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One of the biggest hopes for the former Naval Training Center’s arts and culture district: that a state law could be changed to free them from paying property taxes on their renovated buildings.

That hope has reached a stalemate.

The nonprofit ran into the tax trouble when it created for-profit companies to qualify for funding to fix up the historic buildings, triggering unexpected taxes. The foundation convinced the city in February to cover $1.25 million in back taxes and penalties.

Going forward, the foundation hoped to get the state law changed to become exempt from property taxes.

Sen. Christine Kehoe said she needed the nonprofit NTC Foundation to get letters of support from the county, which would lose money in the deal, before she could take the issue any further in Sacramento.

But after meetings with the county last week, NTC Foundation Executive Director Alan Ziter said it looks like those letters aren’t likely to come from the county. It’s waiting for the state to take action before doing anything.

“It’s sort of a circular discussion,” he said Friday.

The county assessor has said he just follows the law the state sets, not opposing or supporting the effort to change that law. And because the companies are officially for-profit, it would go against the state constitution to lift the tax.

Walter De Lorrell, senior deputy county counsel, said the county’s position on whether the foundation should pay property taxes hasn’t changed: “The assessment for property taxes is proper.”

The foundation is also waiting on a separate plea to the county, an adjustment of the rate at which the buildings are taxed.

Meanwhile, the foundation will launch a campaign for donors to cover the extra rent costs for the nonprofit tenants who find the additional costs burdensome, Ziter said. The additional rent has threatened the affordability for the very arts organizations the district was intended to serve.

(Previously: My original story, TV and radio interviews, and my last update on the tax issue.)

Please contact Kelly Bennett directly at kelly.bennett@voiceofsandiego.org or 619.325.0531 and follow her on Twitter: @kellyrbennett.

Kelly Bennett

Kelly Bennett is a former staff writer for Voice of San Diego.

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