LOCAL NEWS: Comic-Con buys buildings in Barrio Logan

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San Diego Comic Convention, the cash-rich nonprofit that presents the pop culture extravaganza Comic-Con International every summer, bought three buildings in Barrio Logan for $6.3 million last year.

The acquisition was made in the name of a limited liability company the charity said it owns.

“It is part of a potential future business operation that is not appropriate for disclosure at this time,” Comic-Con said in a statement. “Also, there are tenants currently occupying the building and we prefer they not be bothered.”

The multimillion-dollar transaction was referenced in the tax-exempt organization’s most recent audit, which is required to be made public under California law.

Public records show a company called Barriohaus LLC bought two office buildings and a warehouse at and near the intersection of National Avenue and South 16th Street on April 1, 2015, for $6.3 million.

The charity said Barriohaus LLC is wholly owned by San Diego Comic Convention, although there is no mention of the limited liability company on its federal tax filings or in the independent audits.

“The acquisition of the property was approved by the board,” the Comic-Con statement said. “The board also approved formation of Barriohaus LLC to own the property.”

Federal regulators require tax-exempt organizations to disclose when they have interests in related businesses, either with other nonprofits such as a foundation or with for-profit companies.

The U.S. Internal Revenue Service definition of a related organization includes “organizations that stand in a parent/subsidiary relationship.” The agency specifically asks charities if they have such relationships.

“Was the organization related to any tax-exempt or taxable entity?” I.R.S. Form 990 asks. “If ‘Yes,’ complete Schedule R, Part II, III, or IV, and Part V, line 1.”

The most recent San Diego Comic Convention filing, which covers the year ending Aug. 31, 2015, answered no to that question and did not complete or attach Schedule R to its 36-page tax return.

Comic-Con officials said they responded to the question appropriately.

“For tax purposes a single member limited liability company owned by the filer is not considered a related entity,” the charity statement said.

The nonprofit declined to provide any documentation showing that it owns Barriohaus LLC. Instead, a statement noted that the tax return and audit both refer to the purchase. The references in those documents make no mention of Barriohaus LLC.

According to the California Secretary of State’s Office, Barriohaus was established on March 20, 2015, 12 days before it took title to the Barrio Logan buildings.

State records list the business address for Barriohaus as 225 Broadway, Suite 1800, the same downtown office occupied by Comic-Con. The registered agent is San Diego Comic Convention president John Rogers.

The only company member listed on public records available from the Secretary of State’s Office is Rory O’Neill, whom the charity identified as an employee of its law firm.

“Rory O’Neill was the organizer of Barriohaus LLC,” the Comic-Con statement said. “She is a corporate paralegal at Pillsbury Winthrop Shaw Pittman LLP, which is outside legal counsel to SDCC.”

The office and warehouse space purchased by Barriohaus LLC includes just over 32,000 square feet, much of it refurbished in recent years by the late architect Graham Downes.

Both office buildings, located in the 900 block of South 16th Street and the 1600 block of National Avenue, are about 15,000 square feet. The warehouse at 1622 National Avenue is 3,000 square feet.

The properties currently house multiple tenants, including the Sushi On a Roll catering company and the Invisible Children charity.

With fewer than 50 employees, it is not clear what San Diego Comic Convention would do with tens of thousands of square feet of office space. The charity does rely on more than 3,000 volunteers to present the annual comic-book and entertainment showcase.

The charity’s investment in Barrio Logan may be significant beyond the money it spent.

Comic-Con International attracts more than 130,000 visitors to San Diego every year, and pumps tens of millions of dollars into the local economy.

In recent years, charity officials have cited the economic impact and won concessions out of city officials in exchange for a commitment to remain at the harborside convention center.

With millions of dollars in real estate holdings on the edge of downtown San Diego, Comic-Con may be less likely to relocate to other interested convention cities, such as Anaheim or Los Angeles.

Under its current agreement, Comic-Con will remain in San Diego through 2018.

U-T Watchdog reported last month that the event generates millions of dollars in profits each year, and charity officials reported net assets of almost $20 million in 2014.

The latest tax filing, provided by the organization after the conclusion of last month’s festival, shows the nonprofit held just under $25 million in net assets at the end of last August. Almost $12 million of that was held in a non-interest-bearing account.

The latest tax filing also shows increases in pay for the nonprofit’s executives.

Rogers, the charity president, saw his pay increase from $64,000 in 2014 to $208,000 last year. Executive Director Dona Fae Desmond’s salary increased from $132,000 to more than $184,000 over the same period.

Total payments to board members rose from $156,000 in 2014 to just over $300,000 last year, according to the public audits.

San Diego Comic Convention officials announced in June that they were in discussions with the San Diego Hall of Champions about opening a Comic-Con museum inside the historic Federal Building in Balboa Park.

Staff writer Phillip Molnar contributed to this report.from:
• http://www.sandiegouniontribune.com/news/2016/aug/29/comic-con-buildings/