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La Casa de La Raza Working with County, Lender in Effort to Fight Off Foreclosure

La Casa de La Raza is working to reinstate its nonprofit status, a lengthy process that has the Lower Eastside community center once again fighting off foreclosure and higher property tax rates.

The process is moving so slowly, in fact, that the organization’s mortgage loan lender has scheduled to auction off its headquarters at 601 E. Montecito St. on Monday.

La Casa Executive Director Raquel Lopez told Noozhawk she is confident the sale will not happen, and said the nonprofit will make a payment to Fidelity Bank by Friday.

The threat of auctioning off the building is reminiscent of La Casa’s past financial struggles to pay property taxes to Santa Barbara County officials, who in 2012 were considering the same action.

La Casa owed a little more than $97,000 in property taxes to the county in July 2012 — the nonprofit was in default on the property since the 2004-05 tax year — when it took out the Fidelity trust deed to pay off that bill, along with other inherited debt, said Lopez, who has served as director for the past nine years.

The community center, which was founded in 1971 to focus on preserving Latino cultural heritage and providing an umbrella for services, owns and occupies a nearly two-acre site that often lets for-profit organizations use space. Santa Barbara County has assessed the property at $796,809.

La Casa currently owes $9,647.28 in taxes for the 2013-14 fiscal year, and could theoretically be in default up to five years before the county tried to reclaim any funds, according to Harry Hagen, the county’s treasurer and tax collector.

“It’s really between La Casa and their lender,” Hagen said.

Lopez disagrees not with the property value but with the tax rates associated with business conducted within the building.

She said La Casa has been working since 2012 to obtain a certificate from the state Board of Equalization that allows property taxes to reflect its nonprofit status, easing the sting of bills.

The nonprofit received the certification this year and is working with the county to reassess the property, hoping to get a refund from the past nine years it paid taxes in full.

The next hurdle, Lopez said, is that the county thinks the refund only applies to the past four years, not all nine.

While La Casa attorneys work with county staff to iron out paperwork, Fidelity sent the foreclosure notice.

“We had to pay because we were missing a form that the Board of Equalization hands out to organizations,” Lopez said of paying the county back in 2012. “We told our mortgage company that we’re not paying the $9,600. Our mortgage company disagreed with it. There is no problem. It’s not as if we’re being negligent. They just want their money.

“We have until Friday to make a payment. Working with any government agency is complicated.”

Lopez said she’s upset with false media reports that have created unnecessary alarm.

Leo Martinez, one of La Casa’s founders and a Santa Barbara city councilman in the 1970s, said the center has been mismanaged for years both financially and in efforts to carry out its mission.

“The intention of La Casa de la Raza was supposed to be a meeting place for everybody in the community, and it was,” he said, noting a lack of volunteers and a disconnect to those the center is supposed to serve.

Lopez refutes those claims and said she’s still negotiating with Fidelity on the final amount La Casa will pay Friday.

“It’s changing every day,” she said.

Noozhawk staff writer Gina Potthoff can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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