Three documents in this post - the City's "Notice of Default" to the California Space Center (CSC); and responses from Ken Switzer and Steve Franck on behalf of the CSC.
Now, this is the text of CSC response by Ken Switzer:
City of Lompoc
Council Meeting October 6, 2015
Council Meeting October 6, 2015
Dear Mayor and Council Members:
I am not able to attend this evening’s meeting due to a previous commitment on the East Coast, I was not expecting the need in advance to attend tonight’s meeting. As a Realtor for Berkshire Hathaway advising on real estate matters for the California Space Center, and an early-on advocate for this Lompoc project going back a year and a half, I’d like to both ask some questions and give my comments at this critical juncture of the process. I’ve seen up close every step of the effort, from the initial groundwork led by Eva Blaisdell to the RFQ issuance, to the RFQ response to the ENA negotiation to the first steps on the ENA process.
All along I have sensed a strong desire on the part of the Lompoc community and City Council to get a Space Center built, and also have seen the phenomenal time, effort and expense taken on by a very motivated and focused Ms. Blaisdell to realize her goal to build the California Space Center in Lompoc. Stepping back and considering these very much aligned goals of both the Lompoc community and the California Space Center, one figures somewhere in there is a solution to build the Space Center that doesn’t get derailed by a communication problem between the 2 parties, or by a bureaucratic Catch-22 or chicken-and-egg issue that stops the project in its track over a process detail.
In this regard, I know that dozens of pages of very specific answers were given by the CSC, along with many attached exhibits to answer point-by-point the RFQ items requested in 30-day and 60-day milestones outlined in the ENA. I’ve also seen the list of 14 items that City staff asked to be corrected or completed based on their review of the CSC submittals. A question I have is was there ever a direct communication between Staff and CSC to describe these concerns and have them explained person-to-person? And if that effort hasn’t been done yet, will it be done in the next 4 weeks to allow CSC to understand specifically what will suffice or not suffice to meet the goals?
Issuing a public Notice of Default over a process issue that was not expected by the CSC (as opposed to simply a back-and-forth direct communication as to what was deemed missing in the eyes of staff), seemed perhaps unnecessary, and whether intentional or not, has caused real harm to the project’s image to investors. Certainly any project investors are now spooked to the point of not committing their funds until the NOD is removed. I suspect that if this effort fails or is stopped by the City, any future investors or other development groups will be similarly wary of taking a run up the hill on a future RFQ or Space Center development project in Lompoc, where their investors could be at risk of a rigid process that allows no communication between the parties, and can have the plug pulled at anytime.
I understand certainly the desire of the City not to continue with a development group that will either not be able to get the project off the ground, or run short of funds before completing the project, or even if built, then not be capable of running a new California Space Center properly. Those are legitimate concerns no doubt. But likewise beyond showing the capability of joining with contractors and operators capable of building and operating a Space Center successfully, and then meeting the upcoming ENA milestones for a conceptual plan, financial plan and long-term financing commitments, I’m not sure what else any development group can do at this early stage.
Based on the tricky economics of the project, I don’t sense that either a traditional developer or a theme park company like Disney is going to come here to build a Space Center, or any other large-scale development that benefits the people of Lompoc to a significant degree. This type of project is only feasible as part of a larger brand concept with offsite and non-traditional revenue streams, and may only be possible with the structure of a consortium of qualified partners led by a lead entrepreneur. However, finalizing a commitment to potential contractors or Space Center operators this early in the process doesn’t make any business sense, before having a finalized Space Center plan for which to put out bids to qualified companies in order to achieve the best financial results.
The California Space Center project is “real” to the extent it can be so far. It has contributed non-refundable funds to the City of Lompoc for their costs ($25,000), and it has commitments to build and operate from qualified companies when the ENA process is complete and a DDA agreement in place. The CSC has also spent several hundred thousands of dollars so far, both before and after the beginning of the ENA process, on laying the groundwork with various companies, investor outreach, financial modeling and conceptual planning. Different project layout ideas were presented in the 30-day milestone submittal, as were detailed financial models. Very extensive background was provided on Ms. Blaisdell and the potential contractors and operators of a California Space Center in Lompoc.
It would seem to make sense for all parties involved to do whatever is necessary in terms of direct and continuous communication between the CSC and the City to close the gap and get through this chicken-and-egg Catch-22 and move the project forward. The NOD needs to be removed to return investor confidence to the project. Beyond closing the gap with direct communication now to remove the NOD, I would also urge this communication process be kept in place to avoid any future NOD’s that could be cured simply by communicating. Once again this is necessary to avoid investors taking their money off the project. I urge the City Council to please open up the dialogue to ensure the ENA process can be completed in a mutually beneficial way that meets everyone’s goals. Thank you.
Ken Switzer
Berkshire Hathaway Real Estate
Berkshire Hathaway Real Estate
And finally, here is Steve Franck's response:
