June 7, 2003
Fresno State's
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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