Lompoc City Council members voted Tuesday to terminate their 18-month exclusive negotiations with the nonprofit proposing to build an ambitious $220 million space center complex on 96 acres of city land.
Citing missed deadlines and the failure of the Santa Barbara-based nonprofit, Environmental Education Group (EEG), to provide proof of funding for the project prior to transferring ownership of city land, the council voted to give EEG a 15-day notice of termination based on nonperformance of the Exclusive Negotiation Agreement (ENA).
The 5-0 vote included direction to staff to issue a formal Request for Proposal, a step not taken before the ENA was signed with EEG in May 2012.
Council members Ashley Costa and Dirk Starbuck questioned why a staff scrutiny of EEG's credentials and track record requested by council in October 2011 was never presented in a public session.
Teresa Gallavan, assistant city administrator, said she asked an ad hoc group of the city's Economic Development Committee to review EEG's credentials and experience and the review was scheduled to be presented March 20, 2012. Mayor John Linn pulled the item from the meeting agenda and it was never rescheduled.
Costa - who has twice voted against the ENA - said a more extensive background check was needed for an organization proposing to develop a project as large as the space center complex.
"We've been working with this organization for 18 months," Costa said. "We continue to get information from anonymous sources and local media, more than we got from our own due diligence."
Recent news reports disclosed that EEG had a negative balance for two of its last three years according to IRS records. Additionally, a federal district court awarded a $21,000 default judgment against EEG President Alan Tratner for work he performed as president of Inventors Workshop International, a nonprofit the state says is dissolved.
Starbuck said he didn't understand why "our due diligence was pawned off to an ad hoc group" and the council was never informed about their reservations. "What they reported was never given to us."
Lielle Arad, EEG spokeswoman, suggested that concerns about EEG were "a diversion ... from a group of people that are against development in Lompoc."
Many local residents spoke against continuing with EEG and questioned the nonprofit's ability to succeed when other organizations with greater resources have failed.
"We are all very eager and desperate to have a space complex to help our economy," said resident Joy Browder. "But we can't allow ourselves to fall victim to risky gambles or a lack of good fiduciary judgment because of our eagerness and desperation."
"I'm very confused why this council tries so hard to do this with somebody who has not been able to give you the guarantees that you need," resident Terry Hammons said.
Jenelle Osborne, EDC vice-chair and member of the ad hoc group that recommended a 90-day ENA, said the group tried to give the council feedback.
"EEG has not met the performance milestones on an ongoing basis," Osborne said. "They haven't met any of those issues that we keep bringing forward."
EDC Chair Steve Pepe said the committee no longer supports proceeding with the project and that EEG would not meet the qualifications of an RFP.
"Nothing has changed, you don't even have a contract with a developer," he said. "You've spent far more time and effort on this than you should have."
Other residents questioned why the council continued working exclusively with EEG after it missed deadlines and failed to provide information, comparing it to red flags ignored by past councils about Lompoc Housing and Community Development Corporation (LHCDC).
Councilman DeWayne Holmdahl, who was not on the council when EEG negotiations began, also likened the situation to LHCDC and past councils' support. "Looking back, it did not pay off. I cannot support (continuing with EEG)."
The vote to terminate was a setback for Linn who has been EEG's chief supporter since negotiations began in October 2011. Linn opened the council discussion by suggesting the issue was a simple question of whether the council wanted the space center to be built.
"Unless your answer has changed, we need to find a way to go forward," he said. "I am not in favor of quitting."
Linn attempted to discuss language for a revised and extended ENA with EEG, but was stopped at one point by city attorney Joe Pannone, who said details of a revised agreement should not be negotiated from the council dais.
But Councilman Bob Lingl moved to terminate the ENA. "We gave you the ENA. We extended the ENA, and we still have no commitments," Lingl said.
Linn voted for the motion to terminate, saying he could support it only because EEG could respond to the RFP in the future.
"I think we're going to be back here talking to them again, if they choose to come back," he said.