A local bank recently filed a hefty lawsuit against the soon-to-be-defunct Lompoc Housing and Community Development Corporation (LHCDC). The low-income housing nonprofit has been struggling financially since 2008.
According to court documents filed on Sept. 28, Solvang-based Pacific Western Bank filed a temporary restraining order against LHCDC for failing to pay more than $5 million in loans on seven of its 38 Lompoc properties.
On Oct. 7, Santa Barbara County Superior Court Judge James Rigali ordered that a receiver take over management of the properties to protect Pacific Western’s financial interests. The bank took over the properties and loans in 2009 through an agreement with the Federal Deposit Insurance Corporation.
The lawsuit claims LHCDC repeatedly failed to make timely loan payments on properties located throughout the city since January of this year, and also failed to pay more than $1,300 in property taxes.
The Department of Housing and Urban Development (HUD) was working with county and city officials to salvage the properties, as well as botched negotiations with the Cabrillo Economic Development Corporation.
Now Pacific Western is asking the court to issue an injunction to prevent the city and county from getting involved with management of the properties.
A source close to the suit, who asked to remain anonymous, said LHCDC’s financial problems stem from an incident in 2008 when Citibank threatened to pull funding for the organization’s College Parks Apartments project, and a failed attempt to revitalize the historic Lompoc theater.
LHCDC board president Susan Warnstrom declined to comment on the matter, as did legal representation for both sides. LHCDC Executive Director Sue Ehrlich didn’t return phone calls as of press time.
Rigali ordered Pacific Western to turn over to the receiver all keys, books, and documents related to the properties. The bank is now responsible for managing the properties. So far no tenants have been disturbed.
LHCDC is expected to dissolve by the end of the year.
This article appears in Oct 13-20, 2011.