City checks into EEG's background lacked depth, some say

Nonprofit's operating revenue has history of being in the red

Lompoc Record, California/April 14, 2013

The recent disclosure of a federal court's default judgment against Environmental Education Group President Alan Tratner more than a year ago, has raised questions about the extent of the city's examination of the credentials, background and track record of the nonprofit it has negotiated with for 18 months to build the California Space Enterprise Center.

Tratner and EEG first appeared in Lompoc City Council chambers Oct. 18, 2011, with a request to take over development of the space center proposed for 96 acres of city land after the California Space Authority closed its doors in June 2011, more than a decade after trying, and failing, to build a $220 million space museum, amphitheater, launch viewing area, conference center and office complex.

Tratner and EEG were brought to the city by Mayor John Linn, who had continued meeting with organizations involved in Space Authority efforts, in an effort to resurrect the failed attempt to develop a space center complex on acreage near Hancock College's Lompoc Valley Center.

Though little was known or made available about the Santa Barbara-based nonprofit at the Oct. 18 meeting, Linn asked the council to approve entering an Exclusive Negotiation Agreement (ENA) with EEG, arguing that no other entity had come forward to pursue the development.

During the meeting, Tratner described the 40-year-old nonprofit and its plans to add "private space entrepreneurial aspects not envisioned by the California Space Authority," including EEG's "Green2Gold incubators."

"We're experts at putting on expert fundraisers and promotional events and festivals in ways to bring the community into awareness, to get excited about a project and donate to us," Tratner said.

Councilwomen Cecilia Martner and Ashley Costa objected to entering into an agreement, however, citing the lack of information about the organization and its credentials, experience and finances.

"The city staff needs to do some due diligence on any organization that comes in front of us," Martner said, adding that voting to enter into an ENA without conducting a background check was "unprofessional."

Martner's and Costa's suggestion that the city issue a Request for Proposal on the project - which would have required applicants to present qualifications, financial information and legal structure - failed to win support.

Councilmen Bob Lingl and Dirk Starbuck joined Linn to approve entering into an agreement with EEG. Costa and Martner voted no.

But the 3-2 vote included the stipulation that city staff conduct due diligence on EEG and return with a report to be presented in public session within 30 days, or prior to the review of an ENA. That public presentation of the staff's review of EEG never occurred.

Instead, five months later, in March 2012, city staff asked an ad hoc group of Economic Development Committee (EDC) members to review EEG's credentials for a report to the city council.

EDC Vice Chair Jenelle Osborne said the ad hoc group was asked to review materials provided by EEG - a 60-page document about the nonprofit's history, accomplishments and principals - and was provided a Form 990 tax filing for EEG that was more than three years old.

"I don't know that we were tasked with actually vetting this organization. We were asked to review the information and see if we thought it was a good idea to enter into an ENA," Osborne said. "We told city staff there isn't enough information here to make a decision."

Unbeknownst to the city and EDC members, the default judgment in federal court had already been awarded March 2.

At the next full EDC meeting May 2, 2012, Linn and Tratner presented EEG's plans and asked the committee to recommend an ENA. The committee agreed, voting unanimously to recommend a 90-day agreement with EEG, though a one-page summary of its review included a note that EEG had no development experience, was "not responsive to all criteria" and the committee had "too little information for a project this size."

"I felt the committee was being asked to help the council because it really wanted an ENA," Osborne said in a phone interview. She said the committee recommended a 90-day ENA and expected a more thorough scrutiny of EEG would occur during that time.

On May 29, however, Linn pushed for a one-year ENA - not the 90 days recommended by the committee - and was again joined by Lingl and Starbuck. Costa argued for a compromise 180-day ENA and again voiced concern about the lack of information available. Her motion failed to receive any support and the one-year ENA was approved by a 3-1 vote with Costa voting no, and Martner absent.

Now, Osborne said she regrets voting to recommend an ENA.

"I think it's a case where people wanted this to happen so much, they put blinders on," Osborne said. "We're getting a song and dance being handed documents that don't actually have any substance."

On Feb. 5, when the city's consultant, Keyser Marston Associates, presented its financial analysis of EEG's business plan and recommended EEG be required to demonstrate proof of $59 million in funding before city land was handed over, EDC Chair Steve Pepe supported the consultant's recommendation.

He urged the city "to be cautious and make sure we are protecting our assets" by not relying on unverified "promises and expectations."

EEG is required to submit proof of financing to the city by June 1.

Osborne also said she attended the well-advertised but sparsely-attended TechBrew MegaMixer held by EEG at the Chumash Casino in January to promote the space center, and it was disappointing and frustrating, turning into more of a concert than a tech mixer to bring together space industry entrepreneurs and investors on behalf of the space center.

"All it does is bring concerns to mind as to the ability for such a large project to be executed by a group who hasn't been able to show it on a smaller scale," Osborne told council members.

In a phone interview last week, Linn said he was satisfied with the city's investigation of EEG's resources and background, and believes the nonprofit has a greater chance of succeeding with the space center based on its progress to date.

Lingl, however, said based on recent news reports he is not satisfied, and said he was not aware of the lawsuit, nor tax records showing a negative balance for the nonprofit.

"If a reporter can find out information, so can the city,"Lingl said. "But my intention this whole time was to continue to gather information. I never intended to turn over land until we had a lot more information."

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