Oregon Public Broadcasting

It's a destination water park for families from across the Northwest: Great Wolf Lodge in Southwest Washington. Because it's affiliated with the Chehalis Indian tribe, the facility doesn't pay state taxes. But that tax-exempt status is now under scrutiny.

Great Wolf Lodge sits just off Interstate 5, south of Olympia. It's a massive water park and hotel with room rates that start at $200 a night -- part of a nationwide chain.

It's the kind of business that could generate millions in tax dollars for cash-strapped Washington state.

But three years ago, when the Lodge was under construction, the Washington Department of Revenue determined the project was a Tribal business and therefore tax-exempt.

Thurston County, where the water park is located, sees it differently and recently prevailed in federal court. The judge found that the tribe has no day-to-day management role of the water park and few tribal members even work at Great Wolf.

Now Thurston County's prosecutor wants Washington to rescind the water park's tax-exempt status and collect back taxes.

A spokesman for the state Department of Revenue says the agency is open to reviewing the issue, but will wait until a court appeal has concluded.

Calls to the Chehalis Tribe and Great Wolf were not returned.