Why is the City Council of Lompoc Failing to Order an Audit of Visit Lompoc LLC? By Martin Bender

For a few months now I’ve been researching and reporting on the irregularities regarding Visit Lompoc LLC. Everything from financial discrepancies totaling missing hundreds of thousands of dollars to over 30 violations of the contract with the city, and a potential conflict of interest of a city council member, and yet to date, meeting after meeting, the Lompoc City Council has failed to order city staff to conduct even the most basic audit of Visit Lompoc LLC.

Perhaps, it’s merely because one of their own is the President of Visit Lompoc LLC, and in an effort to be loyal to her, the city council figures they can just ignore the issues altogether until they go away. Perhaps, it’s because the city knows that they are complicit in the issues regarding contract compliance with Visit Lompoc LLC. Or perhaps there’s something much worse that would be discovered if an audit was to be conducted and certain individuals would rather that never happen. For her part, Mayor Osborne has allegedly told city staff, the city attorney, and other council members that she will not vote for an audit of Visit Lompoc LLC under any circumstances.

Whatever the motive is for the city council’s blatant failure to order an audit, we the citizens of Lompoc must ensure that our voices are heard and that the city council orders a compliance audit consistent with the terms of the contract with Visit Lompoc, LLC.

We really need the city council to order an audit, it’s common sense but apparently, the city is going to go to extreme lengths not to do so.

Here’s what we know to date:

• The City of Lompoc and Visit Lompoc LLC entered into a 5-year contract in 2014 to form a Tourism Business Improvement District charging a 2% assessment fee to all visitors to Lompoc hotels.
• That fee is collected by the City of Lompoc and then given to Visit Lompoc, LLC (minus a small ~1% collection fee). The contract was renewed on 1 Jan 2019 for a period of 10 years with a total value of over $9.1 million dollars and yet not one audit of the initial 5-year contract was ever done to ensure that Visit Lompoc LLC was indeed spending the funds in compliance with the Agreement with the city and consistent with California State Law.
• That on 8 January 2019, Ms. Cordova was appointed to the Lompoc City Council, meaning she now oversees the very contract with the organization that she’s the President of. In addition to the fact that Ms. Cordova is a highly paid consultant ($100k+) of the very hotels she’s advocating for, as well as a part owner (>$100,000) in at least 1 hotel according to her Form 700 filings.
• In 2019 Visit Lompoc LLC voted to raise the assessment rate from 2% to 3% with a proposed implementation date of 1 January 2020, and yet the City of Lompoc failed to pass a resolution of intention to actually approve said increase, nor did the city provide proper notice to the affected businesses, or hold the required public hearing to approve such an increase as is required under existing state law (BID Law of 1994, Section 36629 & 36635)
• The City of Lompoc began collecting the 3% assessment rate and funneling the unapproved increase to Visit Lompoc LLC in 2020.
• In 2020 and 2021, the extra 1% increase totaled approximately $320,554.22 that it was not authorized to do so, and is likely well over the $500,000 mark at current.
• That Visit Lompoc LLC is required by contract to submit its annual reports to the city council no later than 60 days after the last day of the calendar year, and yet they have still not reported on its collections and spending for 2022. Their “2022” annual report actually reports on 2021 and projections for 2022, and yet the proper report would be reporting on actual 2022 and projections for 2023. Visit Lompoc LLC has consistently failed to provide timely annual reports, with some being as late as 2+ years.
• The “errors” in the annual reports from Visit Lompoc LLC between 2019 to 2021 total an amount of approximately $284,795.51 in funds that Visit Lompoc LLC, in their own annual reports, fails to account for. See for yourself. Visit: https://www.cityoflompoc.com/home/showpublisheddocument/37036/638122410475700000
  • Go to page 6, bottom paragraph “FY21 Actuals” and do the math yourself.
    • Visit Lompoc LLC states that they had $264,591.49 in carry-over funds (unspent funds) from 2020 (which is consistent with their prior years report).
    • Visit Lompoc then states that their “actual collections were higher than anticipated, totaling $526,509.12”. So that means their budget for 2021 would have been $264,591.49 + $526,509.12 = $791,100.61. Visit Lompoc LLC then lists that their total spending for 2021 was $272,926.84. So you take $791,100.61 that they had and subtract out their expenses of $272,926.84 and you get $518,173.77.
    • This means that Visit Lompoc LLC should have had $518,173.77 to carry over into 2022. But look at what Visit Lompoc LLC reports their carry-over was…only $253,582.28, an “error” of $264,591.49.
    • Where did the $264,591.49 go? These errors began in 2019 and progressively increased through 2021 reaching a total of approximately $284,795.51 in missing or unaccounted-for funds. This isn’t rocket science and anyone can do the math and verify my claims are true. I challenge anyone to disprove my accounting. I’ve had another local business owner do exactly this and he confirmed that all my numbers are correct and that there is indeed a $284,795.51 discrepancy in the Annual Reports submitted by Visit Lompoc LLC. Which again, if the average citizen can see these “errors”, why is the city refusing to order an audit and what is the city trying to hide?

• Jasmine McGinty (Development Programs Specialist II) with the city of Lompoc sent Jim Throop (then City Manager) a message with the subject line of “Approval of Management Agreement with Visit Lompoc, Inc. for Implementation of the Renewed Lompoc Tourism Improvement District” in which she states, “the Management Agreement establishes the responsibilities of the City and VLI, with regard to the collection and use of the assessments made pursuant to the LTID.” The city has certain duties and responsibilities to the citizens of Lompoc, and to the State of California to ensure not only compliance by the city itself but also by Visit Lompoc LLC.
• We know that the Management Agreement 2019-2028, Section 10.2 states, “the records maintained by VLI shall include all receipts for expenditures incurred. The city reserves the right for City’s Economic Development Director/Assistant City Administrator, or his/her designee, to perform a contract compliance audit at any time during the fiscal year. VLI agrees to keep all receipts and other supporting documents available for inspection during said audits.” And yet despite their being missing hundreds of thousands of dollars in Visit Lompoc LLC’s Annual Reports, the city continues to look the other way and has failed to order an audit.
• We know that the Management District Plan 2019-2028, Section V(C) states, “Visit Lompoc shall present an annual report at the end of each year of operation to the City Council pursuant to Streets and Highways Code §36650 (see Appendix 1). The Visit Lompoc shall deliver an annual report to the City of Lompoc within 60 days of the end of the calendar year in order for the annual report to be presented to the City Council by the second meeting of March during the term of the assessment…” and yet to date Visit Lompoc has NEVER, not once, timely filed their annual report and had it presented to City Council by the second meeting of March in the year that it was due. The legal term “shall” is defined as “an imperative command; has a duty to or is required to.” And yet despite Visit Lompoc LLC being required to timely submit these reports, year after year, the city council continues to look the other way, all the while unlawfully collecting an assessment rate that was never properly approved and consistent with state law.

Lompoc has ZERO Contract Compliance

The City Council of Lompoc has a duty to not only enforce the Agreement between itself and Visit Lompoc LLC but also has a duty to all of the citizens of Lompoc to ensure that our city is in compliance with California state law regarding this Tourism Business Improvement District plans. To date, the City of Lompoc City Council has taken zero actions to ensure compliance with their own Agreement with Visit Lompoc LLC or to ensure that the Agreement as a whole is enforced consistently with California State Law.

Without any enforcement actions by the City, Visit Lompoc LLC has no incentive to actually comply with its contractual obligations. The mere fact that their own annual reports are missing approximately $284,795.51 should be of great concern to everyone in the city, especially given the fact that our city council is charged with overseeing the contract and has continued to fail to do so despite knowing for weeks about these “discrepancies.”

For its part Visit Lompoc, LLC held an emergency meeting on 30 March 2023 where it voted to:

1. Use these public funds to retain an attorney or law firm regarding the allegations that I raised, and
2. to pay for an independent audit to be done.

But the thing is that we as the citizens of Lompoc should not and cannot rely on the results of Visit Lompoc LLC’s audit but rather require our city council to enforce section 10.2 of the Agreement in which the city conducts its own audit of the contract with Visit Lompoc LLC. If both audits are accurate, then they should reach the same conclusion but the city cannot defer to letting Visit Lompoc LLC essentially police itself.

Demand that our city council orders the city manager to conduct an audit of the Agreement of Visit Lompoc LLC and the City of Lompoc dating back to 2019 through the present.

 

Grand Jury Complaint Form & Process:

1. Visit https://www.sbcourts.org/dv/grand-jury.shtm
2. Click on “Download the complaint form” and submit a request to the Santa Barbara County Grand Jury to investigate the claims as submitted by Martin Bender regarding the City of Lompoc and Visit Lompoc LLC. Complaint Form Link:
3. Email form to: sbcgj@sbcourts.org

If enough people submit complaints, it will put pressure on the Grand Jury to investigate the claims!