The failure of the Lompoc Housing and Community Development Corporation (LHCDC) was reviewed by the Santa Barbara County Grand Jury — the result is the report: “A Failure of Oversight.” In that report, there are a series of recommendations that must be responded to by law. Both the city and county were responsible for overseeing loans they made to the LHCDC. Late Tuesday, The City Council rejected the current draft letter written by staff.
The four recommendations ask that annual audits be reported to City Council, require organizations receiving grants or loans over $50,000 to fund audits, and that the city withhold funding if the organization fails to supply records for audits.
City staff wrote, that while the city understands the Grand Jury’s “desire to effect changes to achieve transparency,” if implemented the recommendations “hinder” providing services to the community.
The response found technical errors of fact, but overall it seems to miss the overall points being made. Several members of the council were openly critical of the document’s format. Councilman Bob Lingl contradicted the response’s apparent avoidance of the issues saying, “There was a lack of oversight.”
City staff has till the September 4 council meeting to revise the response. Staff is directed to, in fact, report that the city will develop an auditing program.
Issued in June, the Grand Jury’s report will have repercussions for years to come. It details a series of warnings that the LHCDC was heading toward insolvency, and a series of failures to react.
LHCDC, incorporated in 1990 under a different name, was the primary agency providing affordable housing in the city with Lompoc Redevelopment Agency (RDA) funds. The housing corporation also ran two homeless shelters, one in the city and another outside city limits. In the form of grants and loans, the city now has a minimum of $1.8 million owed to it, and very likely much more as county ordered “forensic audits” move forward.
“In January 2012,” so reads the report, “Residents of Lompoc and indeed all of Santa Barbara County were shocked to learn that two homeless shelters in the city, Marks House and Bridgehouse, had closed with only five days’ notice on a holiday weekend.”
In scalding terms the report says officials, in the city and the county, “should have anticipated the closing” of the two homeless shelters. At that point it “was clear” to officials that the LHCDC “was failing.”
The crux of the report involves reporting requirements for the loans that were haphazardly enforced. “There were problems,” according to the report since 2003. “The non-profit was regularly out of compliance with rent surveys.” Complants from community activists and low-income residents “about property upkeep” were not followed up. The LHCDC did not “provide financial records for many years” and “failed” make loan payments.
The Grand Jury’s investigation was promted by several “citizen complaints” into “what went wrong.” Frustrating the investigation from the start was that the “LHCDC did not cooperate.” Under these conditions the Jury considered the “oversight” as a failure, and that the “County and the City of Lompoc should have taken” action years ago.