EASTIN: “Few cities have had really big irresponsible actions like this”
Recently, former California Superintendent of Education Delaine Eastin weighed into the city’s leadership on affordable housing and DACHA.
Writes Ms. Eastin, “The previous city councils have worked closely with a local small business specializing in creating nonprofit and cooperative housing called Neighborhood Partners, LLC. This business has successfully built more than 650 units of affordable housing in the Davis area over the past 25-plus years.”
“These homes provide our school teachers, local employees, seniors and more with a safe, affordable haven in our community,” she adds. “Building homes, using the limited-equity cooperative model, gives everyone ownership in the community but not in an individual residence. As members of the co-op, they get the benefit of an affordable home and must adhere to the bylaws of the co-op.”
Delaine Eastin argues that, while DACHA was created “to provide affordable housing to those who could not afford the average price for a Davis [home], some DACHA members realized that the homes they obtained for less than market value were worth $200,000 more, and, with a bit of maneuvering, they might achieve financial gain.”
She accused members of DACHA of acting “outside the law and bylaws.” More importantly, she argues that city staff allowed board members “who should not have been seated on the board because of a failure to pay rent, to vote on the board for personal gain.”
“The staff apparently facilitated this greedy attempt to avoid paying Neighborhood Partners and the Twin Pines Cooperative Foundation, and appears to have been complicit in facilitating the effort of the residents to steal their units at below market rate. The city attorney could and should have stopped this practice. She did not,” she charges.
Toward her end, she cites that “Neighborhood Partners was awarded $330,000 at the conclusion of court-supervised arbitration in June 2009.”
With the City’s foreclosures of DACHA, “most of the 20 homes sit vacant with no revenue coming to the city and the remaining residents are behind in their rent (to the tune of $47,000).”
She goes on to argue, “City staff has spent more than $2 million of public funds in support of DACHA. This has gone on for six years without resolution. Most recently, the city attorney advised the council not to settle because a judge was going to reverse the grounds on which Twin Pines and Neighborhood Partners was suing. This month, the Yolo Superior Court judge overruled nine out of 10 city attorney objections. Neighborhood Partners and Twin Pines can now take depositions and go to trial on 17 serious causes of action.”
Delaine Eastin argues that she wants “the City Council either to settle or mediate the issues and/or to direct a third-party investigation of the staff actions.”
“When the law is broken, we expect those who take an oath to uphold the law to step in and take action. I am a resident of this city who wants the elected members of my council to represent the taxpayers first and foremost and not protect the staff to the detriment of the town,” she added.
Delaine Eastin argues, “Few cities have had really big irresponsible actions like this.” She adds, “We look to our leaders to be the moral compass and find the solutions that maintain our city’s integrity and to represent the city’s residents, first and foremost. As a taxpayer, I am horrified at the time and expense that the city staff has gone to in order to shield illegal activities.”
She concludes, “As a former local elected official, I am embarrassed that some heroic local businesspeople are being stiffed by my city. City Council, please show some leadership.”
There are, of course, other sides to the story.
Elaine Roberts Musser, who is representing members of DACHA legally, wrote into the Enterprise in response to a different story on Twin Pines Cooperative Foundation, because as she put it, “it became clear the essay was merely another exercise in bashing the Davis Area Cooperative Housing Association.”
She writes, “If DACHA members dare to speak up in defense of themselves, public disparagement and/or threatened lawsuits are the painful result. In consequence, DACHA members have been wisely advised by legal counsel to keep silent.”
She adds, “The public discourse ratcheted up against DACHA members has been extremely poisonous, nasty, unrelenting and completely unnecessary. DACHA members have had to stand by helplessly as they were referred to collectively as ‘deadbeats.’ “
Furthermore, she notes, “If any adverse default judgments are entered against DACHA, it is not proof of any wrongdoing. Instead, it would be a result of DACHA’s financial accounts being stripped of all funding, leaving it unable to hire an attorney to defend itself.”
“DACHA has no assets whatever, and exists in name only. There is no reason to forestall its dissolution. Let’s put this ill-conceived dead horse out of its misery. DACHA members (many of whom lost their life savings) should be permitted to move on with their lives, rather than be subjected to endless public pillorying and living in perpetual fear,” she added.
In September, the city council delayed the dissolution of DACHA until February 7 of this year, under advisement of counsel.
At the September 21 meeting of the city council, DACHA President Ethan Ireland explained to council, ” DACHA is dead, It went into cardiac arrest when its accounts were levied, and it finally expired when its properties were foreclosed upon and sold at auction. It’s a corpse; it has nothing but liabilities and it exists on paper only.”
However, it represents a very dangerous corpse. “As long as this corpse – the corpse of DACHA – remains unburied, DACHA’s creditors, represented by Neighborhood Partners and Twin Pines will never stop in their efforts to revive it – to save their own business reputations. Their desperation to exact vengeance has driven them to attempt conjuring up the dead,” he said.
“We live in fear,” he said. “Fear of our doorbells and mailboxes. Fear that upon opening the door there will be yet another process server with yet another subpoena in hand ordering us to yet another round of questions structured to only have wrong answers. Fear that there will be yet another shrewd and legally questionable attempt to levy our personal accounts.”
Mr. Ireland told the council that until DACHA is dissolved, the DACHA residents cannot move on.
“I’m a volunteer, but DACHA has turned into way more than a full-time job for me,” he continued. “I cannot legally resign because state law does not allow the last-standing board members to resign until the corporation is dissolved.”
David Thompson responded, asking why the city has not taken the lead in solving this problem.
He told the Vanguard, “Both NP and TPCF have offered at the podium on numerous occasions to meet with the City to look for ways to settle the issues. We have agreed to mediate. Regretfully for all concerned, the City has refused all our offers. It is a shame that the City is not willing to mediate as the City has created an unneeded difficult impact on all the parties.”
“TPCF/NP continues to offer to mediate with the City and we continue to wonder why the City resists attempting to solve the problem and why the City told the Grand Jury that ‘settlement discussions have begun.’ Everyone, TPCF, NP, the City and the residents of DACHA will be better off if this were settled,” he said.
“DACHA is a public benefit corporation and that type of corporation, its board and its members have serious responsibilities for the corporate assets of the organization,” Mr. Thompson continued.
“No matter what was said last night there seems to be an unwillingness by DACHA, its board and members to follow the laws governing public benefit corporations,” he said. “Last night no one from DACHA or the City mentioned that DACHA is a public benefit corporation and there are specific laws and regulations governing its actions.”
He argued that the members of DACHA owe DACHA over $47,000 – an amount owed to a public benefit corporation.
“DACHA has obligations to the dissolution process which it refuses to carry out. For months DACHA has refused to provide TPCF and NP with documentation that would make for a more effective hearing. Lacking DACHA’s provision of appropriate documents there cannot be a fair and proper hearing,” he argued.
But the DACHA membership sees it differently. As Elaine Roberts Musser, who has been providing legal services pro bono to DACHA members argued, “DACHA is left incapable of defending itself, because corporations are required to be represented by an attorney, and no lawyer has been willing to take the case.”
“As long as DACHA technically remains in existence, burdened with two more potential default judgments, DACHA’s judgment creditors will use these judgments to continue severely abusing legal process,” she continued.
“NP has served 27 subpoenas on DACHA homeowners post judgment, and in one instance served a minor child. DACHA homeowners have been repeatedly dragged into debtor’s exams, then subjected to inappropriate questioning designed to obtain incriminating testimony for use in other lawsuits,” Ms. Roberts Musser continued.
—David M. Greenwald reporting
As Ms. Eastin suggested, this is primarily a failure of city leadership. What the hell is the city doing, other than costing Davis over $2 million so far?
Even sadder than the plight of the DACHA moderate income folks (for whom Elaine graciously is providing both legal and public relations assistance) is the perfornance by our city council and “responsible” staff (for whom our city attorney has provided the worst of legal advice).
By keeping DACHA from completing the original arbitration ordered payments, then by not resolving this mess with a reasonable settlement, the city put us on the hook for millions as well as protracted litigation (requiring, of course, much more work and fees to our city attorney).
This is all about greed. There’s little doubt at this point that DACHA members saw a windfall financial opportunity and went for it–using, at least, devious and, probably, illegal, means.
This isn’t surprising since Davis has an honored history of serving up windfalls instead of building an increasing supply of affordable housing. There’s little doubt it’s the money that means everything to the developers/managers of this ill-fated version of “affordable housing,” particularly once they got pissed at the city’s undermining of the judge’s arbitration decision.
It’s difficult to generate much sympathy for either greedy side In this debacle.
The city has moved from mismanaging this project to misjudging the city’s legal jeopardy to mishandling the continuing cover up efforts trying to hide responsibility for years of official screwups.
The only ones for whom I feel sorry here are Elaine (who has taken on a hopeless task) and Davis taxpayers (who will be getting no credible information about–but will be getting plenty of bills for–this misadventure for years to come).
[quote]He told the Vanguard, “Both NP and TPCF have offered at the podium on numerous occasions to meet with the City to look for ways to settle the issues. We have agreed to mediate. Regretfully for all concerned, the City has refused all our offers. It is a shame that the City is not willing to mediate as the City has created an unneeded difficult impact on all the parties.”[/quote]
I have not been privy to any settlement negotiations. However, in reference to negotiated settlements in general, if one side (A) remains completely unreasonable, it would not be in the interest of the other side (B) to even consider entering a negotiated settlement. This is particularly true if side A did not come to the table with clean hands.
[quote]By keeping DACHA from completing the original arbitration ordered payments, then by not resolving this mess with a reasonable settlement, the city put us on the hook for millions as well as protracted litigation (requiring, of course, much more work and fees to our city attorney). [/quote]
I have no idea where you got this misinformation from. It is NOT THE CITY who levied DACHA’s accounts and wiped out all DACHA’s funding…
[quote]This is all about greed. There’s little doubt at this point that DACHA members saw a windfall financial opportunity and went for it–using, at least, devious and, probably, illegal, means. [/quote]
Where do you get this blatant misinformation? Just because such charges are leveled repeatedly by the opposing side in this case DOES NOT MAKE IT TRUE…
[quote]There’s little doubt it’s the money that means everything to the developers/managers of this ill-fated version of “affordable housing,” particularly once they got pissed at the city’s undermining of the judge’s arbitration decision. [/quote]
WHO initially proposed this “ill-fated” version of “affordable housing” as you put it? It certainly wasn’t the city, and it certainly wasn’t DACHA members. Who stood to financially gain from this “ill-fated” version of “affordable housing” from its inception? It certainly wasn’t the city, and it certainly wasn’t DACHA members…
[quote]The only ones for whom I feel sorry here are Elaine (who has taken on a hopeless task) and Davis taxpayers (who will be getting no credible information about–but will be getting plenty of bills for–this misadventure for years to come).[/quote]
Now why would I take on a “hopeless task” if I thought my client(s) was in the wrong? Is it just possible that I know more facts than the general public, and believe my clients have been unjustly wronged? Now why do you think it is that the public has gotten no credible information? Could it be because one side, through threats/intimidation have effectively silenced the other side?
[quote]Even sadder than the plight of the DACHA moderate income folks (for whom Elaine graciously is providing both legal and public relations assistance) is the perfornance by our city council and “responsible” staff (for whom our city attorney has provided the worst of legal advice). [/quote]
“Even sadder than the plight of the DACHA moderate income folks”? DACHA members are low enough income to qualify for affordable housing, many speak English as a second language, some are disabled – the most vulnerable of populations, purposely sought out IMO because of that very vulnerability/naivete. Many lost their life savings because of the DACHA debacle. I personally find the circumstances repugnant, offensive, unjust, and without excuse. And to add insult to injury these people are being vilified, pilloried in public, and defenseless to fight back – or suffer the consequences of a possible lawsuit, a lawsuit they do not have the money to defend, and the opposition knows it and can (and has) taken advantage of it.
Directly from my Letter to the Editor in the Davis Enterprise:
[quote]1. Iterating vilifying allegations over and over again does not make them true.
2. If DACHA members dare to speak up in defense of themselves, public disparagement and/or threatened law suits are the painful result. In consequence, DACHA members have been wisely advised by legal counsel to keep silent.
3. The public discourse ratcheted up against DACHA members has been extremely poisonous, nasty, unrelenting, and completely unnecessary. DACHA members have had to stand by helplessly as they were referred to collectively as “deadbeats”. Opinion identified as such is one thing. Opinion stated as if it were fact, half truths, baseless accusations and name calling are below the belt.
4. If any adverse default judgments are entered against DACHA, it is not proof of any wrongdoing. Instead it would be a result of DACHA’s financial accounts being stripped of all funding, leaving it unable to hire an attorney to defend itself.
5. The California Attorney General has invited DACHA members to file a complaint of their own.
DACHA has no assets whatever, and exists in name only. There is no reason to forestall its dissolution.
[/quote]
I am glad to see that the victims (NP, Twin Pines) are pursuing the truth. I hope they take depositions and provide them to the Yolo County Grand Jury and appropriate state law enforcement officials.
Steve P: you need to make the appropriate staff and City Attorney accountable for this mess. Also, why is the CC allowing the City Attorney to litigate the mess that she helped to create? She has a direct conflict of interest pursuant to California Bar rules, yet here she is, still billing and churning and using our money in her unsuccessful attempt to cover up years of city mismangement and misteps.
As Ms. Eastin wrote, the City Attorney has cut a fat hog on this one.
Decisions to settle disputes rarely have much to do with “clean hands” and moral purity, and negotiations almost always begin with one side or the other or both thinking the other is “completely unreasonable.” For the city to not “even consider entering a negotiated settlement” is a terrible disservice to Davis taxpayers. A settlement would allow your clients to move on as well as stop the ever increasing legal expenses that taxpayers will have to cough up if this dispute continues. I certainly hope that your clients are encouraging the city to settle, in their own best interest!
Elaine, I’m just telling you what I’ve come to believe based on following the coverage of this debacle in the past years. I don’t see why “WHO initially proposed” the project is of much significance at this point. The city and DACHA have been fully engaged ever since the project got underway. How much is accurate of what sounds like questionable practices by DACHA hasn’t been proved in court. Just as repeating charges “doesn’t make them true,” it doesn’t make them false either. You haven’t chosen to deal with the specifics.
Your advice to “keep quiet” probably is wise. Of course, it doesn’t help calm the waters when David keeps rehashing Ethan Ireland’s old, antagonistic quotes.
I did not mean to minimize the plight of the DACHA members by noting their “moderate income” status to qualify for this affordable housing program. I don’t see them as the hapless victims you suggest–the city bore much responsibility for overseeing their conduct while they were operating and they have effective counsel in their present hour of need. As for your reasons for representing DACHA, I assumed you volunteered because you felt they deserved counsel even if they couldn’t afford it. I certainly accept all the other reasons you’ve implied here.
I don’t understand why the city feels it necessary to hold up dissolution. But, it makes me wonder why you present this as a battle between two parties. You seem to avoid what I see as a critical failure by the principle, responsible party involved. None of the fateful errors and omissions would have happened if the city had done its job at each stage of this project.
David, what is Ms. Eastin’s interest in this issue? From what forum did you get her words? I’m not questioning her right to weigh in, just wondering if she has any relationship or history with the project or the principles.
Just Saying, Ms Eastin’s words were from Davis Enterprise op-ed.
I think we need an independent investigation especially of the city’s role in this.
What is also regrettable, along with everything else, is 20 vacant homes collecting dust and not payments, 20 households who could have affordable homes but don’t.
What would it take to get an investigation?
If the homes are vacant, why hasnt the city retained a local property management company to get them leased?
[quote]For the city to not “even consider entering a negotiated settlement” is a terrible disservice to Davis taxpayers. A settlement would allow your clients to move on as well as stop the ever increasing legal expenses that taxpayers will have to cough up if this dispute continues. I certainly hope that your clients are encouraging the city to settle, in their own best interest! [/quote]
I nor DACHA members have any idea if the city was/is willing to enter a negotiated settlement or not; all of the discussions have taken place behind closed doors. What I do know from personal experience is that if one side digs their heels in and refuses to be reasonable, the other side has absolutely no choice but to “duke it out” in court. Secondly, when one side slings insult after nasty insult, it certainly does not give the appearance of/is not conducive to settlement negotiations. Rather it is indicative of spiteful, vindictive, malicious animosity that hardly bodes well for any type of reasonable negotiation. It takes two to negotiate; only one to spoil any chance at negotiation. Which side has been hurling unproven insults?
[quote]Elaine, I’m just telling you what I’ve come to believe based on following the coverage of this debacle in the past years. I don’t see why “WHO initially proposed” the project is of much significance at this point. The city and DACHA have been fully engaged ever since the project got underway. How much is accurate of what sounds like questionable practices by DACHA hasn’t been proved in court. Just as repeating charges “doesn’t make them true,” it doesn’t make them false either. You haven’t chosen to deal with the specifics. [/quote]
Coverage of this debacle has been pretty much limited to that of the Twin Pines/Neighborhood Partners viewpoint. As I said above [quote]If DACHA members dare to speak up in defense of themselves, public disparagement and/or threatened law suits are the painful result. In consequence, DACHA members have been wisely advised by legal counsel to keep silent. [/quote] So essentially the public has been given only one side of the story.
Who initially proposed this project and how it was proposed is a very vital part of the picture. But unfortunately I cannot say any more on this score, much as I would like to. However, as I noted before [quote]The California Attorney General has invited DACHA members to file a complaint of their own. [/quote]
You are certainly free to choose who to believe. But please recognize you have only been exposed to essentially one side of the story; the circumstances surrounding this case prevent DACHA members from telling their side; and no wrongdoing has been proven thus far. So I would ask what happened to basic fairness and the principle “innocent until proven guilty”?
[quote]I don’t see them as the hapless victims you suggest–the city bore much responsibility for overseeing their conduct while they were operating and they have effective counsel in their present hour of need. As for your reasons for representing DACHA, I assumed you volunteered because you felt they deserved counsel even if they couldn’t afford it. I certainly accept all the other reasons you’ve implied here.
[/quote]
How do low income folks (one a 16 year old child) pay for/indefinitely continue laying out funds for an attorney to protect themselves from highly inappropriate questions asked during debtors exams? Depositions? Debtors exams/depositions repeated over and over again? You would be surprised how easy it is to get sucked into legal process even if you have done nothing wrong. Ask the West Memphis Three. I myself have gone through unjustified legal process… it is nasty, ugly, and you can be a helpless victim with virtually no recourse even if you have done nothing whatever wrong…
[quote]I don’t understand why the city feels it necessary to hold up dissolution. But, it makes me wonder why you present this as a battle between two parties. You seem to avoid what I see as a critical failure by the principle, responsible party involved. None of the fateful errors and omissions would have happened if the city had done its job at each stage of this project.[/quote]
It is a battle between two parties; the city on the one hand and Twin Pines/Neighborhood Partners on the other – and the DACHA homeowners are caught in the middle. I have made it clear in City Council meetings that I am not at all happy with the city dragging its feet in regard to the dissolution; nor do I minimize the errors/omissions of the city. But neither do I minimize what I consider other errors/omissions I am not at liberty to discuss…
I do not have time to reiterate the city’s position right now. Two separate city councils have studied this issue in depth and have reached rare unanimity. There is a reason for this.
The city has not engaged in a PR campaign as David Thompson and Luke Watkins have. We did write one detailed op-ed piece for the Enterprise last year, and I will try to have staff give it to the Vanguard for posting in the near future.
I respect the deep bonds of personal friendship and loyalty between Delaine Eastin and the family of David Thompson. That said, Delaine Eastin has never asked to sit down and go over the history and the documents from the city perspective. I would be happy to talk with her in person and at length if she would like.
My years of analysis of this situation resulted in the conclusion that the failure of DACHA was not due to an unfortunate coincidence that dozens of unusually greedy low income people happened to join DACHA, or that City Staff did or didn’t take some actions, but that the basic business model was flawed.
That is the conclusion of the independent auditor, and it is my independent conclusion as well.
I have two questions for Elaine or anyone else who knows the answers:
1. How much money in fees or other forms of compensation has Neighborhood Partners and or Thompson and or Watkins as individuals and or any others on the NP management team made in connection to DACHA from the start of the project to this day, including all money from the DACHA homeowners and all money from the taxpayers?
2. Were the fees or other forms of compensation charged by and or paid to NP and or its affiliates all spelled out in writing in the original contract which created DACHA and in any subsequent contracts agreed to by the parties involved. And if so, are those contracts public documents?
I have never closely followed the DACHA situation. There is a ton I don’t know about it. However, on background, a member of the Davis City Council some years ago told me that “the reason” DACHA ultimately failed began with the “unreasonable” fees paid to Neighborhood Partners. This member of the DCC implied that the homeowners, most of whom were not sophisticated in such matters, were naively unuaware of how much money was going to flow into the pockets of NP. And that member of the council caused me to infer that the real story of DACHA is a story of an avaricious management company.
If what I think is the case is not correct, I am happy to be disabused. David Thompson, in a comment on The Enterprise site where he acknowledged that Delaine Eastin is a close personal friend of his and because of that she wrote her pro-NP letter, invited me to discuss the whole situation. I am not yet ready to meet with Thompson. I need to take the time to get up to speed on DACHA. But when I have, I will meet with him. I am, alas, bogged down now by other matters.
Rich may be on to something… unlike the unnamed city employees denigrated, Mr Thompson and Watkins are not required to file
Form 700 (State disclosure form of financial interests)… would be interesting to see how much they gained from their “services”. Follow the money… who benefited? How much?
[quote]Follow the money… who benefited? How much?[/quote]
Very wise questions, any the reason why who set up this venture in the first place is very important…
To Rich Rifkin: As much as I would like to answer your questions, I am not at liberty to discuss…
@Rich Rifkin: The major way the fees come into this is as follows:
Neighborhood Partners, i.e., David Thompson and Luke Watkins, contracted with their initial board that they themselves had picked to expand the coop and to pay Neighborhood Partners specified fees for each unit added.
This contract obligated DACHA to add these units and pay them these fees whether or not future boards felt it made fiscal sense to add more units, and whether or not the city would provide these units. Later boards expanded the number of units that future boards were obligated to purchase along with the developer fees. The initial boards were not composed of a majority of members of the DACHA who would actually have to pay the bills.
When a board with more actual DACHA members was finally seated, they felt that the coop was in financial trouble and didn’t want to expand. Our independent auditor agreed.
Neighborhood Partners sued DACHA for the developer fees for the units that they decided against adding, as well as many additional units that the city had not even agreed to provide.
The judgement for these fees came to $331,872. DACHA did not have $331,872 to pay David Thompson and Luke Watkins.
Clarification: Neighborhood Partners sued DACHA for the developer fees for the units that the [b]DACHA BOARD[/b] decided against adding, as well as many additional units that the city had not even agreed to provide.
[i]”This contract obligated DACHA to add these units and pay them these fees whether or not future boards felt it made fiscal sense to add more units …”[/i]
There is a Yiddish word for this kind of scam: It is “scam.”
So, there’s some critical information that’s the basis for what Elaine and Sue place at feet of Neighborhood Partners. But, Elaine isn’t at liberty to reveal to the public what she knows and Sue doesn’t have time to reveal what she knows (except to bemoan that the city hasn’t able to match NP’s “PR campaign.”
Now that we’ve concluded that Delaine Eastin’s comments don’t have to be respected or addressed–but, we do “respect the deep bonds of personal friendship and loyalty between Delaine Eastin and the family of David Thompson”–it’s obvious to me that our city council better come up with some way to settle this, the sooner, the better.
Of course, Sue suggests that the city was not involved in setting up “the basic business model (that) was flawed,” that the city had no management obligation to fix “the basic business model (that) was flawed,” or that the city has no way to minimize the amount of tax money that gets wasted because “the basic business model was flawed.
I’m with SODA on this on. We need a real investigation of what’s happened here, not a convenient agreement of two city councils that usually don’t agree on anything.
[quote]”This contract obligated DACHA to add these units and pay them these fees whether or not future boards felt it made fiscal sense to add more units …”
There is a Yiddish word for this kind of scam: It is “scam.”[/quote]Now, now. It is what it is, a contract (upon which two parties intended to gain). My question is: “Where was the city in all of this?”
[i]”It is what it is, a contract (upon which two parties intended to gain).”[/i]
One side [u]intended[/u] to gain from that provision of the contract. How did the other intend to gain from it?
My guess is that the implications of this provision were lost on the DACHA homeowners when they signed up. You might say, “Well too darn bad for them. They had an obligation to read and understand the contract.”
But I would say “try to put yourself in their places.” They naively trusted that the program was set up to be fair. I have (naively and usually out of laziness) signed many contracts where I did not consult an attorney and skipped over language I did not fully understand in cases where I thought the other side had no reason to be pulling a fast one on me. An obvious example of this is with computer software updates. Do you always read all the details. Or do you just click on the various “okay, godd*mnit, I’ tired of this” buttons? I think most people don’t read all the details.
I concede it is different when you are making a major purchase, such as a house or you are investing money in a managed mutual fund. You should hire a lawyer in cases like that and trust that she will understand and explain the details. But it is not surprising that most unsophisticated people will fail to do that, thinking that the program is set up by people who are acting in good faith. It is then a shock to find out the program is a scam for management profits.
[i] “Where was the city in all of this?” [/i]
I don’t know. However, it would surprise me to find that the principals in Neighborhood Partners did not at some point in the past fund the campaigns of various players on the City Council. And if that is correct, it would further surprise me if those contributions did not play a role in the City letting NP set up this deal the way they did and in the City not properly warning the DACHA homeowners that this deal could go sour in the way it did.
Keep in mind: individuals, companies, unions and so on which fund political campaigns do so out of self-interest. The firefighters don’t make 30% to 50% more than the cops in Davis by happenstance.
@JustSaying: I am sorry that I had other obligations this afternoon.
I have answered David Thompson and Luke Watkins’ arguments directly and at length in previous blogs.
Now to answer your specific questions: First, DACHA is an independent entity and it was not the city’s job to manage it. It was understood that the city was not going to manage the co-op. The city couldn’t approve co-ops if we had to manage them because we have neither the time nor money to do so.
Second, the business model was created by David Thompson and Luke Watkins and not by city staff. The city tried to “minimize the amount of the city’s affordable housing program that was wasted” by helping to put the project on sounder financial footing, as suggested by the independent auditor and finally by foreclosing to recoup loses – an option for the city that Luke Watkins emphasized in writing before the project was approved.
Just Saying, you express anger that I did not answer Delaine Easton’s arguments. Delaine Easton’s specific complaint against the city seems to be that we should have policed the DACHA board, but that was never our responsibility. The organization was supposed to be independent. Delaine Easton also says that staff “appears to have been complicit in facilitating the effort of the residents to steal their units at below market rate.” But we didn’t accept the home ownership option; we provided help to keep the co-op viable.
In fact, it was David Thompson who argued that the “land trust” home ownership model was preferable to the limited equity co-op model. Here is an excerpt from an application that David Thompson prepared and submitted to turn the co-op into ownership housing of the “land trust” model: [quote]When we first proposed taking over the homes on Tufts we proposed looking at a [b]limited equity housing cooperative (LEHC)[/b] or a [b]community land trust (CLT)[/b]. In a LEHC the co-op owns the land and the homes, in the CLT the home owner owns the home and leases the land from the CLT. In the short period we had we could not do a CLT so we did a LEHC. NP’s study for the DACHA board and for the Center for Cooperatives shows that a CLT provides more effective tools and flexibility at a lower cost for single family homes than a LEHC.
The need is therefore to transform DACHA into a CLT to meet the needs of low/mod income households in Davis — application by David Thompson to turn DACHA into home ownership units
http://cityofdavis.org/cs/cdbg/0405pdf/0405-DACHA.pdf%5B/quote%5DRegarding the general complaint that the DACHA board was illegal, our attorneys have advised us that there is case law involving “de facto” boards. I assume that this is because many decisions and contracts are made by boards, and people who don’t like those decisions probably frequently accuse these board members of infractions of the rules or of ineligibility. In order to avoid utter chaos, the courts tend to uphold the decisions of boards even if there is question as to eligibility. This is the advice that we have been given.
The remainder of Delaine Easton’s article seems to revolve around her personal assessment of the motives and character of the DACHA members and of David Thompson and Luke Watkins.
Correction: I meant to write: Delaine Eastin. I apologize. This is what happens when you become overly reliant on spell check.
Here is the link to the application prepared by David Thompson to turn DACHA into a home ownership model from a co-op model. He argues that Neighborhood Partners had always preferred the home ownership model, but didn’t have time to implement it.
Here is the link: [url]http://cityofdavis.org/cs/cdbg/0405pdf/0405-DACHA.pdf[/url]
[quote]Now to answer your specific questions: First, DACHA is an independent entity and it was not the city’s job to manage it. It was understood that the city was not going to manage the co-op. The city couldn’t approve co-ops if we had to manage them because we have neither the time nor money to do so.
Second, the business model was created by David Thompson and Luke Watkins and not by city staff. The city tried to “minimize the amount of the city’s affordable housing program that was wasted” by helping to put the project on sounder financial footing, as suggested by the independent auditor and finally by foreclosing to recoup loses – an option for the city that Luke Watkins emphasized in writing before the project was approved. [/quote]
If the city initially hired the consultants to create an affordable housing model for THE CITY’s affordable housing program, THE CITY knowing that potential homeowners would be low income and speaking English as a second language, a very vulnerable population, it would seem to me that the city had a responsibility for some oversight of its own affordable housing program, especially if there were violations of the city’s own housing ordinance by said consultants. The Grand Jury seemed to think the city owed a duty of supervision. Just because the city says it had no duty to supervise does not necessarily make it so…
[quote]My question is: “Where was the city in all of this?”[/quote]
Good question…
[quote]This contract obligated DACHA to add these units and pay them these fees whether or not future boards felt it made fiscal sense to add more units, and whether or not the city would provide these units.[/quote]
Since the city hired the consultants in question, and it was the city’s affordable housing program, where was the city when the initial contract was drawn up? When the consultant started talking about “land trusts”, which is antithetical to the cooperative model and potentially misleading to homeowners?
[quote]Of course, Sue suggests that the city was not involved in setting up “the basic business model (that) was flawed,” that the city had no management obligation to fix “the basic business model (that) was flawed,” or that the city has no way to minimize the amount of tax money that gets wasted because “the basic business model was flawed. [/quote]
I would argue the city should have been involved from the outset…
Elaine, I would never have voted for this project if I had any inkling that it would involve an obligation by the city to actively police and oversee at this level. We don’t have the time or staff, and for the city to do so would make co-ops a very inefficient way to provide affordable housing. If it is determined that cities have a legal liability to oversee co-ops at this level, I believe it will be the death knoll for cooperative housing.
I certainly had no way knowing, when I voted for this project, that David Thompson and Luke Watkins would immediately start entering into contracts with their initial hand-picked board that would obligate future boards to add units to the co-op and to pay David and Luke a fee for each of these units, whether or not future boards deemed the expansion to be in the best interest of the co-op and whether or not the city was willing to provide these units.
These fees to Neighborhood Partners for hypothetical future units eventually led to the lawsuit by David and Luke that cost DACHA $331,872 that they didn’t have. This award included $282,000 for development fees on housing units that have never been built, such as units in Covell Village.
Neighborhood Partners assured the city that our affordable housing funds would not be at risk if we approved their project.
The business model for this co-op was flawed. David Thompson and Luke Watkins never adequately addressed the underlying issues of fiscal sustainability; they have merely blamed the low income DACHA members and city staff.
[quote]”Since the city hired the consultants in question, and [b]it was the city’s affordable housing program,[/b] where was the city when the initial contract was drawn up?”[/quote]Apparently, you’re mistaken, Elaine. Maybe this was a County of Yolo program or a City of Winters or a Jacob’s Corner or a Plainfield affordable housing program. I’ve never seen people running away so fast from a city project aimed at helping poor people, so it must not be part of a City of Davis program.
Who knew? I guess my questions have to be redirected now that the city council and the city affordable housing program staff leadership claim non-involvement.
I’m not angry, Sue, that you didn’t instantly answer Delaine Eastin’s charges.
I’m disappointed in the city’s performance over all these years and in the efforts going on now to claim the city’s city actions and lack of action had nothing to do with the project’s failure. I’m disappointed that calls for investigations are met with official resistance.
I’m disappointed that supposedly responsible Davis officials have engaged in “affordable housing” experiments that cost tax money and staff time, yet no one will identify a single one for which they take pride. Are there any that have been unqualified successes? (Ones that have developer or city staff beneficiaries don’t count. Ones that involve windfall profits for the first buyers–those who take their equity after, or before, some deadline and re-buy in Dixon–leaving behind more market price houses that don’t meet regular Davis building standards.)
I guess, if I’m angry about anything, it’s that we’re now labeling the DACHA project “a failed business model,” as if that (surprise!) absolves everyone for years of neglect. That we’re now labeling the TP/NP developers as lying business vultures who’ve been running a scam, as if that absolves decision-makers of any due diligence responsibilities. And, that we’re now labeling the DACHA participants as poor, stupid, unsophisticated people who shouldn’t have been allowed to engage in this business at all, as if this absolves the city for its role in advancing this initiative.
So, this is the kind of talk that distresses me: [quote]”My years of analysis of this situation resulted in the conclusion that the failure of DACHA was not due to an unfortunate coincidence that dozens of unusually greedy low income people happened to join DACHA, or that City Staff did or didn’t take some actions, but that the basic business model was flawed.”[/quote]A simple question: What did you do to keep it from failing once you came to this realization years ago?
I have a few more questions for Sue or anyone else who knows the answers:
1. How much city/RDA money and staff costs have been involved in this project?
2. You suggest the city has had almost no involvement in determining the structure of this project. If that’s true, why couldn’t the city at least have encouraged changes that could improved DACHA’s potential to succeed.
3. “The judgement for these fees came to $331,872. DACHA did not have $331,872 to pay David Thompson and Luke Watkins.”–Is it possible the city’s foreclosure action assured that TP/NP never would be paid the entire amount the judge awarded?
4. As SODA already asked, what would it take to get an investigation? Now that the whole thing has collapsed on itself, and the decisions to come will determine whether the city makes or loses millions, the past inquiries are totally inadequate.
The one bright thing I see about this is that David’s reporting approach here is appropriate for the situation. Publish the two sides and let it rest.
This has developed into such a mess that only courts can sort out the “winner.” My guess is that the DACHA folks will lose on the evidence we know about so far.
No matter how much TP/NP might deserve demonization, they likely will “win” if continue to rely on the City Attorney and refuse to settle with them. We cannot now successfully pretend that city actions had no role in the failure and for TP/NP not getting paid what they were owed by judge’s decision.
[quote]A simple question: What did you do to keep it from failing once you came to this realization years ago? –[b][b]Just Saying[/b][/b][/quote][b]JustSaying[/b]: The first time that I was aware that there was a problem was around the year 2005, when I was shown a list of the carrying charges that members were paying various houses. Owning a rental house myself, could see that the carrying charges appeared to be as high or higher than market rate rents for single family houses. Given the fact that member shares were running over $20,000 and that members received no share in appreciation when they sold, I could understand why DACHA members were worried about affordability and also about future vacancies. Furthermore, since members were given back the down payment plus a standard bank-type interest rates on their downpayment, I assumed that the new members buying in would have to pay ever higher membership share costs. I agreed that there were real looming sustainability issues.
Because of this, I voted to have an independent audit conducted, and, following the auditors general directions, voted for the effort of the city to bring the membership share cost down to a level that would make the co-op more affordable and more appealing to future members.
I was not, of course, aware that Neighborhood Partners would sue DACHA for over $330,000 in developer fees for units that a prior board had contracted to add to the project, most of which weren’t even in existence.
Clarification: Furthermore, since members were given back the down payment plus a standard bank-type interest rates on their membership share (the functional equivalent of a “down payment”) when they left the co-op, I assumed that the new members buying in would have to pay ever higher membership share costs. I agreed that there were real looming sustainability issues.
[quote]This has developed into such a mess that only courts can sort out the “winner.” My guess is that the DACHA folks will lose on the evidence we know about so far. [/quote]
What do you mean by “lose” on the evidence? How could you possibly know, since you don’t know all the facts? Even I don’t necessarily know all the facts. A judge in the case stated something to the effect he doubted the plaintiffs in this case would ever be able to collect their money…
[quote]No matter how much TP/NP might deserve demonization, they likely will “win” if continue to rely on the City Attorney and refuse to settle with them. We cannot now successfully pretend that city actions had no role in the failure and for TP/NP not getting paid what they were owed by judge’s decision. [/quote]
In civil cases, there is something called joint and several liability. Each party found liable has to pay its percentage of estimated culpability in the case. Who is more culpable in the following hypothetical? Party A, that drew up a flawed model/contract, misrepresenting what the terms of the contract were, for its own monetary gain; or Party B who hired and trusted said Party A, not realizing Party A was going to do something so one-sided and dishonest (adhesion contract)? If you were a juror, what percentages would you choose to assign blame to culpable Parties A and B?
Party that perpetrated an adhesion contract
Ignore the last sentence “Party that perpetrated the adhesion contract”. Don’t know how it got in there…
[quote]This has developed into such a mess that only courts can sort out the “winner.” My guess is that the DACHA folks will lose on the evidence we know about so far.
No matter how much TP/NP might deserve demonization, they likely will “win” if continue to rely on the City Attorney and refuse to settle with them. We cannot now successfully pretend that city actions had no role in the failure and for TP/NP not getting paid what they were owed by judge’s decision. [/quote]
No one, and I mean no one in this case has “won” or will “win”. All are “losers” for one reason or another. How will TP/NP “win” if the city refuses to settle?
[quote]JustSaying: The first time that I was aware that there was a problem was around the year 2005, when I was shown a list of the carrying charges that members were paying various houses. Owning a rental house myself, could see that the carrying charges appeared to be as high or higher than market rate rents for single family houses. Given the fact that member shares were running over $20,000 and that members received no share in appreciation when they sold, I could understand why DACHA members were worried about affordability and also about future vacancies. Furthermore, since members were given back the down payment plus a standard bank-type interest rates on their downpayment, I assumed that the new members buying in would have to pay ever higher membership share costs. I agreed that there were real looming sustainability issues. [/quote]
It was my understanding that the carrying charges got so high, they violated the city’s affordable housing ordinance. Secondly, many home owners in DACHA lost their life savings…
[quote]”No one, and I mean no one in this case has “won” or will “win”. All are “losers” for one reason or another. How will TP/NP “win” if the city refuses to settle?”[/quote]I agree 100% with your comment–nobody comes out a winner no matter how things proceed from this point.
I’m just talking about salvage value, a way for everyone to benefit. IF the city can bring itself to understand it has some responsibility for what’s been happening over these years–and, regardless of legal liability questions, realizes that the longer DACHA disputes continue the more it costs the city–I’d say it’s a good use of our tax money to stop this now.
The DACHA residents/past residents stop losing because the city dissolves DACHA and the settlement eliminates liability and the associated need for attorneys, depositions, etc. TP/NP stops losing because they get the money they were awarded and potential liability and the finger-pointing from Sue, DACHA folks and others stop. The city stops losing because we quit hemorrhaging legal fees and questions about the council/staff role start fading.
There’s some value for everyone in getting to move on after all these years. Who benefits if we keep up this way?
[quote]TP/NP stops losing because they get the money they were awarded and potential liability and the finger-pointing from Sue, DACHA folks and others stop.–[b]Just Saying[/b][/quote] JustSaying, I am [b]NOT[/b] finger-pointing, I am explaining the city’s action in the face of a lawsuit against the city launched by Neighborhood Partners.
Reading over this last sentence, I want to clarify that I am expaining the city’s past actions, and I feel forced to explain the city’s past actions because of the lawsuit launched by Neighborhood Partners and the attendent continual public finger-pointing by Neighborhood Partners.
Of courses, we explained our reasoning all the way along, but I feel I must explain again because of the public campaign launched being carried out by NP. I should add that anyone has a right to bring issues to the public, and anyone, including NP and councilmembers, have a right to answer and to explain.
Actually, you ARE finger-pointing, just like everyone else involved in the finger-pointing that’s going on here. I’m not saying there’s anything wrong with “explaining our reasoning” and “bringing issues to the public…to answer and to explain.”
My point is that the need for the finger-pointing by all sides would be lessened or eliminated if the city and NP would settle this, thereby getting the long-suffering DACHA folks off the hook at the same time.
Finger-pointing, in the nice terms that we’re using here, is a good thing. The city has been incredibly inept at pointing out where the responsibilities lie and why the city’s responds the way it does in this matter. It’s helpful to the public to have someone like you in authority who’s not afraid to tell it like it is from your council chair viewpoint.
Come to think of it, although you note you’re responding to a PR campaign by NP, they seem to be noticeably quiet at this point. Wonder why David Thompson and his lawsuit-happy (and apparently crooked, if one believes what we’re read here) cohorts haven’t had anything to say?
[quote]I’m just talking about salvage value, a way for everyone to benefit. IF the city can bring itself to understand it has some responsibility for what’s been happening over these years–and, regardless of legal liability questions, realizes that the longer DACHA disputes continue the more it costs the city–I’d say it’s a good use of our tax money to stop this now. [/quote]
You don’t know what settlement offer has been made. You might not think the city was getting any “benefit” if you knew precisely what TP/NP were demanding. Would you feel the city would “benefit” if asked to fork over all the DACHA homes, for instance?
[quote]”Would you feel the city would “benefit” if asked to fork over all the DACHA homes, for instance?”[/quote]Of course not. Why do you suggest TP/NP is making any such demand? Are you just making up something this outrageous for the sake of discussion? I’m not suggesting the city should roll over to some stupid agreement that would end them up in another lawsuit for mis-handling city property by giving it away.
I don’t know what they have offered to accept in settlement, do you? You’ve justified the city’s failure to engage in negotiations by saying TP/HP is unreasonable. What’s your reason for claiming that?
My thought is that TP/NP could reasonably ask for cash or something that would make them whole for the balance of the arbitration award that DACHA no longer could even try to pay once the city foreclosed on them. The city could reasonable ask that all lawsuits stop and that DACHA be relieved of any past responsibilities and be dissolved.
It’s not in TP/NP’s interest, in DACHA’s interest or in the city’s interest to continue along the track the three parties have built for themselves. Do you agree with my idea of a workable settlement? Do you have a better idea?
Furthermore, most settlement agreements have nondisclosure clauses. So the public will have no idea what the city gave up in a settlement agreement. Even if the city does settle with TP/NP, what makes you think the lawsuit against DACHA will be dropped? The settlement would only be between the city and TP/NP, and would not include DACHA members, who have been left twisting in the wind…
I can’t imagine a settlement agreement between the city and TP/NP would include a nondisclosure clause in this case. Why would it?
Why would TP/NP continue against a dissolved DACHA once it had been made whole? Do you a see a reason that DACHA would have to be left twisting in the wind? That’s where they are now, so I guess it’d be no loss for them. But, can’t you see a little innovation lawyering helping improve their present situation?!
[quote]I can’t imagine a settlement agreement between the city and TP/NP would include a nondisclosure clause in this case. Why would it? [/quote]
So there is no admission of guilt. Almost every settlement agreement will contain a nondisclosure clause.
[quote]Why would TP/NP continue against a dissolved DACHA once it had been made whole? Do you a see a reason that DACHA would have to be left twisting in the wind? [/quote]
Because TP/NP are determined to prove DACHA members were in the wrong. Since DACHA has no funds to defend itself, the opposing side can obtain a default judgment with little effort, and trumpet victory that it was correct in referring to DACHA members as “deadbeats”.
[quote]But, can’t you see a little innovation lawyering helping improve their present situation?![/quote]
These people do not have money to hire an attorney to defend them from interminable questionable legal process exerted continuously against them (debtor’s exams; depositions, etc), whereas the city and TP/NP have deep pockets to play chicken…
[quote]Of course not. Why do you suggest TP/NP is making any such demand? Are you just making up something this outrageous for the sake of discussion? I’m not suggesting the city should roll over to some stupid agreement that would end them up in another lawsuit for mis-handling city property by giving it away. [/quote]
I rest my case – you have conceded that the city should not roll over if the demand is outrageous. What I have suggested as a possible demand is not out of the realm of possibility as you suggest, but is very much at the heart of the debate – who should have those houses?
I don’t understand, Elaine. Are you saying that TP/NP is demanding that they be given title to the DACHA houses? Is this part of a suit they’ve filed against DACHA? Against the city? (I don’t suggest that this is “very much at the heart of the debate” between TP/NP and the city or between TP/NP and DACHA.)
Please be clear: Are you saying that TP/NP has demanded possession of the DACHA houses that now are in the hands of the city? Are you saying that the DACHA members think they can get the houses (and, therefore, it’s at “the heart of the debate” because the DACHA people are trying to get the houses?)
Your technique of asking outrageous questions, then announcing “I rest my case” without responding to reasonable questions about your outrageous questions is fascinating. Are you making all of this stuff up? Do you have any basis for making such implications?
[quote]”Because TP/NP are determined to prove DACHA members were in the wrong. Since DACHA has no funds to defend itself, the opposing side can obtain a default judgment with little effort, and trumpet victory that it was correct in referring to DACHA members as ‘deadbeats’. “[/quote]They will have no reason to spend money to continue once a settlement has been reached. This is business, not personal. You will not permit a default judgement to be awarded to TP/NP, will you?
[quote]Your technique of asking outrageous questions, then announcing “I rest my case” without responding to reasonable questions about your outrageous questions is fascinating. Are you making all of this stuff up? Do you have any basis for making such implications?[/quote]
I assume you have been following my comments on this blog long enough to know that I do not “make stuff up”; ask “outrageous questions”; would not take a case on pro bono unless I truly believed a great injustice had been done. Because there is ongoing litigation, it would not be wise for me to say anything more than I already have. It is as frustrating to me as it is for you. I truly regret that I cannot be more forthcoming…
I certainly accept your pro bono motives. I wouldn’t put it past you to make your argument in this forum more understandable by using a fictitious example, nothing wrong with this. But, I’m loosing track of what you’re contending. Guess it’ll all become understandable down the road….
To JustSaying: You are losing track of what I am contending, or just having a hard time believing something so outrageous could be true? Just a rhetorical question! I do understand your frustration, but think of how frustrating/helpless it is for DACHA members and myself to feel we cannot say much in our defense or else be threatened with dire consequences? Unfortunately the American jurisprudence system has some extremely unfair aspects to it…
Since Sue Greenwald has dragged my personal name into this discussion several times, I want to chime in briefly.
Sue has her facts wrong. For someone who we all acknowledge is very intelligent, whether we agree with her or not on one issue or other, she has shown a serious lack of willingness to deal with the facts concerning this matter. For example, in 2009 when the arbitrator awarded $330,000 to NP,and made a number of comments about the inaccuracy of the “audit” that the city had previously conducted, she dismissed his views as those of someone from outside of Davis, who like others from outside of Davis, just doesn’t understand how things work here.
Elaine is acting as an attorney, not a commentator discussing the facts of the issue. The reason she has advised her clients to remain quiet is because they are guilty, and can not provide a defense that will help the public’s perception of their side of the argument. She herself is limited to hurling insults about how we are terrible people.
Rich Rifkin, who I don’t believe I have ever had a face to face conversation with, even though we have both lived in town for more than 30 years, usually has some interesting things to say about one topic or another in his Enterprise columns. I particularly enjoy ones that deal with history. However, by his own admission, he is very uninformed on this issue, has never asked to meet with me about it, and for some reason has decided to make vitriolic accusations about our character, without the facts to support his conclusions. He seems to think that we are money grubbing developers who have made a pile of $. He has not bothered to find out how much we have earned on this DACHA project, compare it to other affordable housing developers in the area, or conpare it to what a for-profit developer would earn. Until he has done that research, and shared it with the rest of the readers, I don’t understand how he feels OK with arriving at his very negative conclusions.