[TheThinkTank] Leasehold tax exemption with retail space?

Hey Folks,

      This is Chauncey from The ReCyclery in Port Townsend, WA a

501(c3) non-profit cycling organization. We are operating on city property for free in exchange for the programs and outreach we do to get more individuals on bicycles. As a part of our work, we operate a retail space. The state has decided that we are not exempt from leasehold tax because we operate a retail space and they want to charge us 13% of the leased property's value per year. Let's just say, it's a lot of money in taxes if you consider the "potential" value of the space. I'm wondering if anyone has experience with this issue and whether or not you were able to come to a favorable decision that was reasonable for your organization's budget. Much appreciation!