County Housing May Owe $3.5 Million

Federal Audit Reveals Misspent Grants and Shoddy Documentation

Santa Barbara’s Housing and Community Development Division could be on the hook for as much as $3.5 million to the federal Department of Housing and Urban Development for either misspending federal affordable housing grants or for failing to document that the expenditures complied with federal guidelines. Since 2005, the county has received $10.8 million from the federal government to develop low- or very low-income housing. Late last year, HUD’s Office of Inspector General conducted an exhaustive audit of how $8 million of that was spent. Auditors concluded $444,000 was unjustifiable and will have to be paid back, and $3.1 million may have to be repaid because the documentation to justify these expenditures is not adequate. The auditors also found that county housing officials complied with federal rules and regulations in distributing $3.9 million in federal housing loans.

Triggering the audit was the recent bankruptcy of the Lompoc Housing and Community Development Corporation, a major recipient of HUD funds that were deployed through the county housing office. The auditors concluded that the Lompoc nonprofit had serious reporting, performance, and compliance problems dating back to 2005, yet the county continued to distribute funds despite the repeated failure to comply with requests for documentation. “There are concerns as to why the County continued to disburse funds,” the auditors concluded, “when there were continuing issues.” The Lompoc housing nonprofit was represented by former county supervisor Joni Gray’s husband, George Wittenburg, yet Gray did not recuse herself from votes to authorize federal housing funds to that troubled agency. For this transgression, Gray recently agreed to pay a $3,000 fine to the California Fair Political Practices Commission.

The federal auditors also looked at other low-income housing developers and discovered a pattern of poor oversight and supervision by county housing officials. The county’s housing program has been marked by a high degree of turnover from top to bottom, and the auditors concluded that contributed to lack of management, haphazard record keeping, and a chronic failure to inspect the premises of housing projects built with federal funds. Herman Parker, who took over as director of Housing and Community Development just as the Lompoc housing crisis came to a boil, commented that he is in discussions with HUD officials to resolve any outstanding issues. “We have what you’d call a disagreement between what the feds feel is appropriate documentation and what the county feels is appropriate documentation,” he said. “But there is documentation. We are still in the process of working through these issues.”

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