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.