For the second time in the past two years, officers of La Casa de la Raza find themselves confronting the prospect of imminent foreclosure if they don’t come up with tens of thousands of dollars by this coming Monday. La Casa is both a building — in this case occupying nearly one square block on East Montecito Street — as well as an organization dedicated to providing affordable community-center space to organizations serving the city’s Latino population. Founded in 1971, La Casa has been treading on financial thin ice for some time; two years ago, the County of Santa Barbara initiated proceedings to auction the property after La Casa fell $90,000 behind in property tax payments over a 10-year period.
A dispute over property taxes precipitated La Casa’s most recent predicament, as well, though this time the hole — $45,000 — is not quite so deep. According to executive Raquel López, nearly $10,000 of that stems from a delinquent property-tax payment that La Casa is contesting. The bank holding La Casa’s mortgage notified López she needed to pay the property taxes now — regardless of the dispute over their calculation — or face default action. Until that payment is made, she explained, the bank has also declined to accept La Casa’s mortgage payments for two months. Property taxes and back rent, she said, total about $25,000. The rest, she said, were fees, penalties, and interest charged by the bank. López said La Casa’s attorney Robin Unander is seeking to negotiate less onerous terms with the bank. If need be, she added, La Casa could and would make the payment before a default action takes place.
La Casa’s well-known financial struggles have been exacerbated by past bookkeeping practices that were lax or nonexistent. This resulted in the organization losing its tax-exempt status for a while, during which time the county sought to exact higher property taxes from the organization’s substantial real estate holding. Even with the tax-exempt status now regained, however, La Casa’s path is far from clear. Another issue has been whether La Casa — a nonprofit organization — should be taxed for business endeavors taking place on its premises run by for-profit businesses, like the car repair shop. López maintained that issue has likewise been resolved and that the organization is now due a significant credit for having paid excess taxes for 10 years.
The county tax collector maintains just as emphatically that La Casa is entitled to retroactive relief for only four years. In the meantime, however, the drama of this fiscal brinkmanship has rekindled old complaints — and even older animosities — between La Casa’s current management and many of its initial founders, who are worried the organization they helped start might go down the tubes.