Editor’s Note: by request, some asked us to run this letter from 2006. The letter is dated June 24, 2006. John Gianola is the managing attorney for Legal Services of Northern California. LSNC provides a wide range of legal services to a low-income population of approximately 500,000 throughout Northern California. Their mission is “To empower the poor to identify and defeat the causes and effects of poverty within their communities, efficiently utilizing all available resources.”
Dear Mayor and Council Members:
As you know, I am the City’s representative on the board of Davis Area Cooperative Housing Association (DACHA), I was appointed to the board in fall 2005. I have not yet reported to the Council regarding my impressions and opinions of DACHA.
I understand that the Council will be receiving a report from staff on the audit of DACHA at its June 27, 2006 meeting. Unfortunately, I will be out of town and will not be able to attend. I believe that this is an appropriate time to share with you my thoughts on the audit report, the staff report, and my opinions on the structure of DACHA.
I joined the DACHA board at a time of much conflict between the residents of DACHA and its board and especially with DACHA’s consultants, Neighborhood Partners (NP), Since I have ‘been on the board, it has evolved from a board with only one resident member and one that was primarily influenced and controlled by NP to a board that now has a resident majority, DACHA has terminated its relationship with NP. It has been a pleasure working with this new board as it has restored some of the faith in the leadership of the organization and has encouraged active participation by residents in the administration of DACHA.
I find nothing to dispute about the audit report. I also fully support the staff’s recommendations stated in its June 21 report.
When I joined the board, it was clear that DACHA was suffering financially, and the residents were upset about the high cost of their housing and generally frustrated with the administration of the organization. As the board knows, there was also much mistrust of NP by many of the residents.
My concern when I joined the board was to help ensure the viability of DACHA and to establish faith in the organization among the residents. However, because of the lack of necessary documentation and confused accounting of the organization, it was impossible for me and the board to make responsible long-term decisions about DACHA. I felt as if I lacked basic information about this organization, such as a clear accounting of DACHA’s liabilities. Therefore, I eagerly awaited the results of the City’s audit of DACHA to give me an independent, objective and better understanding of DACHA’s viability so that I could make informed and appropriate decisions about this important community asset.
The audit report confirmed my suspicions: DACHA is in financial distress and that it represents a significant financial risk to the City and to the members of DACHA. Based on the information in the audit and the auditor’s conclusions, it would be a violation of my fiduciary duty to DACHA and to the City as its representative to support additional long-term community investment in DACHA. Particularly, it makes little financial sense to award the Parque Santiago affordable units to DACHA as the addition of these units will not alter the serious long-term financial risk to this organization. Affordable housing is a very limited community asset and needs to be invested and administered wisely. Unfortunately, DACHA no longer represents a sound and safe affordable housing investment for the community.
I support the recommendation that staff be directed to do an analysis of the sustainability of DACHA and explore different models or options for DACHA. My impression is that the members of DACHA have lost faith in the organization and, as a result, it cannot continue to adequately function as a cooperative. I think it is vital that the City explore an alternative model that allows the current residents, who invested large sums of money in good faith in DACHA, to maintain their homes. Any plan that involves residents being removed from their homes or being forced to maintain this risky housing model simply would not be right.
Moreover, I believe that it is not enough to merely make DACHA homes affordable to these residents. Mere affordability is the goal of affordable rental housing programs. These residents were promised “homeownership” and no one has made good on that promise. The current financial structure, according to the audit, will not significantly increase equity in these properties. DACHA is a very expensive proposition for something that more resembles rental housing than it does homeownership. I also urge the Council to direct staff to explore alternative models that gives the current residents some degree of real ownership in their housing and a better opportunity for realizing equity in their homes. I do not know whether or not it is possible to realize such an alternative, but I know DACHA residents deserve serious efforts to explore and consider all alternatives.
I understand that NP is stridently arguing that DACHA must be maintained as a cooperative and that more units should be added to DACHA. However, the matter at hand is not what is best for NP – it is what is best for the City and the residents of DACHA. NP is the only entity that seems to have faith in the continued growth of DACHA. But NP has a financial interest in adding more units to DACHA and its advocacy must be seen in that light.
The following are my observations and opinions about the structure of DACHA and why it may have been ill-conceived. Some of these opinions are shared in the audit and staff reports. I have the benefit of hindsight and I do not believe that all these problems necessarily should have been understood at the initiation of DACHA. I share these observations in the hope that important lessons can be learned from this experience and that mistakes will not be repeated in future affordable housing ventures.
Scattered-sites and economy of scale
It seems to go against the very nature of a cooperative to have members’ units scattered about the City. Similar units in one location certainly fosters a sense of common good and cooperation. Indeed. I’ve observed that it has been difficult for DACHA to establish a common bond among its residents. In fact, this scattered-site model fosters inherent conflict among residents. For example, there is some conflict and resentment among the members that some of the DACHA units with the worst financing have been a drain on DACHA’s limited resources. Also, residents of one site have particular landscaping needs that they would like DACHA to pay for while residents of another site do not see how such maintenance will benefit them. Thus, scattered-sites present an impediment to developing a cooperative relationship which is essential to a housing co-op model
Moreover, building similar units as one development with similar financing has the benefit of not only fostering cooperation among co-op members, but has the benefit of a favorable economy of scale. Needless to say, the staggered scattered-site model of DACHA is a poor economy of scale and helped lead to unfavorable financing to the organization and high maintenance costs to the residents.
In short, I believe the very concept of DACHA as staggered scattered-site units is fundamentally a faulty model for cooperative housing.
Over-marketing
To live in a housing cooperative is not simply a financial choice, but a lifestyle choice.
Successful cooperative housing demands continued and full participation of the members. Thus, marketing for co-op housing should be targeted to those who want to live the co-op lifestyle. This apparently did not happen with DACHA. It does not appear to me that any residents completely understood what it meant to live in a co-op, received any training on co-ops, or were encouraged to actively participate in the co-op when they purchased their shares. The main marketing theme seemed to rely on a promise of affordable homeownership and not the benefits and responsibilities of living a cooperative lifestyle.
DACHA suffers from a lack of participation of members. The burden of trying to administer DACHA, especially navigating the organization through its financial crisis, has fallen on a core group of residents. Although these residents are bright, energetic, and committed to DACHA, they are expending a great and inordinate amount of time and personal resources to running the organization. I cannot blame residents who are not involved as I believe that regular participation in DACHA was not part of what they bargained for. Nor do I think it is fair for anyone who may want to live in a co-op to be subjected to the tremendous problems of administering a co-op such as DACHA.
I’ve observed a great amount of stress by several residents who have taken on the difficult tasks and challenges facing DACHA. I’m concerned about the ability of these residents to continue this level of work for the long-term and the stress on their health and on their families.
Drafting of bylaws and occupancy agreements
DACHA and NP would have benefitted from more oversight by the City of the drafting of DACHA’s essential documents. There is unnecessary confusion and difficulties with DACHA due to poorly drafted bylaws and occupancy agreements. The bylaws have confusing and inconsistent provisions and conflict with various resident occupancy agreements.
The drafting of these documents was shoddy and should have received more review by the City. In the future, I recommend that any documents relating to the operation of a co-op be closely reviewed by staff, the City Attorney, and the Social Services Commission: As the members of co-ops need to understand exactly what their bylaws state, r also recommend that the City require that such documents be written in plain and simple language with a minimum of “legalese.”
Conflict of interest
As the Council is aware, there is a great amount of mistrust of NP by many of the DACHA residents. This was certainly the case when I was appointed to the board. Although I do not believe that there was necessarily any real conflict, there was some apparent conflicts of interest with NP’s involvement in DACHA. These apparent conflicts undermined NP’ s credibility in the organization.
A few of these apparent conflicts are as follows:
- Loans made by David Thompson to DACHA residents and loans by Twin Pines Cooperative Foundation (TPCF – of which Mr. Thompson is president). Although these loans may have been intended to assist members to buy shares, it created suspicion and conflict between NP and some of the residents, especially when supporting documents for some of the loans could not be produced. It was simply inappropriate for the consultants for DACHA to also act as a lender to the organization. It was an apparent conflict of interest that has actually produced conflict within the organization.
- David Thompson in his response to the audit report claims that if DACHA were to dissolve then the remaining assets must go to TPCF to develop other cooperative housing. Such language is reflected in the Articles of Incorporation (which can be amended). If not a real conflict, it raises a perceived conflict that the assets of DACHA would go to an organization of which DACHA’s consultant is the president. Because NP has a real financial interest and stake. In continued cooperative housing development in Davis, it appears that Mr. Thompson would indirectly financially benefit from the dissolution of DACHA. TCPF should not have been made a beneficiary of the dissolution of DACHA nor had any financial investment in DACHA as long as DACHA’s consultant was a member of TCPF. It is an unnecessary apparent conflict of interest that could easily have been avoided with more stringent oversight by the City.
- Because NP was responsible for the drafting of the bylaws, articles of incorporation, occupancy agreements, and various other contracts and agreements, it created the impression among many residents that NP exerted too much control and power over DACHA’s affairs. I would recommend that in the future, the City require independent sources to draft essential documents relating to cooperatives as to avoid the apparent conflict of interest by consultants.
Thank you for consideration of these comments. Please feel free to contact me if you need further information.
Sincerely,
John F. Gianola
I want to emphasize that John Gianola was chosen by the city to sit on the DACHA board and to advise us because of his high stature in the legal community representing the needs of low-income citizens. He was the Managing Attorney for Legal of Northern California.
Legal Services of Northern California provides a legal services to a low-income citizens throughout Northern California.
Please excuse my serious proof-reading handicap. I meant to say:
I want to emphasize that John Gianola was chosen by the city to sit on the DACHA board as our sole appointee and to advise us. We chose him because of his high stature in the legal community that represents the needs of low-income citizens. He was the Managing Attorney for Legal Services of Northern California.
Legal Services of Northern California provides legal services to low-income citizens throughout Northern California.
We weighed his advice heavily.
I should add that at the time John Gianola wrote this assessment, it was not clear whether he realized the extent of the binding contracts that the Neighborhood had entered into with the initial Neighborhood Partners-appointed board and subsequent non-member dominated boards to expand the co-op and the extent of the financial liability that the associated fees to Neighborhood Partners represented.
John Gianola had no way of knowing at the time he wrote this letter that Neighborhood Partners would sue DACHA for the future fees for the expansion that did not take place, and that, in fact could not take place because the city had not agreed to supply 60 single-family units to DACHA.
It would be interesting to see what he would have written had he known about the contracts and the subsequent lawsuit. He left because he took a job out of state.
I had the privilege of working closely and extensively with John Gianola in setting up and running a legal clinic Dan Wolk instituted in West Sacramento. I have a great deal of respect for John Gianola’s expertise…
Luke and I also worked with John Gianola on a number of housing issues. I will respond to a number of his comments later today.
What concerns me is that John as an Attorney sitting on the DACHA board participated in so many of the DACHA actions. He was appointed for his legal skills with housing but then proceeded to engage in the breaking of the bylaws of DACHA and the laws of the State of California.
January 14, 2012
To: Davis City Council (for DACHA Hearing to forward to California Attorney General)
Fr: David Thompson, President of Twin Pines Cooperative Foundation (TPCF)
Re: Evidence #13. Did City Appointee Break Law & Attorney General’s Requirements & assist DACHA’s illegal Self-Dealing Transactions? No action yet by City Council.
cc: Steve Pinkerton, City Manager; Danielle Foster, City staff and interested parties.
As a Public Benefit Corporation, DACHA is required by law to meet certain standards when it comes to self-dealing transactions between members of the DACHA Board and the organization. There is a section of the DACHA bylaws 5.4 (256 words) on Self-Dealing Transactions (taken from the Law) and instructions on the Attorney General’s website for a public benefit corporation to meet the law.
Regretfully, City staff, the City Attorney, and the City Appointee on the DACHA board never appear to have ever mentioned or met the Attorney General’s requirements.
Self-Dealing Transactions at DACHA Executive Session Meeting of August 24, 2006
First, there were not enough eligible board members to achieve a legal quorum. With the City Appointee on the DACHA board, a City staff member in attendance and the meeting at a city office the illegal DACHA meeting was held anyway.
According to the Law and to the Bylaws of DACHA a self-dealing transaction is required to be noticed, the members provided with detail, and the meeting should be open. For this self-dealing transaction there is no published Agenda, no explanation of the required details as an attachment to the Agenda and the meeting was held in Executive Session with no one other than Danielle Foster of City staff attending.
At this closed meeting the excessive delinquencies of two members were dealt with. One of the delinquents was (a board member & Board Treasurer) the other a non board member. The Treasurer was given 4 years/4 months to pay off $4,307 she owed DACHA. The City Appointee to the DACHA board made the motion. Even though the Bylaws required that she be automatically removed from the board, there is no mention of that issue and she was not removed as she should have been.
The non-board member was required to pay a lump sum (which she did) and to pay off the balance of $3,454 at $250 per month. The non board member was given only 14 months to pay off a delinquent amount smaller than the delinquent Treasurer. By September 30, 2006, the Treasurer’s delinquency to DACHA had been allowed to increase to $5,748 (64 months on a $90 per month) and the non board member’s delinquency had dropped to $3,454 (14 months on a $250 per month plan). Why did the Treasurer get a much better deal than the non board member on a motion by the City Appointee? The board and City staff has a history of favoritism to the Treasurer.
The City Appointee, John Gianola was appointed to the board by Mayor Asmundson partially because he knew a lot about housing law. The City Appointee -more to come!
For more about DACHA and the City role visit http://www.community.coop/davis.
Att: Minutes DACHA Executive Session August 24, 2006.
Thanks for posting this old piece of DACHA history. It’s certainly a devastating view to the state of DACHA management in mid-2006. (It probably detracts from the power of John Gianola’s review to speculate about if it’s “clear whether he realized the extent of….” anything he doesn’t talk about just to suggest that he would support one view or the other more than five years later.)
Although he served for less than a year before he wrote this, he showed up at a strained period and certainly developed strong opinions about DACHA: a lack of trust (due to real or imagined conflicts of interest) between the members and Neighborhood Partners before DACHA terminated its contract with NP, the model for this project and the failure of the city to provide needed oversight of the DACHA board.
Sue, how does one get to the city staff’s report and audit? I tracked down the June 27, 2006, council page and found only a set of minutes without the package. (Interestingly, you were absent. Even more interesting, you’re shown as voting in some cases and as making statements in other cases. An interesting off-topic mystery?)
Mr. Gianola appears confident that the city had a pathway outlined in the city report and his own recommendations to solve the issues that faced DACHA in 2006. He obviously didn’t think the city was powerless to act to correct the perceived flaws.
(I have to question your contention, Sue, that he could have been unaware about the contracts approved by the board when he was so thorough about reviewing the early DACHA documents. Were the audit and city staff report silent about the “binding contracts”?)
Sue, you keep suggesting that you (and, I presume, city staff and other counselors) couldn’t have anticipated how NP would set up the coop, how they would operate once established and how they would sue after they were dumped by DACHA. Something about “private enterprise trust” drove the decisions, I think.
However, the city knew by 2006 about the first two issues; Mr. Gianola (and the audit and the staff report, as well?) makes that clear and recommends corrective actions. Furthermore, given the obvious bad feelings described here and the contractual obligations DACHA had with its dismissed contractor certainly should have limited the level of surprise when any lawsuits appeared.
This letter foreshadows the opinions I’ve read recently about the flawed model, etc., or maybe was the source of those views. It also makes clear to those of us whose reading only goes back a couple years that DACHA fired Neighborhood Partners in 2005-2006, leaving the city more than five years to take some leadership in getting DACHA back on track.
Some specific questions:
1. Mr. Gianola, obviously a dedicated spokesman for the advancement of low-income people, had served only a short time when he did this. How much longer did he represent the city as a DACHA board member? Who proceeded him as the city’s representative? Who has followed him as the city’s representative from Mr. Gianola’s term until today? Will the current city’s representative be making a report at the upcoming council meeting?
2. Where is the city staff responsibility for DACHA project management? Mr. Gianola points to “staff, City Attorney and Social Services Commission” as people who could have provided oversight and kept “shoddy…essential documents” from getting DACHA off to a bad start.
To which department, in addition to the city attorney, did the council give oversight responsibility? Did these people meet with DACHA members, attend board meetings, report back to the city on a regular basis with recommendations for action?
3. Where can one read “an analysis of the sustainability of DACHA and [s]explore[/s] different models or options for DACHA,” assuming that the council followed recommendation that the staff develop one? What did the city do to correct the DACHA flaws in the more than five years that David T. no longer “controlled” the project?
A different and additional self-dealing transactions (not allowed by the Attorney General) which John Gianola Attorney, participated in.
December 15, 2011
To: Davis City Council (for DACHA Hearing to forward to California Attorney General)
Fr: David Thompson, President of Twin Pines Cooperative Foundation (TPCF)
Re: Evidence #9. City staff allows DACHA Treasurer seemingly to be delinquent for seven years and to break bylaws and laws without restrain from 2005 to 2012. Why such staff favoritism to DACHA Treasurer?
John Gianolo was on the board during most of these instances.
She was elected Treasurer of DACHA at the DACHA meeting of October 12, 2005 where a legal quorum was affirmed by city staff members Foster and Ayala-Garcia. However, rent rolls show there was not an eligible quorum to effect legal business. The 2005 rent rolls (attached) show that she was delinquent when elected. Due to being delinquent more than 30 days she was neither eligible to vote at the October 12 meeting nor to serve on the board. However, city staff declared there was a legal quorum with no mention of her being 30 days delinquent. The bylaws required she be automatically removed from the Board.
She has been delinquent continuously for almost seven years (since March of 2005) to the above date. At present, she is delinquent $7,821.08 by DACHA’s records (Rent rolls attached). There is no mention in the minutes of (the board, members or city staff) anyone following the requirement that she (and other board members) be automatically removed from the board as required by the bylaws.
On May 31, 2007 a self-dealing transaction took place with a board member (Treasurer) at the DACHA board meeting. The self-dealing transaction was not noticed to the membership. The Self dealing transaction involved expanding her home, allowing her to exchange the value of the improvement for an increase in her share to $20,000 and the deletion of her payment plan of $50 per month. The information required of a public benefit corporation for a self-dealing transaction was not provided by the board. The process required by the bylaws of DACHA for a self-dealing transaction was not followed. The approval of the illegal self-dealing transaction took place not in the open as required by law but hidden from the membership in the executive session of the board.
The City appointee, John Giannola was a member of the DACHA board. At this meeting there was no legal quorum for DACHA to conduct business. (See Minutes of May 31, 2007 meeting). City staff never took action to invalidate the quorum vote. Other illegal self-dealing transactions have taken place between the DACHA board and the Treasurer with the participation of the City appointee John Giannola and the attendance of City staff at the improperly called and conducted meetings.
The former President of DACHA told me that she had asked City staff for funds (about $800) to begin eviction proceedings against the Treasurer for owing so much to DACHA. Danielle Foster refused to provide the funds for DACHA to evict her. Sworn testimony by other DACHA board members shows that they did not know what was going on but that the President and Treasurer did as they were the two DACHA board members who were the main contact people with City staff (Cochran, Foster, Ayala-Garcia).
In the loan documents DACHA is required to notify the City of member delinquencies. There is no record of DACHA ever notifying the City of the rash of member delinquencies that at one point reached upwards of $110,000. Nor is there any evidence of the City staff enforcing their own loan documents, or requiring DACHA to pursue the major delinquencies.
How could a resident of a project that has a city loan be allowed to be on the board (illegally), to vote (illegally), to sign documents, to be constantly delinquent (almost seven years), to engage in self-dealing transactions and other corporate transgressions without any written record of the DACHA board or city staff pursuing their delinquencies and improper presence on the board.
The Treasurer was therefore ineligible to serve on the board or to vote during those four years. The Arbitrator brought this up in his report (June of 2009) to the Yolo County Superior Court. However, even after seeing that report, Danielle Foster continued to meet and work with an ineligible President and Treasurer and ineligible board. And we are talking about the conduct of the ineligible Treasurer of an ineligible membership to whom Danielle Foster had recommended that the City loan them $4 million dollars.
[quote]”…it appears that Mr. Thompson would indirectly financially benefit from the dissolution of DACHA. TCPF should not have been made a beneficiary of the dissolution of DACHA nor had any financial investment in DACHA as long as DACHA’s consultant was a member of TCPF. It is an unnecessary apparent conflict of interest that could easily have been avoided with more stringent oversight by the City.”[/quote]Here’s the best little nugget, in my opinion.
Did the city take Mr. Gianola’s observation to heart and act? Did we assure that DACHA revised its articles of incorporation–let’s say in the month or two following!–to correct this conflict and did the city assure the action was conducted in a legal manner that would survive any challenge by TCPF?
Fascinating. Now, I see where you got this odd-sounding “hypothetical,” Elaine.
All of the “shoddy” documents that John Gianola speaks of were approved by the City Attorney and the City Attorney testifed to the state I believe both that she had reviewed the documents and they met state requirements.
They are the same documents that are used by almost all limited equity housing cooperatives in California and are similar to the ones used by Dos Pinos.
David Thompson, Twin Pines Cooperative Foundation
[quote]”The Arbitrator brought this up in his report (June of 2009) to the Yolo County Superior Court.”[/quote]David T., where can one look at the arbitrator’s report on-line?
Did you and DACHA agree to arbitration at some point and did you both agree to work with this specific arbitrator?
It’s been suggested that you gained default judgments against DACHA because they failed to appear with an attorney. Is this an accurate report? I assume this doesn’t refer to the arbitration hearings, so what default judgments did you win against DACHA?
It’s been said that you subpoenaed a minor, essentially part of a legalistic terror campaign. Is there anything to this charge?
It’s been said that DACHA failed because it did not have enough money to pay the arbitration award. Do you agree?
I hope you’ll see my comments on yesterday’s story on the dissolution plan and see fit to answer for the benefit of [u]Vanguard[/u] readers.
[quote]”All of the ‘shoddy’ documents that John Gianola speaks of were approved by the City Attorney and the City Attorney testifed to the state I believe both that she had reviewed the documents and they met state requirements.”[/quote]You apparently have more faith in the city attorney that some folks do. In any case, it’s simple a matter of Mr. Gianola’s [u]opinion[/u] about whether the work was “shoddy.” Given his Legal Services background, it isn’t surprising he’d be a little dramatic if he saw papers that that didn’t provide adequate protection for “low-income” program participants.
More to the point are his specific concerns:[quote]”There is unnecessary confusion and difficulties with DACHA due to poorly drafted bylaws and occupancy agreements. The bylaws have confusing and inconsistent provisions and conflict with various resident occupancy agreements.”[/quote]Did the articles of incorporation, bylaws and occupancy agreements get revised to deal with the issues raised at the time?
It is more than a little fascinating if Mr. Gianola developed the opinion that the city attorney must not have reviewed documents because of their shoddiness, inconsistency and confusing nature. I wonder if he and the staff had some reason to believe she had not when, according to your account, she not only reviewed but approved of them and later testified to their legal adequacy.
[quote]They are the same documents that are used by almost all limited equity housing cooperatives in California and are similar to the ones used by Dos Pinos. [/quote]
God help us if this is true…
[quote]Did the articles of incorporation, bylaws and occupancy agreements get revised to deal with the issues raised at the time? [/quote]
And who drafted these “poorly drafted” documents? Certainly not the DACHA homeowners…
[quote]Fascinating. Now, I see where you got this odd-sounding “hypothetical,” Elaine.[/quote]
Now you are beginning to catch on…
Let me address the issue of the “minor” first as that is a human part of all of this. It is of course regretful that a minor was subpoenaed and I apologise that that happened and it should not have happened. The issue of the “minor” has been inappropriately raised as a way of portraying me as a “heartless’ something. So it has been used as a red herring relative to the truth.
Here’s how the sitation unfolded.
Our attorney asked DACHA for a list of all the members who had received (what we consider to be an illegal) refund of their share capital.
The management company for DACHA provided us with the names and addresses
of each of the members who they had sent checks to amounting to about $200,000. The check sent to this one family with their names listed was about $18,000. The family cashed that $18,000 check.
Having those names directly from DACHA’s management company our lawyer then prepared the list of people to subpoenae.
The father and daughter(minor)turned up at Court. We did not know until that morning that because the daughters name was on the check sent to the family for $18,000 she had therefore been subpoenaed.
DACHA’s management company gave us her name and the process took over.
It was a mistake for DACHA to have sent us her name. We would have no idea that the name on the check for $18,000 was that of a minor.
We apologise for our part in her having to turn up in court.
David Neighborhood Partners.
I find it fascinating how the architects of a mess can paint themselves as “angels”; and everyone else as somehow “evil”. Is there something wrong w such a picture I wonder? In my experience, there is usually “your side”, “my side”, and the truth lies somewhere in the middle, altho it may be heavily skewed to one side or the other depending on circumstances…
Here is the section from California law.
(4) The federal, state, or local public agency which executes the
regulatory agreement shall satisfy itself that the bylaws, articles
of incorporation, occupancy agreement, subscription agreement, any
lease of the regulated premises, any arrangement with partners, and
arrangement for membership share accounts provide adequate protection
of the rights of cooperative members.
According to the law, Harriet Steiner had to sign off on the above.
DACHA’s lawyer at the time should have the sign off from Harriet.
David Thompson, Neighborhood Partners. lLC.
It is disturbing to me that given the letter which is the basis for this story (or Mr Gianola’s views prior to the letter) on the status of DACHA, that he as the City’s rep, did not pursue the unraveling and correction of the issues. Why did that not happen. This gets muddier with every story in my opinion. And I ask along with Just Saying, for the arbitor’s report. Someone must have agreed with NP to allow the judgment.
.??
I will be posting that in the morning.
[quote][u]Elaine[/u]:”And who drafted these “poorly drafted” documents? Certainly not the DACHA homeowners…”
[u]J. Gianola[/u]: “Because NP was responsible for the drafting of the bylaws, articles of incorporation, occupancy agreements, and various other contracts and agreements…”[/quote]
Mr. Gianola believed NP handled its document development responsibility in a way that engendered distrust from DACHA members, including setting up an appearance of a conflict of interest (that might lead to NP trying to dissolve DACHA in order to take over the properties).
He also chastised the city for inadequate oversight in the document development process, by alleging (apparently incorrectly) that Harriet Steiner, city staff and a commission were missing in action.
Finally, he recommended that the problems be corrected and noted that the city was fully capable of assuring that this get done. A critical current question is whether the city acted on his advice, particularly with respect to the articles of incorporations changes that would have eliminated the potential conflict of NP assuming ownership upon DACHA dissolution.
David T., your California law citation is particularly damning if it applies to the DACHA project. If so, the responsibility for the quality of the documents clearly falls to the city (as opposed to the responsibility for [u]drafting[/u] them up for others’ consideration, revision and approval): [quote]”The…local public agency which executes the regulatory agreement shall satisfy itself that (the documents) provide adequate protection of the rights of cooperative members.”[/quote]
David T., you write about “DACHA’s lawyer at the time should have the sign off from Harriet” to support your claim that she was required to approve the documents and, likely, did. Who was the lawyer to which you refer? Was the lawyer employed by–and paid for–DACHA itself, the city or your organization(s)?
If DACHA had its own attorney at this time, that suggests even more entities failed in their legal responsibilities. I wonder if the DACHA members should hold up dissolution in order to go after all of the attorneys involved here for malpractice! There must be some lawyers in this country aren’t conflicted out by NP and who’d be willing to take the case on contingency.
I have no idea how that NCLS attorney could participate on the DACHA board when vote after vote was taken without a legal quorem?
Also, was he acting as a lawyer? Was he the City’s lawyer/representative, or a lawyer representing the DACHA members, or what?
If the City wanted any attorney’s opinion of what was going on with DACHA, appointing an attorney to the Board was creating a conflict of interest from the first day. The lawyer becomes one of the actors, and he should not have agreed to that arrangement.
Also, the record is clear: DACHA members were not “low income.” The housing was not supposed to be for low income. It was moderate to middle income housing, and I believe its members included UCD faculty and staff, and other professionals who were not economically or educationally challenged. They knew what they were signing, or had access to legal assistance. These are not people who fell off a tomatoe truck and wandered into the applications office for that housing.
Also, the record is clear: the monthly payments made by DACHA in the early days were literally a steal for them, as compared to market rate housing. They got a great deal.
Problem was, over time, it appears that some DACHA members may thought they saw an avenue to taking the houses for themselves.
Remember, DACHA was created after the staff-enabled give aways of other affordable housing units in, say, Wildhorse, to occupants who took the $100,000s of city equity money and ran. DACHA members were, or should have been, well aware that there was recent precedent of taking city afforable equity and the City doing nothing about it.
(Dear City Attorney and Housing Staff: wasn’t it your job to put the city equity language in the Wildhorse affordable housing deeds, and you did not? What was that debacle worth? $7 million, if memory is correct?)
So DACHA members most likely know all of this.
If it were not for NP and Twin Pines filing their cases, those DACHA homes would have been taken by their occupants, and the city afforadable housing program would have once again lost millions of public money, all without public notice or accountability.
Thank you, David, Luke, NP and Twin Pines, for continuing your fight to set things straight and gain some accountability onDACHA.
BTW, there has yet to be any accountability for what staff and the water gang tried to do to the City in the bogus rate hikes of Sept 6. Not one person has been fired or disciplined, so far as I know.
Tell me: why should any of us vote for the Parks Parcel Tax renewal, or any future city parcel tax renewal, when over and over, huge mistakes are made and there is no accountability?
.
[quote]Let me address the issue of the “minor” first as that is a human part of all of this. It is of course regretful that a minor was subpoenaed and I apologise that that happened and it should not have happened….DACHA’s management company gave us her name and the process took over. It was a mistake for DACHA to have sent us her name. We would have no idea that the name on the check for $18,000 was that of a minor. We apologise for our part in her having to turn up in court. [/quote]Elaine, does this satisfy your concerns? It certainly puts the situation in a different setting that you’d assumed it was in making your criticisms.
David T., why in the world would a minor be receiving an $18,000 payment from DACHA? Was she a coop member, and the head of the household? If you thought all such payments were illegal, why do you think it was “an error for DACHA to have sent us her name”? Was she treated respectfully or poorly when she was on the stand?
For whatever reason DACHA’s management company made out a check to a DACHA household for over $18,000. One of the names on that check was a minor.
The names of the people who had received checks from DACHA were provided to NP’s attorney.
When she turned up with her father we had no idea why she was there. Ms. Musser I think brough to out Attorney that the person subpoened was in fact the young girl, a minor.
We of course knew something was wrong, we checked our files, the minor’s name was indeed on the check.
We of course agreed that she should be excused. She was never on the stand and again if we had not been given her name by DACHA we would not have asked her to be there.
People have faulted us but it was a mistake DACHA made and passed on to us.
David, Neighborhood Parnters, LLC.
[quote]”Remember, DACHA was created after the staff-enabled give aways of other affordable housing units in, say, Wildhorse, to occupants who took the $100,000s of city equity money and ran. DACHA members were, or should have been, well aware that there was recent precedent of taking city afforable equity and the City doing nothing about it.”[/quote]While I’m personally aware of the inadequate management the city exercised in Wildhorse and other east-side development, I’m skeptical that word got around to the DACHA members and inspired them to figure out how to get on a windfall themselves.
It certainly didn’t work out for them if they did try, and I’m not sure how David T. gets credit for them losing their homes entirely. Or, if he wants it.[quote]”I have no idea how that NCLS attorney could participate on the DACHA board when vote after vote was taken without a legal quorem? Also, was he acting as a lawyer? Was he the City’s lawyer/representative, or a lawyer representing the DACHA members, or what?”[/quote]That’s easy. He was the city’s board representative, and it doesn’t matter whether he was an attorney on the side or not. Are you suggesting he should have abandoned his city assignment if there was not a legal quorum? Did someone suggest a lack of quorum at the time, or is that a after-the-fact allegation.
Who was/was the city representative(s) when you were on the council? Did they handle their responsibilities to your satisfaction?
Sue, how does one get to the city staff’s report and audit?–[b]JustSaying[/b]
Here is the link for the audit and the accompanying staff report: [url]http://cityofdavis.org/meetings/councilpackets/20060627/11_DACHA_Audit.pdf
[/url]
Justsaying: there was a clear conflict between the actions of DACHA, and the City, and no, you cannot have a city person who is an attorney sitting there and doing nothing while the DACHA Board, with him sitting on the board, acts without a legal quorem.
[quote]°Direct staff to work with Davis Area Cooperative Housing Association (DACHA) to make
corrections to management, fiscal systems, and accountability, as defined in the audit report.
°Direct staff to return to the Social Services Commission and City Council with an analysis
about the sustainability of DACHA and to make recommendations about corrective actions
or alternative models for sustaining its affordable units.
°Direct the Parque Santiago affordable units to be sold by the project developers to low and
moderate income buyers as resale-restricted units in accordance with the requirements of the city’s Affordable Housing Ordinance.”[/quote]Thanks for the link, Sue. Did the city council direct staff to do these things? Did the corrective actions get done?
Justsaying: DACHA placed the attorney/city rep in an untennable situation: he was an attorney; he was a city rep; he had a duty to the city to blow the whistle on misconduct by the DACHA Board; yet there he sat, on the board, not blowing the whistle. Then, when things blew up, of course he was in the situation where he had to trash someone else besides the CIty (his appointee) or the DACHA Board (of which he was a Member). Who was left to trash: NP of couse.
I would not accept a thing that the City rep/attorney has to say, because he was stuck defending his own conduct, right?
ERM and Sue: got anything else you can throw out there to defend DACHA and City Attorney and Staff that we can count on as reliable? So far, I am not impressed.
I hope NP takes the depositions, files the motion for summary judgment, and sends the transcripts to the Yolo County Grand Jury. (The GJ’s earlier report lacked detailed data review, and specifically said it would not examine any issues that where in litigation. Well, the time to perform an appropriate review is coming up.)
Dear City Council: I hope you do not settle this mess anytime before the depositions are taken, and filed in Superior Court so all of us taxpayers can see for ourselves who did what with DACHA over the past 5-7 years. A settlement right now would merely bury what staff and DACHA did or tried to do.
DACHA’s attorney was David’s long time friend Karen Tiedemann in Oakland.
She wrote the by laws for Rancho Yolo and Leisureville and these by laws also needed revisions.
Gail Madsen was DACHA’s manager and long time friend of David.
Lots of inter-relationships –
M.H.: I wonder if you’ve read the initial sales pitch for DACHA??
Page after page talked about the glories of home ownership and how DACHA
was a first step in home ownership. It’s no wonder members were confused, or taken advantage of.
John Gianola, is a lawyer, who in his letter critiqued among other things the shoddy bylaws. So to say that he must have read them.
John was appointed to the board as the City’s representative due to his knowledge of nonprofit and housing law.
If he read the bylaws he would have seen that the bylaws state:
board members who were delinquent more than 30 days were required to be automatically removed from the board
Members who were delinquent more than 30 days were not able to vote
He would have also seen the entire section in the bylaws (taken from state law) on self dealing transactions
He would also be aware of the Quarterly reports provided by the management company that would show the delinquencies by member
During 2005, 2006 and 2007 John Gianola attedned at least 14 meetings where there was neither a legal quorum for the board nor a legal quorum for the membership.
There was no DACHA meeting he attended that was legal
Mr Gianola had to have known (as did many others including staff)that the 14 meetings were not legal or proper.
He, the staff, the City Attorney, were constantly combing the bylaws and of course they were approved by the City Attorney and were provided to each member as required by law.
In 2007 at meetings with City staff present there was a discussion and vote to suspend the bylaws about delinquency so they could vote.
Why the discussion of suspending that part of the bylaws?
Because City staff and DACHA knew that there were not enough eligible members to vote to borrow 4 million dollars.
So everyone knew they were breaking the bylaws (including City staff and the City Attorney) as they all allowed DACHA to borrow $4 million in public funds.
It seems that as a board member John Gianola did not do the job required by California law, in his report to the Council he should have reported that the board and membership votes were illegal and he should have reported the delinquencies.
And by actively participating in so many instances of the breaking of the bylaws and state law was this how he should have conducted himself as the City representative on the board, as a board member and as a lawyer in California?
Seems at least questionable ethical conduct.
David Thompson, Twin Pines Cooperative Foundation
Self-Dealing Transactions from the DACHA bylaws which are also part of State Law.
John Gianola participated in a number of self dealing transactions that did not meet the requirements of the law and are part of the complaint filed against DACHA and the City.
Section 5.4Self-Dealing Transactions.
Except as provided below, the Board shall not approve a self-dealing transaction. A self-dealing transaction is one in which the Corporation is a party and in which one or more of the Directors has a material financial interest. The Board may approve a self-dealing transaction if all of the following exist:
(a)Notice of the self-dealing transaction is on an agenda posted in accordance with Section 5.9 including a description of the transaction with sufficient detail for Members to determine the nature of the transaction.
(b)The Corporation enters into the transaction for its own benefit.
(c)The transaction is fair and reasonable as to the Corporation at the time the Corporation enters into the transaction.
(d)Prior to consummating the transaction or any part thereof the Board authorizes or approves the transaction in good faith by a vote of a majority of the Directors then in office without counting the vote of the interested Director or Directors, and with knowledge of the material facts concerning the transaction and the Director’s interest in the transaction.
(e)Either (i) prior to consummating the transaction or any part thereof the Board considers and in good faith determines that the Corporation could not have obtained a more advantageous arrangement with reasonable effort under the circumstances, or (ii) in fact the Corporation could not have obtained a more advantageous arrangement with reasonable effort under the circumstances.
A self-dealing transaction does not include entry into an Occupancy Agreement or purchase of a Membership for its Transfer Value.
David Thompson, Twin Pines Cooperative Foundation
[quote]Seems at least questionable ethical conduct.—[b]David Thompson[/b][/quote]So now John Gianola joins the long, long list of people and organizations who David Thompson has accused of unethical conduct because they criticize his role in the DACHA failure.
This list includes, but is not limited to, the low/moderate income members of DACHA, the former City Manager, the City Attorney, three city staff members, myself, the rest of the City Council, the Yolo County Grand Jury, Yolo County and our independent auditor.
Now the highly respected John Gianola, former managing attorney for Legal Services of Northern California — an organization dedicated providing legal services to low income people — is added to the long list of people attacked and accused of unethical behavior by David Thompson.
Sue: low income? Dacha members could earn up to $90k. And many did
Their deal and monthly payments were a steal compared to comparable housing.
Home values were escalating rapidly and some wanted a piece of the equity action in 2005-08 They tried to get those homes for cheap, and but for NP and Twin Pines they would have succeeded
Why hasn’t the city rented these homes that are now vacant?