Two weeks ago the Vanguard reported that the plaintiffs in the suit against the city – Twin Pines and Neighborhood Partners – made an offer to the city to settle their dispute. The matter was scheduled for city council consideration during closed session at the meeting last week.
The Davis Enterprise is reporting this morning that the city rejected the $875,000 offer and made a counter-offer instead.
According to the paper, “The city offered either $185,000 to be split between the two organizations – and to forgive Neighborhood Partners the $15,000 it owes in legal fees to the city from a recent court ruling – or, instead, the city would make available a few-acre piece of land on Fifth Street that’s already designated for affordable housing for Neighborhood Partners to develop.”
This is considerably less than the offer made back in back in April of 2010 when Stephen Souza, on behalf of the city council or perhaps acting on his own, “conveyed a settlement offer to Neighborhood Partners and Twin Pines of $300,000.”
Early this year, the city offered another settlement, this time for $280,000.
At the time, the city council wrote, “This offer is more than reasonable, since nearly two years of additional attorney’s fees have been accumulated to the detriment of the City’s Affordable Housing program and, unlike the April 2010 offer, this offer cannot preserve DACHA because the City now owns the DACHA units and the DACHA Board is pursuing full dissolution of the co‐op.”
They continue, “Neighborhood Partners and Twin Pines have turned down this settlement offer as well, but the City has re‐extended the offer in hopes of reaching a reasonable settlement. This is a critical time in the legal disputes, as significant expenses will be incurred by all parties in upcoming months if Neighborhood Partners and Twin Pines continue to press their cases via litigation.”
David Thompson and Luke Watkins turned down the offer, in part because it did not include a settlement to Twin Pines. Some on the council objected that Twin Pines had no discernible damages, but David Thompson told the Vanguard that it would naïve of them to expect Twin Pines to drop their contentions and illegal of him to convince the non-profit to do so because he received a personal settlement offer (as a principal of Neighborhood Partners).
The city apparently believes they are going to win the case.
John Higginbotham, the city’s litigation attorney from Best, Best and Krieger, told the Enterprise, “I think they should accept it.”
He argued that if they took the case to trial they would get nothing.
On the other hand, Louis Gonzalez, representing Twin Pines and Neighborhood Partners, told the paper they found the offer insufficient and they would reject it.
He reportedly told the paper, “(It’s) less than what the city has previously offered and it is insufficient given the merits of the case (that Neighborhood Partners and Twin Pines are building against the city).”
The paper did go on to say that the two sides appear to be making progress and agree it is in their best interest to settle prior to April.
While I’m sure they believe that, the two sides are very far apart. If the city is really interested in settling this, they need to get off of their high horse and make a real offer here.
For one thing, if the case goes to trial, it figures to drag out another couple of years.
The current cost to the city is subject to dispute. David Thompson has long maintained that the city has spent over $800,000 defending itself on the DACHA issue. The city, using somewhat different metrics – looking mainly at direct expenses only – argued that from 2007-2011 they had spent about $430,000 and most of that from April 2010 to December 2011.
In March of 2012, the city responded to a Public Records Request by the Vanguard to account for city legal expenses to DACHA.
“The City and Agency were sued by Twin Pines in April 2010 and by Neighborhood Partners in March 2011. In 2007, the City voluntarily participated in mediation with DACHA and Neighborhood Partners that, unfortunately, did not result in a settlement of the DACHA/Neighborhood Partners dispute,” the city attorney reports.
She continues, “In 2008, the Agency refinanced all of the DACHA secured debts culminating in a $4 million secured loan to DACHA.”
In 2009, Neighborhood Partners was awarded $331,000 against DACHA. DACHA went into default on its loan after Neighborhood Partners levied on and emptied DACHA’s bank accounts.
On July 1, 2010, the Redevelopment Agency foreclosed on the DACHA units to safeguard the public funds loaned to DACHA.
“2011 costs include litigation expenses and other legal services related to DACHA. No other legal fees were expended by the City and the Agency,” Harriet Steiner told the Vanguard back in March 2012.
David Thompson now places the figure at over one million, counting a number of other expenses as related to DACHA.
The $275,000 on the consent calendar represents the fiscal year 2011-12 figure and it appears about $110,000 of that was spent in the first part of the fiscal year ending December 2011. That would appear to put direct legal expenses at $600,000 by June 30, 2012.
All of that would suggest the city’s more reasonable offer would have been in the $400,000 to $500,000 range.
The lowball offer suggests that the city believes they can win, but given the prospect of continued legal expenses, it is not clear that winning in trial is the cost-effective alternative.
For everyone involved, including the taxpayer, this episode is best off put to rest. Time for the city to get serious and quit insulting the plaintiffs in this matter. Expenses continue to mount.
—David M. Greenwald reporting
“For everyone involved, including the taxpayer, this episode is best off put to rest.”
I think that there would be universal agreement, with the possible exception of the attorneys, with this statement.
However, I believe that that is as far as the agreement goes. Some might argue that just as it is the obligation of the city to get the best deal that it can for it’s taxoayers in terms of labor negotitiations, it is also the city obligation to get the taxpayers the best deal it can in the negotiation of law suits. Granted, it is legitimate to question what path offers the best deal. However, I see it no more valid to ask the city to “get serious and quit insulting the plaintiffs” than if is to make the same demands of the plaintiffs who have frequently insulted CC members and city staff and city attorneys in multiple public venues including this blog.
I find it ironic that the city alleges to offer a piece of land on Fifth St for NP to develop as part of their offer when they have maligned NP throughout the discussion!
I have been reading about the DACHA project for the past 10 years and I’m still not clear why David Thompson feels the city owns him $875K.
We all could use close to a million dollars, but I’ve never been able to figure out why after setting up a poorly structured co-op housing development that was doomed to fail that David wants us taxpayers to give him an extra $875K?
Yesterday the Enterprise wrote: “Fourteen of the 20 houses are occupied and each tenant is up to date in rent, the city reports.”
I’m also wondering how in a city that has never had a vacancy rate of more than 5% that the DACHA homes have just been able to go from 50% vacant this summer to 30% vacant today. How hard can it be to rent below market homes in a town with low vacancy?
P.S. Any idea if David Thompson and Neighborhood Partners involved with the “Twin Pines Apartments” on F street (that was torn apart for most of last year in what looks like should have been a two week repair job with a competent contractor)?
To me you should be saying the city is not going to cave to NP/TPCF. Thank goodness since the real facts show that the city is right in this case. Does the loser in court not perhaps even have to pay some of the winners costs? If this case is argued correctly in front of a judge, the city should do fine. They are offering some land so NP can have somewhere to put a project that could have been a continuation of DACHA adding more units, but they are mistaken to think they had this in their pocket. More units were never approved by the city so their contention that they are owed massive damages for not being able to develop them are misplaced. And from there they just went off the deep end with accusations.
Twin Pines Apartments are not NP’s. Their’s was Dos Pinos, which by all accounts has gone well ever since they got rid of Dave Thompson’s involvement, i.e., his “consulting”.
Settling lawsuits isn’t always about the money involved,
it’s also about not getting a reputation for settling meritless, nuisance, lawsuits, not encouraging more of them to be filed by anyone.
It’s interesting that Stephen Boutin has been replaced, apparently, by Louis Gonzalez.
The whole DACHA thing has been too confusing to follow. I’ve read Enterprise articles, watched council meetings, and spoken with David Thompson, but I still feel that I don’t know who’s in the wrong. There’s enough accusatory verbiage floating about to make me thing that there’s ample blame to go around, but if either party to the dispute believes that they’ve presented a compelling case to the public, this member of the public would like to dispel that notion.
.