June 7, 2003
Save Mart Center
Tax Exemption Under Fire
By Edward Davidian, Staff Writer
FRESNO STATE -- Finding
a sponsor to underwrite development of a new 18,000 seat Event
Center on the CSU-Fresno campus is still in a tail spin as the
SaveMart Supermarket and Pepsi deal is taking a lot of heat.
Selling the naming rights can mean big
bucks. At least some officials thought so at Fresno State., According
to terms revealed by university officials, Fresno State was supposed
to profit by $40-million over 20 years from selling the naming
rights to Save Mart, a regional supermarket chain.
Unfortunately, it turns out that profits
made on Fresno State's sale of naming rights may very well
make the university's tax-exempt bonds vulnerable to adverse tax
consequences. Why? Well it now appears that the sale of the bonds
amounts to a business purpose and may not be sufficiently within
Fresno State's 501(c)(3) tax exemption.This according to tax attorney,
Gregory Johnson, of the Denver law office of Patton Boggs.
Financing the Arena project by trying
to sell naming rights before obtaining a legal opinion
on that tax avoidance strategy was not a very bright move by Fresno
State's administrative leaders.
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