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Grand Jury Calls Out County, Lompoc for Failure of Oversight with Housing Corporation

Report concludes there were steps that should have been taken to protect the public’s investment through loans

A Santa Barbara County Grand Jury report calls out the County of Santa Barbara and Lompoc’s Redevelopment Agency for failing to properly monitor millions of dollars in loans given to the Lompoc Housing and Community Development Corporation.

“If attention had been paid and LHCDC had been forced to better manage its affairs in a timely fashion, low-income renters in Lompoc would have been much better served, and taxpayers would have been saved millions,” the report concludes.

The LHCDC has a long history of noncompliance and warning letters, but never saw any consequences, according to the report. It was warned repeatedly for overcharging on its rent for affordable units, had complaints about property upkeep, failed to provide financial records and missed loan payments. The county is working on a forensic audit of the organization’s finances, partly to track the $2.89 million it invested in LHCDC properties.

Lompoc officials are still unsure how the city’s money to LHCDC was spent, but the RDA spent $1.8 million with the organization through 2009.

By the beginning of 2012, 30 of the 42 properties had been repossessed by lenders, placed in receivership or foreclosed upon, and two homeless shelters in Lompoc were closed almost without notice. Marks House and Bridgehouse later opened under new management, but many people and families were displaced.

The Grand Jury report concluded that there were steps the county and city should have taken to protect the public’s investment in loans to LHCDC.

The loan contracts gave the county authority to inspect the organization’s financial records and require annual financial statements — which it didn’t — and Lompoc’s Redevelopment Agency had the power to enforce the affordable housing rules, such as rent maximums, attached to its contracts — which it didn’t, according to the report.

LHCDC had “repeated delays and missed deadlines as early as 2003.”

In its recommendations, the Grand Jury asks the county to require annual audits of all organizations that receive more than $100,000 from the county and have the Board of Supervisors approve that funding for the Auditor-Controller’s Office.

It recommends that the Lompoc City Council do the same, and order its employees to conduct annual audits on organizations that receive $50,000 or more of city funding.

Both the county and City of Lompoc should withhold all funding from organizations that fail to supply complete records for the audits or fail to meet contract requirements, the Grand Jury recommended.

The city and county have 90 days to respond to the report. which was published last week.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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