In a letter sent out before Christmas, the Santa Barbara County Grand Jury wagged its finger at the city of Lompoc for not yet implementing an audit policy for nonprofits.
“The city of Lompoc, despite its agreement to do so, has not instituted a requirement for organizations receiving city grants and loans to submit annual audits,” the grand jury said in a press release.
Lompoc officials agreed to establish an auditing process after a grand jury report examining the fall of the Lompoc Housing and Community Development Corporation (LHCDC) came out in 2012. The corporation fell apart after failing to meet its financial obligations to its lenders. Lompoc lost an estimated $1.8 million when the corporation’s properties became insolvent. The grand jury’s office said it’s been more than a year since the city agreed to put a nonprofit audit process in place.
“In the jury’s opinion, the Lompoc City Council has engaged in conduct detrimental to its citizens’ best interests,” the press release said.
While it’s true Lompoc hasn’t firmly established an audit process for nonprofits as outlined in the suggestions portion of the 2012 report, Mayor John Linn said the city has been working on an ordinance that’s more expansive than what the grand jury asked for.
Linn pointed out that the grand jury only asked the city to conduct audits of organizations that receive from the city funds in excess of $50,000.
“We don’t have anyone that size anymore, except the Chamber of Commerce,” Linn said.
Even the chamber barely makes the cut for that limit, he said, adding that city staffers have been working to include organizations that borrow less money from the city as well.
“If we weren’t doing anything, we would be in violation of the law,” Linn said of the grand jury recommendation. “We’ve taken a lot of steps to get a good ordinance.”
The latest draft of that ordinance is set to go before the city’s Human Services Commission in January or February. Depending on whether the commission approves revisions on the ordinance, the proposed audit policy could go back to the City Council in February or March.
Linn said the city could have passed the bare minimum of audit policies in July 2013, but wanted to do more with the ordinance.
Grand Jury Foreman Ted Sten told the Sun he couldn’t answer any questions outside of what’s detailed in the 2012 report and the recent letter and press release.
“What the city now does is up to the city,” Sten said.
The city drafted a response to the grand jury’s letter on Christmas Eve explaining the process Lompoc has gone through to get to this point in the ordinance process.
“The result will be an audit policy drafted with meticulous review adopted in collaboration with the public,” the response said. “We encourage the public, as well as the grand jury, to review the proposed audit policy on file at city hall.”
This article appears in Jan 2-9, 2014.
