Former Santa Barbara County Supervisor Joni Gray has agreed to pay a $3,000 fine to the California Fair Political Practices Commission (FPPC) for violating the state’s conflict-of-interest laws by voting in 2008 to extend a forgivable loan of $50,000 to a flamboyantly and financially troubled nonprofit housing agency — the Lompoc Housing and Community Development Corporation — for which her husband, attorney George Wittenberg, served as legal counsel.
Because Wittenberg was paid for his legal services, state conflict-of-interest rules barred his wife — who was also his business partner in the law firm, as well as county supervisor — from voting on county contracts with the Lompoc housing agency. Gray, who lost her bid for reelection last November, released a statement explaining she agreed to pay the fine in order to put the matter to rest, but denied any wrongdoing. “I do not now nor never did see this issue as a conflict in that my law partnership was designed so that each partner worked independently of the others,” she said in an email. “Only the partner that worked on a case received income from the client.”
It remains unclear exactly what triggered the investigation by the state watchdog agency or how the matter fell onto the FPPC’s radar screen. After all, the demise of the Lompoc housing agency — with 255 units of affordable housing, two homeless shelters, and numerous commercial properties in downtown Lompoc — has been a high-profile train wreck many years in the making. Gray’s critics have contended that her close ties to the housing nonprofit — Gray’s chief of staff also served on the agency’s board of directors — shielded the organization from even a cursory level of oversight and review. In prior interviews, Gray has denied such suggestions, but the issue was one of many seized upon last year by her campaign opponent, Peter Adam, to discredit her. Although Adam was a political outsider, he managed to unseat the incumbent Gray.
Last year’s Grand Jury issued a report — A Failure of Oversight — faulting housing officials with Santa Barbara County and the City of Lompoc for not enforcing basic financial reporting requirements for the nonprofit dating back to 2003. In that time, the city and county funneled roughly $30 million — mostly grants from the federal Department of Housing and Urban Development (HUD) — to Lompoc Housing. Only early last year, in fact, did the County Counsel’s office notify Gray that she appeared to have a conflict of interest, at which point she recused herself from further participation.
While the FPPC provides a tidy punctuation mark for Gray’s murky role in the mess, the stormy saga of the housing agency is far from over. The District Attorney’s Office is still conducting an open investigation to determine whether criminal wrongdoing took place. Last year, investigators seized boxes of records from former Lompoc Housing executive Sue Ehrlich. They and County Auditor Bob Geis complained that Ehrlich had been nonresponsive to their requests for cooperation. Geis has been retained by the DA to comb over the documents seized in the search, and it could be some time before those endeavors are concluded.
To date, no serious allegations have surfaced suggesting that agency personnel enriched themselves by pilfering public funds. Instead, the concern is that Lompoc Housing director Ehrlich expanded the agency’s mission from affordable housing into commercial redevelopment and may have improperly directed funding that should have gone to housing projects into commercial projects, like the ill-fated effort to restore Lompoc’s historic marquee movie theater. The good news is that two homeless shelters operated by Lompoc Housing have been rescued and remain in operation after a brief, but alarming, hiccup during which they went dark. Likewise, management of some of the bigger affordable housing complexes in Lompoc Housing’s portfolio has been assumed by more reputable providers like Peoples’ Self-Help Housing.
The most ominous shadow cast by the meltdown of Lompoc Housing remains the fate and future of the county’s relationship with HUD, which has contributed about $900,000 a year to underwrite various affordable housing programs. Last spring, HUD issued a blistering report of the county’s use of such funds and demanded many major changes. Ironically, that report listed problems with a number of housing projects — all of which were solvent — other than those developed by Lompoc Housing.
Last November, investigators with HUD’s Office of Inspector General began a major audit of how the county spends — and accounts for — HUD funds. The inspectors concluded their audit in mid-April but have yet to issue a final report. For a while it appeared these twin audits might threaten funding relied upon by many ongoing affordable housing operations. But a deal was struck between county housing officials and HUD to maintain existing funding levels pending resolution of the conflict.