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Lompoc council orders independent review of conservation rebate program after auditors flag process gaps
Summary
The council directed a third-party review of city conservation and energy rebate programs covering the prior two years after an audit found 11 of 81 tested rebates lacked contractor license documentation; the move follows public allegations about improper approvals and staff said remedies and costs will be returned to council.
The Lompoc City Council voted April 21 to hire an independent investigator to review the city's conservation rebate programs covering the prior two years after an outside audit flagged process deficiencies.
City attorney (speaker 12) told the council that auditors from LSL CPAs tested 81 rebate payments issued between February 2024 and October 2025 and found 11 that lacked documentation showing the contractor who performed the work held an active California contractor license. "The auditors recommended clarifying that applications should not be approved unless they contain contractor's name, city, and state license number," the city attorney said. He advised hiring an outside reviewer for neutrality and to scope a report the council could act on.
The issue drew heated public comment and council scrutiny. A resident who identified themself as a utility commissioner (speaker 15) told the council they had reviewed a sample of rebates and found roughly half that they examined did not meet program requirements. That commenter also said the city manager submitted two rebates included in the audit. "Part of my concern was that you had a city manager who also submitted rebates improperly," the commenter said.
Council members debated scope and cost of an independent review and whether to run the review in-house first. Council member Vega (speaker 3) asked staff to provide a factual history of when rebate application forms changed; the city attorney said staff could return with that information and that the council could then adjust the review period if warranted.
Mayor James Mosby (speaker 1) moved to direct staff to retain an outside consultant to examine all rebate programs (residential and commercial) going back two years, to return with a proposed scope and cost estimate, and to include analysis of potential remedies such as whether the city could recover funds or seek payment from the rebate contractor'vendor's errors-and-omissions bond. The motion was seconded and passed 4-0 with Council member Bridal recused from voting.
City staff and public commenters also identified the third-party contractor that processes rebates for the city (Efficiency Services Group, referred to in public comment as "ESG"), which the public said is under contract for approximately $75,000 per year and is required by contract to maintain an errors-and-omissions bond. A public commenter said that bond could be a potential source for recovering funds if improper payments are found. The city attorney said he would research whether financial remedies from the vendor might be used to offset investigation costs.
Next steps: staff will return with (a) the factual history of application-form changes, (b) a scope and cost for an independent review covering the defined period (the council asked for two years as a first step), and (c) an analysis of potential remedies and vendor-liability options. If the investigation finds evidence of criminal conduct, the city attorney said the matter could be referred to the district attorney.
