A second bank has filed a lawsuit against the foundering nonprofit Lompoc Housing and Community Development Corporation (LHCDC). The suit also lists the city of Lompoc as a defendant because officials allocated $75,000 to LHCDC through the city’s redevelopment agency.
According to court documents filed on Nov. 8, Citibank is suing LHCDC on behalf of federal mortgage association Fannie Mae for failing to pay monthly installments on a $300,000 loan from February 2001. That loan was originally made by California Federal Bank, which merged with Citibank in 2002.
A bank representative sent letters to LHCDC president Sue Ehrlich on March 30 and April 25 informing her the nonprofit had defaulted on its monthly loan payments.
Citibank is asking that the court order LHCDC to pay the outstanding balance of the loan in full, plus interest, and to appoint a receiver to operate and manage properties at 709-713 E. North St. in Lompoc. The bank is also looking to recover all attorney fees and additional costs stemming from the lawsuit.
“Citibank has incurred, and will continue to incur, substantial expenses in administrative costs, foreclosure costs, and amounts to compensate a receiver and/or property manager,” the lawsuit said.
Solvang-based Pacific Western Bank filed a similar suit against LHCDC in September for failing to pay more than $5 million in loans on seven of its 38 Lompoc properties.
A Santa Barbara County Superior Court judge ordered that a receiver take over management of those properties in October.
A source close to the both suits, 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 is expected to dissolve by the end of the year.
Attorneys for both parties failed to return phone calls as of press time.
This article appears in Nov 23-30, 2011.
