Ark Encounter, LLC v. Parkinson

• Decision Date: 25 January 2016
• Docket Number: Civ. No: 15-13-GFVT
• Citation: 152 F.Supp.3d 880
• Parties: Ark Encounter, LLC, Crosswater Canyon, Inc., and Answers in Genesis, Inc., Plaintiffs, v. Don Parkinson, in his official capacity as Secretary of the Kentucky Tourism, Arts and Heritage Cabinet, Matt Bevin, in his official capacity as Governor of the Commonwealth of Kentucky, and Bob Stewart in his individual capacity, Defendants.
• Court: U.S. District Court — Eastern District of Kentucky

152 F.Supp.3d 880

Ark Encounter, LLC, Crosswater Canyon, Inc., and Answers in Genesis, Inc., Plaintiffs,

v.Don Parkinson, in his official capacity as Secretary of the Kentucky Tourism, Arts and Heritage Cabinet, Matt Bevin, in his official capacity as Governor of the Commonwealth of Kentucky, and Bob Stewart in his individual capacity,¹ Defendants.

Civ. No: 15-13-GFVT

United States District Court, E.D. Kentucky, Central Division. Frankfort.

Signed January 25, 2016

J. Michael Johnson, Freedom Guard, Inc., Bossier City, LA, James Murray Dickerson, Jr., Taft, Stettinius & Hollister, LLP, Cincinnati, OH, Nathan W. Kellum, Memphis, TN, Robert B. Craig, Taft, Stettinius & Hollister, LLP, Covington, KY, for Plaintiffs.

OPINION & ORDER

Gregory F. Van Tatenhove

, United States District Judge

Rising on what was once farmland near the community of Williamstown, Kentucky, is what purports to be an exact replica of the ark that figures prominently in the Old Testament story of a great flood that covered the earth. The modern-day Noah that is constructing the replica hopes that its almost $100 million investment will produce a successful tourist attraction. At first, the Kentucky Tourism Cabinet, with the same hope, approved tax incentives for the project. But then, representatives of the Commonwealth, concerned that the project was going to “advance religion,” reversed course; the reason: providing the tax incentives would be contrary to the First Amendment protection from the state establishment of religion.

So, in essence, the question presented here is this: if a tourist attraction, even one that as described here “advances religion,” meets the neutral criteria for tax incentives offered by the Commonwealth of Kentucky, can the Commonwealth still deny the incentive for Establishment Clause reasons? This opinion is long but the answer to that question is short—no. The reasons this is true based on these facts follow.²

I

A

Under the Kentucky Tourism Development Act (KTDA), Ky. Rev. Stat. § 148.850, et seq .

, Kentucky provides an incentive program for qualifying tourism attractions “in order to advance the public purposes of relieving unemployment by preserving and creating jobs that would not exist if not for the incentives offered by the authority to approved companies, and by preserving and creating sources of tax revenues for the support of public services provided by the Commonwealth.” Ky. Rev. Stat. § 148.853(1)(b). A wide variety of projects have qualified for these incentives, including a broad spectrum of organizations with different purposes and presenting diverse messages. Such projects have included attractions such as the Newport Aquarium, 21C Museum Hotel, Kentucky Speedway, Kentucky Kingdom, and multiple bourbon visitor centers such as Buffalo Trace, Maker's Mark, and Old Forester distilleries. [R. 1, ¶ 65.] Since the KTDA's enactment the Commonwealth has approved over $1 billion in new tourism investments, but so far AiG is the only applicant with a religious affiliation. [Id .].

AiG distributes publications, and also provides museums, facilities, and exhibitions related to the Bible concerning “origins and history.” [R. 1, ¶¶ 13, 16.] In 2007 AiG opened its Creation Museum in Petersburg, Kentucky, which has attracted approximately 2.3 million visitors. [R. 15-1 at 7.] In light of that success, AiG's leadership approved a new project in October 2011—“a theme park centered around a full-scale replica of Noah's Ark” [id .], designed “as a means of expanding the ministry's mission of proclaiming biblical authority and the Gospel of Jesus Christ.” [R. 1, ¶ 29; R. 18-1 at 13.] The initial concept included a variety of exhibits such as an extensive petting zoo and aviary with live shows, a pre-Flood town with retail and entertainment, a children's play area, a replica of the Tower of Babel, geology and Biblical history exhibits with special effects, a first-century village, and several restaurants and food carts as well as retail outlets and kiosks. [R. 1, ¶¶ 45-46; R. 15-5 at 11-12.]

After researching surrounding states for the best location for this theme park, AiG chose to build in Kentucky, not only because of its proximity to the Creation Museum, but also because of the unique incentives for tourist attractions Kentucky offered. [R. 15-1 at 8; R. 18-1 at 16.] Based on a 2008 marketing feasibility study, AiG knew the proposed Ark project would exceed the KTDA eligibility requirements and accordingly met with officials from the Kentucky Department of Travel and Tourism to discuss the project. [R. 15-1 at 8.]

Afterward, AiG's counsel provided a legal memorandum addressing concerns about separation of church and state. [Id . at 9.] State and local officials expressed enthusiasm for the project, and in October 2010 assured AiG that any legal concerns were fully addressed and that the project would qualify for the incentives under the KTD Act. [Id . at 10.] Also in October 2010, then-Governor Beshear met with AiG leaders and pledged to publicly support AiG's application. [Id . at 10.]

After a 2009 study confirmed the Ark project would attract millions of tourists and create thousands of new jobs, officials from Indiana and Ohio expressed interest in finding property for the project in their states, but partly because of the KTDA incentives and the enthusiasm of Kentucky leaders for the project, AiG determined Kentucky was the best location, and in 2010 signed a contract for an option to purchase over 500 acres of land in Williamstown, Kentucky. [Id . at 9.] Also in 2010, AiG formed the separate non-profit subsidiary Crosswater Canyon and another subsidiary Ark Encounter, LLC (AE) to oversee and manage the Ark attraction. [R. 1, ¶¶ 50-51; R. 15-1 at 9.] In November 2010, AE submitted its first application for the economic incentives under the KTDA. [R. 15-1 at 10; R. 15-2.] According to Plaintiffs, AE agreed to another option to purchase additional acreage in Grant County soon afterward, based on Kentucky officials' enthusiastic endorsement. [R. 15-1 at 10.] On December 1, 2010, AiG held a joint press conference with then-Governor Beshear in Frankfort to publicly announce the Ark Project as a new tourist attraction in Kentucky. [Id . at 11.] At the conference AiG leaders explained the religious aspects of the project, including their intention for it “to lend credence to the biblical account of the Flood and Noah's Ark,” and also to include “a Gospel message.” [Id . at 11.] During the conference, Governor Beshear announced his enthusiasm for the project, commenting that it did not raise any constitutional issues and that he believed there would be no problems in securing its approval. [Id . at 11.]

On December 20, 2010, the Kentucky Tourism Development Finance Authority (KTDFA) gave preliminary approval of AE's first application and entered into the first Memorandum of Agreement (MOA) with AE, LLC, reflecting the Commonwealth's intent to provide tax incentives subject to satisfying the KTDA's requirements. [R. 15-4.] As part of the agreement, AE retained and paid for an independent consultant, Hunden Strategic Partners (Hunden) to confirm that the Ark project met the necessary economic impact requirements. [Id . at 11-12.] On May 6, 2011, Hunden submitted a report to state officials concluding that the project met all the objective criteria required by the KTDA. [R. 15-5.] On May 19, 2011, the KTDFA granted final approval for the Ark Project to receive the KTDA's tax incentives and entered into a Tourism Development Agreement (TDA) with AE, LLC, which stated that the Ark project was eligible to receive incentives of up to 25% of approved costs incurred through May 19, 2014, and affirmed that without that assistance “the Company would not engage in the Project.” [R. 15-6; R. 15-1 at 12.] The TDA also contained a provision that required AE to waive its right to exercise religious preferences in hiring for the Ark project – a provision not included in agreements with other participants in the program. [Id .] AE accepted the language at the time because it was told that it was obligatory, and because AiG intended to rely on private investment so as to include other “safeguards to preserve the religious mission and identity of their project.” [R. 15-1 at 11-12; R. 18-1 at 16.]

After obtaining final approval for the project, AiG exercised its option to purchase land in Grant County and prepared the offerings for private investors. [R. 15-1 at 12.] According to AiG, however, the economic downturn resulted in the investor subscription process taking longer than anticipated, and AiG had to reduce its budget for the project and change its focus to funding an initial phase and then complete the project under a phased development plan. [Id .; R. 18-1 at 16.] Partly as a result, AiG's board of directors changed from the private investment model to utilizing taxable bonds as the primary financial structure for the Ark project. [R. 15-1 at 13.] Because of these changes, the project could not be completed by May 2014 as originally anticipated, and state officials advised that a new application was required. [Id . at 13.] Accordingly, AE submitted a second application on March 28, 2014, that was “virtually identical” to the first application except for specifying that the project would be completed in several phases. [Id .] The purpose and religious nature of the Ark Project remained the same.

On April 24, AE received a letter from William Dexter, general counsel for the Kentucky Department of Travel and Tourism, stating that “[a]dditional information has come to our attention that further describes the Ark which requires us to inquire further to determine the suitability of the project for state incentives.” [R. 15-8 at 1.] The only such information cited by the letter was a recent press conference in which the president of AiG, Ken Ham, and the director of museum design described the evangelical mission of AiG and noted that the third...