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Tuesday, March 26 , 2019, 2:22 pm | Partly Cloudy 63º

 
 
 
 

Ron Fink: City of Lompoc Loses Your Money, Again

At a recent council meeting the Lompoc city staff reported they were unable to sell property that they estimated would bring $400,000. This has caused the city to be a little short of budget income projections.

I searched for a history of these properties. How did the city of Lompoc become the owner of four buildable lots located in residential areas, one in a commercial area and several others that are open space? It isn’t a happy story.

Three of the buildable lots were purchased by nonprofit organizations to construct low-income housing; two were part of the Lompoc Redevelopment Area (RDA).

One nonprofit, the Lompoc Housing and Community Development Corporation (LHCDC) went out of business due to poor management and accounting practices. It’s unclear why the other couldn’t build their other project.

According to a 2011 report in a local newspaper, “Lompoc gave LHCDC a federal Community Development Block Grant loan in April 2003 for $140,000 for the acquisition of the property (at 518 North T), according to a staff report.”

Later, the federal government would demand that the loan be returned.

The property remains vacant, and the city listed it for $185,000 and it was sold for $90,000 in May 2017.

A loan of $407,000 was provided to Habitat for Humanity to purchase property at 1404-1408 W. College. It’s unclear if this loan was to “purchase and construct” or just for the property. The property is still vacant; the city listed it for $199,000 and it was sold for $95,000 in December 2017.

The city loaned LHCDC another $375,000 in CalHFA Help II funds to assist with the purchase of property at 110-114 South K. The property is still vacant; the city listed it for $155,000 and it hasn’t sold yet.

At the time LHCDC was viewed as “local,” therefore politicians of the time thought they should be extended favored status for loans. Another factor was that many prominent people in our community served on the LHCDC Board of Directors.

In November 2012, press reports indicated the council was “Presented with an independent consulting firm’s comprehensive report on all LHCDC loans and properties, council members were confronted with a glaring lack of documentation of oversight by the city’s Community Development Department on nearly all LHCDC housing properties, going back more than 10 years in some cases.”

In total, LHCDC received more than $29 million in loans to buy and rehabilitate 44 properties. “According to the report, the city financed $4,868,596 of the $29 million, of which only $1,736,074 was repaid by LHCDC before it stopped making loan payments to public and private lenders.”

That’s sounds like a $3.1 million loss to me.

The history of these properties clearly illustrates why government should not be in the real estate loan business. Private lending institutions extend loans based on many factors, one is the ability to pay the money back with interest.

But, in these cases, it wasn’t “their money,” meaning the politicians who loaned it or the city employee who was supposed to be monitoring the program. It was taxpayers' money entrusted to elected officials who tossed it out like confetti.

The current City Council had nothing to do with the original loans, but, they did approve the sales.

The City Council had a hearing concerning the disposition of remaining properties on April 17. Most of the other properties are on odd-shaped lots in the Cultural Resources District, including property where the original La Purisima Mission was located.

Each would require extensive monitoring if any ground is disturbed. These properties were acquired using federal grants.

As the discussion evolved, Councilman Victor Vega made a motion to remove all the properties in the Cultural Resources Area from consideration and adjust the budget accordingly. This was a wise move because it’s doubtful the properties could be sold. The motion passed unanimously.

The remaining two properties consist of one parcel that is leased to a nonprofit organization as a daycare center, and a vacant lot. Motions were made to remove these properties from consideration for sale and that passed unanimously.

So, the result was that of the city-financed $4,868,596 loans to LHCDC, $3.1 million was lost; of the $545,000 originally loaned for three properties in question, only $185,000 has been recovered so far. And, if you subtract the $140,000 that was returned, the amount recovered is only $45,000.  

As for the people involved, the city employee responsible for the program has since left and obtained a similar, but higher paying position in county government. The elected officials are no longer in office and the executive director of LHCDC was never held accountable for the money she lost.

Once again, the government shouldn’t be in the loan business. They’ll lose your money every time they try. And, the proposal that $400,000 could be available from all the property sales, well that appears to have been a bad dream.

— Ron Fink, a Lompoc resident since 1975, is retired from the aerospace industry and has been active with Lompoc municipal government commissions and committee since 1992, including 12 years on the Lompoc Planning Commission. He is also a voting member of the Santa Barbara County Taxpayers Association. Contact him at [email protected]. Click here to read previous columns. The opinions expressed are his own.

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