Exit Plan Required To Qualify For Champion Center Loan of $19,090,000:
Before obtaining the $19 million dollar Champion Center loan, in 2012, the District’s CEO submitted an “Exit Plan” required by the office of California Statewide Health Planning and Development, Cal-Mortgage Loan Insurance Division. The Exit Plan stated how the District would convert the facility into revenue if it failed as a business.
The Exit Plan described how the Champion Center facility space would be apportioned and leased out to multiple entities to produce revenue if the venture failed. The Champion Center was closed in June 2017, but according to the District, as of May 2018, none of the space has been leased out to produce revenue.
However, in 2012 the CEO painted a rosy picture in the “Exit Plan.”
He described Exit Option 1 as follows: “…”I have already been approached by the County Sheriff inquiring if this (morgue) is a possibility and expressing an interest in the space. Assuming a lease payment of $1.00/sq.ft., this lease would generate approximately $132,000 of revenue annually.
We checked to see whether the District’s projected revenue of $132,000 for leasing space to the Sheriff as a morgue facility was factually based. We submitted a California Public Records Act request to the Santa Barbara County Sheriff’s office. We asked for a document showing the total dollar amount that was spent by the Sheriff’s department for Lompoc morgue services in 2017.
Sheriff Spends $1,100 a Year for Morgue Services in Lompoc:
The Santa Barbara County Sheriff’s office provided a “Vendor Disbursement” form listing Starbuck-Lind Mortuary as the firm providing morgue services for 2017. The form showed that the Sheriff’s Department disbursed $1,100 for morgue services for the year 2017. That’s all. Just $1,100.
District Falsely Claimed Sheriff Would Pay District $132,000 Per Year:
The difference between $1,100 and $132,000 doesn’t seem like an oversight or an understandable human error. It seems more like exaggeration on a grand scale, a misrepresentation, or fabrication.
The District CEO claimed that leasing Champion Center space to the Sheriff’s office for a morgue would earn revenue of $132,000 annually. Since payments would be made until 2042 to pay off the loan some observers might conclude the CEO was projecting revenue for 24 years for a total of $3,168,000 for renting part of the Champion Center facility as a morgue.
It’s well-known that providing false information when applying for a loan is not a good idea. The Board and the CEO knew or should have known they were submitting false information for the purpose of securing a $19,090,000 loan.