Editor’s note: The Vanguard was asked to publish verbatim this account of the history of DACHA, along with an accounting of all assets. This is pulled from the city’s staff report and it appears to be the most complete recounting of the DACHA history that I have seen. In conjunction with the other accounts the Vanguard has published, this will give all three sides a chance to have presented each side of the story, and all the public an opportunity to fully scrutinize what happened, what went wrong, and assess blame if and where necessary.
HISTORY
2002: City of Davis Redevelopment Agency (City RDA) retained Neighborhood Partners, LLC (NF) (operated by David J. Thompson (DT) and Luke Watkins (LW)), to develop a limited-equity affordable housing cooperative called ”Davis Area Cooperative Housing Association” (DACHA). DACHA home sites were randomly sprinkled throughout Davis, which would later be cited as highly problematic. City RDA initially invested $1,500,000 in the project. Twin Pines Cooperative Foundation (TPCF), of which DT was its CEO, also provided start-up funds. DT made several personal loans to DACHA, naming TPCF as DACHA’s charitable beneficiary. During the first charter meeting, Dallas Kassing and Ty Smalley, also of TPCF, were appointed DACHA’s President and Treasurer respectively. The charter board retained NP as DACHA’s consultant for marketing and property acquisition – agreeing to pay DT & LW an hourly rate of $120, plus a finder’s fee of $8,000 (later increased to $10,000) for every house added to DACHA. DT listed himself as DACHA’s agent for service of process, routinely using his private address as the organization’s business address.
2003-2004: DT and/or LW were in attendance at DACHA meetings. DT drafted board agendas for DACHA, wrote most of its correspondence – while billing DACHA at $120/hr. As marketer, DT solicited members to purchase shares in DACHA. Several articles of correspondence authored by DT and 2004-2005 City Block Grant Application show DT stated repeatedly DACHA would provide “affordable home ownership.” DT actually listed himself and LW as board members in this application. Prospective members were told DACHA membership could be obtained for an average of $20,000, but the full purchase price wasn’t required because “investors” would make up the difference. Prospective members were not always informed “investors” were either DT himself or an organization he ‘operated (TPCF); nor was it made clear the “investment” funds provided would be treated as a loan. Most DACHA members spoke English as a second language, having difficulty understanding the sales pitch/contract terms. Many members mistakenly believed they made a down payment on a home they would own.
DACHA expanded rapidly, adding 12 new properties for a total of 20 units, nearly-meeting the original project scope of 22. By early, 2003, NP secured other development deals. As city representatives sat by at board meetings, DACHA’s scope ballooned to 60 properties. To keep up the rapid pace of acquisition, DT obtained loans on DACHA’s behalf. The DACHA board accepted them without question – regardless of terms. Through this combination of aggressive development, over-marketing and debt accumulation, DACHA became fiscally unstable/undercapitalized. ·The DACHA board was forced to increase carrying charges (rental rates) for residents to unsustainable levels. DT increased share prices for later members to amounts greater than $20,000 – in direct violation of the City’s Regulatory Agreement governing affordable housing.
2005: The price of living in a DACHA home went far beyond the Yolo County median for affordable housing, and median rental rate of Davis homes. So DACHA members obtained a detailed breakdown of their rents, discovering later-joining members across town were paying significantly more per month to occupy smaller units, pitting member against member in disputes over equity. At least two residents were being held liable for loans they never agreed to and for which no promissory note existed. DACHA members questioned Kassing & Smalley’s ability to make decisions independent of DT. Inquiry was raised as to the propriety of the relationship between DT’s firms and DACHA, as well as the apparent conflicts of interest between DT’s role as marketer and the financial rewards he was reaping as DACHA’s consultant.
The DACHA membership impeached Kassing and Smalley, appointing two resident directors to fill their seats. The new board notified NP that neither DT nor LW’s presence was desired at DACHA meetings. DT responded by presenting an ostensible “bill” for “services rendered” to DACHA since its 2002 inception, demanding immediate payment. Up to that point, NP had failed to issue any invoices to DACHA for services. The DACHA board requested a more detailed invoice to determine the validity of NP’s claim. The new board formally resolved not to continue expanding DACHA, informing NP it would not renew its consultant contract, asking that any pending developments be terminated and no new projects added.
John Gianola, managing attorney for Legal Services of Northern CA Woodland and the City’s Sponsor Director for DACHA, began a legal analysis of DACHA records. He urged an audit, and the City agreed. The CPA firm Gilbert & Associates (G&A) was hired by the city to conduct the audit. G&A’s findings were critical of the DACHA model, expressing bafflement over how it was intended to function, and skepticism about its financial stability. Their analysis of the DACHA loans indicated many contained irregularities/abnormalities. The audit discovered numerous problems, such as sloppy accounting practices, no financial data-analysis, among other aberrations; determining DACHA to be unsustainable and encouraged restructuring. DT disagreed, demanding a new audit. Gianola responded with a letter to the City stating the audit findings were validated by his own review of the DACHA records. He indicated.NP had crafted DACHA’s bylaws, occupancy & subscription agreements in a shoddy manner, with little oversight from the City, and NP had mismanaged DACHA.
2006-2008: The new board cooperated with the City RDA in restructuring DACHA to meet the demands of the city’s regulatory agreement. Using the audit data as a model, the City RDA stabilized DACHA by refinancing via a single, long term fixed-interest rate loan. Funds from the fixed rate loan were used to pay off the unsustainable/irregular loans. At City RDA’s direction, the DACHA board reset membership share prices to a more affordable $6,250. Those who had expended more for their shares were refunded any excess paid. Rental rates were lowered to be more in line with the Yolo County median for affordable housing. NP filed suit against DACHA for alleged improper termination of its contract, demanding damages for canceled development projects and against residents for “interfering with economic relations”.
2008-2010: DT’s other company, TPCF, also filed suit against DACHA for supposed misuse of public funds, breach of fiduciary duty, unjust enrichment, conspiracy for financial gain, and various other charges, initially seeking $4.5 million in redress, and punitive damages. The NP v. DACHA suit was arbitrated, as required by NP’s consulting contract. Immediately prior to the arbitration hearing, DACHA’s attorney, Geoffrey Goodman of Murphy Austin Adams Schoenfeld LLP, was elected to a judgeship, requiring him to abandon the case. The replacement attorney from Nossaman, LLP neither negotiated nor researched DT’s preference for arbitrator, allowing DT’s selection to stand without challenge. Neither did the replacement attorney dispute assertions made by NP during the arbitration. As a result the judgment was in NP’s favor, with an award of $331,872. DACHA obtained new counsel through Hefiler, Stark and Marois LLP (HS&M). On advice of counsel, the DACHA board proposed a repayment/rent-increase plan, notifying DT & LW of their desire for a settlement of both suits. DT & LW obtained a Writ of Execution, levying DACHA’s accounts. In consequence, DACHA was left without operating funds. Thus DACHA defaulted on its loan to City RDA. The City then notified DACHA of its intent to foreclose.
2010: Further attempts at negotiation were unsuccessful. DT amended the TPCF suit to include the City of Davis, City RDA, and John Does 1-100 as co-defendants. NP and TPCF subsequently filed an involuntary bankruptcy petition against DACHA, to halt the foreclosure sale and enforce the terms of the NP vs. DACHA arbitration award. The court ruled improper any attempt to file an involuntary bankruptcy upon a non-profit corporation. DACHA was awarded $45,000 in attorney’s fees. TPCF chose to pay NP the $45,000 damage award, reducing what DACHA owed to approximately $245,000. Unable to act to collect the $45,000 judgment, DACHA assigned its award to its attorneys, HS&M.
City RDA conducted a foreclosure auction of the DACHA houses, selling them to the City of Davis. DACHA was left with no real property or cash assets, becoming a non-profit cooperative corporation in name only. Former residents of DACHA began paying rent directly to City of Davis under a new lease agreement. HS&M filed a motion to withdraw from the case because it was no longer getting paid for its services. The City was not willing to offer monetary assistance for DACHA’s legal representation as it had in the past. Two weeks before Christmas, NP attempted to levy DACHA members’ personal finances, by claiming each member was in possession of money belonging to DACHA. DACHA residents responded by denying possession, which exempted them from garnishment.
The CA Attorney General sent a letter to DACHA, with notification that neither NP, nor the law firm they hired to incorporate DACHA as a non-profit (Goldfarb Lipman), nor any member of the DACHA Charter Board of Directors had ever filed properly with the CA Attorney General’s Register of Charitable Trusts (RCT), despite registration upon incorporation being required by state law. Neither had yearly tax documents been filed with the AG, as required by law. The AG’s office demanded a full financial accounting of DACHA and immediate registration on the RCT. DACHA’s board president informed the AG’s office of the defunct status of the organization and provided tax filing information as required.
2011: DACHA shareholders asked City of Davis to conduct a dissolution hearing pursuant to CA Civil Code §817.2. Seeking replacement legal counsel the board president discovered DACHA’s Directors and Officers Errors & Omissions insurance policy lapsed 6 mos. previously, due to a mistaken City Staff cancellation. The insurance agency refused to honor the policy, leaving DACHA without legal representation. DT & LW then used the Writ of Execution under the NP v. DACHA to compel testimony from present and former DACHA members and a child, even though members hadn’t been personally sued. DT amended the TPCF v. DACHA suit a third time to include additional charges. Yolo County Superior Court granted HS&M’s uncontested motion to withdraw as counsel. NP filed a second suit against DACHA and City RDA, seeking to obtain housing units formerly belonging to DACHA and now owned by the City.
Obtaining legal counsel for DACHA and its residents has been virtually impossible. Legal Services of Northern California has refused assistance due to a conflict of interest, denying DACHA residents access to low-income legal assistance. McGeorge School of Law and UC Davis Law School have declined to take the case. Housing & Economic Rights Advocates and the ACLU declined as well, stating they are not competent to provide legal advice in this arena. To date, all other private firms contacted in the surrounding area do not provide low-cost/pro-bono assistance; have conflicted out; have had prior dealings with DT; or are not skilled enough to handle a case of this complexity.
ASSETS & LIABILITIES
A. Assets: None. See attached general ledger.
B. Liabilities: Approximately $552,788.70. Detailed breakdown:
1) Damage award to Neighborhood Partners totaling approximately $267,758.60 (last notice of damage award total 141 days of last stated interest of $70.61 per day)|
2) California Corporation’s Estimated 2010 Tax totaling $800.
3) Legal fees to Nossaman, LLP totaling $93,918.08.
4) Legal fees to Hefner, Stark & Marois totaling $37,244.46.
5) Overdraft fees to First Northern Bank of Dixon totaling $1,142.64.
6) Woodland-Davis Termite & Pest Control invoice totaling $275.00.
7) Charlie’s Carpet Cleaning invoice totaling $195.00.
8) Sherwin-Williams Co. invoice totaling $400.00
9) Various City of Davis Finance Department Charges totaling $75,955.88
10) Madsen &, Walton Property. Management payroll totaling $39.04
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.
DISPOSITION OF ASSETS
As stated above in the history section, DACHA is in possession of a single account receivable: an award of $45,000 in attorneys’ fees, the proceeds of which have been assigned to DACHA’s former counsel Hefner, Stark & Marois. Because NP levied DACHA’s accounts in 2009, seizing over $50,000; then deducted the $45,000 award of attorney’s fees from the total amount owed it by DACHA, and since the City foreclosed on and sold at auction all DACHA’s real property, DACHA has absolutely no assets.
After consultation with a bankruptcy attorney on 13 April 2011, it was determined DACHA is unable to sustain a bankruptcy petition due to its utter and complete lack of finances. Said attorney recommended dissolution as the only viable option and also stated a bankruptcy petition would only interfere with the ability of the organization to dissolve.
Further, he stated, a bankruptcy would likely not eliminate the suits pending from NP and TPCF because of the non-dischargeable nature of the allegations.
SATISFACTION OF DEBTS & LIABILITIES
DACHA’S debts have been discharged to the fullest extent possible. DACHA is incapable of satisfying its debts and/or liabilities to any further degree. Due to entrenched litigation stifling prospects of generating income at any point now or in the future, there is no conceivable way in which DACHA will ever be capable of meeting any of those obligations.
CONCLUSION
DACHA has no finances; no real property; no assets of any kind. It has no legal representation, nor resources to retain an attorney for itself or its members. DACHA has only two remaining resident directors (at least one of whom cannot resign under both California Law and the DACHA bylaws), and 11 remaining members, some of whom own shares the corporation is incapable of repurchasing as its bylaws require. Because it would serve absolutely no good purpose to continue the business of running DACHA as if it were a viable non-profit public benefit corporation/affordable housing cooperative, and to avoid DACHA’s members being further victims of financial exploitation, as well as continued legal and public harassment against which they are unable to defend, it is the conclusion of the DACHA board and all of its membership that the only solution available is dissolution of the cooperative.
Who is the author of the various sections. Your intro suggests not the Vanguard?
I should have said – and will add, this is pulled from the city’s staff report and it appears to be the most complete recounting of the DACHA history that I have seen.
I doubt that the city staff authored this. The language is reminiscent of Vanguard stories and comments. I could be wrong, but would the real author(s) please stand up?
I also remember reading something in the 50-some pages that the city staff wrote that they weren’t going to be considering the DACHA history in evaluating whether the dissolution proposal was meeting requirements.
For clarification: This recounting is the required submission by DACHA of its dissolution plan to the city under CA Civil Code Section 817.2.
“I doubt that the city staff authored this”
It was in the city’s staff report – it was never stated that it was authored by the city. I have no idea who authored it.
My understanding is that this report was authored by DACHA.
[quote]My understanding is that this report was authored by DACHA.[/quote]
Precisely…
If the first paragraph of the DACHA Dissolution Plan is any measure then DACHA is once again woefully short on the truth, facts and information.
Of all the DACHA documents this one is the most lacking in validity. Of course there is a DACHA side but this first paragraph tells me that DACHA has started off losing any ability for its case to be credible. The DACHA information goes downhill from the first sentence on.
What is written here by DACHA reminds me of the quotes of the Arbitrator about the DACHA Board.
Quotes from the Arbitration Award filed with the Yolo County Superior Court in June, 2009. Quotes by Kenneth M. Malovos, the attorney jointly chosen by DACHA and Neighborhood Partners and approved by the Yolo Superior Court.
“The testimony by three members from DACHA who appeared at the arbitration can only be described as cavalier. For the most part their testimony was characterized by failures of memory, contradictions and a certain inability to admit even their own written words. Two of theses members appear to have been in serious arrears in their fees during times that they were members of the Board, in direct contravention of the bylaws”. (Page 7 of the Arbitration Award)
“What is curious is that representatives of the City of Davis were present throughout the entire time when the new Board took these untoward actions and they did little to discourage the Board”. (Page 5 of Arbitration Award)
Throughout all of the testimony of the DACHA board and members there is a pattern of lack of knowledge of the basic facts of their actions. Even when the DACHA members were in control of the board none of them seem to remember how major board decisions were made. As we have learned from testimony major DACHA decisions seemed to be being made by City staff (Foster) and one or two board members (Teague, Garcia or Huff). The rest of the DACHA board seemed oblivious to the decisions taken in their name.
We clearly need to learn more about the role of City staff? The cost and losses to the City re: DACHA are now at $2.4 million.
David Thompson, Twin Pines Cooperative Foundation
Let’s look at the first sentence in DACHA’s opening paragraph.
“2002: City of Davis Redevelopment Agency (City RDA) retained Neighborhood Partners, LLC (NF) (operated by David J. Thompson (DT) and Luke Watkins (LW)), to develop a limited-equity affordable housing cooperative called ”Davis Area Cooperative Housing Association” (DACHA).”
This opening statement is completely untrue. The City of Davis/RDA did not retain or hire or contract with or have any form of signed agreement with Neighborhood Partners.
There was no contractual relationship of any kind between the City/RDA and NP.
How bizarre for DACHA to make a claim in the opening sentence that is completely and factually untrue.
There is no validity to DACHA’s information in this first sentence of their public document they are submitting to the City and to the Attorney General.
David Thompson, Twin Pines Cooperative Foundation
The second sentence states; “DACHA home sites were randomly sprinkled throughout Davis, which would later be cited as highly problematic.”
Our response: DACHA is a multi site co-op almost all in three clusters in Davis. Who cited it as problematic?
Many co-ops in California are multi-site and work very well.
•The largest Senior Co-op in California has almost 2,000 units at 15 different sites in eleven different cities
•The largest Student Co-op in California accommodates about 1,300 students at 20 different locations throughout the City of Berkeley
•The largest housing co-op in California accommodates 15,000 households at numerous locations in three different cities
•Oak Center Homes is 89 homes on 42 different sites in Oakland
•Solar Community Housing Association is four houses on three different sites with the intent to acquire more sites at different locations.
•All Land Trusts (a different form of cooperative) in California are multi-site
The problem with DACHA was not multi-sites but greed for the $200,000 each one could gain if they dissolved the Co-op. May 21, 2005 letter to Council from DACHA, we want to own the homes. From that time on the members focussed on actions that regretfully led to the destruction of the co-op.
David Thompson, Twin Pines Cooperative Foundation
[quote]Elaine: “My understanding is that this report was authored by DACHA.”
Sue: “Precisely…”[/quote]Meaning what? Or, more specifically, who?
In so far as I am aware, no developer can build an affordable housing project for the city’s affordable housing program in which the city has invested a substantial amount of its own RDA funds [i]without the city’s permission[/i]…
[quote]Meaning what? Or, more specifically, who?[/quote]
DACHA, period.
In the first paragraph DACHA also wrote:
“Twin Pines Cooperative Foundation (TPCF), of which DT was its CEO, also provided start-up funds. DT made several personal loans to DACHA, naming TPCF as DACHA’s charitable beneficiary.”
How lazy and incorrect can DACHA be? I am not CEO of Twin Pines Cooperative Foundation. As a nonprofit we do not have a CEO. I am and have been for 20 years the unpaid President of the TPCF board. We have a paid Executive Director.
I did make several loans to DACHA but in none of them did I name TPCF as the Charitable Beneficiary.
David Thompson, Twin Pines Cooperative Foundation
[quote]Our response: DACHA is a multi site co-op almost all in three clusters in Davis. Who cited it as problematic? [/quote]
John Gianola, former head of Legal Services of Northern CA, whom I have a great deal of respect for. He cited specific problems within DACHA that had to do with the particular multi-site approach that had been implemented…
[quote]The problem with DACHA was not multi-sites but greed for the $200,000 each one could gain if they dissolved the Co-op. May 21, 2005 letter to Council from DACHA, we want to own the homes. From that time on the members focussed on actions that regretfully led to the destruction of the co-op. [/quote]
Please note from dissolution plan:
[quote]Several articles of correspondence authored by DT and 2004-2005 City Block Grant Application show DT stated repeatedly DACHA would provide “affordable home ownership.”… Many members mistakenly believed they made a down payment on a home they would own.[/quote]
DACHA homeowners only know what they were told…
[quote]From that time on the members focussed on actions that regretfully led to the destruction of the co-op. [/quote]
From the dissolution plan:
[quote]G&A’s findings were critical of the DACHA model, expressing bafflement over how it was intended to function, and skepticism about its financial stability. Their analysis of the DACHA loans indicated many contained irregularities/abnormalities. The audit discovered numerous problems, such as sloppy accounting practices, no financial data-analysis, among other aberrations; determining DACHA to be unsustainable and encouraged restructuring. DT disagreed, demanding a new audit. Gianola responded with a letter to the City stating the audit findings were validated by his own review of the DACHA records. He indicated.NP had crafted DACHA’s bylaws, occupancy & subscription agreements in a shoddy manner, with little oversight from the City, and NP had mismanaged DACHA….
On advice of counsel, the DACHA board proposed a repayment/rent-increase plan, notifying DT & LW of their desire for a settlement of both suits. DT & LW obtained a Writ of Execution, levying DACHA’s accounts. In consequence, DACHA was left without operating funds. Thus DACHA defaulted on its loan to City RDA. The City then notified DACHA of its intent to foreclose.[/quote]
Who destroyed this cooperative?
David, to this question: [quote]”Who is the author of the various sections. Your intro suggests not the Vanguard?”[/quote] You replied:[quote]”I should have said – and will add, this is pulled from the city’s staff report and it appears to be the most complete recounting of the DACHA history that I have seen.[/quote]When I responded to SODA’s question, you jumped in to note: [quote]”It was in the city’s staff report – it was never stated that it was authored by the city. I have no idea who authored it.”[/quote]I guess I could reply, “I never stated that you stated it was authored by the city,” but I’ll make some other observations instead:
1. When you note, “the [u]Vanguard[/u] was asked to publish verbatim this account of the history of DACHA….”, isn’t it basic that you include in the editor’s note who it was who asked you to publish something?
2. Why would you not be responsive to SODA’s question about who wrote the piece and talk about the city report from which it was “pulled” instead? It seems disingenuous to pretend to answer if you know you’re not, but that reasonable people will read that the city authored it for their report. If you knew it only was an attachment to the report, submitted by DACHA, and you didn’t know the author, I’d expect you’d say that.
3. Why don’t you care to know who authored an article that you agreed to reprint? Why wouldn’t you attribute it to the author? [quote]”I have no idea who authored it.”[/quote]I’m sorry, but this is difficult to accept. It suggests you don’t care and don’t care to find out and don’t want to know–none of these options is credible, given your great coverage of DACHA’s journey.
What I don’t get is why play these mystery games about authorship of a critical piece of work in this case? It makes it look as though there’s some reason to keep it anonymous, which I don’t think is true at all. If I were responsible for this document, I’d take pride in my authorship and hard work.
[quote]What I don’t get is why play these mystery games about authorship of a critical piece of work in this case? It makes it look as though there’s some reason to keep it anonymous, which I don’t think is true at all. If I were responsible for this document, I’d take pride in my authorship and hard work.[/quote]
DMG has merely reprinted a public document – the dissolution plan that was submitted to the city by DACHA…
To JustSaying: Surely you are aware there are many lawsuits filed and threatened to be filed in this case, which requires extreme caution…
[quote]”John Gianola, former head of Legal Services of Northern CA, whom I have a great deal of respect for. He cited specific problems within DACHA that had to do with the particular multi-site approach that had been implemented…”[/quote]This flaw in the project design has been cited so many times, it’s become generally accepted as a fact. It’s used over and over in most every discussion about why DACHA failed, so one presumes it has some validity.
Where is Mr. Gianola’s report on the DACHA project?
[quote]Where is Mr. Gianola’s report on the DACHA project?[/quote]
I will send DMG the entire letter for publication – it was an attachment to the dissolution plan…
To JustSaying: Just as an aside, here is the pertinent part of the report inre multi-site housing:
[quote]It seems to go against the very nature of a cooperative to have members’ units scattered about the City. Similar units in one location certainly foster a sense of common good and cooperation. Indeed, I’ve observed that it has been difficult for DACHA to establish a common bond among its residents. In fact, this scattered-site model fosters inherent conflict among residents. For example, there is some conflict and resentment among members that some of the DACHA units with the worst financing have been a drain on DACHA’s limited resources. Also, residents of one site have particular landscaping needs that they would like DACHA to pay for while residents of another site do not see how such maintenance will benefit them. Thus, scattered-sites present an impediment to developing a cooperative relationship which is essential to a housing co-op model.
Moreover, building similar units as one development with similar financing has the benefit of not only fostering cooperation among co-op members, but has the benefit of a favorable economy of scale. Needless to say, the staggered scattered-site model of DACHA is a poor economy of scale and helped lead to unfavorable financing to the organization and high maintenance costs to the residents.
In short, I believe the very concept of DACHA as staggered scattered-site units is fundamentally a faulty model for cooperative housing. [/quote]
[quote]”DMG has merely reprinted a public document – the dissolution plan that was submitted to the city by DACHA….Surely you are aware there are many lawsuits filed and threatened to be filed in this case, which requires extreme caution…”[/quote]True enough, but David didn’t try to attribute it the way you describe. In fact, when asked about the authorship (probably because he neglected to say who wrote it or who promoted its publication in the [u]Vanguard[/u]), he implied city staff involvement.
I understand that you might live with the secrecy levels required for this document, but one would think that David would not be satisfied even if he thought it was “most complete recounting of the DACHA history that I have seen.” Since I might not be an attorney, I thought more disclosure was appropriate in this forum.
Anyway, I think I know who authored and edited the dissolution paper/[u]Vanguard[/u] article and on whose behalf the work was done. Good enough for me.
Good enough for David, too, since the article will end up on both lists, most commented on and most read.
[quote]Vanguard…most commented on and most read.[/quote]
LOL Yes the Vanguard is [i]very[/i] well read!
“isn’t it basic that you include in the editor’s note who it was who asked you to publish something?”
The editor’s name? It was members of the public, if they wish to make themselves known, they can do so.
“What I don’t get is why play these mystery games about authorship of a critical piece of work in this case?”
What you interpret as a “game” was merely the fact that I was trying to get the material out, did not know who put it out, and did not take enough time to elaborate on this. I do my best to get the material out and properly attribute it. I don’t have a staff, I don’t have an editor, Highbeam is kind enough to volunteer their time to at least catch the worse errors, but it’s difficult not to over look things even when they are important as this was. Unfortunately, I feel like you are trying to play games with me and that instead of making thoughtful suggestions you try to play gotcha. I don’t have a dog in the DACHA fight. I have pushed for transparency and independent investigation and I have tried to get as much material out as I can. This was an opportunity to put out a synopsis, obviously a biased, we can speculate about who the author might be.
To JustSaying: In hindsight, I doubt anyone involved in the DACHA project wanted it to fail. All connected with DACHA certainly wanted complete and utter success. The problem is that due diligence was not done at the outset, for a project that was extremely complicated, controversial in the sense it was extremely innovative by the city’s standards, and that had serious inherent developer conflicts of interest/development flaws that needed to be addressed but were allowed to slide/fester/balloon out of all control…
Just as an aside, my fervent hope is there are serious lessons to be learned from the DACHA debacle on how NOT to do an affordable housing project…
Because of the numerous inaccuracies, misstatements and mistruths in the DACHA document TPCF asks that each of the authors of the DACHA report be identified.
We do not think it appropriate that the authors for DACHA are not identified but are allowed to submit a series of shoddy facts in a report required by state law for a request for legal dissolution hearing to the City Council for forwarding to the Attorney General.
Is this report coming from the board of two members who do not own shares in DACHA as required by State Law?
Was this report authorised by the apparently non eligible DACHA board?
When did the DACHA approve this report for submission to the state?
Please provide the minutes of the DACHA board meeting where this report was approved?
Was it written by bone fide DACHA members?
Were non DACHA members involved in the writing of this document?
Unless the authors of the DACHA report are identified as being the responsible parties TPCF will ask for the report to be struck from the public record. We are talking about a public hearing required by State Law.
Each one of authors of any document submitted in the public and transparent dissolution process required by law should be identified. No unsigned document should be accepted by the City and entered into the hearing record.
David Thompson, Twin Pines Cooperative Foundation
David: That does not seem to be a good way to bring the authors forward. Why not focus your time on correcting the record as opposed to engaging in a witch hunt?
CA Civil Code Section 817.2(d) states:
[quote](d) If the dissolving limited-equity housing cooperative or
workforce housing cooperative trust does not merge with an existing
cooperative or trust, both of the following shall occur:
(1) Upon completion of the public hearing required pursuant to
subdivision (a), the city or county shall adopt a resolution
approving of the dissolution and make a finding that the dissolution
plan meets the requirements of state and federal law, meets the
donative intent standards of the United States Internal Revenue
Service, and is free of private inurement, which includes, but is not
limited to, a prohibition on any member receiving any payment in
excess of the transfer value to which he or she is entitled pursuant
to subdivision (b) of Section 817.
(2) The city or county shall forward all of the information and
written testimony from the hearing to the Office of the Attorney
General for the Attorney General to consider as part of his or her
ruling on the dissolution.[/quote]
One of the problems with this poorly drafted statute is that it is woefully short on specifics; is unbelievably vague/confusing as to its terms…
[quote]How bizarre for DACHA to make a claim in the opening sentence that is completely and factually untrue.–[b]David Thompson[/b][/quote]David, these poor people can’t even afford an attorney to help them write their dissolution plan, and in the past, when a little money was available to them to hire an attorney, you objected vehemently and claimed we were providing a “gift of public funds”.
Now, you are essentially ridiculing them because they don’t have the money to hire an attorney.
I don’t know the exact legal way to describe the relationship between you, Luke, the City and the RDA, but I have an attorney that I can and will ask, and they don’t.
But since you have plenty of attorneys, why can’t you help us out and just tell us the legal description of your relationship between the City and the RDA?
Another sentence in the first paragraph of the DACHA report goes on to say;
“During the first charter meeting, Dallas Kassing and Ty Smalley, also of TPCF, were appointed DACHA’s President and Treasurer respectively.”
It is incredulous how incorrect this statement is. Dallas Kassing and Ty Smalley were not also of TPCF. Neither Dallas Kassing nor Ty Smalley were ever board members of TPCF, neither of them had had any or have had any organizational or any other relationship to TPCF in any way, ever, at any time.
Is anyone at DACHA checking these incorrect statements?
Please give us a document that is accurate?
You can ask Kassing and Smalley under oath if they ever had any relationship to TPCF and the answer will be no.
Where the unsigned authors of the DACHA report submitted as a public record for the use of the Attorney General to decide on the upholding of law come up with this statement is beyond me.
The lack of validity starting with this first paragraph should be of concern to the City Council and to the Attorney General. There is hardlly an iota of truth in just the first paragraph.
David Thompson, Twin Pines Cooperative Foundation
[quote]”To JustSaying: In hindsight, I doubt anyone involved in the DACHA project wanted it to fail. All connected with DACHA certainly wanted complete and utter success. The problem is that due diligence was not done at the outset, for a project that was extremely complicated, controversial in the sense it was extremely innovative by the city’s standards, and that had serious inherent developer conflicts of interest/development flaws that needed to be addressed but were allowed to slide/fester/balloon out of all control…”[/quote]As usual, we end up agreeing in the end.
If it’s true as alleged that the developers had conflicts which encouraged them to take unfair financial advantage of the DACHA members instead earning their fair capitalistic cut in this project, [u]someone[/u] should have been there to assure that they couldn’t put the members at such a disadvantage.
If it’s true as alleged that the DACHA members had friends who encouraged them to undermine the co-op so they could end up with individual windfall profits, [u]someone[/u] should have been there to assure they maintained all of their financial and legal responsibilities.
That [u]someone[/u] is the City of Davis, in my opinion. There’s no indication that anyone in city government accepts any responsibility for what happened during the many years before we moved in to foreclose on DACHA.
I would venture to say this was written by Elaine.
If whoever wrote the DACHA peice had asked me if I would read it to make sure of any inaccuracies, misstatements or errors I would have been quite willing to review the document.
However, non one chose to do that. Now some unknown people have submitted an unsigned document to the City as part of a hearing process that meets the requirements of State law and is to be submitted to the Attorney General.
Numerous statements are made about TPCF and NP which are incorrect, untruthful and possibly harmful to our organizations.
We do not think the City should allow this document to go forward.
David Thompson, Neighborhood Partners LLC
[quote]I would venture to say this was written by Elaine.[/quote]
DACHA was the author…
[quote]If whoever wrote the DACHA peice had asked me if I would read it to make sure of any inaccuracies, misstatements or errors I would have been quite willing to review the document. [/quote]
Now why would DACHA think to have its dissolution plan reviewed by anyone connected with suing it?
As City Appointee, John Gianola attended many illegal DACHA board meetings. Here is what has been submitted to the Davis City Council to be forwarded to the Attorney General.
January 14, 2012
To: Davis City Council
for DACHA Hearing to forward to California Attorney General)
Fr: David Thompson, President of Twin Pines Cooperative Foundation (TPCF)
Re: Evidence #13. Did City Appointee Break Law & Attorney General’s Requirements & assist DACHA’s illegal Self-Dealing Transactions? No action yet by City Council.
cc: Steve Pinkerton, City Manager; Danielle Foster, City staff and interested parties.
As a Public Benefit Corporation, DACHA is required by law to meet certain standards when it comes to self-dealing transactions between members of the DACHA Board and the organization. There is a section of the DACHA bylaws 5.4 (256 words) on Self-Dealing Transactions (taken from the Law) and instructions on the Attorney General’s website for a public benefit corporation to meet the law.
Regretfully, City staff, the City Attorney, and the City Appointee on the DACHA board never appear to have ever mentioned or met the Attorney General’s requirements.
Self-Dealing Transactions at DACHA Executive Session Meeting of August 24, 2006
First, there were not enough eligible board members to achieve a legal quorum. With the City Appointee on the DACHA board, a City staff member in attendance and the meeting at a city office the illegal DACHA meeting was held anyway.
According to the Law and to the Bylaws of DACHA a self-dealing transaction is required to be noticed, the members provided with detail, and the meeting should be open. For this self-dealing transaction there is no published Agenda, no explanation of the required details as an attachment to the Agenda and the meeting was held in Executive Session with no one other than Danielle Foster of City staff attending.
At this closed meeting the excessive delinquencies of two members were dealt with. One of the delinquents was [edit] (a board member & Board Treasurer) the other a non board member. The Treasurer was given 4 years/4 months to pay off $4,307 she owed DACHA. The City Appointee to the DACHA board made the motion. Even though the Bylaws required that [edit] be automatically removed from the board, there is no mention of that issue and she was not removed as she should have been.
The non-board member was required to pay a lump sum (which she did) and to pay off the balance of $3,454 at $250 per month. The non board member was given only 14 months to pay off a delinquent amount smaller than the delinquent Treasurer. By September 30, 2006, the Treasurer’s delinquency to DACHA had been allowed to increase to $5,748 (64 months on a $90 per month) and the non board member’s delinquency had dropped to $3,454 (14 months on a $250 per month plan). Why did the Treasurer get a much better deal than the non board member on a motion by the City Appointee? The board and City staff has a history of favoritism to the Treasurer.
The City Appointee, John Gianola was appointed to the board by Mayor Asmundson partially because he knew a lot about housing law. The City Appointee -more to come!
For more about DACHA and the City role visit http://www.community.coop/davis.
Att: Minutes DACHA Executive Session August 24, 2006.
[quote]”Where the unsigned authors of the DACHA report submitted as a public record for the use of the Attorney General to decide on the upholding of law come up with this statement is beyond me.”[/quote]David T., after reading the lengthy city report, I gathered that the Dissolution Statement (duplicated here I think) was submitted in a package along with other documents, including DACHA member signatures. The public record is the public record and includes all submissions made by those representing DACHA.
I assume you’re making a case that the council should not move forward on the dissolution. Since the staff seemed to say the history isn’t a consideration on this matter, it seems as though you’re spending a lot of time challenging things that the council won’t be considering. It’s possible that the Attorney General won’t care much either, but it certainly isn’t an issue now.
Nobody cares what your relationships or titles were at this point. It would be better to concentrate on the issues that might be germane, assuming that you don’t want DACHA dissolved.
These take-no-prisoners attacks on everything and everybody just give ammunition to those who already portray you as a heartless businessman.
[quote]”If whoever wrote the DACHA peice had asked me if I would read it to make sure of any inaccuracies, misstatements or errors I would have been quite willing to review the document….We do not think the City should allow this document to go forward.”[/quote]Having just read this, I have a suggestion. David T., how about editing/rewriting the dissolution document so that it’s accurate to you and providing it to DACHA’s representatives at the council meeting? (Or, better yet, [u]before[/u] the meeting so they’ll have time to decide whether the changes would be worth it to them to submit as part of their package.)
A court will toss the DACHA unsworn piece and restore DACHA
Unsigned DACHA report Sixth Sentence of the First Paragraph
“The charter board retained NP as DACHA’s consultant for marketing and property acquisition – agreeing to pay DT & LW an hourly rate of $120, plus a finder’s fee of $8,000 (later increased to $10,000) for every house added to DACHA.”
Even after paying for 28 lawyers to fight for DACHA against our small business the City was quite factually wrong in describing how much NP was paid. The mistruths are certainly meant to harm NP. NP had to correct the incorrect information that was in former city manager, Bill Emlen’s editorial before. So why DACHA would now make its’ own set of incorrect statements is hard to believe. It might look good to make it seem NP made a lot of money but the facts that DACHA have show that what they wrote is not true.
This statement is false. If you look at the DACHA records you will not see NP being paid $120 an hour for anything. You will only see NP being paid for each home added to DACHA.
The next statement is grossly incorrect and does not reflect the true records that the DACHA organization has; “…plus a finder’s fee of $8,000 (later increased to $10,000) for every house added to DACHA.” The signers of the DACHA report should change the inaccuracies in this report to reflect the truth.
NP never received $8,000 per unit as DACHA implies here. That $8,000 number was never increased to $10,000 and certainly NP never ever received $10,000 for any DACHA home, ever. DACHA makes it look like NP got $10,000 per unit.
NP received $6,525 per unit for developing the 20 DACHA homes. To imply otherwise as this public statement does is to be dishonest.
Keep in mind, that Sue Greenwald, along with other Council members approved CHOC getting over $30,000 a home for the Land Trust. NP has always been the lowest cost per unit to the City developer of affordable housing.
So NP’s $6,525 is one fifth the fee of a competitor.
We urge the unsigned authors of the DACHA report to submit a report that is corrected as to its statements about NP and TPCF.
David Thompson, Neighborhood Partners. LLC.
It should be understood that individuals owing any debt to a homeowners association by law are not to be referred to by name, but by lot number only. Publishing by name would hold a homeowner up to public ridicule/scorn, or is that the purpose here…
The rent rolls of DACHA are now and have been for a number of years a matter of public record.
The rent rolls are part of the public record of the Yolo Superior Court, the Federal Bankruptcy Court, the City of Davis and the Attorney General.
David Thompson, Twin Pines Cooperative Foundation
I have edited David’s post above to remove the name.
[quote]NP has always been the lowest cost per unit to the City developer of affordable housing.–[b]David Thompson[/b][/quote]First, this statement has not been verified on its face.
Also, the variable that I would look at is not how much an affordable housing costs the city’s affordable housing fund, but how much an affordable housing project costs in total taxpayer dollars. I pay taxes to the federal government, the state and the county as well as the city.
For example, if a project uses project-based section 8 vouchers or block grants or tax credits, that counts as public subsidy dollars. David only talks about the city subsidy. I think it is more meaningful to look at total subsidy.
[quote]I have edited David’s post above to remove the name.[/quote]
Much appreciated…
[quote]The rent rolls of DACHA are now and have been for a number of years a matter of public record. [/quote]
Printing out an entire rent roll that is a matter of public record is one thing, but to hold up a single DACHA resident for ridicule/scorn is an entirely different matter…
[quote]Elaine: “It should be understood that individuals owing any debt to a homeowners association by law are not to be referred to by name, but by lot number only. Publishing by name would hold a homeowner up to public ridicule/scorn, or is that the purpose here…”
David T.: “The rent rolls of DACHA are now and have been for a number of years a matter of public record. The rent rolls are part of the public record of the Yolo Superior Court, the Federal Bankruptcy Court, the City of Davis and the Attorney General.”
Don: “I have edited David’s post above to remove the name.”[/quote]So, Sue, this is the kind of back and forth to which I was referring. Both folks insist they are correct in their diametrically opposed statements. Neither provides a source.
By editing David T.’s statement, Don must have concluded Elaine is correct, yet also gives no source or reason.
How can the rest of us gain any knowledge with this kind of exchange and no fact-checker available?
[quote]”We urge the unsigned authors of the DACHA report to submit a report that is corrected as to its statements about NP and TPCF.”[/quote]David T., are you willing to help buy editing the report, as I suggested, and providing a factual on to the DACHA representatives? You’re still saying “unsigned.” Did you look to see whether the DACHA dissolution package was signed? In reading the city staff report, it seemed that way to me.
“…by editing…”
[i]By editing David T.’s statement, Don must have concluded Elaine is correct, yet also gives no source or reason. [/i]
I have not made that conclusion.
[b]JustSaying[/b]In our adversarial system, the best you can do is carefully read the arguments of all sides and draw your own conclusion. Elaine said that she was going to post the letter by John Gianola, the City’s appointee to the Board and the esteemed former managing attorney for Legal Services of Northern CA.
Council and staff received this advice from our appointee, and of course we gave it great weight. This is another third-party perspective that you should read carefully if you are interested in hearing all perspectives.
I can only go with what I have seen.
What David posted from DACHA is unsigned. I have asked on the blog for the names of the authors. No one has replied. If anyone knows of any DACHA signatures then I would be glad to know who they are.
Am I not for a public document entitled to know who my accusers are?
There are a number of incriminating and untrue accusations in this report and they are not just about NP and TPCF.
I always sign my name and don’t use any other name.
Anonymity may be ok for a blog but not for a public document furnished to the Attorney General making many untrue accusations.
David J. Thompson, Twin Pines Cooperative Foundation
Questions to pose to City Council
•Why as a lender did City Staff allow DACHA as a borrower from the City to break its articles and bylaws?
•Why as a lender did City Staff allow DACHA as a borrower from the City to break numerous state laws applying to public benefit corporations and limited equity housing cooperatives?
•Why did staff ignore the wrongdoings that went on at DACHA? The City Appointee to the board was supposed to report back to City staff. Did the City Appointee to the DACHA board ever report on wrongdoings?
•Why did the City ignore the legal opinion it had received from Goldfarb and Lipman that informed DACHA and the City that what they were planning to do (and then did) did not meet the requirements of the law?
•Why did the City Attorney allow DACHA to return over $200,000 of corporate assets to the members when that was not allowed under the law according to the legal opinion provided by Goldfarb and Lipman?
•Why did the City Attorney tell the Council that over $200,000 could be returned to the DACHA members because there were no encumbrances when there were?
•Why did City Staff forebear on the repayment of over $100,000 in public funds for DACHA to fight DACHA breaking a private contract?
•Why did City Staff agree to forebear on the repayment of over $100,000 of public funds in March of 2007 when at the time the DACHA members were delinquent over $38,000 to DACHA?
•Why did City Staff approve the forbearance of almost $7,000 a month for about 16 months and then watch the DACHA members use the cash flow to increase their delinquencies from $38,000 to $75,000? Was that an appropriate use of public funds?
•Why was DACHA’s board and membership allowed to borrow $4 million in public funds when both the board and members were ineligible to be seated and to vote and could not achieve a legal quorum for either the board or membership?
•Why did the City Attorney need a second vote from the DACHA board and membership to borrow the $4 million in public funds?
•Why did the City Attorney need a second vote to confirm that the Officers could sign the various loan documents?
•Why has the City Staff continue to turn a blind eye to a board that has been meeting without a legal quorum for now six years?
•Why did City staff allow DACHA to use over $50,000 of borrowed public funds to pay for lawyers when the City Mayor and City Attorney have said that none of the public funds were to be used by DACHA for lawyers?
David Thompson, Twin Pines Cooperative Foundation)
Interesting that the DACHA report makes no references to the lack of legal quorums for over six years making so many of the actions invalid.
October 21, 2011
To: Davis City Council
Fr: David Thompson, President of Twin Pines Cooperative Foundation (TPCF)
Re: Submission of material as part of the Dissolution Hearing on DACHA
cc: Steve Pinkerton, City Manager; Danielle Foster, City staff and interested parties
Evidence #1 on the Dissolution of DACHA. Rent Rolls 2005-2010 (By Quarter)
The City Council is required to review all the submitted materials and assess a number of issues. Rather than send all of this the week before the February 7 hearing I have chosen to send by topic on a regular basis starting in October.
When cross checked with DACHA membership and the DACHA board members the Rent Rolls show (according to the DACHA bylaws) that there was no legal quorum of either the board or membership for all the major legal decisions made by DACHA during the key four year period between 2005 and 2009. These relate to the improper conduct of the DACHA board and membership in their fiduciary responsibilities as a public benefit corporation. DACHA provided these to the courts and they are part of the public record.
During this period, the board and membership lacked a legal quorum. Here is a list of some of the alleged actions they took even though they lacked legal authority:
•The illegal removal of the Appointee of the Twin Pines Cooperative Foundation
•The improper seating of ineligible DACHA members on the Board
•Not informing TPCF of vacancies in sponsor seats as required by the bylaws
•Not automatically removing ineligible Board members as required by the bylaws
•Borrowing $4 million in public funds and not informing the Davis City Council that the DACHA votes were improperly conducted by ineligible members
•The improper and illegal distribution of corporate funds to members
•Removing TPCF as the rightful beneficiary
•Participating in self-dealing transactions not in compliance with the bylaws and the Davis Stirling Act
•Decisions about loans to board members not meeting the requirements of the Attorney General
•Numerous other infractions of California laws applied to Corporations, nonprofit corporations and public benefit corporations
•Many actions taken by the board and membership were not in conformity with the loan conditions agreed to by DACHA with both TPCF and David Thompson.
City staff (either Jerilyn Cochran, Danielle Foster & Elvia Garcia) was present at many of the DACHA meetings where the alleged improper or illegal actions took place.
.
Attachments: DACHA Rent Rolls 2005-2009. Most importantly for the dissolution requirements of the law look at Rent Rolls from fall 2007 to fall of 2009
February 3,2012
To: Davis City Council (for DACHA Hearing to forward to California Attorney General)
Fr: David Thompson, President of Twin Pines Cooperative Foundation (TPCF)
Re: Evidence #18. Questions DACHA officers sign documents under Penalty of Perjury?
No action yet by City Council.
cc: Steve Pinkerton, City Manager; Danielle Foster, City staff and interested parties.
Numerous official documents of the Davis Area Cooperative Housing Association (DACHA) have been signed by representatives of DACHA. Here is a list of city, county, state or federal agencies which had legal documents that a representative of DACHA was required to sign under penalty of perjury:
1. City of Davis/RDA (?)
2. Yolo Superior Court (numerous instances of signatures under penalty of perjury)
3. California Corporation Franchise Tax/Income Tax Return Form 100
Required Signature of DACHA Officer signed under penalty of perjury
4. Secretary of State of the State of California Change in Articles of Incorporation
Required Signature of DACHA President and Secretary (attached)
5. US Corporation Income Tax Return, Form 1120.
Requires Signature of Officer (Title) signed under penalty of perjury
6. United States Bankruptcy Court
7. Individual Tax Returns (Claims relating to DACHA deductions may be improper)
The likely possible signers under penalty of perjury for DACHA would appear to be:
Stephanie Teague (Hinkle), signing mostly as President
Jessica Garcia, signing mostly as Treasurer
Cat Huff, signing in some cases as Secretary and in others as President
Ethan Ireland signing possibly as an officer as Acting President or other officer
Ms. Calcagno signing possibly as an officer as Acting Secretary or other officer
Rent rolls show Teague, Garcia and Huff were delinquent more than 30 days. According to the bylaws they should have been automatically removed from the board. Each one of the legal actions above required board and/or membership action and yet the board and/or membership were never able to achieve a legal quorum for proper action. There is almost no reference in the DACHA minutes of board approval of the official and legal actions listed above which illegal board members took when signing under penalty of perjury
The DACHA membership removed the TPCF Director illegally and replaced other sponsor board members illegally so a majority of the board seats were occupied illegally by ineligible DACHA members. If TPCF had been seated and filled the other four sponsor seats TPCF would have opposed the illegal actions taken by the ineligible board
The membership meetings at which each of the above board members were elected did not achieve the legal quorum of eligible members for such an action
In October of 2009, the DACHA membership (lacking a legal quorum) elected a board composed of four board members. Only one board member (Huff) owned a share in DACHA. The three other board members elected (Ireland, Calcagno & Johnson) did not own shares in DACHA, were not members according to the bylaws or owner occupiers according to California law, had their deposits held in trust and not owned by DACHA, had signed various unapproved amended documents with DACHA that had been altered seemingly without board or membership approval or change in the bylaws. Those members had a ruling from the Attorney General that the funds they had in trust were not DACHA’s funds. Each of those four members has had their funds returned to them on the basis that those were their own funds and never had been DACHA’s.
However, that four person board composed of three non owner occupier/non-members took numerous official and legal actions in the name of DACHA.
The two members who appear to remain on the DACHA board are Ireland and Calcagno. Lacking any form of membership or ownership in DACHA how can they be a legal board of a limited equity housing cooperative?
Ireland has been asked for almost a year to produce minutes of board and membership meetings, correspondence, membership rolls and tax returns. He has refused to answer the requests.
[b]@JustSaying[/b]: Earlier, you asked a very reasonable question: Why didn’t the city help DACHA pay for legal representation? The above statement by David Thompson which I have copied here is an example of what we faced.[quote]Why did City staff allow DACHA to use over $50,000 of borrowed public funds to pay for lawyers when the City Mayor and City Attorney have said that none of the public funds were to be used by DACHA for lawyers?—[b]David Thompson[/b][/quote]
[quote]”By editing David T.’s statement, Don must have concluded Elaine is correct, yet also gives no source or reason.”
“I have not made that conclusion.”[/quote]Then, what was your reason for changing his statement?
[quote]”@JustSaying: Earlier, you asked a very reasonable question: Why didn’t the city help DACHA pay for legal representation? The above statement by David Thompson which I have copied here is an example of what we faced.”
“Why did City staff allow DACHA to use over $50,000 of borrowed public funds to pay for lawyers when the City Mayor and City Attorney have said that none of the public funds were to be used by DACHA for lawyers?”—David Thompson[/quote]I’m not sure of the point here, but it certainly makes mine about the “back and forth.”
Did the city staff “allow DACHA to use over $50,000 of borrowed public funds to pay for lawyers”? Did the city subsequently say no “public funds were used by DACHA for lawyers”? Which statement is true; it seems both cannot be. And, nobody provides support for what they say.
In any case, if the city [u]could have[/u] helped DACHA keep from getting in this fix with better legal advice before foreclosure–but didn’t because of fear of facing abuse from David T.–what does this say about the city having the courage to meet its responsibilities to citizens?
I look forward to reading the Gilbert & Associates audit and John Gianola’s response(s). Maybe they’ll clear up some of the confusion reigning here.
“Then, what was your reason for changing his statement?”
I don’t speak for Don, but in general I attempt to not name non-public figures.
Facts on this occurence have been asked for. So here you go.
When the City lent $4 million to DACHA in August of 2008, the loan was made improperly as there was not an eligible board or eligible membership to borrow public funds. But of course, City staff did not share this material fact with the City Council in their documents.
As detailed by City staff in their loan report to the City Council, none of the $4 million was set aside for legal costs or litigation.
When asked at a City Council meeting,both the City Attorney and the Mayor replied that DACHA was not allowed to use the loan funds for litigation.
However, through discovery, NP learned that City staff had approved and allowed two transactions were over $50,000 of public funds were provided to DACHA. Under testimony, the then Treasurer of DACHA could not explain how DACHA’s lawyers had been paid. Yet NP has the emails (Ayala-Garcia) and instructions to the City Finance Office(from Foster)directing [public funds to DACHA’s lawyers. This transaction will come up in the law suit.
The DACHA situation has taught me that City staff appear to take actions
which were prohibited. Then when this is brought to the Council’s attention nothing is done. There seems to be no record of the City Council approving these unauthorised transfers of public funds to DACHA.
January 10, 2012
To: Davis City Council (for DACHA Hearing to forward to California Attorney General)
Fr: David Thompson, President of Twin Pines Cooperative Foundation (TPCF)
Re: Evidence #12. Did DACHA use $171,000 of Public Funds to defend wrongdoing?
No action yet by City Council.
cc: Steve Pinkerton, City Manager; Danielle Foster, City staff and interested parties.
The DACHA board did not have a quorum of eligible members at any time during the 19 months detailed below. So none of these actions were taken by an eligible board. Yet City staff allowed the DACHA board to forebear on $116,510 of repayment of public funds.
Neighborhood Partners, LLC, (NP) attempted in every way possible to settle their contractual dispute with DACHA. NP even agreed to mediation and to include the City in mediation even though their contract required only arbitration. The City Attorney spent quite a lot of public funds doing much of the work during mediation. DACHA’s Attorney played a back seat to the City Attorney. However, DACHA continued to stall and NP had to trigger the Arbitration which resulted in a $330,000 judgment awarded to NP and approved by Yolo Superior Court.
$116,510. During the dispute, DACHA asked the City of Davis if they could forebear paying their City mortgage so they could pay lawyers to defend themselves against breaking a legal contract. City staff recommended to Council that DACHA be allowed to forebear paying their entire mortgage to the City in an amount of $6, 427.79 per month for six months. However, the forbearance went on for almost 19 months and finally amounted to $116,510. Did the Council approve all of the extensions?
$38,099. Amount owed by DACHA members to DACHA when they obtained forbearance from City staff. As a lender, it would seem prudent for City staff to ask DACHA members to pay down their large delinquencies before forbearing on 18 months of repayment of public funds. Six months later the members owed DACHA $44,090. By the end of the forbearance the trend would seem to show DACHA members owed DACHA $75,000. So DACHA used the cash flow from the forbearance to increase their delinquencies from $38,000 to $75,000. No demand by City staff on DACHA members.
$37,000. DACHA delinquencies increased during public fund forbearance.
$90,000. Amount now owed to DACHA’ lawyer. What was done with City’s $116,510?
$116,510. Amount of DACHA public fund repayment forborne. Was all of that used by DACHA to pay for the purpose approved by the City? Did City staff certify that the $116,510 was used specifically to pay for DACHA’s legal bills?
$4 million in public funds lent to DACHA. August 2008. Mayor and City Attorney state publically that none of the money can be used for litigation purposes.
$25,000. August/September 2009. Amount paid by DACHA board to Heffner for litigation purposes. Cat Huff emails City staff member Ayala-Garcia that “we wiped out our reserves when we paid the retainer for the new lawyer ($25,000).
January 1, 2010. New law for limited Equity Housing Cooperatives. If a co-op receives public funds it cannot use corporate funds to avoid compliance with the law.
January 1, 2010. DACHA starts using corporate funds for legal costs disallowed by law.
$30,000. April 23, 2010. DACHA lawyer asks City Attorney to fund $30,000 retainer for litigation costs from rents paid. City agrees and City staff sends funds to Hefner. Did Council approve either of these disallowed expenses from borrowed public funds?
$171,000. Public funds borrowed by DACHA used to pay for litigation expenses (est.)
I’m re-reading Just Sayings question. Here’s my answer.
In 2008, A loan of $4 million was made to DACHA with the proviso that none of the funds could be used for lawyers or litigation.
In 2009 and in 2010 City staff made available over $50,000 of public funds in two different transactions to pay for DACHA’s lawyers.
In 2010, after the fact, at a City Council meeting both the Mayor and City Attorney said that the funds lent to DACHA were not supposed to be used for lawyers or litigation. (I have the transcript)
No obvious sanction against City staff members, Ayala-Garcia or Foster.
When a couple of decent board members wanted approval of the use of $800 each to evict two former board members who were perpetually delinquent, Danielle Foster refused their request.
Under testimony, one former board member stated that he quit in part because City staff protected the delinquent board members.
Why are perpetually delinquent board members being protected by City Staff?
Who is watching our funds at City Hall?
City staff could easily have worked with TPCF and NP to solve the problems. Regretfully, they chose to feed DACHA’s runaway board and now our City has lost or wasted $2.4 million on a prololonged pantomime.
David Thompson, Twin Pines Cooperative Foundation
[b]@JustSaying:[/b] You asked why the city did not provide funds for DACHA’s defense, and I tried to show you that we were challenged by Neighborhood Partners every time Dacha obtained any money at all to use for attorneys.
I will answer your question as directly as I can: In this particular case that David Thompson is complaining about, our attorney said it was entirely legal.
[b]@JustSaying:[/b]I can be even clearer. As you can see from David Thompson’s statement above, he is suing us for providing funds that he claims DACHA members used for attorneys.
Here’s some of the background on the unauthorised use of public funds by DACHA that were approved by City staff.
In the bankruptcy case, DACHA’s lawyer told us that the City had released about $30,000 to DACHA to pay for legal bills. Whether this was to cover previous unpaid bills or to pay for Hefner to do the bankruptcy we do not know. If Hefner was paid $30,000 by the City to do the bankruptcy why did they need their legal fees paid by TPCF/NP? Would that not be double dipping?
In the billing from Hefner on 4/23/2010 it shows “re turnover of Funds from City”
As the $30,000 in funds was being released by city staff why were their names removed? Should the public not know who at the City approved this?
Appendix:
Staff report to City Council December 7, 2007
1.The loans must be used for the following purposes:
Purpose Current Estimate
Purchase of primary loans (includes existing City/Agency assistance to DACHA) $3,501,000
Repayment of Secondary Loans $172,000
Establishing Reasonable General Reserves (Capital, Maintenance, Administrative
And Vacancy Reserves, as well as reserves for other share price stabilization) $415,000
Total Estimate: $4,088,000 (Rounded) $4,100,0005
Legal was not one of the purposes.
David Thompson, Twin Pines Cooperative Foundation
[b]@David Thompson:[/b]Putting aside the legal issues for a minute (I trust our attorney’s advice on this), don’t you think that the low/moderate income DACHA members have the right to an attorney to defend themselves? If this were a marriage, the low-income spouse would have their attorney fees paid by the high-income spouse. Do you think it is morally right for DACHA to be sued and to have no defense whatsoever? This is not a legal question on my part; it is a moral one.
[quote]”In 2009 and in 2010 City staff made available over $50,000 of public funds in two different transactions to pay for DACHA’s lawyers.”[/quote]Thank you for taking time to get around to my modest questions. Sue and others have repeatedly said that this did not happen. When someone like me suggests the city [u]should have assured[/u] that the DACHA board did not operate in the way you allege by incorporating attorney costs in the project, I’m told that it wouldn’t have been legal for the city to do that.
What proof do you have to keep making this claim in the face of city statements to the contrary?
It’s been suggested that you want some outrageous compensation (possession of the DACHA properties was one hypothetical) rather that a “reasonable settlement” that would reimburse you for your losses and expenses that might have resulted from the city’s foreclosure action.
Have you refused to discuss settlement with city staff?
For those of us on the outside, it’s difficult to understand how the city can pay out so much money on the DACHA venture, and still plead inadequate funds for oversight to control acts (including yours) that are blamed for DACHA’s collapse.
Can you provide a [u]short[/u] summary of what you think is the primary reason for DACHA’s failure?
In case you overlooked my questions about the Dissolution Plan, I’m wondering why you should attack because it’s “unsigned” when it’s accompanied by a later signature sheet that makes clear the DACHA residents’ intention to dissolve the coop.
If you would have helped the group develop a version that’s more accurate, will you agree to do it now?
I can’t get to this without seeming unbearably presumptuous, but here goes:
1. If it’s true that you have money for tons of attorneys–enough to have conflicted out everyone for miles around, we hear–I have to recommend you redirect a small amount to a public relations advisor. I think the tactic of taking on the city staff in such detail (deserved or not) doesn’t play well except, maybe, in court.
2. City leaders suggest the fear you might criticize or sue influences the way they operate. One indicates that she trusted you, but you and your partner did things contrary to you said you’d do and what you should have done if you were interested in the DACHA members’ welfare and the project’s success.
A respected Davis commentator, Rich Rifken, has stronger words to describe you and your actions. Your friends have responded with letters that quote your earlier writings. You are losing this public relations contest.
3. Most everyone expresses sympathy for the DACHA members. Whether they’re guilty of the things you charge doesn’t really affect the concern that Davis people feel for their loses. If they really were engaged in efforts to gain windfall profits, well, it didn’t work and they’ve been penalized, guilty or not.
4. How can this DACHA nightmare go away–with lessons learned–for the developers, the members, the city staff and council and all the rest of us? Given the charges and the language in the debate, it won’t be easy. Given your past contributions to the community, it seems as though you’d want to be a leader in resolving this.
Given the reception you’re getting now from the city, I suspect you’ll never really know when they “get even” in the future unless you end up perceived as a major player in settling this war.
See, I told you this wouldn’t come across good….
[quote]See, I told you this wouldn’t come across good….[/quote]
Actions speak louder than words…