City must pay U.S. Treasury $140,000 for one LHCDC loan

It’s official: The city of Lompoc is now on the hook to return $140,322 from city funds to the U.S. Department of Housing and Urban Development (HUD) for one longstanding noncompliant loan to Lompoc Housing and Community Development (LHCDC). The city received the official notification on April 5 that it must repay the loan given to LHCDC in April 2003.

The $140,322 loan was awarded to LHCDC to purchase a vacant lot in the 500 block of North T Street to develop affordable housing for low-income first-time homebuyers. LHCDC was not able to develop the proposed development, though the loan was supplemented by additional RDA loans from the city for financing and construction. In 2009, the city gave LHCDC more funds from its Affordable Housing Trust Fund to payoff the delinquent RDA loan. None of the loans were repaid by LHCDC and city council members voted in closed session to foreclose on the property.

City Administrator Laurel Barcelona notified city council members in Oct. 2011 that HUD required the payback, and asked HUD if the city could repay the $140,322 loan using other sources of federal funds, rather than city funds. In its response to the city, HUD said federal funds could not be used to repay the noncompliant loan because no low-income housing was produced and no public benefit was achieved with the federal funds.

As the City has stated that it cannot develop the property, it must reimburse the United States Department of Treasury (“Treasury”) in the amount of $140,322 in order to close the finding and avoid further sanctions.

Read the HUD letter here.

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