It was not as clean a process as some of the members of the Davis City Council would have liked, but in the end, by a 4-1 with Mayor Joe Krovoza opposing simply because the motion was too muddied by nuance, the council voted to send the dissolution of DACHA to the Attorney General to act upon, pursuant to state law for the dissolution of nonprofit public benefit corporations.The Council voted first to approve staff recommendations 2 and 3, which were to adopt the resolution which approved the dissolution of DACHA, as required under California Civil Code Section 817.2 (“Section 817.2”) and making the findings required by Section 817.2, and further to direct “staff to forward all of the information and written testimony from this hearing to the Office of the Attorney General for the Attorney General to consider as part of her ruling on the dissolution, in accordance with Section 817.2.”
Second was “to ask the city attorney to work diligently to mediate or otherwise settle this matter.”
The third part of the motion was to “commission an independent and objective examination of the situation with an eye toward proper disposition of the DACHA units to consider forming an advisory body made up of independent individuals appointed to the panel that would have a background in co-ops, housing, construction, development. Consider establishing something similar to the existing Water Advisory Committee. And no member shall have a conflict of interest.”
Fourth was to “direct staff to return to council with a plan to maintain renting the DACHA units.”
Councilmember Sue Greenwald argued that the last part of the motion “is problematic being in a lawsuit. It’s terribly problematic. It’s not wise from a fiduciary responsibility to do this.”
Mayor Joe Krovoza said, “I don’t know how you send to the Attorney General findings that are narrow under section 817 and share with the Attorney General the process that this community might want to engage in with regard to limited equity co-ops going forward and how we might heal the situation.”
He called it “nonsensical to me” and said, “it even borders on embarrassment.”
Mr. Krovoza pointed out an obvious conflict when it comes to tasking the city attorney to mediate this matter. “There’s no way the City Attorney can mediate this matter when they’re a party defending itself in a lawsuit and as we’ve already heard, we’re working to settle this matter.”
“As the council, we should take our responsibility and decide what to do with the units,” Councilmember Greenwald argued. “We know a lot about it at this time; I have been involved in this issue for a decade. I voted for the project so I had every reason to have wanted it to succeed.”
“I did have doubts, that the model wouldn’t work,” she added. “I had doubts that the expansion model without paying down the debt would work. I had doubts that single-family would be a cost-efficient way to provide affordable housing and to provide co-op housing.”
“This has been a very painful episode in our great heritage and history of providing affordable housing,” Councilmember Stephen Souza said. “We have people who are… caught in the middle. Those people are the ones that probably… have felt more hurt than the other parties in the middle.”
He argued that settlement “would help to take some of the pain away – settlement that is appropriate.”
“A resolution of the assets in an examination panel that looks at what went wrong and where do we go from here,” he added.
Councilmember Dan Wolk added, “This is actually one of the more vexing issues that I’ve confronted since being appointed to the council. It seems like we’re in a rabbit hole and it seems like this motion is the best way to get us out.”
He argued that we owe it to the community to settle this matter and “get it off our plate.” At the same time, he called for “an independent and objective look at the situation.”
Earlier in the evening, many of the parties came forward to speak.
David Thompson, speaking for both Neighborhood Partners and Twin Pines Cooperative Foundation, questioned the legality of these proceedings, arguing that there is a “conflict of interest of City staff running a hearing regarding the dissolution of DACHA, a limited equity housing cooperation in which the City staff has played such a significant role that it is now the subject of two lawsuits.”
He told the council on Tuesday, “Given the apparent conflict of interest, this hearing is blatantly improper. What’s more egregious is that the hearing is being conducted by the same City staff that are named and complained of in TPCF’s lawsuit against the City, Redevelopment Agency for the City of Davis (“Agency”), and DACHA.”
He argued, “The Council should recuse itself, allow the hearing to go on, take testimony, close the hearing and forward the material to the Attorney General without recommendation.”
Luke Watkins said that they have done the public noticing correctly this time. “The first time was clearly incorrect because no one told me.”
“I didn’t appreciate in September, what I thought was harassment, we got from the city about why won’t you just let us proceed forward when it was clear that you didn’t comply with the law,” he said. “But you wouldn’t admit it.”
“One of the things that offends me about this whole thing is an unwillingness on the part of the city to admit when it’s done something wrong,” Mr. Watkins said pointedly.
“You stand here right now, you’re supposed to be an impartial body holding this hearing and rule on whether this entity has met the requirements and whether private inurement has occurred,” he said. “Yet you all know you’re defended in two law suits with this entity, you’re not a disinterested party, you can’t possibly sit in a disinterested role and come to that conclusion.”
“We all know you want to do this because it’s advantageous in your suit and your defendant’s position,” he added.
On the other hand, Elaine Roberts Musser, representing DACHA members, asked for dissolution immediately, arguing, “DACHA has done everything that is legally required and then some. It is an organization in name only without any assets whatsoever.”
“There is absolutely no legal basis upon which the city could make a finding that DACHA’s not met all of the requirements” of the Civil Code, she argued. “The staff report clearly shows some but not all of the thorny problems embedded within Section 817 to itself. This would include that DACHA may not even be subject to its provisions.”
“It is very likely that DACHA can dissolve of its own accord without the city’s permission,” she added but argued, “Nevertheless I feel it crucial that the Attorney General take a look at this case and render a formal decision.”
She also noted, “It is with some dismay that I continue to hear DACHA members referred to as deadbeats, among other things, in city council chambers, in public emails to the city council, and various other venues.”
“At some point in the future, when it is more appropriate, I will have something to say in regard to the entire DACHA debacle,” she added.
Ethan Ireland, the last official board member of DACHA said, “It hurts to be referred to as a deadbeat when I know and can prove that I have paid every month on time for the almost four years that I have lived in the unit.”
“Tonight isn’t about me,” he argued, it is about DACHA and “it is about whether that organization is solvent or not.”
“It’s about whether it exists in any meaningful way beyond a scrap of paper in some box somewhere,” he said. “As is clear in the staff report, it absolutely does not. DACHA has no assets of any kind. It has massive liabilities. And frankly no conceivable way it can continue operating.”
“Its membership has no interest in remaining members of an organization that is being so heavily sued and their only wish is for it to be dissolved so that they can get on with their lives,” Mr. Ireland stated. He said he is the sole remaining board member, a volunteer, “I can’t resign legally and get on with my life until the organization is legally dissolved.”
“As I said four months ago, DACHA is a corpse and one left out long past when it should have been put in the ground,” he said.
—David M. Greenwald reporting
Is Elaine Musser saying that all members of DACHA paid every month on time the entire time that they lived in the house? Or are some members “deadbeats” and still owe money to DACHA. If they still owe, then this is an asset that should be collected or, if noncollectable, the “income” should be reported to the IRS.
The people caught in the middle, who are being hurt, was those people who paid, on time, every month and now are renting through no fault of their own. There must be a way to salvage this.
Was unable to watch last night. David do you think the ‘advisory committee’ has hopes of untangling this? And to what end, if it’s going to dissolution? Does the AG now rule, and rule what? I feel I have followed this “soap opera” through several seasons and missed the last episode.
I have never been able to follow this story and make sense of it. What is the relationship between Neighborhood Partners and Twin Pines? Did Twin Pines get $300,000 or do they just have a judgement they are trying to collect? What are the liabilities? Surely the property has value who claims that value and why? Did anyone make money on the deal? If so, Who?
Ethan Ireland points out that the DACHA organization has “massive liabilities” and is being sued. I think that those issues (along with being under formal investigation by the state, it that report’s accurate) are what ultimately determines whether DACHA legally can dissolve. The city’s “approval” seems to be a pretty academic exercise.
If the Attorney General isn’t required to keep a co-op in operation when it hasn’t settled such business, and looks like it never can, he should close it down. Other types of businesses as well as individuals get to go though bankruptcy and move on. Apparently, that’s not possible for DACHA.
Mayor Joe is right that this motion is a muddled mess of inconsistency. The council should have dealt with these issues separately. He’s right to have voted against it, if only for the goofy concept of having the city attorney “mediate or otherwise settle this matter.” What an unworkable, dark joke to play on all of the participants involved in the DACHA fiasco.
I’m surprised that Sue voted for this, given the poison pill included in it. With this motion, the city has decided to get into the housing rental business with a pile of units spread all over town.
Sue’s right to assume that the units could be targets for litigation as long as the city holds the foreclosed properties. (Of course, it also could be inviting a suit the instant we put the first unit up for sale since it could be seen as disposing of DACHA’s assets before it deals the liabilities it assumed in the foreclosure and the pending lawsuits.)
My guess is that the “yes” votes came from those who didn’t want appear unsympathetic to the DACHA members who lost everything when the city foreclosed on the co-op and took over all of its assets.
Looking for sympathy from the council has been the obvious strategy, portraying all the DACHA members as poor, pitiful, unsophisticated victims of an unscrupulous, rich businessman. It was apparent when it came down to TWO speakers playing the “deadbeat card” last night and whining about how it “dismays” and “hurts” to have members who did not pay their debts called deadbeats* at some point when all parties seemed to be delighting in name calling.
The council owes the staff big time for coming up with a way to express sympathy in public without it being binding in any way because the decision whether to permit DACHA dissolution now just goes to the Attorney General to decide. The contortions the staff had to undertake to get this issue in a form that could have been shipped out of town with a quick “yes” vote were amazing.
The council should have simply taken the opportunity to pass the decision up to the AG and not muddled up the gift horse with all these problematic add-on’s.
——————————
*deadbeat: n. One who does not pay one’s debts, or one who persistently fails to pay personal debts or expenses. (On-line: thefreedictionary and Merriam-webster.com) Examples: 14 DACHA members who still owe unpaid rent, etc., totaling about $50,000 of whom eight are former board members.
If some sort of “advisory committee” is formed, how is it possible to have it without a conflict of interest by making sure there is no representation of NP/TP or friends of NP/TP on this committee?
Or DACHA members present or past, Elaine!
[quote]Looking for sympathy from the council has been the obvious strategy, portraying all the DACHA members as poor, pitiful, unsophisticated victims of an unscrupulous, rich businessman. It was apparent when it came down to TWO speakers playing the “deadbeat card” last night and whining about how it “dismays” and “hurts” to have members who did not pay their debts called deadbeats* at some point when all parties seemed to be delighting in name calling. [/quote]
The only ones engaging in “namecalling” has been NP/TP and their representatives/friends…
[quote]Or DACHA members present or past, Elaine![/quote]
I suspect DACHA members would have nothing to do with a committee on affordable housing… you know the adage – burn me once shame on you, burn me twice shame on me…
[quote]Is Elaine Musser saying that all members of DACHA paid every month on time the entire time that they lived in the house? Or are some members “deadbeats” and still owe money to DACHA. If they still owe, then this is an asset that should be collected or, if noncollectable, the “income” should be reported to the IRS. [/quote]
This was all taken care of in the dissolution plan…
[quote]11) Share transfer value to 12 members as follows:
a) Six members who left after the levy occurred, but were eligible for a repurchase of their shares as per DACHA bylaws, a total outstanding of $37,500;
b) Six members remaining in DACHA, who will be eligible for a repurchase of their shares upon their departure of the organization as per DACHA bylaws, an approximate total of $37,500.[/quote]
Note: it is the DACHA members who are owed money…
Just because it’s in the dissolution plan doesn’t mean anything “[u]was[/u] taken care of.” Anyway, what does this mean, Elaine? It certainly doesn’t get to Ryan Kelly’s point.
As you say, the plan’s quote you offer suggests that there are rights left for DACHA members and they are the ones “who are owed money….” It seems to be silent on whether where were or are accounts collectable from members who did not (or still have not) payed their DACHA bills. What’s the answer to that question?
[quote]”Note: it is the DACHA members who are owed money…”[/quote]Does that mean that the city owes them money, having assumed DACHA in its foreclosure? If it’s the members who are owed money, are you including David Thompson in the list of people who also are owed?
How would dissolution affect these debts to members and NP?
P.S.–Good job last night in a difficult setting. You accomplished your [i]pro bono[/i] volunteer task well.
Elaine – I’m referring to the monthly carrying charge that each member was supposed to pay while living there (similar to my monthly mortgage or others monthly rent). Not the shares. Did all members pay their monthly fees on time, every month. Or were they delinquent and still owe this money. Were there members that were deadbeats? Were there Board members who were deadbeats? Can the City collect this?
I’m not an NP/TP friend, but merely a Davis citizen who is deeply unsettled that at the waste of public funds and the illegal activities of a Board who squandered the investments of their fellow members.
Yes Ryan and Just Saying, exactly .
It appeared from previous posts that there were monies owed and carried over for years. What now will happen to those debts and why has the city allowed them to be owed for so long?
[quote]It seems to be silent on whether where were or are accounts collectable from members who did not (or still have not) payed their DACHA bills. What’s the answer to that question?[/quote]
In so far as I am aware, when the city foreclosed, any and all debts (assuming there were any at all) would have been taken care of in that proceeding. If you want to know the particulars on this issue, you will have to inquire of the city…
[quote]P.S.–Good job last night in a difficult setting. You accomplished your pro bono volunteer task well.[/quote]
At one point, I had to leave the room, because what was being said about DACHA members at the podium was so grossly mistaken and unfair…
Notice, our side made no accusations of wrongdoing, but took the high road… which is more than I can say for the other side…
Frankly, and to put not to fine a point on it, last night’s spectacle orchestrated by Mr. Thompson I found to be deeply disturbing on so many levels…
[quote]I’m not an NP/TP friend, but merely a Davis citizen who is deeply unsettled that at the waste of public funds and the illegal activities of a Board who squandered the investments of their fellow members. [/quote]
Yet you seem not one whit bothered by any illegal actions of the consultant…
Argggggggggghhhhhhhhhhhhhhhhhhhhhh…. this is becoming too unsettling, so I am going to retire for the day and take care of more pressing business. One thing that needs to be understood is how difficult it is for customers of a failed housing project, who have no political connections or financial means, to defend themselves, especially in a small town. Such hapless consumers are at such an extreme disadvantage going up against a a well connected and financed developer/consultant/salesperson/man-about-town…
IMHO, DACHA residents were eaten up, spit out, and left on the ground to suffer, then kicked some more while they were down. It is not over for them, not by a long shot…
As a strong consumer advocate, I became involved in this case because I truly believed a great injustice had been done to these people, and I still believe it…
And the DACHA award for The Most Wisdom Packed in the Fewest Words goes to….[b]Don Shore![/b][quote]”It’s pretty clear to me that the city of Davis should completely get out of the affordable housing business. If they want to mandate affordable housing, density zoning is the way to do it.”[/quote]
[quote]”In so far as I am aware, when the city foreclosed, any and [b]all debts (assuming there were any at all) would have been taken care of[/b] in that proceeding. If you want to know the particulars on this issue, you will have to inquire of the city…”[/quote]Given your work on this case, I’m surprised that you don’t know and don’t care whether DACHA members owed the co-op or whether the co-op owed David T. at the time the city foreclosed.
If you’re saying the dissolution plan dealt with this issue, it does in a way that’s confusing to me. Are you saying that the city–in foreclosing on DACHA–intended the act to result in a forgiving of the accounts collectable? I don’t know if this even would be legal, but it certainly wouldn’t suggest fiduciary responsibility is running rampant.
I also find it odd that, to the contrary, “it is the DACHA members who are owed money…” How so?[quote]”The only ones engaging in ‘namecalling’ has been NP/TP and their representatives/friends…”[/quote]You, of all people, should find this a surprising claim.[quote]”Argggggggggghhhhhhhhhhhhhhhhhhhhhh…. this is becoming too unsettling, so I am going to retire for the day and take care of more pressing business. One thing that needs to be understood is how difficult it is for customers of a failed housing project, who have no political connections or financial means, to defend themselves, especially in a small town.”[/quote]I told you this [i]pro bono[/i] job wouldn’t be easy. Why didn’t you listen?[quote]”IMHO, DACHA residents were eaten up, spit out, and left on the ground to suffer, then kicked some more while they were down.”[/quote]Who selected the venue and the questionable 817.2 process instead of “DACHA (dissolving) of its own accord without the city’s permission”? Furthermore, are you sure that dissolving might not foreclose rights and options that members might retain if they still were a formal co-op organization?
[quote]In so far as I am aware, when the city foreclosed, any and all debts (assuming there were any at all) would have been taken care of in that proceeding.[/quote]
I seriously doubt this. It seems like these deadbeat members should pay the personal debt that they owed DACHA and this money be used to satisfy some of the debt of the Co-op, especially since other members paid their share dutifully. It would be only fair.
It really seems to me that some of the members thought that they could get a house at a discount in Davis, which they then could reap a financial windfall through either selling it or refinancing it. At least that is what they wanted to do and that’s where they went off the rails. I really don’t have a whole lot of sympathy for those people. I do have sympathy for people who just wanted to have an affordable home and understood how the co-op could provide them that. I think that’s still possible.
Dear Mr. Kelly:
Ms. Musser has the information to answer your questions but I am certain will not.
I believe your questions are appropriate given the public funding used and the overall cost of public funds in this matter.
Here is what you asked:
“Elaine – I’m referring to the monthly carrying charge that each member was supposed to pay while living there (similar to my monthly mortgage or others monthly rent). Not the shares. Did all members pay their monthly fees on time, every month. Or were they delinquent and still owe this money. Were there members that were deadbeats? Were there Board members who were deadbeats? Can the City collect this?”
A review of the rent rolls which the City and the Courts have as public record show that
Allow me to present the information by Quarter and by Year from DACHA’s books
Quarter endingDelinquentNot delinquent Amount Delinquent
Mar 2005164 $15,323
Sep 2005146$17,317
Dec 2005182$19,165
Three Resident Board members as of December 2005
Dec 200530$3,014
David Thompson, Neighborhood Partners LLC.
The Table in my last post did not transfer so am trying another way. Sorry.
Dear Mr. Kelly:
Ms. Musser has the information to answer your questions but I am certain will not.
I believe your questions are appropriate given the public funding used and the overall cost of public funds in this matter.
Here is what you asked:
“Elaine – I’m referring to the monthly carrying charge that each member was supposed to pay while living there (similar to my monthly mortgage or others monthly rent). Not the shares. Did all members pay their monthly fees on time, every month. Or were they delinquent and still owe this money. Were there members that were deadbeats? Were there Board members who were deadbeats? Can the City collect this?”
A review of the rent rolls which the City and the Courts have as public record show that
Allow me to present the information by Quarter and by Year from DACHA’s books
2005DNDAmount
Mar16419,003
Jun16415,232
Sep14617,317
Dec18219,165
D= Delinquent
ND= Not Delinquent
Amount of Member Delinquencies
David Thompson, Neighborhood Partners, LLC
Third time to try.
Dear Mr. Kelly:
Ms. Musser has the information to answer your questions but I am certain will not.
I believe your questions are appropriate given the public funding used and the overall cost of public funds in this matter.
Here is what you asked:
“Elaine – I’m referring to the monthly carrying charge that each member was supposed to pay while living there (similar to my monthly mortgage or others monthly rent). Not the shares. Did all members pay their monthly fees on time, every month. Or were they delinquent and still owe this money. Were there members that were deadbeats? Were there Board members who were deadbeats? Can the City collect this?”
A review of the rent rolls which the City and the Courts have as public record show that
Allow me to present the information by Quarter and by Year from DACHA’s books
2005 by Quarter
Mar Members Owe $19,003 D 16 ND 4
Jun Members Owe $15,232 D 16 ND 4
Sep Members Owe $17,317 D 14 ND 6
Dec Members Owe $19,165 D 18 ND 2
Dec 2005 3 Bd Members -all delinquent owing $3,014
D= Delinquent
ND Not Delinquent
Bylaws Delinquent 30 days must be automatically removed from board
Bylaws Delinquent members cannot vote
Since Oct 2005 all illegal votes by DACHA board and membership due to lack of eligible members to make the legal quorum required by bylaws.
David Thompson,Neighbourhood Partners. LLC.
I can see it. So the majority of members were delinquent at the end of Dec 2005 (18 out of 20), including 3 Board members. Elaine says that this personal debt was taken care of in the foreclosure process. Do you know if that is true? If so, how would a foreclosure process absolve the personal debt of the members? I understand that the Co-op wouldn’t be able to collect this money past debt from the new owner in a foreclosure (usually a bank, but in this case, the City of Davis), but that doesn’t wipe away the fact that there is still personal debt owed by the member. The members can’t complain that they lost their investment, if they are going to use foreclosure to wipe away what they owed in carrying charges. They should have protected their investment and not expect the City to bail them out. I still believe that there must be a way to sort this out.
DACHA 20 homes Delinquencies
Mar 14 D 6 ND Members Owe $21,984
Jun 19 D 1 ND Members Owe $32,544
Sep 17 D 3 ND Members Owe $32,842
Dec 19 D 1 ND Members Owe $37,012
2007
Mar 16 D 4 ND Members Owe $38,099
Jun 17 D 3 ND Members Owe $39,356
Sep 14 D 6 ND Members Owe $44,090
Dec 17 D 3 ND Members Owe $54,123
D= Delinquent
ND Not Delinquent
David Thompson Neighborhood Partners, LLC.
I thought the Mayor did a good job running the meeting last night.
However, it was somewhat unsettling to see the City Attorney and senior housing staff sitting at staff table giving the CC advice, when in fact those two where 2 of the 3 primary culprits who put the CC into the “rabbit hole” as Dan Wolk described it.
Also, the City’s litigation position might be improved if DACHA actually dissolves (if the AG does it), and here the City Attorney sits, giving 100% incorrect advice to her clients who are suffering from the mess she assisted with creating. The City Council did NOT have to make those dissolution findings and send it to the AG’s office; I was completely shocked to listen to her advice.
If I had been the Mayor, I would have required her and the senior staffer to leave the room as conflicted.
If there were so many delinquent members who was watching this? Elaine can you shed light on these numbers?
I imagine that the delinquent amount is divided unequally between the 17 members. I would guess that there were some members who were living there for free for a significant period of time. Elaine, this meets the definition of deadbeat.
David, what do you propose? Is the Co-op salvageable?
I am deeply disturbed that DACHA members are being maligned, accused without proof and unable to defend themselves because they are low-income people (family incomes varying between $31,000 and $68,000 a year in 2007), and afraid to even answer for themselves because they are being sued and under threat of lawsuits by David Thompson and/Luke Watkins in their various hats.
Yet no one seems to care that David Thompson and Luke Watkins acted as both consultant and developer, entered into a binding contract with their hand-picked charter board which obligated future boards to expand the co-op regardless of the financial circumstances or availability of these units and then sued the co-op to collect fees for this hypothetical service and won a judgment of $330,000 from an arbitrator based not on the ethics of the contract but on the existence of the contract per se, and then levied to accounts of this co-op rendering it insolvent.
No one asks, no one cares. Yet people are willing to accept the claims of David Thompson and Luke Watkins that these low/moderate income citizens are deadbeats.
I am just scratching me head.
Going through every quarter since 2005 until June 2010 (foreclosure)the large majority of DACHA members and boaard members were always delinquent.
As a result, there were never enough eligible members to meet the bylaws requirements for a legal quorum, and there were never enough eligible board members for a legal quorum of the board.
At foreclosure, the DACHA members owed $47,000 to DACHA. Neither the City nor DACHAhave made any attempt to collect that money.
DACHA cannot treat shares as a debt. Co-op law does not allow them to treat it as debt. I think they have had bad advice on this matter. The members should have accepted the Federal Bankruptcy, it would have givne them personally the best outcome. But it seems they followed the advice of the City to the possible detriment of themselves.
Yet, City staff knew they were delinquent and allowed all of this to go on at DACHA.
I am amazed at what City Staff allowed to happen and we the citizens have paid a lot for the apparent coverup.
David Thompson, Neighborhood Partners, LLC.
Sue. We the readers are frustrated. Claims are made that DACHA members are and have been delinquent. No one disputes it. If true it is not right and although I would not malign the DACHA members as you describe I don’t think the facts of what they continued to owe should be matter of record. It is taxpayer $ that subsidized the project. Do you dispute David’s table. If not, who was paying attention all those years?
Personally, I think that David Thompson and Luke Watkins are the ones that should be answering the questions.
The DACHA members were promised a risk-free investment (the $20,000 membership share cost with very low rate of return but with affordable “rents”. But their “rents” went above market market rate and increasing vacancies threatened their ability to recover their membership share costs. The city tried to help, but they still lost over $6,000 a family.
And worst of all, they have endured years of being sued without funds to defend themselves.
Again, I think David and Luke should be answering the questions.
Sue or Elaine
Please answer the delinquent issue we raised.
[quote]Claims are made that DACHA members are and have been delinquent. No one disputes it.–[b]SODA[/b][/quote]Elaine says that the organization owes DACHA members money. We know that they have been paying rent since they have been our tenants.
I budge the diquency goes back many years. Why can’t there be a straight answer about so many issues with this mess.
David Thompson and Luke Watkins claim they were owed about $330,000.
Why is no one asking David Thompson and Luke Watkins why they have not accepted any of the cities offers to settle? The city has been offering to settle for years.
Any settlement offer on the part of the city is generous, since the city is not obligated to pay anything to David Thompson and Luke Watkins, and since the settlement would be for the proceeds from a contract they entered into with a hand-picked Board that obligated the co-op to add houses that did not even exist.
[b]@SODA:[/b]Why aren’t you asking for straight answers from David Thompson and Luke Watkins? I suspect it is because it is easier to understand the concept of a few alleged missing rent payments then it is to understand the convoluted business arrangements made by David Thompson and Luke Watkins.
Sorry about typos. Am on iPhone and type is micro. No way to expand it.
A few rent payments? Did you see the table?
The arrangement if wrong should have had oversight by city staff and city atty if so bad from beginning.
Sue above says:
[i][b]Why is no one asking David Thompson and Luke Watkins why they have not accepted any of the cities offers to settle? The city has been offering to settle for years. [/b][/i]
The first written offer that NP/TPCF have received from the city of Davis to settle these two pending lawsuits against the city and the redevelopment agency was received by our attorney on January 27, 2012 – 13 days ago. Other than that offer, we have no idea what Sue is talking about.
This is so frustrating to try to follow. The back and forth. How can both be right. I am giving up.
Who has the title today? Did they get the $330,00 or is it just a claim?
It seems pretty straight forward actually who made money and who lost money?
12)Finally, DACHA’s Dissolution Plan omits the following items:
•The $7 million in assets that DACHA fraudulently transferred from TPCF to the City;
•Approximately $230,000 was distributed to DACHA Members that, according to a Legal Opinion from Goldfarb and Lipman law firm, was an illegal distribution of corporate assets in violation of California Law;
•Of the $4 million DACHA borrowed from the City and Agency, about $200,000 of that was held in reserves;
•$47,000 is presently owed by Members to DACHA;
•Over $50,000 obtained by DACHA from the City for legal costs were unauthorized;
•All presumed self-dealing transactions were not approved by the Attorney General;
•All claims for deductions from the IRS did not conform with IRS regulations;
•Under the law regarding dissolution of a cooperative, DACHA must pay all outstanding encumbrances and liens. DACHA lists $74,000 in share value which, if DACHA’s dissolves, must first be used to pay encumbrances and liens;
•The gain that any DACHA member may obtain from eventually owning one of the homes would be against the intent of AB 1246; and
•Because any gain of a DACHA Member which comes from owing their home cannot be quantified, it would be irresponsible for the City to rule that the requirements of Dissolution have been met.
Based on the foregoing, TPCF believes that the City is in no position to affirm either that the requirements of AB 1246 have been met or that the requirements for dissolution have been met.
DAvid Thompson, Twin Pines Cooperative Foundation
TPCF opposes the City staff recommendation that DACHA be allowed to dissolve for the reasons outlined below:
1)There are two lawsuits currently pending against DACHA that allege various claims, many having to do with the corporate assets of DACHA as a Public Benefit Corporation. (Both lawsuits are attached to this memo.)
2)DACHA’s 20 homes are part of both lawsuits and a Notice of Pendency of Action (lis pendens) has been filed against all 20 properties.
3)DACHA has become a landmark case of the largest looting of a limited equity housing cooperative in the nation.
4)DACHA’s neglect of its corporate responsibilities as a public benefit corporation, the breaking of articles and bylaws and state law, make DACHA the national poster child of a “Board gone bad.”
5)Since May 16, 2005 when the DACHA members asked the Council to be able to own the homes themselves, DACHA has been violating California law.
6)Since fall of 2005, the Board and Membership of DACHA have been ineligible to serve and ineligible to vote. Thus, all of DACHA’s corporate actions since 2005 are questionable and must be reviewed.
7)Many actions taken by the DACHA board and membership were in direct opposition to their legal responsibilities as a limited equity housing cooperative and as a public benefit corporation.
8)The roll of the City staff of Davis in attending, witnessing, participating in, and ignoring the blatant breaking of DACHA;s Articles, Bylaws, and both state and federal law is the subject of both lawsuits and must be reviewed.
9)The City Attorney told the Council that distributions could be made because DACHA had no encumbrances. However, as there were encumbrances in place when the distributions were made, this claim has no validity and was an outright misrepresentation. Since then, the City Attorney has been asked to provide proof of there being no encumbrances and has failed to do so.
10) From May 16, 2005 to date, and as of February 7, 2012, the plans of the City and the discussion at Council meetings have consistently been to provide a way for DACHA Members to be allowed to own their homes.
11) Until the City Council rules that DACHA members cannot ever own these homes, the City Council is violating AB 1246.
David Thompson, Twin Pines Cooperative Foundation
TPCF/NP hereby formally submits its protest of this hearing to the Davis City Council for the reasons outlined below:
1)Given the apparent conflict of interest, this hearing is blatantly improper. What’s more egregious is that the hearing is being conducted by the same City staff that are named and complained of in TPCF’s lawsuit against the City, Redevelopment Agency for the City of Davis (“Agency”), and DACHA. The Council should recuse itself, allow the hearing to go on, take testimony, close the hearing and forward the material to the Attorney General without recommendation.
2) The cost of the hearing process must be borne by DACHA. City staff has not charged DACHA the applicable costs and charging DACHA anything less than the applicable costs must be viewed and treated as a gift of public funds.
3) The members of DACHA currently owe DACHA $47,000. Not listed in assets.
4)TPCF has asked DACHA to provide information about votes, minutes, membership rolls, tax returns, etc., only to have all such requests blatantly ignored.
5)DACHA’s current two Board Members do not own a single share in DACHA. This is not only in violation of DACHA’s governing documents, but means that they are not legally entitled to represent DACHA at the hearing.
6)It is questionable whether DACHA’s vote to request dissolution was conducted by eligible Members and in a manner that is in accordance with both California law and DACHA’s own governing documents.
7)Public Benefit Law gives particular rights to an organization named in the articles of incorporation of a public benefit corporation. DACHA did not follow the Attorney General’s guidelines as they relate to the assets of a public benefit corporation, such as not reporting the impending loss of its real estate, not reporting self-dealing transactions, and not reporting improper board actions such as the illegal change in beneficiary and removal of TPCF representative, all of which require reporting.
dt tpcf
Sue:
Affordable housing development is possibly the most complex form of housing development undertaken in the United States. It usually involves multiple government funding sources, state and federal tax credits, tax exempt bonds, property tax exemptions, inclusionary zoning requirements and several feet of detailed paperwork. Among the ten or so projects that NP has developed since 1998, the DACHA real estate transactions were the least complex.
What you continue to refer to as a convoluted business arrangement (implying something shady) was in fact just a series of fairly simple real estate transactions. The DACHA financing was actually fairly straightforward. It involved a couple of city loans and four conventional commercial real estate loans from First Northern Bank of Dixon and River City Bank. Certainly this is more complicated than the FHA 30 year fixed rate loan that you might have on your own home, but that does not make it convoluted, with a negative emphasis on the word.
You repeatedly accuse NP of serving as both the “developer” and the “consultant” for DACHA, as if serving these two roles is somehow bad. You also claim to have a written document in which I told you that we would never do such a thing. Whenever I read your comments about this, or hear you say it like you did again last night, I have no idea a) why serving this dual role would be an ethical or legal problem, and b) why I would have ever written such a statement to you. But even if I did, so what? The truth is that we were a development consultant to DACHA, and sbsequently (at the request of the DACHA board) provided a very limited amount of administrative consulting tasks. There is no conflict in these roles. What is the actual problem that you are trying to allege? I suspect that I wrote that we would not be the management agent for DACHA, which we were not; but even if we had been serving in that role, it would have not been an ethical or legal conflict.
The complexity that DACHA members seemed to be upset about was the fact that they all had different property tax bills, insurance bills, landscaping expenses, and interest rates on the loans used to purchase their homes, and therefore different rent levels. This occurred simply because they houses were acquired from different developers (with different sales prices mandated by the city) over four years. These were simply basic financial details, not convoluted business practices. And the city staff approved all of these details in advance of each cluster of units being acquired.
Perhaps as a non-real estate professional, you are simply confused.
[quote]Perhaps as a non-real estate professional, you are simply confused. — [b]Luke Watkins[/b][/quote]Luke, this is [b]EXACTLY[/b] what you said to me ten years ago when I told you that I thought that your business model for the DACHA co-op seemed unsustainable.
Who made money and who lost money?
“10) From May 16, 2005 to date, and as of February 7, 2012, the plans of the City and the discussion at Council meetings have consistently been to provide a way for DACHA Members to be allowed to own their homes.’
11) Until the City Council rules that DACHA members cannot ever own these homes, the City Council is violating AB 1246. “
So what is so good about a system that doesn’t allow people to own their homes? Who owns the homes?
What advantage is there for the tenants over renting. Does the developer make the money while the tenants get stuck with the bill?
It just goes to show once again another unintended consequence of Davis’ anti-growth policies that lead to some ridiculous scam. Seems like everyone but the developers would have been better off with Covell Village instead of this rip off.
What I can’t believe is that no one here is even questioning the fact that NO DACHA residents are chiming in to defend themselves. Aside from an occasional comment by Ethan, DACHA residents are keeping their lips sealed. Because of this, you all are ONLY GETTING ONE SIDE OF THE STORY! DACHA residents are under pending lawsuits by NP and TP and therefore cannot speak out. You all are being fed a lot of lies and misinterpreted information by David and Luke. I can GUARANTEE that not everything they say is true. There are two sides to every story and you all only have one. The sad thing is you will never get the other side because whenever a DACHA resident tries to speak out they get threatened with another lawsuit by David.
“Perhaps as a non-real estate professional, you are simply confused. “
Luke,
As a non -real estate professional, I am very confused.
Since I have no preconceived notions about this situation, perhaps you can help me understand some points.
1) How can there be no conflict of interest if as a development consultant to DACHA, you were also advising
the additional of more units for which a fee of $8000.00 was collected per unit ?
2) Did you and or David choose the members of the initial board ? If so, how does this not represent a conflict of
interest ?
3) For what service, if not acting as an agent, did you or David collect $8000 per additional unit?
Perhaps I can explain my confusion. In medicine, radiologists are not allowed to order diagnostic radiology tests, which they would then perform and then collect the fees for having performed them. They must be ordered by an independent clinician. This is to prevent the obvious abuse of ordering unnecessary tests to increase one’s income.
How do you believe this differs from proposing to a board of your own choice the addition of additional units knowing that you would receive a fee for each unit added ?
[quote]”I am deeply disturbed that DACHA members are being maligned, accused without proof and unable to defend themselves because they are low-income people (family incomes varying between $31,000 and $68,000 a year in 2007), and [b]afraid to even answer for themselves because they are being sued and under threat of lawsuits [/b]by David Thompson and/Luke Watkins in their various hats….Yet people are willing to accept the claims of David Thompson and Luke Watkins that these low/moderate income citizens are deadbeats.”[/quote]I’m mystified at this response. The DACHA member’s attorney and you both know whether delinquent payments are part of DACHA’s historic problems, but Elaine claims “when the city foreclosed, any and all debts (assuming there were any at all) would have been taken care of in that proceeding.”
If it’s true these people weren’t and aren’t deadbeats, I think you and Elaine would say so, rather that protesting the detailing of the charges. If David T.’s information is correct, these folks are not being maligned or being accused without proof. It’s disingenuous to claim they’re afraid to answer for themselves; Ethan Ireland is reported here claiming full and on-time payments.
I have read every word offered up the last month or so from all sides. I’ve got nothing against the DACHA members even though it appears there’s plenty of evidence that they mishandled their co-op responsibilities and, assuming David T.’s figures are basically correct, their personal responsibilities. I’ve pretty well concluded they suffered from bad advice all around, not the least of which came from their contacts with the city.
Do you know whether any DACHA members jeopardized their own co-op organization by not making their payments on time or whether the DACHA assets are shy by amounts that were owed by members when the city foreclosed?
These claims have been bouncing around for a long time and I’d think the staff would have clarified this with the city council by now. The staff would have to research the DACHA financial picture before getting into questions of DACHA dissolution, I’d think.
It would be better for those who speak up for DACHA members to provide the facts if they differ from David T.’s claims instead of saying we shouldn’t believe the “accusations without proof.” All this does is encourage David T. to provide more detail, which he now has done, and follow it with more “proof” that will embarrass DACHA members and their supporters even more.
Thompson and Watkins built housing that the inhabitants could not afford, and made nice profits for themselves by exploiting non-too bright politicians. They claimed they were working for the benefit of the low-income people they are now suing.
They are not developers of affordable housing.
They are developers of unaffordable housing.
Hate to raise this, as I support Sue in her re-election, but there was not one word — not one — not a single word from Sue or any other CC member before I left the CC in April 2004 that was negative about the DACHA model or authorizing legislation.
Sue voted for all of it, with enthusiasm, until long after 2004.
Read the minutes from those days.
Its pretty simple actually and I really wish I could get a straight answer. Who profited and who lost?
Dand and Rochelle: good motion you made last night, except you should have forced the City Attorney and Danielle Foster to recuse themselves from the room while the hearing was going on.
Also, the City Attorney’s advice to you that you HAD to make the dissolution finding was flat incorrect.
Notice that the City Attorney did not brief you on the actual AG process as to how they deal with these things?
She did not call the AG’s office to find out what would happen if the City chose not to recommend dissolution. Wonder why?
David: I think NP should put together a packet to brief the CC as to the true state of affairs of the AG’s legal process.
Oh while I was writing JR posted. So did these guys come out ahead and are now suing to get more while the people who bought the houses lost all their money? I’m still stuck on the people not being allowed to own their own homes or build equity. I mean your home is not like a membership at the Co-Op or a share in the Green Bay Packers. Why was such a project ever allowed? And how does it work that the debt never gets paid off? Who would ever design such a program with a straight face? I am really confused please somebody explain it to me because I have been reading all these letters about what great visionaries the developers are so I must not be getting it.
[quote]”Yet no one seems to care that David Thompson and Luke Watkins acted as both consultant and developer, entered into a binding contract with their hand-picked charter board which obligated future boards to expand the co-op regardless of the financial circumstances or availability of these units and then sued the co-op to collect fees for this hypothetical service and won a judgment of $330,000 from an arbitrator based not on the ethics of the contract but on the existence of the contract per se, and then levied to accounts of this co-op rendering it insolvent.
No one asks, no one cares. Yet people are willing to accept the claims of David Thompson and Luke Watkins that these low/moderate income citizens are deadbeats.
I am just scratching me head.” [/quote]I’m even more perplexed by this response. We don’t care about several of these things because the don’t matter. If they were issues to worry about, why would the city not worry about them at the time it was going on?
We would care about the dual roles (developer and consultant) if there’s a reason to, was there? Was it illegal? Unethical? What’s the point?
We would care about the “hand-picked charter board” if there’s a reason to, was there? Was it illegal? Unethical? Who should have organized the charter board for the organization? What’s the point?
We would care about the “binding” contract if there’s a reason to, was there? Was it illegal? Unethical? What’s the point?
We do care about the lawsuit and arbitrator’s award, but not for the reason you’d like. The suit was to resolve the issue of whether the new DACHA board violated its agreement and caused damages. The arbitrator decided in David T.’s favor, but you don’t seem to accept the arbitrator court’s fairness and legitimacy.
In addition, the arbitrator findings provide the most current, unbiased and complete evidence of what happened to DACHA. It’s a shame that discrediting the auditor (accepted by both parties) is the only defense against the findings.
I’d welcome any information that contradicts the claims you protest. But, it seems as though some see this as some kind of unfair sporting event, sort of Shirts vs. Skins, or in this case, Bad Bullies vs. Poor Folk. Picking one side and rooting incessantly for them isn’t too productive, however.
Others of us see this as one more futile effort in a series by our city government to engage in “affordable housing” schemes that don’t work. But, before the future can get serious consideration, we need to take an accurate, in depth look at the DACHA experiment, what happened and what the city should do to make the best out of the DACHA mess.
Nobody’s satisfied with David T.’s extensive “evidence dumps” or the DACHA apologists’ redundant, “cut and paste” charges. But the truth is out there somewhere and our city government probably has access to all of it, but hasn’t been forthcoming since it foreclosed on DACHA. We could use your help in breaking loose the accurate information.
[quote]”In medicine, radiologists are not allowed to order diagnostic radiology tests, which they would then perform and then collect the fees for having performed them. They must be ordered by an independent clinician. This is to prevent the obvious abuse of ordering unnecessary tests to increase one’s income.”[/quote]I love you, medwoman. This is such a great analogy even if I don’t think it fits setting up a co-op. I anxiously await Luke’s response, as well as Sue’s to my similar question.
So, let me ask this (not off-topic since you already legitimately applied the concept): In medicine, are physicians allowed to order diagnostic radiology tests, which someone else would perform yet at a lab (probably nearby) owned by the physician? If prohibited, how long has it been? I ran into this kind of connection quite a bit in the past, but have been with Kaiser for years and, therefore, haven’t kept up with any rich doctors.
Toad: the City Attorney has made a ton of money out of litigation arising from her documentation and advice to the City.
As Delain Eastin wrote in her SUnday Op Ed in the DE weeks ago, the City Attorney “cut a fat hog” on this one.
Attorneys who draft the documents that end up in litigation should not be litigating them, since the client is not getting independent advice as to remedies.
For example, if Rochelle as an attorney drafts a will for someone, and later questions arise about the drafting of that will, she would be ethically prohibited from litigating her work product. The City Attorney here is no different. Yet, the “hog cutting” continues. I saw it clearly last night at the CC meeting.
Sue: just admit you were duped by staff and bad advice from 2006 to date, and clean it up, get rid of those who harm the CC, and move on?
ERM: when did you begin representing DACHA? Anyone else know? How much of this were you on board for?
“Others of us see this as one more futile effort in a series by our city government to engage in “affordable housing” schemes that don’t work. But, before the future can get serious consideration, we need to take an accurate, in depth look at the DACHA experiment, what happened and what the city should do to make the best out of the DACHA mess. “
I agree with this much. It would have been better all these years to build more housing thus reducing the cost in fee for everyone. Another example of the unintended consequences of growth restrictions.
i will say though that the patronizing of Sue that she doesn’t understand is shameful. I mostly disagree with Sue about development but I have never thought that she didn’t understand exactly what was going on with any issue. If something is so complicated why can’t you explain it instead of trying to snow people with explanations that smart people can’t understand? I was always taught that if you can’t understand how something works you shouldn’t invest in it. So how is it that people are not allowed to ever pay off their debts? Isn’t that usury or predatory lending or something?
I don’t really understand what the continued discussion is about. Are you folks calling for the city council to re-agendize this issue and vote on it again? They’re done with it. It’s going to the AG. Unless I misunderstood what they did last night, it’s not coming back to the council for further consideration.
[quote]”Why is no one asking David Thompson and Luke Watkins why they have not accepted any of the cities offers to settle? The city has been offering to settle for years.
Any settlement offer on the part of the city is generous, since the city is not obligated to pay anything to David Thompson and Luke Watkins, and since the settlement would be for the proceeds from a contract they entered into with a hand-picked Board that obligated the co-op to add houses that did not even exist.”[/quote]Because you’re the only one who knew about these offers and you failed to enlighten Elaine and me as we were batting around this question awhile back. How many years and how many times?
It’s difficult to make our own judgments about what the city might be obligated for, if anything, without being privy to the lawsuit papers. Will you or David G. or David T. or Luke let us know how we can view them on-line, please.
It seems by foreclosing on DACHA, the city has assumed some obligations to carry on its business, collecting accounts, paying debts, managing properties in a businesslike way, etc., and looking out for the interests of the city as well.
As you suggest, that could mean a moral(?) need to pay David and Luke what’s still owed from the legitimate arbitrator’s award whether you like the finding or not. And, as you’ve pointed out, they must have a horrendous bunch of attorney fees that needed to get picked up in a settlement.
Settlements in nasty disputes like this one sometimes include statements of apology or secrecy conditions to which no citizen wants a public body to agree.
There’s probably more to such a list. [u]Then[/u], one can start looking at what might be added to make it “generous.” This isn’t going to be pretty.
“In medicine, are physicians allowed to order diagnostic radiology tests, which someone else would perform yet at a lab (probably nearby) owned by the physician? If prohibited, how long has it been? “
I do not believe that this is allowed, although since I am not in fee for service medicine, I could be wrong on this point. I agree with you that the analogy is not perfect, but I think that the princiiples involved are close enough to be worth enquiring. I would love to hear from either David or Luke with their perspective on this.
Mr. Toad: I still strongly support Sue for re-election, and most of the time she gets the votes right, but here, she was duped by staff and complicated technical advice years ago. Then, she defaulted to trying to help the “little guy,” which she almost always does, but in the end I think she is embarrassed as to how she was taken, and you know how hard-headed she can be, and she just does not want to admit being duped.
Of course, her hard head has saved us over and over, as she has sat up there for nearly 12 years and survived the boulders that many not-so-nice CC members and self-interested commentators have lobbed at her without justification or reason.
That’s why I am strongly supporting her again. I will never forget the service she gave us on September 6, 2012, when she was the lone NO vote against the developers and staff and the water gang of consultants who nearly stole nearly $600 million out of the wallets of Davis and Woodland rate payers without any justifiable rates or even need for the surface water project.
On DACHA, she needs to smell the coffee and see the true culprits, and victims.
Taken by whom Mike?
[quote]”I don’t really understand what the continued discussion is about. Are you folks calling for the city council to re-agendize this issue and vote on it again? They’re done with it. It’s going to the AG. Unless I misunderstood what they did last night, it’s not coming back to the council for further consideration.”[/quote]Would it be that all this is behind us. The dissolution action was cut and dried, but the council decided to add three more elements that will generate continued discussion for years to come.
I actually don’t see much conversation here about the dissolution decision itself or any desire to re-agendize it. I see lots of rehashing of the charges levied during the meeting, but that kind of talk will continue on with the three additional elements. Nerves of last night’s participants still are raw and obviously they’re still supporting their cases for a decision that’s past, but don’t you think that’s understandable?
My own desire is to find out how the city plans to deal with the DACHA properties, the lawsuits and it’s most odd decision last night, to have the City Attorney to mediate a settlement to this nasty business. Plus, to express my appreciation for your wise observation about getting out of the affordable housing business and somehow get it agendized!
medwoman:
Thank you for asking concrete questions.
[quote]1) How can there be no conflict of interest if as a development consultant to DACHA, you were also advising the additional of more units for which a fee of $8000.00 was collected per unit ?
[/quote]From the very beginning of the conception of DACHA, the vision was to create a limited-equity housing cooperative that would acquire the first-time homebuyer single family homes that the city of Davis affordable housing program requires subdivision developers to sell to the public at a below-market price. Since the late 1970s, the city has had a policy of one kind or another that required this, and there has been a consistent debate over how quickly the home buyers should be allowed to re-sell those below-market homes for a windfall profit. This was particularly controversial by about 2000 because the difference between the below-market price in the Wildhorse neighborhood and the price that some of the homes were re-selling for just 2 years later was nearly $250,000 per home. In 2002, as an effort to stop these windfalls, the city council agreed that it would support the creation of a city-wide limited equity housing cooperative to be developed by my firm Neighborhood Partners. The model presented to the city council was the 60-unit Dos Pinos limited-equity housing cooperative that had been in existence at that point for 17 years, and had a long waiting list. The city staff report authored by city planner Katherine Hess made this clear. We presented it that way to the city council. In order to implement that agreed upon vision, we signed a consultant contract with DACHA, so that we would have a commitment from DACHA for us to build the organization’s housing stock to the point that it would have a viable economy of scale. While the 20 DACHA units were acquired over about 4 years, the decision by the city council to create a limited-equity cooperative of approximately 60 units was made in 2002. Without that commitment from the city council, we would not have taken on the project.
In the vast majority of fields, professionals are tasked with looking for opportunities to use their skills to make something good happen for the benefit of their clients. When you have a problem with your car, you go to a mechanic and he tells you what needs to be fixed, and then most people end up hiring that person to fix the problem. Does the mechanic have a potential conflict of interest? Of course. But you still have him fix the car because you have faith in his professional integrity.
I learned a tiny bit about radiology during this past year, because my mother broke her hip, which was repaired. Then 60 days later she was still in pain, and an MRI was finally ordered, and it was determined that she has a compressed vertebrae. The MRI was sent to Dr V., a radiologist who does a procedure involving the insertion of special cement into the vertebrae. My mother and I went to his office, he looked at the MRI, told us what the options were, and told us what he could do. Did he have a potential conflict of interest because he diagnosed the remedy and then implemented it. Yes, of course. But we wanted it done by someone who knew what they were doing, and that someone was the same person who would be very good at identifying an opportunity to fix the problem. Also it would have been very inefficient to thank him for his diagnosis, and then go find someone else to do the actual work. It would have also cost the medicare system more money for the second diagnosis from someone else would would still then do the work. The second Dr. would have had a conflict too.
I’ll answer the other two questions in another post.
[quote]2) Did you and or David choose the members of the initial board ? If so, how does this not represent a conflict of
interest ?
[/quote]
The initial board of directors for every new organization is always chosen by someone who has the vision for what the organization is going to do. They go around looking for people who want to volunteer their time towards that shared vision. In this case, who else should have recruited the initial board? Perhaps the city staff. But that was never a condition of their approval of the project, and they expressed no desire to do so. We approached Dallas Kassing, the former president of the Davis Food Co-op and a career professional at the UCD Vet. School. He agreed to serve. We discussed other potential board members with Dallas, and asked a few that we thought might have some valuable skills and/or represent a part of the Davis area work force. Ty Smalley, a long time Davis architect agreed to serve, and we then discussed potential board members with Ty. Karen Newton, a local kindergarten teacher agreed to serve, as an unofficial representative of school district employees. Karen Reid, a local businessperson and former director of the chamber of commerce agreed to serve.
Just because we participating in recruiting these talented volunteers does not mean that they were incapable of independent decisionmaking. It is an unfair insult to their intelligence and integrity to infer that they were simply sheep. And I’m not saying that you are inferring that, by simply asking the question.
[quote]3) For what service, if not acting as an agent, did you or David collect $8000 per additional unit? [/quote]
The standard real estate brokerage fee for a single family home transaction is 6% of the sales price, which is usually split evenly between the buyer’s and seller’s real estate brokers. These homes were valued at approximately $300,000 each, so that would be a $9,000 fee each of the two brokers. And in 2002-2005 there were very few $300,000 homes sold, so most brokers were earning much larger fees per transaction. And the broker does not participate in obtaining city zoning approval for the unit or arrange the financing. So we believe that our $8,000 per unit fee was quite a bargain for DACHA. Please read the arbitrator’s discussion of this issue for more detail on our work tasks.
[b]@Luke Watkins:[/b]Concerning Question Number 1
In a July 19, 2002 letter to Katherine Hesse, in answer to a question about your proposal that the council was to consider, the following question was asked, and you gave the following answer. I hope everyone looks at Luke’s answer to question #1 above and his answer to staff question below [b]VERY CLOSELY[/b].
[quote][b]Question by city staff[/b]: What will be the relationship between the Board and any consul/ants or contractors?
[b]Answer by Luke Watkins[/b]: NP will be the developer of the LEHC. It will not be a consultant or a contractor. This is the same as the structure that was utilized to develop the Dos Pinos Housing Cooperative. [/quote]
When Luke Watkins and David Thompson know that the city had not promised to provide any more houses when, wearing hats of both consultant and developer, they signed contracts with the DACHA board that they themselves appointed binding future boards to pay them for adding many additional houses to DACHA?
In the July 19, 2002 answer from Luke Watkins to City Staff Questions, City Staff asks:
[quote][b]City Staff:[/b] By approving this proposal, is the city committing to allocate some or all/future affordable housing projects to this mode?[/quote]Luke Watkins answers:[quote]Clearly there is no such
commitment from the city to mandate this.–[b]Luke Watkins[/b][/quote]
Typo Correction:
Did Luke Watkins and David Thompson know that the city had not promised to provide any more houses when, wearing hats of both consultant and developer, they signed contracts with the DACHA board — a board that they themselves had appointed — binding future boards to pay them for adding a large number of additional houses to DACHA?
In the July 19, 2002 answer from Luke Watkins to City Staff Questions, City Staff asks: [quote][b]City Staff[/b]: “By approving this proposal, is the city committing to allocate some or all/future affordable housing projects to this mode?”
[b]Luke Watkins[/b] answers: “Clearly there is no such commitment from the city to mandate this.”[/quote]
[quote]”I hope everyone looks at Luke’s answer to question #1 above and his answer to staff question below VERY CLOSELY.”[/quote]Sue, I hope you’ll be a little more specific (and a little less innuendo-ish) about what you see as as problems here. What proposal are you talking about, the original DACHA concept?
You’re again being so vague in hinting at wrongdoing, it difficult to understand your concerns. Did NP end up as the consultant to DACHA as opposed to the Dos Pinos operation, apparently contrary to this reply? Did it happen without the city’s knowledge? If the plans changed with appropriate approvals, do you really see it as a problem? I hope Luke answers for himself, but allow me a couple impressions of your comments.
Are you answering someone’s question in your second point (“Did Luke Watkins and David Thompson know that the city….?”) or are you again hinting that something’s illegal or improper? The city staff question and the Watkins answer seem very clear, reasonable, accurate and imply nothing unusual.
Was the city [u]obligating[/u] itself in 2002 to allocate any or all future projects to DACHA? The staff and Luke appear to be agreeing that any future city additions to DACHA would have to come in separate proposals to be approved at later dates. Would you agree? I fail to see what significance you might see in this exchange, and I “looked very closely.”
I do wish you’d quit implying there’s something untoward about “a board that they themselves had appointed”–if you refuse to give any reason that this is unethical or illegal. Luke has given a response to medwoman’s question. His answer certainly is consistent with my own experience with selecting founding boards for several non-profits.
Sorry, Sue, I apparently hadn’t looked [u]closely[/u] enough…[quote]Luke (July 18, 2002): “[b]NP will be the developer of the LEHC. It will not be a consultant or a contractor.[/b] This is the same as the structure that was utilized to develop the Dos Pinos Housing Cooperative.
Luke (Feb. 8, 2012): “The model presented to the city council was the 60-unit Dos Pinos limited-equity housing cooperative that had been in existence at that point for 17 years, and had a long waiting list. The city staff report authored by city planner Katherine Hess made this clear. We presented it that way to the city council. [b]In order to implement that agreed upon vision, we signed a consultant contract with DACHA[/b], so that we would have a commitment from DACHA for us to build the organization’s housing stock to the point that it would have a viable economy of scale.”
As per Sue’s hinting, these two statements appear to directly contradict each other, assuming a second business wasn’t in place to provide consulting services beyond NP’s developer service. (When you said “we” in your response here, are you referring to NP or a different entity?) If both statements refer to NP, why is there this conflict in your statements, and what problem was it? Does this refresh your recollection, Luke?
[quote]That’s why I am strongly supporting her again. I will never forget the service she gave us on September 6, 2012[/quote]Ahhhh… now Mr Harrington shows his psychic abilities…
Luke
Thank you for your very direct responses to my questions. I am afraid though that the inadequacy of my analogy was made apparent in your response. I see a major difference between a doctor or mechanic performing a service for fee provided by the client or the clients insurer, and a consultant benefiting financially from acquisitions being financed by others through increased rents or “carrying costs” as the case may be.
Do you not see a distinction here, and if not, what is your thinking ?
[quote]Luke Watkins: What you continue to refer to as a convoluted business arrangement (implying something shady) was in fact just a series of fairly simple real estate transactions. [/quote]
Real estate transactions for which you did not have a realtor’s license to engage in?
[quote]”Did you read the entire audit carefully, David? I don’t see how any “independent investigation” will be more satisfying to citizens than the audit….”[/quote]Both the audit and the arbitrator’s finding are independent investigations. The audit is dated June 2006, nearly six years ago, long before the city’s foreclosure and all of the questions that have been raised as a result.
The arbitrator’s finding is dated June 2009, much more recent yet still a year before the city’s foreclosure. Still it is much “more satisfying” than the much earlier audit.
Not welcoming an “independent investigation” to look at all that’s gone on since 2006 is an odd stand for you to take. It’s important to resolve the conflicting histories being offered, which you persist in arguing. It’s even more important in coming up with a reasonable resolution to the DACHA episode and in moving forward with other affordable housing projects (or deciding whether to try any others).
Interestingly, Gilbert Associates makes it clear that:[quote]”The City did not request that we perform, and we did not perform, an assessment of DACHA’s compliance with affordable housing rules, including determination of whether affordable housing thresholds were calculated correctly and whether applicants approved for membership were appropriately evaluated with respect to those thresholds.”[/quote]Given the charges that are flying around now, this shortcoming–intended by the city staff if not the council–makes the value of the audit somewhat suspect for many of the issues that you are raising now.
The audit report has to be viewed in conjunction the staff report, which contains many interesting asides, including this little gem: [quote]”The City believes that it would be the residual beneficiary of DACHA’s dissolution, just as the City sanctioned its creation and regulates its activities. If so, [b]with proper guidance from legal counsel and the cooperation of DACHA’s board, the City should (if it chooses) be able to dissolve DACHA [/b]and reestablish its properties under another affordable housing mechanism. For example, the City could buy the properties from DACHA for enough to pay off DACHA’s debts, and then sell the homes with resale restrictions devised to keep the homes affordable for their target population indefinitely. [b]The members at the time would, one hopes, have the first opportunity to buy these homes[/b] under newly-established affordable housing restrictions, thus fulfilling their desires for home ownership that were not satisfied by membership in DACHA.”[/quote]You keep pointing to NP’s “misleading” advertising as responsible for the DACHA folks thinking they could refinance their homes and gain the same windfalls that many of us gained before the crash.
How can you say with a straight face that when the staff announced the city’s desire to convince the new DACHA board to sell out the co-op and have the city give the members the co-op’s properties in some to-be-determined favorable deal.
How did you expect the co-op members to behave in the last five years with the explicit promise of “home ownership” hanging over them, not from NP but from the City of Davis council and staff.
I’ve taken your encouragement to re-read and decide whether the audit is the best “impartial review” upon which to rely for the future. It is not. We need a current review of what’s happened here. Actually, I’d missed the shocking staff proposal to sabotage the co-op structure the first time around–this needs a close look.
Finally, if it turns out that the foreclosure ends up being the tool for getting the houses into the hands of DACHA members–and the dissolution is just one more step to allow it and this is why you’re arguing to sell off the properties–I’ll really be disappointed in how you councilors are dealing with the citizenry.
If the decision ever comes to sell the DACHA properties, will you agree to support an open market sale instead of some special boondoggle that ends up with DACHA members getting “first opportunity”or otherwise unfairly benefitting from the way they’ve behaved as co-op members?
[quote]”Mr. Toad: I still strongly support Sue for re-election, and most of the time she gets the votes right, “[/quote]Then, couldn’t you be a little nicer when you’re talking about her in public.
[quote]1. Going through every quarter since 2005 until June 2010 (foreclosure) the large majority of DACHA members and board members were always delinquent.
2. As a result, there were never enough eligible members to meet the bylaws requirements for a legal quorum, and there were never enough eligible board members for a legal quorum of the board.
3. At foreclosure, the DACHA members owed $47,000 to DACHA. Neither the City nor DACHA have made any attempt to collect that money.[/quote]Sue, you’ve characterized these and other similar charges from NP as “maligning” the DACHA members and somehow unfair for NP to make. But, you’ve always never dealt with the question of whether they in fact are true.
I can’t believe it’s because you don’t know whether they’re factual, but the way you protest makes it seem as though you’re denying them without really doing that. Elaine’s tactics are similar. I apologize if I’m incorrect, and you’ve actually taken the opportunity to answer these when they’ve been offered before. If so, please just point me to your early answers.
Please respond directly to these three statements. Are they accurate?