Will the Lights Go Out at La Casa de la Raza? 

Bankrupt Community Center Up for Sale, or Not

La Casa de la Raza boardmembers Michael Gonzalez and Mark Martinez explain why they hope to put the 47-year-old community center up for sale.
Paul Wellman

The long and anguished financial death throes of La Casa de la Raza ​— ​a center started 47 years ago as an idealistic dream to provide a cultural and political hub for the city’s Latino community ​— ​could soon come to a merciful end. La Casa Board President Mark Martinez and Vice President Michael Gonzalez announced Monday their plans to sell the community center on East Montecito Street to pay off the $1.2 million debt that forced La Casa into bankruptcy proceedings two years ago. They expressed a glimmer of hope that some philanthropic-minded benefactor might step in, purchase the property, and create a space where La Casa’s mission could continue. Failing that, they expressed an intention to use whatever funds are left after creditors are paid off to underwrite programs consistent with La Casa’s goals. “It took blood, sweat, and tears to get this started,” Martinez said. “We still have hope, dreams, and prayers that it can stay alive.”

From its start, La Casa has provided an incubator space where progressive political organizations could congregate; school-age kids could learn to box, dance, or repair their own bikes; and South Coast residents could see bands ​— ​like Los Lobos and X ​— ​play in a setting that was intimate, cavernous, and astonishingly affordable. Typically, about 3,000 people visit La Casa a month, but during Santa Barbara’s recent disasters, the numbers hit 10,000, as La Casa offered much needed daycare space for families when local schools shut down. Although La Casa has always been all about “La Raza” ​— ​reflecting its origins in the Brown Pride movement of the late 1960s ​— ​the thrust of the organization has also been ethnically ecumenical and emphatically multicultural. Or as Gonzales put it, “It’s been a place where kids of all colors could get hot and sweaty together, dancing as one.”

For any sale of the property to go through, however, a bankruptcy court judge must first approve the appointment of commercial realtor Mark Mattingly to handle the deal. That, it turns out, may not be nearly as simple as it sounds, given the operatic intensity of the bad blood boiling between one of La Casa’s original founders, Tomas Castelo, and La Casa’s current board and management. Castelo was not just La Casa’s first president; he currently owns La Casa’s mortgage, having bought it two years ago when the troubled community center was facing foreclosure. That marked the second time in four years that Castelo saved La Casa from the threat of imminent foreclosure. Today, La Casa owes Castelo nearly $850,000.

La Casa director Raquel Lopez
Paul Wellman

Castelo wants to be paid, but he’s equally adamant that the individuals he claims created La Casa’s financial woes not reap the fruits of any sale. Given today’s commercial real estate market, La Casa ​— ​a sprawling 26,000-square-foot, stucco-encased former lumber warehouse ​— ​might well fetch anywhere from $4.5 million to $5 million. Conceivably, there could be millions left after creditors are paid. “If there’s $3.5 million on the table afterward,” Castelo said, “I don’t trust the existing board to manage it.”

La Casa’s financial troubles date back many years. Numerous philanthropic organizations and big donors have sought to intervene. One, a successful attorney who spent his childhood at La Casa, donated $350,000. But nothing worked. Most eventually walked away. Castelo has financial records that suggest he’s been bailing out La Casa in amounts large and small dating back to 2004. To the extent Castelo has played the role of La Casa’s financial savior, the organization’s leadership now clearly regards him as the financial predator who triggered the bankruptcy proceedings in the first place by insisting he be reimbursed with interest and attorney’s fees. To the extent these disputes have played out in the courts, they have fallen in Castelo’s favor.

At 75, Castelo remains both very engaged and exceptionally formidable. He also expresses keen devotion to the mission of La Casa. When it appeared that longtime Santa Barbara landlord Ed St. George was poised to strike a deal that would give him 50 percent ownership of La Casa and management rights of the property for $1.1 million, Castelo successfully, in the words of St. George, “put the kibosh on the deal.” St. George added he only wanted to help out an organization that helped him out as a kid. Castelo said the deal was too sweet by far and that St. George would wind up owning the building. Castelo’s critics insist that’s exactly what he wants.

Castelo chased St. George away by giving St. George’s attorney, Dan Reicker, a serious case of cold feet. Castelo argued that La Casa’s board was not legally constituted according to the organization’s bylaws. No membership meetings ever took place from which boardmembers were nominated and elected, Castelo charged. Because of that, Castelo has insisted, the existing boardmembers lack the legal authority to authorize the sale. Attorneys for La Casa insisted this was rubbish, that La Casa had no “members.” Whether Reicker was too cautious ​— ​as La Casa’s attorneys contend ​— ​still remains to be seen. St. George tried to have a meeting of the minds with Castelo two months ago. Instead, they locked horns. St. George withdrew.

Castelo vowed to oppose the appointment of Mattingly on the same grounds. Old members do exist, he insisted, by the hundreds. If the property is to be sold, they must first be tracked down and a board elected. La Casa’s attorneys vehemently disagree. The matter goes back before a bankruptcy judge May 8. La Casa is hosting a public meeting this coming Monday evening to discuss the impending sale. Should such a sale go through, Martinez and Gonzalez estimated programs could continue for many months. In the meantime, the organization will limp along, serving its community, with Mark Twain’s famous quote hovering unstated in the ether: “The reports of my death are greatly exaggerated.”


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