Lompoc rejects county grand jury’s recommendations on policing tourism funds

Every hotel in Lompoc currently pays a fee equal to 3 percent of its nightly revenue to the city, which keeps 1 percent of that total and submits the remaining 99 percent to its Tourism Business Improvement District (TBID).

click to enlarge Lompoc rejects county grand jury’s recommendations on policing tourism funds
File photo by Jayson Mellom
AWAITED REPLY: The city of Lompoc recently responded to accusations from a Santa Barbara County grand jury report, which scrutinized the city’s Tourism Business Improvement District for underreporting funds.

While Lompoc’s TBID organization—Visit Lompoc LLC (Explore Lompoc)—is contracted to only use the hotel funds for tourism enhancement projects, the city doesn’t have a system of checks and balances in place to monitor how they’re spent, Lompoc Management Services Director Christie Donnelly explained.

“It is not within Lompoc’s purview to ascertain whether the 3 percent fee assessed on hotel customers is achieving its intended objectives,” Donnelly said at the Lompoc City Council’s May 21 meeting.

Donnelly led a presentation on staff’s responses to a Santa Barbara County grand jury report that investigated Lompoc and its TBID. Filed in March, the report accused the city of a “consistent lack of oversight” and Visit Lompoc of underreporting more than $500,000 in funds between 2020 and 2022.

“The summary of those responses is that we disagree,” Donnelly said. “We will not be implementing any of the recommendations made by the grand jury.”

Donnelly asserted that the “crux of the issue” boils down to semantics and emphasized that revenue collected through the 3 percent hotel fee is not “Lompoc-provided funds,” as it’s a fee rather than a tax.

“It is important to recognize that none of the funds disbursed from Lompoc to [Visit Lompoc] are Lompoc-provided funds … [it’s] revenue reportable to [Visit Lompoc] alone,” Donnelly said. “Lompoc serves as a pass-through agent and does not have any legal authority, claim, or control over the funds it administers.”

In response to the grand jury report’s allegation that Visit Lompoc underreported funds in its annual reporting to the city, Donnelly said that the city’s contract with Visit Lompoc doesn’t require annual financial statements or cumulative totals of excess funds in regular annual reports.

“There is no requirement under law or the agreement that [Visit Lompoc] would need to report cumulative totals,” the management services director said.

Donnelly added that information about the nonprofit’s carryover funds and annual tax returns are available to the public through watchdog websites, such as ProPublica.

After Donnelly’s presentation, Councilmember Jeremy Ball commented that regardless of how the city handles refuting the grand jury report’s allegations, “there’s a lot of uncertainty based upon these initial accusations … percolating throughout the community.”

“What might we have done to prevent these types of accusations?” Ball asked city staff. “How do we avoid this in the future?”

Donnelly said that staff could have required Visit Lompoc to include annual financial statements in its reporting to the city.

“We could have asked them to put financial statements in the annual report. Is that our purview? Right now, it is not our purview,” Donnelly said. “The way that the agreement is written, that is not something we can ask.”

Visit Lompoc’s treasurer Atul Patel spoke during public comment and said that the TBID is “more than happy” to include balance sheets in future annual reports and is voluntarily arranging an independent audit of its finances. 

“It’s unfortunate that it’s happened this way, but I am very hopeful that the information provided by an independent auditor can put this to rest,” Ball said. “I think that will help this whole community put this behind them.” 

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