WILLIAMSTOWN, Ky. -- A $10 transaction might have cost the Ark Encounter millions in tax incentives, the Lexington Herald-Leader reported Friday.
The enormous Noah's Ark theme park, which opened last July, was created by Christian fundamentalist organization Answers in Genesis and established as a for-profit LLC. On June 28, however, Answers in Gensis transferred the $48 million parcel of land on which the Ark Encounter was built to a nonprofit subsidiary called Crosswater Canyon.
Crosswater Canyon paid just $10 for it.
Why does any of this matter? As a nonprofit entity, Crosswater Canyon has been able to claim religious tax exemptions for which the Encounter did not quality. Williamstown City Council members openly worried that the sale would be the first step in the Ark Encounter's leadership attempting to establish itself as a tax-exempt entity.
"I believe this is the first step," Williamstown City Councilman Kim Crupper told the Lexington Herald-Leader. "The impact would be far larger than just Williamstown."
Losing that revenue would hurt Williamstown, Grant County and local schools, according to Mayor Rick Skinner, who added he was "disappointed" by how much the city's relationship with park management had deteriorated.
In an apparent move to prevent the Ark Encounter from avoiding the taxes it originally agreed to pay, the Kentucky Tourism Arts and Heritage Cabinet acted Friday and suspended a tax incentive worth up to $18 million until the theme park either re-applies or its sale to Crosswater Canyon is reversed.
A letter from the cabinet's attorney, Leigh Powers, accused the ark of failing to get permission from state authorities and carrying out the transaction without their knowledge. Additionally, Powers argued that the incentive had been granted to the Ark Encounter -- not to Crosswater Canyon.
"A non-profit entity may qualify for a Tourism Development tax incentive," she wrote. "However, they must go through the process like every other entity."
Powers added the Ark Encounter could no longer claim tax rebates from ticket or other sales after June 28.
In a statement released Friday afternoon, Answers in Genesis co-founder Mark Looy said the organization would comply with the state's "concerns." He didn't specify how.
"We are appreciative of the support we have received from the governor and tourism officials, and look forward to maintaining a positive relationship with the state long into the future," Looy wrote.