Balboa Park Groups Run Big Budgets, But Pay Virtually No Rent

This story is a part of The People’s Reporter, a feature where the public can submit questions, readers vote on which questions they want answered and VOSD investigates.

The question from John Stump of City Heights: How much do the Balboa Park museums and other organizations renting space in Balboa Park make, and what rents do they pay?

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Most of the nonprofits in the city-owned buildings in Balboa Park pay very little or nothing at all in rent.

The city’s logic behind the subsidies is that Balboa Park’s buildings were constructed for the expositions in 1915 and 1935, and someone needed to do something with them once the events ended. Filling the buildings with nonprofits that provide cultural, educational and recreational uses made sense. Not only would the nonprofits serve residents in ways the city wasn’t, but they’d attract tourists, helping make Balboa Park one of the city’s biggest attractions and economic drivers. And the subsidized rents came with strings – the nonprofits had to take on the buildings’ maintenance costs and pay utilities.

The city, though, is still on the hook for the major structural and exterior maintenance, plus upkeep of park infrastructure like water pipes. Over the years, the city has amassed an estimated backlog of $300 million in infrastructure and maintenance needs in Balboa Park, but there’s no dedicated funding stream to fix those problems.

The maintenance problems beg the question: Why don’t the Balboa Park institutions that make the most money help the park by paying rent?

We’ve compiled a list of what the major nonprofit Balboa Park leaseholders make and what, if anything, they pay in rent. The organization’s gross annual revenue – money made before deducting expenses – is based on their most recently available tax forms. The city provided the rent revenue amounts.

There are other tenants in Balboa Park that don’t lease from the city, but use buildings, land or rooms in the park by paying permits that cost around $400 to $600 every three years. The Redwood Bridge Club and the lawn bowling club are examples of groups that pay for permits to inhabit buildings or land in the park. There are also other organizations in Balboa Park that sublease space from the nonprofits that have leases with the city. The restaurant Panama 66, for example, pays the San Diego Museum of Art about $200,000 for its space in Balboa Park. The Balboa Park Conservancy pays the city about $92,800 in rent because it shares profit from tenants that sublet space in the House of Hospitality building, which the conservancy oversees. The conservancy and the city are currently in lease negotiations.

And in Balboa Park’s Spanish Village Art Center, about 30 artists and artist groups have leases with the city and pay 33 cents a square foot for studio space – that’s well below market rate for an area as desirable as Balboa Park. The leases with the city never expire. Most leaseholders share their studio space with other member artists, and there are other opportunities for about 200 local artists who are members of the organization to show their work at Spanish Village.  There’s also a jury process that gives artists who live in San Diego County the potential to access the subsidized space. Once an artist goes through the jury process and becomes a member of Spanish Village, they can opt to be put on a waiting list for studio space.

The San Diego Zoo and San Diego Comic-Con International have the largest annual budgets in Balboa Park. Comic-Con just locked in a rent-free lease last year, and the zoo pays the city just $92,000 annually. The zoo is also the beneficiary of a property tax charged to city residents that’s pulled in more than $10 million annually in recent years. Because the zoo pays such a low rent and makes so much money, the thinking goes, it should contribute more to repair the park’s backlog of maintenance needs.

City leaders’ rationale for the subsidies to Comic-Con and the zoo is that the organizations are major tourism drivers that generate large economic impact in the region.

Peter Comiskey, who heads up the Balboa Park Cultural Partnership, a nonprofit that advocates for its 30 Balboa Park members, said it’s important to remember that many of the nonprofits that inhabit the park don’t pay rent, but have bankrolled expensive upgrades and renovations of the city-owned buildings and parkland over the years.

“Our members are regularly going beyond what their leases require,” Comiskey said. “They’re making major capital investments and other major investments on infrastructure. They’re really maintaining these excellent assets for the city while at the same time providing a very compelling cultural experience for residents and tourists as well.”

The Mingei International Museum, for example, closed this month for a year-long renovation expected to cost between $38 million and $42 million. The Museum of Photographic Arts made major renovations in 2014 and 2015 that it said cost $1.6 million, and that’s on top of a recent $950,000 investment for a new HVAC system and $450,000 the nonprofit is paying to install solar panels. The Old Globe said its utility bills alone have been in excess of $320,000 every year. For refuse removal alone in 2017, the nonprofit said it paid over $16,000. The Old Globe said it has also funded the replacement of two elevators in its buildings, plus is gearing up for major repairs and upgrades to one of their theaters for an estimated $200,000.

“Over the last three years, we have paid over $1.3M each year for operating improvements, maintenance and upgrades to our Balboa Park facilities,” Old Globe spokeswoman Susan Chicoine wrote in an email. “This amount does not include the personnel expenses (salaries, benefits, taxes, etc.) for our maintenance staff who are charged with doing or supervising this work.”

The Old Globe and most of the Balboa Park nonprofits also get public support through two funding programs run by the city’s Commission for Arts and Culture. The programs dole out money the city collects in hotel taxes, and park nonprofits often win those grants. For instance, The Old Globe this year won $491,017 from the Commission for Arts and Culture.