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January 19, 2020

8/13/2014 10:34:00 AM
County and Feds wrestle with tribal land tax issue
Genesis of the tribal land tax ruling

In what is called the “Great Wolf Decision,” the United States Court of Appeals for the Ninth Circuit ruled last year that all buildings on tribal land held in trust by the federal government are immune from property taxes.
This started in 2007, when Thurston County began assessing property taxes on the then new Great Wolf Lodge, which was built on land held in trust for the Confederated Tribes of the Chehalis Reservation.
Great Wolf was owned by a limited liability company, CTGW, LLC. The Chehalis Tribe holds 51 percent ownership of the company. Although tribal buildings on tribal land are not taxed, when the tribe brought suit, the county argued that CTGW was a corporation, and, therefore, not entitled to tax immunity.
A district court ruled that Thurston County could keep collecting taxes. But on appeal, the Ninth Circuit Court of Appeals ruled in the Chehalis Tribe’s favor, striking down the lower court’s ruling.
Attorney Jane Futterman of the Thurston County Prosecutor’s Office, which argued on behalf of that county, the appeal period ran out in July and the ruling is permanent.
In Shelter Bay, a house on tribal land with a building valued $150,000 generates $1,974 this year in property taxes.
The La Conner School District gets the biggest share of that tax money, with $849. The rest goes to the state government, La Conner Library, the county, Fire District 13, Medic 1, the Port of Anacortes and a conservation futures fund. 

Sandy Stokes

The federal court ruling that made at least 1,000 La Conner area homes exempt from property taxes is in the hands of lawyers.
County officials have said the affected properties will be removed from the 2015 tax rolls.
Meanwhile, the county is advising residents whose homes are on leased tribal land to pay their taxes this year, “until we get this sorted out,” said RC Cavazos, chief deputy with the Skagit County Assessor’s office.
The second half of the 2014 property tax is due Oct. 31.
The move stems from a United States Court of Appeals for the Ninth Circuit ruling that all buildings on tribal land are immune from taxes, regardless of ownership.
In the La Conner area, more than 1,000 homes have been built on land held in trust by the federal government for the Swinomish Indian Tribal Community. The court ruling affects about 800 of the approximately 900 homes in Shelter Bay as well as most of the homes in the Pull & Be Damned Road neighborhood and in other areas on the Swinomish Indian Reservation.
Cavazos said that the 2014 taxes are actually paying for services rendered in 2013; therefore, the county’s position is there will be no refunds issued for past year’s taxes. “Since they’ve already gotten the services, they should pay the taxes in October,”he said.
Presently the county’s lawyers are working with U.S. Bureau of Indian Affairs lawyers to figure out the exact count of properties that must be removed from the tax rolls, Cavazos said. Once it has the exact figures, the county will be able to tell each of the taxing entities how they’ll be affected.
While people whose homes are on Indian land make lease payments to the Bureau of Indian Affairs, they have never paid state and county property tax on the actual ground their homes sit on. However, they have been taxed on the value of the structures.
In Skagit County, this means $111 million worth of property is coming off the tax rolls — almost all of it in the La Conner area — for a revenue hit of $1.5 million per year.
But it’s too early for homeowners on leased tribal land to figure on a cash windfall — Swinomish officials have said it is likely the Tribal Senate would enact a tax code in order to maintain public services.
The court ruling, which affects the entire United States, gives tribes taxing authority for the first time.
For non tribal properties in the La Conner area, in the unlikely event that the tribe and other officials don’t work out a way to support the schools and other entities, the court ruling could prove expensive.
Last year voters in La Conner School District passed a $20 million bond to pay for the school renovation and reconstruction underway right now. In the precincts on tribal land, Shelter Bay, Swinomish and Snee Oosh, voters overwhelmingly approved the bond by more than 2-1. 
The ruling means that just under 20 percent of the school district’s tax base will disappear. With those properties now immune from taxes, if a solution is not found, the whole tax bill will fall to properties off the reservation as well as land within the reservation that is owned “fee simple” and not held in trust.
Cavazos said that most taxing entities have limits on how much they can assess to an individual owner without an election. But the school bond was passed by voters, so a limit does not apply. When properties come off the tax rolls, the amount owing would be spread among the remaining taxpayers.
La Conner School District Superintendent Tim Bruce said he believes the county, tribe and all affected entities will solve the problem. “I truly believe what everybody wants in the end is something that will be fair and equitable for all,” he said.

Related Stories:
• Tax uncertainty is taxing for everyone
• Big hit for taxpayers and agencies they fund
• Hundreds of local homes now tax-exempt

Reader Comments

Posted: Wednesday, May 6, 2015
Article comment by: Tom Silva

If I Lived in La Connor proper I would demand that all residents of the city Proper contribute to the building of toll booths on every road leading into the city Proper from tribal land and charging the appropriate toll to enter or exit the city from tribal land.

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