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Update: Ark property sold back to for-profit entity after state threatens loss of tax incentives

Update: It was reported late Monday that the Ark property was sold back to the for-profit entity Ark Encounter LLC by Crosswater Canyon just three days after it was originally sold. Answers in Genesis, which owns the Ark Encounter, Crosswater Canyon and the Creation Museum in Petersburg, has not yet offered a detailed explanation for the transactions. This story provides details of the original sale.

By Mark Hansel
NKyTribune managing editor

The Kentucky Tourism Arts and Heritage Cabinet has sent a letter to Ark Encounter LLC, informing the owners of the attraction that it is in violation of its Tourism Development Agreement with the Commonwealth.

The letter, addressed to Answers in Genesis counsel James Parsons, indicates the violation occurred when the Ark Encounter transferred the Ark Project land to the nonprofit, Crosswater Canyon Inc., on June 28 for $10.

The Ark Encounter, located in Williamstown, was developed by the Apologetics ministry Answers in Genesis at an estimated cost of $92 million.

Answers in Genesis Co-Founder and Chief Communications Officer Mark Looy issued the following statement regarding the letter from the Tourism Cabinet:

“We have been in contact with the counsel for the Tourism Department regarding the recently received letter. We don’t believe the transfer of the property created a default, but we will comply with concerns that the Tourism Department may have related to the transfer. 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.”

The notice of violation suspends the accrual of incentives and puts the Ark Encounter’s subsidies of up to $18 million, in the form of tax rebates, in jeopardy.

The letter from the Tourism Cabinet states, in part:

“…as the Tourism Development Agreement is between the Commonwealth and Ark Encounter LLC, not Crosswater Canyon LLC, the current owner, please be advised that no further incentives may accrue from sales tax imposed on sales generated by or arising at the tourism development project, as of the date of transfer of property, June 28, 2017.”

The Ark Encounter has been awash in controversy since the project was announced in December, 2010. At that time then-Governor Steve Beshear pledged support for the project and the state tax incentives.

The incentives were approved by the Beshear administration in 2014, but were later withdrawn, when questions arose about hiring practices at the attraction.

The Ark Encounter sued the state for incentive eligibility and won.

A letter from the Kentucky Tourism Arts and Heritage Cabinet informing Ark Encounter counsel James Parsons that his client is in violation of its tax incentive agreement (click to enlarge).

In January, 2016, a federal judge issued a preliminary injunction against the state of Kentucky for blocking efforts by Answers in Genesis (“AiG”) to participate in the Kentucky Tourism Development Program.

The federal court found that “the Commonwealth’s exclusion of AiG from participating in the program for the reasons stated – i.e., on the basis of AiG’s religious beliefs, purpose, mission, message, or conduct, is a violation of AiG’s rights under the First Amendment to the federal Constitution.”

In April, 2016, current Gov. Matt Bevin announced that the state would not appeal the ruling by U.S. District Judge Greg Van Tatenhove.

The attraction opened in July, 2016.

The centerpiece of the Ark Encounter is a full-sized replica of Noah’s Ark, filled with elaborate displays and re-creations of animal kinds similar to those developers say might have been brought onto the ark at the time of the Biblical flood.

Answers in Genesis officials announced earlier this month that the Ark Encounter attracted one million visitors in its first full year of operation, despite losing several months of the tourism season. They expect second-year attendance figures to be in the 1.4-million to 2.2-million range estimated by an independent research firm’s evaluation.

The state estimated annual attendance at 325,000.

In April, the City of Williamstown imposed a 50-cent admission ticket tax to the city’s tourist attractions, which includes the Ark Encounter. The tax is designed to improve the city’s emergency services, which officials say is necessary because of the increased traffic generated by the attraction.

Ark Encounter leaders say they should be exempt from the tax because of the religious nature of the attraction. There is speculation among some city officials that AiG transferred the property to Crosswater Canyon to avoid the fee.

The creation of a tax increment financing  (TIF) district on the site limits the amount of money the city can receive from the Ark encounter. The creation of the TIF permits 75 percent of the state and local property taxes generated by the Ark Encounter to be returned to the attraction.

The transfer of the land to Crosswater Canyon is not believed to impact the TIF agreement.

According to Guidestar, which provides financial information on nonprofits, Crosswater Canyon filed its initial IRS 990 tax-exempt form in 2013, for the 2012 year.

One of the displays inside the Ark Encounter in Williamstown (file photo).

Its mission statement, as identified on the Guidestar profile is “to operate for the benefit of and to support the mission and purposes of Answers in Genesis, Inc.”

Crosswater Canyon’s business address is listed as 2800 Bullitsburg Church Road in Petersburg, the same as that of the Answers in Genesis U.S. headquarters and the Creation Museum, which is owned and operated by AiG.

Crosswater Canyon’s principal officer is identified as Michael D. Zovath, a co-founder of AiG and its chief action officer.

The letter from the Tourism Cabinet states it believes AiG officials are aware that the Ark Encounter may not be eligible for state tax incentives if it is owned by a non-profit legal entity.

It references this statement on the AiG website:

“The for-profit LLC structure also allows the Ark Encounter to be eligible for various economic development incentives that would not have been available with a non-profit structure.”

The Tourism Cabinet indicates the Company has 30 days from receipt of the letter to remedy the situation, which seemingly would involve the transfer of land back to Ark Encounter LLC, if it wishes to maintain eligibility for the incentives.

Contact Mark Hansel at mark.hansel@nkytrib.com

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  1. Freethought says:

    Christians doing what they do best: Lying, cheating, dishonesty and corruption.

  2. Eduardo says:

    The word “huckster” comes to mind. They have experience playing on the gullible.

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