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There’s another unexpected, stymieing cost in the effort to renovate a section of the Naval Training Center into an arts, culture and nonprofit district.

The NTC Foundation, which manages the district, recently learned that it must pay a government-set “prevailing wage” for construction workers at all eight buildings in the next phase of rehabilitation, not just the three it originally thought. That’s adding nearly $1 million to the $22 million project.

The foundation has an idea for where some of that money could come from.

A few weeks ago we learned the NTC Foundation, which manages the district, successfully appealed its unexpected property tax bills and now gets a partial refund.

The appeal meant the city, which pitched in more than $1 million early this year to cover the bills and penalties, would get a chunk of that back. The county assessor agreed that because the buildings are supposed to be rented to arts, culture and nonprofit groups, the foundation wouldn’t be able to charge the rents the buildings might otherwise attract. The refund of taxes, interest and penalties is estimated to be about $688,300, said Jeff Olson, division chief for assessment services.

The foundation is heading to City Council next week to ask that the refund be turned back around to cover the unexpected costs of the prevailing wage.

That help would be “in furtherance of important municipal and other public purposes” associated with having the district to begin with, city redevelopment staff said in a report to City Council. The city owns the buildings.

For this second phase of development, the eight buildings, the city already agreed to pay $4 million in redevelopment funds. Originally, the NTC Foundation thought that only the three buildings that city money would help rehab would be subject to the “prevailing wage” requirement.

The foundation will reduce some interior improvements and other costs, and go after more tax credits, to make up the rest of the shortfall, said executive director Alan Ziter.

This is pushing the project back about a month from when Ziter thought it would break ground. In theory, he said, construction could start Oct. 1.

“What more could go wrong?” Ziter said.

The City Council will hear this request in its meeting next Tuesday at 2 p.m.

The unexpected wage requirement was yet another hurdle for the foundation. Though it’s a nonprofit, the foundation unexpectedly triggered property taxes by creating a for-profit company to help finance the rehabilitation of historic buildings. (I explained this structure in an earlier post.)

I’m Kelly Bennett, the arts editor for VOSD. You can reach me directly at kelly.bennett@voiceofsandiego.org or 619.325.0531.

And follow Behind the Scene on Facebook.

Kelly Bennett

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

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