Monterey History and Art Association catches a tax break thanks to county appeals board.

The Stanton Center on Custom House Plaza in Monterey was the scene of a celebration on Wednesday evening, June 16, with a Monterey Peninsula Chamber of Commerce ribbon cutting ceremony and two shows featuring a husband-and-wife magician team direct from Las Vegas for the opening of the Monterey Magic & Comedy Club.

The new club is “in association with the Monterey History & Art Association,” as a sign in the lobby reads in small letters along the bottom.

The MHAA board last month entered into an agreement with the club’s owners, PREpresents, to put on professional magic shows inside the Stanton Center Theater, as well as manage the nonprofit’s Salvador Dalí Exhibition running since 2016. That exhibit replaced the failing maritime museum that had occupied the building since MHAA built the center for $6.5 million in 1992 on city land. The agreement with PREpresents was another attempt by MHAA to make the Stanton Center a successful venture, despite an original city lease specifying the center be used for maritime and Monterey history.

As around 100 business leaders, along with the MHAA board members, noshed on trays of appetizers and sipped wine and champagne among the Dalí artwork displays—a first gathering of its type for many after months in a pandemic, including no masks for most attendees—there was something else for MHAA to celebrate Wednesday.

A week earlier the Monterey County Assessment Appeals Board issued a decision that will significantly reduce the nonprofit’s property tax bill from a property assessment used in January 2017. The board issued findings on June 9 stating that instead of paying taxes on an assessed value of $2.4 million as suggested by the Monterey County Assessor Steve Vagnini during an appeals hearing before the board earlier this year, MHAA would pay based on a value of $1.1 million. Which means instead of paying more than $24,000 annually in property taxes, MHAA will pay half, or approximately $12,000.

In essence, the appeals board split the difference between Vagnini’s assessment of $2.4 million and the contention of MHAA board member—and original owner of the Dalí artwork—Dmitry Piterman, who had demanded that the value be zero. (The official ask by MHAA of the appeals board was for a value of $960,000, based on calculations by MHAA’s appraiser.)

In response to Piterman's demand for a valuation of zero, the decision states: “This argument [of zero value] was not supported by precise calculations or the evidence or fully explained.”

The valuation is a significant win for MHAA, although it still means more than the nearly $400 annually that MHAA paid for years to the Monterey County Tax Collector, based on having a welfare exemption granted to many nonprofits. In 2016, when the MHAA board entered into an agreement with Piterman and the museum changed to a permanent Dalí exhibit that charges admission, the Assessor’s Office determined MHAA was no longer entitled to the exemption.

In making its decision, the appeals board disagreed with Vagnini's calculation of how long the lease will be in practice, and determined that he incorrectly asserted that the term of the city’s $1-a-year ground lease was 70 years—50 years with an option to renew for another 20 years—upon which he based part of his calculations to get to $2.4 million.

“The board finds on the evidence that it is not reasonable to assume exercise of the option,” the decision reads. Part of that evidence is MHAA’s documented financial difficulties and its move to find a “sublessee” in Dalí 17, Piterman’s company. (Piterman has since begun the process of donating the art to MHAA.)

The board also took the side of the MHAA appraiser in how much to charge based on cost per square foot. The appraiser used $0.67-per-square-foot while Vagnini used $1.25.

There was a vindication for Vagnini in the decision. During hearings that spanned from 2019 to 2021, Piterman and MHAA attorney Gary Varga tried to argue that Vagnini had a conflict of interest because he had earlier served for a short time on the MHAA board.

After detailing the testimony by Piterman and Varga, the board’s decision states that it “finds that the evidence presented does not show a relationship between Mr. Vagnini's activities in connection with MHAA in 2015 and the Assessor’s analysis of the value…”

After the light-hearted magic show on Wednesday night, featuring mind reading tricks and sleights of hand, MHAA Board President Carey Pearce was asked for a comment about the appeals board’s decision. He declined to comment and only said, “Ask Steve Vagnini about it.”

“We respect the board’s decision,” Vagnini says. “It ultimately came down to the term of possession. The board felt the city would raise the rent and MHAA would not choose to exercise the option for the lease [for an additional 20 years]. That’s the board’s decision and we honor it.”

Vagnini says in addition he’s honoring a promise he made during the hearings, that whatever the board decides for the only year MHAA was appealing, 2017, his office will use the appeal board’s assessment of $1.1 million for every year thereafter even though it’s not required. “It’s the right thing to do,” he says.

In the meantime, issues surrounding MHAA are far from over. Monterey officials said last month they are examining the lease which specifies how the property is to be used for educating people about the region’s history. Also last month, MHAA filed a lawsuit against the county in Monterey County Superior Court challenging the removal of the welfare exemption. It was filed one year after the county denied an appeal in 2020, which is past the six month deadline to file a lawsuit in such cases.

For now MHAA had something else to celebrate: PREpresents partner Paul Reder says the twice-nightly magic shows in the 100-seat theater have been sold out since they launched over Memorial Day weekend. Advance tickets sell for $32, $37 the day of the show. Seats in the VIP row go for $10 more.

Part of the money from those sales will go to pay MHAA’s property tax expenses.