuselage placed on the roof of the

structure.

Visitors wait up to 30 or 45 minutes to experience a

30-second ride on the water slides, and have available wave

and other pools. In making use of these facilities, visitors

are amortizing a $30 cost of admission, reduced by $5 for

persons shorter than 42 inches in height.

An alternative fee applies for persons who make no

use of the water facilities, and the primary reason for choos-

ing the “dry” pass appears to be to visit the H2O Center.

This fact supports the court’s conclusion that, from the

point of view of the visitor, the primary attraction of the

Waterpark is the fun aspect of the facility rather than the

scientific aspect of the facility. While wall displays and some

other features of the facility present facts about water and

aviation, these are, in the opinion of the court, incidental

and secondary to the primary attraction of the Waterpark—

the enjoyment of water for recreation.

Indeed, the record demonstrates that while some

school and scouting groups make use of the Waterpark,

220 Evergreen Aviation & Space Museum v. Yamhill Cty. Assessor

such use—even if it qualifies as use for science education—

accounts for less than five percent of the total use of the

Waterpark. The rate charged for such groups was the same

as a group rate for general admission to all aspects of the

facility. Of the total time of such visits, a very small part

was devoted to education about water or flight.

The record indicates that relatively few staff are

allocated to educational functions compared to the staff

allocated to the recreational features of the Waterpark.

The staff allocation facts demonstrate the funda-

mental issue in this case. The department distinguishes

between recreation and education. Taxpayer asserts,

through academic and other testimony, that scientific edu-

cation can, and perhaps often does, occur in environments

other than school rooms and traditional methods.

Importantly, while taxpayer made these assertions

through testimony of staff and the third-party academic

person, no testimony or other evidence was offered from

persons using the facility as to their purposes in coming to

the Waterpark or the learning that occurred for them at the

Waterpark. If the experience for which patrons pay a sub-

stantial admission charge was primarily related to scien-

tific education, the court would expect to have heard about

that from the patrons themselves.

In addition, the court does not see how the use of

the airplane fuselage in connection with water slides accom-

plishes any purpose other than what can be accomplished at

the aviation museums adjacent to the Waterpark. On this

record the court simply cannot conclude that the primary

purpose of the placement of the airplane was educational

rather than promotional for the recreation facility that is

the Waterpark.

V. CONCLUSION

Taxpayer has failed to bear its burden of proof to

show that the primary use of the Waterpark is scientific

or educational, within the meaning of those terms as used

by the legislature. The court finds that, with the exception

of areas covered by the stipulations of the parties, the pri-

mary use of the Waterpark is for recreational activities and

Cite as 22 OTR 216 (2016) 221

those areas are not exempt from property taxation. Now,

therefore,

IT IS THE DECISION OF THIS COURT that the

Waterpark property is not exempt from taxation.