Editor’s Note: by request, some asked us to run this letter from 2006. The letter is dated June 24, 2006. John Gianola is the managing attorney for Legal Services of Northern California. LSNC provides a wide range of legal services to a low-income population of approximately 500,000 throughout Northern California. Their mission is “To empower the poor to identify and defeat the causes and effects of poverty within their communities, efficiently utilizing all available resources.”
Dear Mayor and Council Members:
As you know, I am the City’s representative on the board of Davis Area Cooperative Housing Association (DACHA), I was appointed to the board in fall 2005. I have not yet reported to the Council regarding my impressions and opinions of DACHA.
I understand that the Council will be receiving a report from staff on the audit of DACHA at its June 27, 2006 meeting. Unfortunately, I will be out of town and will not be able to attend. I believe that this is an appropriate time to share with you my thoughts on the audit report, the staff report, and my opinions on the structure of DACHA.
I joined the DACHA board at a time of much conflict between the residents of DACHA and its board and especially with DACHA’s consultants, Neighborhood Partners (NP), Since I have ‘been on the board, it has evolved from a board with only one resident member and one that was primarily influenced and controlled by NP to a board that now has a resident majority, DACHA has terminated its relationship with NP. It has been a pleasure working with this new board as it has restored some of the faith in the leadership of the organization and has encouraged active participation by residents in the administration of DACHA.
I find nothing to dispute about the audit report. I also fully support the staff’s recommendations stated in its June 21 report.
When I joined the board, it was clear that DACHA was suffering financially, and the residents were upset about the high cost of their housing and generally frustrated with the administration of the organization. As the board knows, there was also much mistrust of NP by many of the residents.
My concern when I joined the board was to help ensure the viability of DACHA and to establish faith in the organization among the residents. However, because of the lack of necessary documentation and confused accounting of the organization, it was impossible for me and the board to make responsible long-term decisions about DACHA. I felt as if I lacked basic information about this organization, such as a clear accounting of DACHA’s liabilities. Therefore, I eagerly awaited the results of the City’s audit of DACHA to give me an independent, objective and better understanding of DACHA’s viability so that I could make informed and appropriate decisions about this important community asset.
The audit report confirmed my suspicions: DACHA is in financial distress and that it represents a significant financial risk to the City and to the members of DACHA. Based on the information in the audit and the auditor’s conclusions, it would be a violation of my fiduciary duty to DACHA and to the City as its representative to support additional long-term community investment in DACHA. Particularly, it makes little financial sense to award the Parque Santiago affordable units to DACHA as the addition of these units will not alter the serious long-term financial risk to this organization. Affordable housing is a very limited community asset and needs to be invested and administered wisely. Unfortunately, DACHA no longer represents a sound and safe affordable housing investment for the community.
I support the recommendation that staff be directed to do an analysis of the sustainability of DACHA and explore different models or options for DACHA. My impression is that the members of DACHA have lost faith in the organization and, as a result, it cannot continue to adequately function as a cooperative. I think it is vital that the City explore an alternative model that allows the current residents, who invested large sums of money in good faith in DACHA, to maintain their homes. Any plan that involves residents being removed from their homes or being forced to maintain this risky housing model simply would not be right.
Moreover, I believe that it is not enough to merely make DACHA homes affordable to these residents. Mere affordability is the goal of affordable rental housing programs. These residents were promised “homeownership” and no one has made good on that promise. The current financial structure, according to the audit, will not significantly increase equity in these properties. DACHA is a very expensive proposition for something that more resembles rental housing than it does homeownership. I also urge the Council to direct staff to explore alternative models that gives the current residents some degree of real ownership in their housing and a better opportunity for realizing equity in their homes. I do not know whether or not it is possible to realize such an alternative, but I know DACHA residents deserve serious efforts to explore and consider all alternatives.
I understand that NP is stridently arguing that DACHA must be maintained as a cooperative and that more units should be added to DACHA. However, the matter at hand is not what is best for NP – it is what is best for the City and the residents of DACHA. NP is the only entity that seems to have faith in the continued growth of DACHA. But NP has a financial interest in adding more units to DACHA and its advocacy must be seen in that light.
The following are my observations and opinions about the structure of DACHA and why it may have been ill-conceived. Some of these opinions are shared in the audit and staff reports. I have the benefit of hindsight and I do not believe that all these problems necessarily should have been understood at the initiation of DACHA. I share these observations in the hope that important lessons can be learned from this experience and that mistakes will not be repeated in future affordable housing ventures.
Scattered-sites and economy of scale
It seems to go against the very nature of a cooperative to have members’ units scattered about the City. Similar units in one location certainly fosters a sense of common good and cooperation. Indeed. I’ve observed that it has been difficult for DACHA to establish a common bond among its residents. In fact, this scattered-site model fosters inherent conflict among residents. For example, there is some conflict and resentment among the members that some of the DACHA units with the worst financing have been a drain on DACHA’s limited resources. Also, residents of one site have particular landscaping needs that they would like DACHA to pay for while residents of another site do not see how such maintenance will benefit them. Thus, scattered-sites present an impediment to developing a cooperative relationship which is essential to a housing co-op model
Moreover, building similar units as one development with similar financing has the benefit of not only fostering cooperation among co-op members, but has the benefit of a favorable economy of scale. Needless to say, the staggered scattered-site model of DACHA is a poor economy of scale and helped lead to unfavorable financing to the organization and high maintenance costs to the residents.
In short, I believe the very concept of DACHA as staggered scattered-site units is fundamentally a faulty model for cooperative housing.
Over-marketing
To live in a housing cooperative is not simply a financial choice, but a lifestyle choice.
Successful cooperative housing demands continued and full participation of the members. Thus, marketing for co-op housing should be targeted to those who want to live the co-op lifestyle. This apparently did not happen with DACHA. It does not appear to me that any residents completely understood what it meant to live in a co-op, received any training on co-ops, or were encouraged to actively participate in the co-op when they purchased their shares. The main marketing theme seemed to rely on a promise of affordable homeownership and not the benefits and responsibilities of living a cooperative lifestyle.
DACHA suffers from a lack of participation of members. The burden of trying to administer DACHA, especially navigating the organization through its financial crisis, has fallen on a core group of residents. Although these residents are bright, energetic, and committed to DACHA, they are expending a great and inordinate amount of time and personal resources to running the organization. I cannot blame residents who are not involved as I believe that regular participation in DACHA was not part of what they bargained for. Nor do I think it is fair for anyone who may want to live in a co-op to be subjected to the tremendous problems of administering a co-op such as DACHA.
I’ve observed a great amount of stress by several residents who have taken on the difficult tasks and challenges facing DACHA. I’m concerned about the ability of these residents to continue this level of work for the long-term and the stress on their health and on their families.
Drafting of bylaws and occupancy agreements
DACHA and NP would have benefitted from more oversight by the City of the drafting of DACHA’s essential documents. There is unnecessary confusion and difficulties with DACHA due to poorly drafted bylaws and occupancy agreements. The bylaws have confusing and inconsistent provisions and conflict with various resident occupancy agreements.
The drafting of these documents was shoddy and should have received more review by the City. In the future, I recommend that any documents relating to the operation of a co-op be closely reviewed by staff, the City Attorney, and the Social Services Commission: As the members of co-ops need to understand exactly what their bylaws state, r also recommend that the City require that such documents be written in plain and simple language with a minimum of “legalese.”
Conflict of interest
As the Council is aware, there is a great amount of mistrust of NP by many of the DACHA residents. This was certainly the case when I was appointed to the board. Although I do not believe that there was necessarily any real conflict, there was some apparent conflicts of interest with NP’s involvement in DACHA. These apparent conflicts undermined NP’ s credibility in the organization.
A few of these apparent conflicts are as follows:
- Loans made by David Thompson to DACHA residents and loans by Twin Pines Cooperative Foundation (TPCF – of which Mr. Thompson is president). Although these loans may have been intended to assist members to buy shares, it created suspicion and conflict between NP and some of the residents, especially when supporting documents for some of the loans could not be produced. It was simply inappropriate for the consultants for DACHA to also act as a lender to the organization. It was an apparent conflict of interest that has actually produced conflict within the organization.
- David Thompson in his response to the audit report claims that if DACHA were to dissolve then the remaining assets must go to TPCF to develop other cooperative housing. Such language is reflected in the Articles of Incorporation (which can be amended). If not a real conflict, it raises a perceived conflict that the assets of DACHA would go to an organization of which DACHA’s consultant is the president. Because NP has a real financial interest and stake. In continued cooperative housing development in Davis, it appears that Mr. Thompson would indirectly financially benefit from the dissolution of DACHA. TCPF should not have been made a beneficiary of the dissolution of DACHA nor had any financial investment in DACHA as long as DACHA’s consultant was a member of TCPF. It is an unnecessary apparent conflict of interest that could easily have been avoided with more stringent oversight by the City.
- Because NP was responsible for the drafting of the bylaws, articles of incorporation, occupancy agreements, and various other contracts and agreements, it created the impression among many residents that NP exerted too much control and power over DACHA’s affairs. I would recommend that in the future, the City require independent sources to draft essential documents relating to cooperatives as to avoid the apparent conflict of interest by consultants.
Thank you for consideration of these comments. Please feel free to contact me if you need further information.
Sincerely,
John F. Gianola
I want to emphasize that John Gianola was chosen by the city to sit on the DACHA board and to advise us because of his high stature in the legal community representing the needs of low-income citizens. He was the Managing Attorney for Legal of Northern California.
Legal Services of Northern California provides a legal services to a low-income citizens throughout Northern California.
Please excuse my serious proof-reading handicap. I meant to say:
I want to emphasize that John Gianola was chosen by the city to sit on the DACHA board as our sole appointee and to advise us. We chose him because of his high stature in the legal community that represents the needs of low-income citizens. He was the Managing Attorney for Legal Services of Northern California.
Legal Services of Northern California provides legal services to low-income citizens throughout Northern California.
We weighed his advice heavily.
I should add that at the time John Gianola wrote this assessment, it was not clear whether he realized the extent of the binding contracts that the Neighborhood had entered into with the initial Neighborhood Partners-appointed board and subsequent non-member dominated boards to expand the co-op and the extent of the financial liability that the associated fees to Neighborhood Partners represented.
John Gianola had no way of knowing at the time he wrote this letter that Neighborhood Partners would sue DACHA for the future fees for the expansion that did not take place, and that, in fact could not take place because the city had not agreed to supply 60 single-family units to DACHA.
It would be interesting to see what he would have written had he known about the contracts and the subsequent lawsuit. He left because he took a job out of state.
I had the privilege of working closely and extensively with John Gianola in setting up and running a legal clinic Dan Wolk instituted in West Sacramento. I have a great deal of respect for John Gianola’s expertise…
Luke and I also worked with John Gianola on a number of housing issues. I will respond to a number of his comments later today.
What concerns me is that John as an Attorney sitting on the DACHA board participated in so many of the DACHA actions. He was appointed for his legal skills with housing but then proceeded to engage in the breaking of the bylaws of DACHA and the laws of the State of California.
January 14, 2012
To: Davis City Council (for DACHA Hearing to forward to California Attorney General)
Fr: David Thompson, President of Twin Pines Cooperative Foundation (TPCF)
Re: Evidence #13. Did City Appointee Break Law & Attorney General’s Requirements & assist DACHA’s illegal Self-Dealing Transactions? No action yet by City Council.
cc: Steve Pinkerton, City Manager; Danielle Foster, City staff and interested parties.
As a Public Benefit Corporation, DACHA is required by law to meet certain standards when it comes to self-dealing transactions between members of the DACHA Board and the organization. There is a section of the DACHA bylaws 5.4 (256 words) on Self-Dealing Transactions (taken from the Law) and instructions on the Attorney General’s website for a public benefit corporation to meet the law.
Regretfully, City staff, the City Attorney, and the City Appointee on the DACHA board never appear to have ever mentioned or met the Attorney General’s requirements.
Self-Dealing Transactions at DACHA Executive Session Meeting of August 24, 2006
First, there were not enough eligible board members to achieve a legal quorum. With the City Appointee on the DACHA board, a City staff member in attendance and the meeting at a city office the illegal DACHA meeting was held anyway.
According to the Law and to the Bylaws of DACHA a self-dealing transaction is required to be noticed, the members provided with detail, and the meeting should be open. For this self-dealing transaction there is no published Agenda, no explanation of the required details as an attachment to the Agenda and the meeting was held in Executive Session with no one other than Danielle Foster of City staff attending.
At this closed meeting the excessive delinquencies of two members were dealt with. One of the delinquents was (a board member & Board Treasurer) the other a non board member. The Treasurer was given 4 years/4 months to pay off $4,307 she owed DACHA. The City Appointee to the DACHA board made the motion. Even though the Bylaws required that she be automatically removed from the board, there is no mention of that issue and she was not removed as she should have been.
The non-board member was required to pay a lump sum (which she did) and to pay off the balance of $3,454 at $250 per month. The non board member was given only 14 months to pay off a delinquent amount smaller than the delinquent Treasurer. By September 30, 2006, the Treasurer’s delinquency to DACHA had been allowed to increase to $5,748 (64 months on a $90 per month) and the non board member’s delinquency had dropped to $3,454 (14 months on a $250 per month plan). Why did the Treasurer get a much better deal than the non board member on a motion by the City Appointee? The board and City staff has a history of favoritism to the Treasurer.
The City Appointee, John Gianola was appointed to the board by Mayor Asmundson partially because he knew a lot about housing law. The City Appointee -more to come!
For more about DACHA and the City role visit http://www.community.coop/davis.
Att: Minutes DACHA Executive Session August 24, 2006.
Thanks for posting this old piece of DACHA history. It’s certainly a devastating view to the state of DACHA management in mid-2006. (It probably detracts from the power of John Gianola’s review to speculate about if it’s “clear whether he realized the extent of….” anything he doesn’t talk about just to suggest that he would support one view or the other more than five years later.)
Although he served for less than a year before he wrote this, he showed up at a strained period and certainly developed strong opinions about DACHA: a lack of trust (due to real or imagined conflicts of interest) between the members and Neighborhood Partners before DACHA terminated its contract with NP, the model for this project and the failure of the city to provide needed oversight of the DACHA board.
Sue, how does one get to the city staff’s report and audit? I tracked down the June 27, 2006, council page and found only a set of minutes without the package. (Interestingly, you were absent. Even more interesting, you’re shown as voting in some cases and as making statements in other cases. An interesting off-topic mystery?)
Mr. Gianola appears confident that the city had a pathway outlined in the city report and his own recommendations to solve the issues that faced DACHA in 2006. He obviously didn’t think the city was powerless to act to correct the perceived flaws.
(I have to question your contention, Sue, that he could have been unaware about the contracts approved by the board when he was so thorough about reviewing the early DACHA documents. Were the audit and city staff report silent about the “binding contracts”?)
Sue, you keep suggesting that you (and, I presume, city staff and other counselors) couldn’t have anticipated how NP would set up the coop, how they would operate once established and how they would sue after they were dumped by DACHA. Something about “private enterprise trust” drove the decisions, I think.
However, the city knew by 2006 about the first two issues; Mr. Gianola (and the audit and the staff report, as well?) makes that clear and recommends corrective actions. Furthermore, given the obvious bad feelings described here and the contractual obligations DACHA had with its dismissed contractor certainly should have limited the level of surprise when any lawsuits appeared.
This letter foreshadows the opinions I’ve read recently about the flawed model, etc., or maybe was the source of those views. It also makes clear to those of us whose reading only goes back a couple years that DACHA fired Neighborhood Partners in 2005-2006, leaving the city more than five years to take some leadership in getting DACHA back on track.
Some specific questions:
1. Mr. Gianola, obviously a dedicated spokesman for the advancement of low-income people, had served only a short time when he did this. How much longer did he represent the city as a DACHA board member? Who proceeded him as the city’s representative? Who has followed him as the city’s representative from Mr. Gianola’s term until today? Will the current city’s representative be making a report at the upcoming council meeting?
2. Where is the city staff responsibility for DACHA project management? Mr. Gianola points to “staff, City Attorney and Social Services Commission” as people who could have provided oversight and kept “shoddy…essential documents” from getting DACHA off to a bad start.
To which department, in addition to the city attorney, did the council give oversight responsibility? Did these people meet with DACHA members, attend board meetings, report back to the city on a regular basis with recommendations for action?
3. Where can one read “an analysis of the sustainability of DACHA and [s]explore[/s] different models or options for DACHA,” assuming that the council followed recommendation that the staff develop one? What did the city do to correct the DACHA flaws in the more than five years that David T. no longer “controlled” the project?
A different and additional self-dealing transactions (not allowed by the Attorney General) which John Gianola Attorney, participated in.
December 15, 2011
To: Davis City Council (for DACHA Hearing to forward to California Attorney General)
Fr: David Thompson, President of Twin Pines Cooperative Foundation (TPCF)
Re: Evidence #9. City staff allows DACHA Treasurer seemingly to be delinquent for seven years and to break bylaws and laws without restrain from 2005 to 2012. Why such staff favoritism to DACHA Treasurer?
John Gianolo was on the board during most of these instances.
She was elected Treasurer of DACHA at the DACHA meeting of October 12, 2005 where a legal quorum was affirmed by city staff members Foster and Ayala-Garcia. However, rent rolls show there was not an eligible quorum to effect legal business. The 2005 rent rolls (attached) show that she was delinquent when elected. Due to being delinquent more than 30 days she was neither eligible to vote at the October 12 meeting nor to serve on the board. However, city staff declared there was a legal quorum with no mention of her being 30 days delinquent. The bylaws required she be automatically removed from the Board.
She has been delinquent continuously for almost seven years (since March of 2005) to the above date. At present, she is delinquent $7,821.08 by DACHA’s records (Rent rolls attached). There is no mention in the minutes of (the board, members or city staff) anyone following the requirement that she (and other board members) be automatically removed from the board as required by the bylaws.
On May 31, 2007 a self-dealing transaction took place with a board member (Treasurer) at the DACHA board meeting. The self-dealing transaction was not noticed to the membership. The Self dealing transaction involved expanding her home, allowing her to exchange the value of the improvement for an increase in her share to $20,000 and the deletion of her payment plan of $50 per month. The information required of a public benefit corporation for a self-dealing transaction was not provided by the board. The process required by the bylaws of DACHA for a self-dealing transaction was not followed. The approval of the illegal self-dealing transaction took place not in the open as required by law but hidden from the membership in the executive session of the board.
The City appointee, John Giannola was a member of the DACHA board. At this meeting there was no legal quorum for DACHA to conduct business. (See Minutes of May 31, 2007 meeting). City staff never took action to invalidate the quorum vote. Other illegal self-dealing transactions have taken place between the DACHA board and the Treasurer with the participation of the City appointee John Giannola and the attendance of City staff at the improperly called and conducted meetings.
The former President of DACHA told me that she had asked City staff for funds (about $800) to begin eviction proceedings against the Treasurer for owing so much to DACHA. Danielle Foster refused to provide the funds for DACHA to evict her. Sworn testimony by other DACHA board members shows that they did not know what was going on but that the President and Treasurer did as they were the two DACHA board members who were the main contact people with City staff (Cochran, Foster, Ayala-Garcia).
In the loan documents DACHA is required to notify the City of member delinquencies. There is no record of DACHA ever notifying the City of the rash of member delinquencies that at one point reached upwards of $110,000. Nor is there any evidence of the City staff enforcing their own loan documents, or requiring DACHA to pursue the major delinquencies.
How could a resident of a project that has a city loan be allowed to be on the board (illegally), to vote (illegally), to sign documents, to be constantly delinquent (almost seven years), to engage in self-dealing transactions and other corporate transgressions without any written record of the DACHA board or city staff pursuing their delinquencies and improper presence on the board.
The Treasurer was therefore ineligible to serve on the board or to vote during those four years. The Arbitrator brought this up in his report (June of 2009) to the Yolo County Superior Court. However, even after seeing that report, Danielle Foster continued to meet and work with an ineligible President and Treasurer and ineligible board. And we are talking about the conduct of the ineligible Treasurer of an ineligible membership to whom Danielle Foster had recommended that the City loan them $4 million dollars.
[quote]”…it appears that Mr. Thompson would indirectly financially benefit from the dissolution of DACHA. TCPF should not have been made a beneficiary of the dissolution of DACHA nor had any financial investment in DACHA as long as DACHA’s consultant was a member of TCPF. It is an unnecessary apparent conflict of interest that could easily have been avoided with more stringent oversight by the City.”[/quote]Here’s the best little nugget, in my opinion.
Did the city take Mr. Gianola’s observation to heart and act? Did we assure that DACHA revised its articles of incorporation–let’s say in the month or two following!–to correct this conflict and did the city assure the action was conducted in a legal manner that would survive any challenge by TCPF?
Fascinating. Now, I see where you got this odd-sounding “hypothetical,” Elaine.
All of the “shoddy” documents that John Gianola speaks of were approved by the City Attorney and the City Attorney testifed to the state I believe both that she had reviewed the documents and they met state requirements.
They are the same documents that are used by almost all limited equity housing cooperatives in California and are similar to the ones used by Dos Pinos.
David Thompson, Twin Pines Cooperative Foundation
[quote]”The Arbitrator brought this up in his report (June of 2009) to the Yolo County Superior Court.”[/quote]David T., where can one look at the arbitrator’s report on-line?
Did you and DACHA agree to arbitration at some point and did you both agree to work with this specific arbitrator?
It’s been suggested that you gained default judgments against DACHA because they failed to appear with an attorney. Is this an accurate report? I assume this doesn’t refer to the arbitration hearings, so what default judgments did you win against DACHA?
It’s been said that you subpoenaed a minor, essentially part of a legalistic terror campaign. Is there anything to this charge?
It’s been said that DACHA failed because it did not have enough money to pay the arbitration award. Do you agree?
I hope you’ll see my comments on yesterday’s story on the dissolution plan and see fit to answer for the benefit of [u]Vanguard[/u] readers.
[quote]”All of the ‘shoddy’ documents that John Gianola speaks of were approved by the City Attorney and the City Attorney testifed to the state I believe both that she had reviewed the documents and they met state requirements.”[/quote]You apparently have more faith in the city attorney that some folks do. In any case, it’s simple a matter of Mr. Gianola’s [u]opinion[/u] about whether the work was “shoddy.” Given his Legal Services background, it isn’t surprising he’d be a little dramatic if he saw papers that that didn’t provide adequate protection for “low-income” program participants.
More to the point are his specific concerns:[quote]”There is unnecessary confusion and difficulties with DACHA due to poorly drafted bylaws and occupancy agreements. The bylaws have confusing and inconsistent provisions and conflict with various resident occupancy agreements.”[/quote]Did the articles of incorporation, bylaws and occupancy agreements get revised to deal with the issues raised at the time?
It is more than a little fascinating if Mr. Gianola developed the opinion that the city attorney must not have reviewed documents because of their shoddiness, inconsistency and confusing nature. I wonder if he and the staff had some reason to believe she had not when, according to your account, she not only reviewed but approved of them and later testified to their legal adequacy.
[quote]They are the same documents that are used by almost all limited equity housing cooperatives in California and are similar to the ones used by Dos Pinos. [/quote]
God help us if this is true…
[quote]Did the articles of incorporation, bylaws and occupancy agreements get revised to deal with the issues raised at the time? [/quote]
And who drafted these “poorly drafted” documents? Certainly not the DACHA homeowners…
[quote]Fascinating. Now, I see where you got this odd-sounding “hypothetical,” Elaine.[/quote]
Now you are beginning to catch on…
Let me address the issue of the “minor” first as that is a human part of all of this. It is of course regretful that a minor was subpoenaed and I apologise that that happened and it should not have happened. The issue of the “minor” has been inappropriately raised as a way of portraying me as a “heartless’ something. So it has been used as a red herring relative to the truth.
Here’s how the sitation unfolded.
Our attorney asked DACHA for a list of all the members who had received (what we consider to be an illegal) refund of their share capital.
The management company for DACHA provided us with the names and addresses
of each of the members who they had sent checks to amounting to about $200,000. The check sent to this one family with their names listed was about $18,000. The family cashed that $18,000 check.
Having those names directly from DACHA’s management company our lawyer then prepared the list of people to subpoenae.
The father and daughter(minor)turned up at Court. We did not know until that morning that because the daughters name was on the check sent to the family for $18,000 she had therefore been subpoenaed.
DACHA’s management company gave us her name and the process took over.
It was a mistake for DACHA to have sent us her name. We would have no idea that the name on the check for $18,000 was that of a minor.
We apologise for our part in her having to turn up in court.
David Neighborhood Partners.
I find it fascinating how the architects of a mess can paint themselves as “angels”; and everyone else as somehow “evil”. Is there something wrong w such a picture I wonder? In my experience, there is usually “your side”, “my side”, and the truth lies somewhere in the middle, altho it may be heavily skewed to one side or the other depending on circumstances…
Here is the section from California law.
(4) The federal, state, or local public agency which executes the
regulatory agreement shall satisfy itself that the bylaws, articles
of incorporation, occupancy agreement, subscription agreement, any
lease of the regulated premises, any arrangement with partners, and
arrangement for membership share accounts provide adequate protection
of the rights of cooperative members.
According to the law, Harriet Steiner had to sign off on the above.
DACHA’s lawyer at the time should have the sign off from Harriet.
David Thompson, Neighborhood Partners. lLC.
It is disturbing to me that given the letter which is the basis for this story (or Mr Gianola’s views prior to the letter) on the status of DACHA, that he as the City’s rep, did not pursue the unraveling and correction of the issues. Why did that not happen. This gets muddier with every story in my opinion. And I ask along with Just Saying, for the arbitor’s report. Someone must have agreed with NP to allow the judgment.
.??
I will be posting that in the morning.
[quote][u]Elaine[/u]:”And who drafted these “poorly drafted” documents? Certainly not the DACHA homeowners…”
[u]J. Gianola[/u]: “Because NP was responsible for the drafting of the bylaws, articles of incorporation, occupancy agreements, and various other contracts and agreements…”[/quote]
Mr. Gianola believed NP handled its document development responsibility in a way that engendered distrust from DACHA members, including setting up an appearance of a conflict of interest (that might lead to NP trying to dissolve DACHA in order to take over the properties).
He also chastised the city for inadequate oversight in the document development process, by alleging (apparently incorrectly) that Harriet Steiner, city staff and a commission were missing in action.
Finally, he recommended that the problems be corrected and noted that the city was fully capable of assuring that this get done. A critical current question is whether the city acted on his advice, particularly with respect to the articles of incorporations changes that would have eliminated the potential conflict of NP assuming ownership upon DACHA dissolution.
David T., your California law citation is particularly damning if it applies to the DACHA project. If so, the responsibility for the quality of the documents clearly falls to the city (as opposed to the responsibility for [u]drafting[/u] them up for others’ consideration, revision and approval): [quote]”The…local public agency which executes the regulatory agreement shall satisfy itself that (the documents) provide adequate protection of the rights of cooperative members.”[/quote]
David T., you write about “DACHA’s lawyer at the time should have the sign off from Harriet” to support your claim that she was required to approve the documents and, likely, did. Who was the lawyer to which you refer? Was the lawyer employed by–and paid for–DACHA itself, the city or your organization(s)?
If DACHA had its own attorney at this time, that suggests even more entities failed in their legal responsibilities. I wonder if the DACHA members should hold up dissolution in order to go after all of the attorneys involved here for malpractice! There must be some lawyers in this country aren’t conflicted out by NP and who’d be willing to take the case on contingency.
I have no idea how that NCLS attorney could participate on the DACHA board when vote after vote was taken without a legal quorem?
Also, was he acting as a lawyer? Was he the City’s lawyer/representative, or a lawyer representing the DACHA members, or what?
If the City wanted any attorney’s opinion of what was going on with DACHA, appointing an attorney to the Board was creating a conflict of interest from the first day. The lawyer becomes one of the actors, and he should not have agreed to that arrangement.
Also, the record is clear: DACHA members were not “low income.” The housing was not supposed to be for low income. It was moderate to middle income housing, and I believe its members included UCD faculty and staff, and other professionals who were not economically or educationally challenged. They knew what they were signing, or had access to legal assistance. These are not people who fell off a tomatoe truck and wandered into the applications office for that housing.
Also, the record is clear: the monthly payments made by DACHA in the early days were literally a steal for them, as compared to market rate housing. They got a great deal.
Problem was, over time, it appears that some DACHA members may thought they saw an avenue to taking the houses for themselves.
Remember, DACHA was created after the staff-enabled give aways of other affordable housing units in, say, Wildhorse, to occupants who took the $100,000s of city equity money and ran. DACHA members were, or should have been, well aware that there was recent precedent of taking city afforable equity and the City doing nothing about it.
(Dear City Attorney and Housing Staff: wasn’t it your job to put the city equity language in the Wildhorse affordable housing deeds, and you did not? What was that debacle worth? $7 million, if memory is correct?)
So DACHA members most likely know all of this.
If it were not for NP and Twin Pines filing their cases, those DACHA homes would have been taken by their occupants, and the city afforadable housing program would have once again lost millions of public money, all without public notice or accountability.
Thank you, David, Luke, NP and Twin Pines, for continuing your fight to set things straight and gain some accountability onDACHA.
BTW, there has yet to be any accountability for what staff and the water gang tried to do to the City in the bogus rate hikes of Sept 6. Not one person has been fired or disciplined, so far as I know.
Tell me: why should any of us vote for the Parks Parcel Tax renewal, or any future city parcel tax renewal, when over and over, huge mistakes are made and there is no accountability?
.
[quote]Let me address the issue of the “minor” first as that is a human part of all of this. It is of course regretful that a minor was subpoenaed and I apologise that that happened and it should not have happened….DACHA’s management company gave us her name and the process took over. It was a mistake for DACHA to have sent us her name. We would have no idea that the name on the check for $18,000 was that of a minor. We apologise for our part in her having to turn up in court. [/quote]Elaine, does this satisfy your concerns? It certainly puts the situation in a different setting that you’d assumed it was in making your criticisms.
David T., why in the world would a minor be receiving an $18,000 payment from DACHA? Was she a coop member, and the head of the household? If you thought all such payments were illegal, why do you think it was “an error for DACHA to have sent us her name”? Was she treated respectfully or poorly when she was on the stand?
For whatever reason DACHA’s management company made out a check to a DACHA household for over $18,000. One of the names on that check was a minor.
The names of the people who had received checks from DACHA were provided to NP’s attorney.
When she turned up with her father we had no idea why she was there. Ms. Musser I think brough to out Attorney that the person subpoened was in fact the young girl, a minor.
We of course knew something was wrong, we checked our files, the minor’s name was indeed on the check.
We of course agreed that she should be excused. She was never on the stand and again if we had not been given her name by DACHA we would not have asked her to be there.
People have faulted us but it was a mistake DACHA made and passed on to us.
David, Neighborhood Parnters, LLC.
[quote]”Remember, DACHA was created after the staff-enabled give aways of other affordable housing units in, say, Wildhorse, to occupants who took the $100,000s of city equity money and ran. DACHA members were, or should have been, well aware that there was recent precedent of taking city afforable equity and the City doing nothing about it.”[/quote]While I’m personally aware of the inadequate management the city exercised in Wildhorse and other east-side development, I’m skeptical that word got around to the DACHA members and inspired them to figure out how to get on a windfall themselves.
It certainly didn’t work out for them if they did try, and I’m not sure how David T. gets credit for them losing their homes entirely. Or, if he wants it.[quote]”I have no idea how that NCLS attorney could participate on the DACHA board when vote after vote was taken without a legal quorem? Also, was he acting as a lawyer? Was he the City’s lawyer/representative, or a lawyer representing the DACHA members, or what?”[/quote]That’s easy. He was the city’s board representative, and it doesn’t matter whether he was an attorney on the side or not. Are you suggesting he should have abandoned his city assignment if there was not a legal quorum? Did someone suggest a lack of quorum at the time, or is that a after-the-fact allegation.
Who was/was the city representative(s) when you were on the council? Did they handle their responsibilities to your satisfaction?
Sue, how does one get to the city staff’s report and audit?–[b]JustSaying[/b]
Here is the link for the audit and the accompanying staff report: [url]http://cityofdavis.org/meetings/councilpackets/20060627/11_DACHA_Audit.pdf
[/url]
Justsaying: there was a clear conflict between the actions of DACHA, and the City, and no, you cannot have a city person who is an attorney sitting there and doing nothing while the DACHA Board, with him sitting on the board, acts without a legal quorem.
[quote]°Direct staff to work with Davis Area Cooperative Housing Association (DACHA) to make
corrections to management, fiscal systems, and accountability, as defined in the audit report.
°Direct staff to return to the Social Services Commission and City Council with an analysis
about the sustainability of DACHA and to make recommendations about corrective actions
or alternative models for sustaining its affordable units.
°Direct the Parque Santiago affordable units to be sold by the project developers to low and
moderate income buyers as resale-restricted units in accordance with the requirements of the city’s Affordable Housing Ordinance.”[/quote]Thanks for the link, Sue. Did the city council direct staff to do these things? Did the corrective actions get done?
Justsaying: DACHA placed the attorney/city rep in an untennable situation: he was an attorney; he was a city rep; he had a duty to the city to blow the whistle on misconduct by the DACHA Board; yet there he sat, on the board, not blowing the whistle. Then, when things blew up, of course he was in the situation where he had to trash someone else besides the CIty (his appointee) or the DACHA Board (of which he was a Member). Who was left to trash: NP of couse.
I would not accept a thing that the City rep/attorney has to say, because he was stuck defending his own conduct, right?
ERM and Sue: got anything else you can throw out there to defend DACHA and City Attorney and Staff that we can count on as reliable? So far, I am not impressed.
I hope NP takes the depositions, files the motion for summary judgment, and sends the transcripts to the Yolo County Grand Jury. (The GJ’s earlier report lacked detailed data review, and specifically said it would not examine any issues that where in litigation. Well, the time to perform an appropriate review is coming up.)
Dear City Council: I hope you do not settle this mess anytime before the depositions are taken, and filed in Superior Court so all of us taxpayers can see for ourselves who did what with DACHA over the past 5-7 years. A settlement right now would merely bury what staff and DACHA did or tried to do.
DACHA’s attorney was David’s long time friend Karen Tiedemann in Oakland.
She wrote the by laws for Rancho Yolo and Leisureville and these by laws also needed revisions.
Gail Madsen was DACHA’s manager and long time friend of David.
Lots of inter-relationships –
M.H.: I wonder if you’ve read the initial sales pitch for DACHA??
Page after page talked about the glories of home ownership and how DACHA
was a first step in home ownership. It’s no wonder members were confused, or taken advantage of.
John Gianola, is a lawyer, who in his letter critiqued among other things the shoddy bylaws. So to say that he must have read them.
John was appointed to the board as the City’s representative due to his knowledge of nonprofit and housing law.
If he read the bylaws he would have seen that the bylaws state:
board members who were delinquent more than 30 days were required to be automatically removed from the board
Members who were delinquent more than 30 days were not able to vote
He would have also seen the entire section in the bylaws (taken from state law) on self dealing transactions
He would also be aware of the Quarterly reports provided by the management company that would show the delinquencies by member
During 2005, 2006 and 2007 John Gianola attedned at least 14 meetings where there was neither a legal quorum for the board nor a legal quorum for the membership.
There was no DACHA meeting he attended that was legal
Mr Gianola had to have known (as did many others including staff)that the 14 meetings were not legal or proper.
He, the staff, the City Attorney, were constantly combing the bylaws and of course they were approved by the City Attorney and were provided to each member as required by law.
In 2007 at meetings with City staff present there was a discussion and vote to suspend the bylaws about delinquency so they could vote.
Why the discussion of suspending that part of the bylaws?
Because City staff and DACHA knew that there were not enough eligible members to vote to borrow 4 million dollars.
So everyone knew they were breaking the bylaws (including City staff and the City Attorney) as they all allowed DACHA to borrow $4 million in public funds.
It seems that as a board member John Gianola did not do the job required by California law, in his report to the Council he should have reported that the board and membership votes were illegal and he should have reported the delinquencies.
And by actively participating in so many instances of the breaking of the bylaws and state law was this how he should have conducted himself as the City representative on the board, as a board member and as a lawyer in California?
Seems at least questionable ethical conduct.
David Thompson, Twin Pines Cooperative Foundation
Self-Dealing Transactions from the DACHA bylaws which are also part of State Law.
John Gianola participated in a number of self dealing transactions that did not meet the requirements of the law and are part of the complaint filed against DACHA and the City.
Section 5.4Self-Dealing Transactions.
Except as provided below, the Board shall not approve a self-dealing transaction. A self-dealing transaction is one in which the Corporation is a party and in which one or more of the Directors has a material financial interest. The Board may approve a self-dealing transaction if all of the following exist:
(a)Notice of the self-dealing transaction is on an agenda posted in accordance with Section 5.9 including a description of the transaction with sufficient detail for Members to determine the nature of the transaction.
(b)The Corporation enters into the transaction for its own benefit.
(c)The transaction is fair and reasonable as to the Corporation at the time the Corporation enters into the transaction.
(d)Prior to consummating the transaction or any part thereof the Board authorizes or approves the transaction in good faith by a vote of a majority of the Directors then in office without counting the vote of the interested Director or Directors, and with knowledge of the material facts concerning the transaction and the Director’s interest in the transaction.
(e)Either (i) prior to consummating the transaction or any part thereof the Board considers and in good faith determines that the Corporation could not have obtained a more advantageous arrangement with reasonable effort under the circumstances, or (ii) in fact the Corporation could not have obtained a more advantageous arrangement with reasonable effort under the circumstances.
A self-dealing transaction does not include entry into an Occupancy Agreement or purchase of a Membership for its Transfer Value.
David Thompson, Twin Pines Cooperative Foundation
[quote]Seems at least questionable ethical conduct.—[b]David Thompson[/b][/quote]So now John Gianola joins the long, long list of people and organizations who David Thompson has accused of unethical conduct because they criticize his role in the DACHA failure.
This list includes, but is not limited to, the low/moderate income members of DACHA, the former City Manager, the City Attorney, three city staff members, myself, the rest of the City Council, the Yolo County Grand Jury, Yolo County and our independent auditor.
Now the highly respected John Gianola, former managing attorney for Legal Services of Northern California — an organization dedicated providing legal services to low income people — is added to the long list of people attacked and accused of unethical behavior by David Thompson.
Sue: low income? Dacha members could earn up to $90k. And many did
Their deal and monthly payments were a steal compared to comparable housing.
Home values were escalating rapidly and some wanted a piece of the equity action in 2005-08 They tried to get those homes for cheap, and but for NP and Twin Pines they would have succeeded
Why hasn’t the city rented these homes that are now vacant?
[quote]”Justsaying: there was a clear conflict between the actions of DACHA, and the City, and no, you cannot have a city person who is an attorney sitting there and doing nothing while the DACHA Board, with him sitting on the board, acts without a legal quorem.”[/quote]Michael, when did the issue of a lack of quorum arise as a public concern? Did this become an issue afterwards or did someone challenge the board at every meeting when the group met without enough board members?
One can’t be as critical of Mr. Gianola as you are here, whether he was an attorney or not, if all the attendees blithely carried on the business of the DACHA board not realizing there wasn’t a quorum or if someone challenged the eligibility of attendees sometime down the road.
There is nothing in Mr. Gianola’s report about anything raised by anyone, including the auditors, about this issue. I’ll look closely for mention of this when I read the audit, the staff report and Davit T. responses at the time.
There seem to be lots of problems with DACHA that have come to people’s realizations after the fact. I’m wondering if this quorum issue is one of those.
Since fall of 2005 DACHA has not had a legal quorum of the board or membership.
SO everyone combed through the bylaws, and everyone looked a lot at the section on the board of directors because that is how they took the actions to remove the representative of TPCF. Lots of votes had to take place. John Gianola looked at the bylaws.
Section 4.6Voting.
No Member who is shown on the books or management accounts of the Corporation to be more than thirty (30) days delinquent in payments due to the Corporation under such Member’s Occupancy Agreement shall be eligible to vote in person or by proxy.
Then there is this part Section 5.6
(b)Any Director who is more than thirty (30) days delinquent in the payment of such Director’s Carrying Charges (as defined in Section 5.3) shall automatically be removed.
Bylaws are to be followed and the City loan documents required that the bylaws be met.
The City’s appointee, a lawyer about housing, sat on a board which was illegally seated and that took illegal actions. The bylaws were being broken, loan requirements were not being met. State law was being broken.
The requirements of the Attorney General on self dealing transactions were not being met and Sue Greenwald is just fine with all of this going on.
“Additionally, valid actions of the board of directors at a meeting require a quorum and sufficient vote of the directors. If an organization is confused about who counts for quorum and voting purposes, it could cause a series of past board actions to unravel or be cast into suspicion. Should someone challenge the validity of a board action, an organization may need to reach back many months, if not years, to determine whether important matters such as amendments to Bylaws or Articles and elections of the current directors were valid.”
From non profit law blog.
David Thompson, Twin Pines Cooperative Foundation
[quote]For whatever reason DACHA’s management company made out a check to a DACHA household for over $18,000. One of the names on that check was a minor.
The names of the people who had received checks from DACHA were provided to NP’s attorney.
When she turned up with her father we had no idea why she was there. Ms. Musser I think brough to out Attorney that the person subpoened was in fact the young girl, a minor.
We of course knew something was wrong, we checked our files, the minor’s name was indeed on the check. [/quote]
Then this was management’s mistake, no? But then note the comment made by eagleeye:
[quote]Gail Madsen was DACHA’s manager and long time friend of David.
Lots of inter-relationships – [/quote]
So, in answer to:
[quote]Elaine, does this satisfy your concerns?[/quote]
No, it does not satisfy my concerns. Secondly, there should be no refusal to withdraw such a subpoena, once a mistake like this is realized. It should be rectified [i]immediately[/i]…
[quote]It certainly didn’t work out for them if they did try, and I’m not sure how David T. gets credit for them losing their homes entirely. [/quote]
Perhaps you should ask yourself the following questions:
Who proposed this flawed model?
Who drew up the governing documents for this flawed model?
Who provided the misleading advertising for this flawed model?
Who is the only one who made any money from this flawed model?
Who is the one who levied this flawed model’s accounts so it collapsed and the city had to foreclose?
Once the mistake by DACHA was brought to our attention we did rectify it immediately.
David Thompson, Neighborhood Partners, LLC.
[quote]ERM and Sue: got anything else you can throw out there to defend DACHA and City Attorney and Staff that we can count on as reliable? So far, I am not impressed. [/quote]
Since you seem so concerned about perceived conflicts of interest, why don’t you have a problem with the gross developer conflicts of interest that arose at the inception of this flawed model?
“Gail Madsen was DACHA’s manager and long time friend of David.”
Not true.
NP provided the DACHA charter board with three different management companies to choose from. Gail Madsen was not one of them. The board chose another company.
Madsen was chosen by the DACHA board from three choices when the first mgmt company resigned.
Gail Madsen does not manage any of NP’s other properties
We know each other professionally but not as friends. I’ve never even had lunch with her.
David Thompson, NP
[quote]Here is the section from California law.
(4) The federal, state, or local public agency which executes the
regulatory agreement shall satisfy itself that the bylaws, articles
of incorporation, occupancy agreement, subscription agreement, any
lease of the regulated premises, any arrangement with partners, and
arrangement for membership share accounts provide adequate protection
of the rights of cooperative members. [/quote]
This is absolutely meaningless without the context of a cite to the actual code section…
[quote]Someone must have agreed with NP to allow the judgment.
.??[/quote]
Yes, the arbitrator that was selected by NP…
[quote]Problem was, over time, it appears that some DACHA members may thought they saw an avenue to taking the houses for themselves. [/quote]
From Mr. Gianola:
[quote]These residents were promised “homeownership” and no one has made good on that promise.[/quote]
Who made the sales pitch about home ownership?
[quote]Sue: low income? Dacha members could earn up to $90k. And many did
Their deal and monthly payments were a steal compared to comparable housing.
Home values were escalating rapidly and some wanted a piece of the equity action in 2005-08 They tried to get those homes for cheap, and but for NP and Twin Pines they would have succeeded [/quote]
So DACHA should never have been conceived as it was?
[quote]Once the mistake by DACHA was brought to our attention we did rectify it immediately. [/quote]
Some people have a different definition of what “immediately” means…
Elaine
How could the arbitor who led to the DACHA judgment for NP we chosen by them? Why would the city and DACHA allow that? Why isn’t this part of the timeline in the history of the document David G published yesterday?
[quote]Elaine
How could the arbitor who led to the DACHA judgment for NP we chosen by them? Why would the city and DACHA allow that? Why isn’t this part of the timeline in the history of the document David G published yesterday?[/quote]
From history:
[quote]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.[/quote]
Is there no recourse from the law firm? Sounds lie it might have been professional neglect on their part?
[quote]Is there no recourse from the law firm? Sounds lie it might have been professional neglect on their part?[/quote]
The lawyer will argue it was his “professional judgment” so it would be difficult case to win; DACHA members do not have the means to hire a lawyer to sue…
ERM: “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.”
.?? “professional judgment” not to negotiate or research or dispute assertions?
Someone in DACHA wrote as published in the City packet, and above:
“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.”
Whoever wrote that had better be factual and correct …. do those two law firms know what their former client is writing about their legal services?
Just a note: if DACHA has a cause of action for malpractice, it is considered a thing of value, and should be so listed as a potential asset on their books. If there is a potential claim for damages, has the statute of limitations run yet? If not, it has to be listed as an asset.
If the statute has run, why did the City Attorney let that one expire? Doesn’t she have a duty, with housing staff, to look at all potential ways to fund DACHA, and to fend off claims that lack merit, as ERM constantly asserts the NP claims lacked merit?
ERM: have you looked into the potential DACHA claims against its lawyers, and I mean anyone who assisted DACHA within the statute of limitations? As their current attorney, isn’t it your duty to look at ways to assist it financially. What have you done about the facts stated in that paragraph above, which YOUR clients wrote, and I am sure you saw before it was published to the City? Do you think those lawyers are going to file a case against DACHA now, on your watch, for what you let get published? What’s DACHA remedy against you, ERM, if you let them publish the above paragraph and it’s wrong, and DACHA loses that defamation case?
David: I think you should comment on this new mess.
BTW, I am NOT giving any opinions about the merits of any claims as described herein; I know knowing about this particular issue; this is the first time I can recall seeing it posted here. I am just commenting on the procedures involved, and some of the odd relationships that arise out of that paragraph.
ERM: when, exactly, did you start to represent DACHA informally or formally? Whether paid, or not, as you know that payment status does not matter.
Correction: “I know NOTHING about this particular issue …”
Justsaying: thanks for the comment and questions. I dont think the quorem issue was brought to the CC so long as I was on it (to APril 2004). I started reading housing reports after that where things were not going well for DACHA, for whatever reason.
I’m not critical of that legal aid attorney, as I was not there. But I was commenting on the weird relationships, and the potential conflicts of interest that appear in the documents before the CC tomorrow night.
When someone hires me, I am clear, and I mean clear, whom my client is, and the scope of work.
I know from reading this Blog that the DACHA Board, when the legal aid attorney was a Member, studied the DACHA Bylaws carefully several times in an attempt to avoid the quorem requirement and other things. So yes, that attorney knew or should have known there were quorem problems. He became an actor in the process that is being criticized now in court in Woodland.
If I had been asked by the City to look into the DACHA matter, I would have has a signed retainer contract for services, even as a volunteer, and I would have attended the meetings as an ex officio attendee, with no voting power, and I would have a city staff member being the voting representative. THen I would not be a fact witness; the staff member would have been the witness, and I could have freely analyzed the process, and the DACHA mess, with some objectivity. Obviously, this is not what occurred here. Too bad. So no, I dont give the long letter from 2006 much weight, as of course, he trashed NP, and not his own Board and conduct.
Sue: INMO, respectfully, you picked a political horse to ride; DACHA had a lot of members, and friends, and you often default to residents and “the little guy.” I am the same; one reason I am supporting you for re-election is that side of you that I appreciate, as I know many do.
However, I dont think your judgment is objective at this point, as you picked your side years ago, probably from incorrect data and analysis supplied by the same staff whose conduct is at issue in the litigation, and so far you won’t admit you fired a blank on this one.
You basically have more than one vote on this issue, as the newer CC members are probably looking to you for leadership on this issue since you are the only CC member left from those days when DACHA was created, to the troubles, to now. You have repeatedly blogged here that you are the one with the information that the CC needs to get this one right.
However, as the evidence has come out in the litigation, unfortunately, your horse has lost its shoe; it will not cross the finish line first in Yolo County Superior Court.
If you really, really want to know the details, and how incorrect I think you have been, read the deposition transcripts and exhibits that NP and Twin Pines are about to generate, and you will see for yourself how some have duped you.
We all make mistakes, and unfortunately, on this one, you have, with all due respect.
[quote]”Since fall of 2005 DACHA has not had a legal quorum of the board or membership.”[/quote]So you say now. My question is whether anyone challenged the board’s right to meet at one or all of its meetings in 2005, 2006, etc. and was Mr. Gianola put on notice before June 2006 that anyone contended that the board was meeting illegally? If not, he cannot realistically be criticized for continuing to represent the city at the meetings.
When is the first time you can document that you informed the city that you thought the board was doing business without a quorum?
[b]@Michael Harrington:[/b]I certainly don’t have anything to gain politically on this issue, Michael. And that is an understatement. One side in this dispute has many friends and supporters in the community who will never follow this issue closely and who have already made up their minds. Some of them are my own friends as well. The other side is isolated and powerless. Political expediency would dictate ignoring interests of the DACHA members, but it would be very, very wrong to do so.
[quote]”When someone hires me, I am clear, and I mean clear, whom my client is, and the scope of work.”[/quote]Maybe this is where someone (me?) is confused. My impression from this letter is that Mr. Gianopla was an appointed member of the board and not acting as an attorney but as a citizen representative. If so, the city would not be his client.[quote]”I know from reading this Blog that….”[/quote]You must know better than that. Reading this blog doesn’t mean one knows [u]anything[/u] for a fact. You would have read a lot of opinions, all of which could not true since the “facts” directly contradict each other.
[quote]Sue: INMO, respectfully, you picked a political horse to ride; DACHA had a lot of members, and friends — [b]Michael Harrington[/b][/quote]Rereading this just astonishes me. DACHA has a lot of member and friends? You have GOT to be kidding.
[quote][u]Michael[/u]: “Sue: low income? Dacha members could earn up to $90k. And many did. Their deal and monthly payments were a steal compared to comparable housing.”[/quote]You’re kidding, of course. You really mean that most of us [u]Vanguard[/u] readers (except you lawyers, of course) could have qualified for DACHA housing?
Yep
Could have qualified. However, if you really made that much money, you would have bought your own house. If I recall, one of the problems with DACHA was that members were paying around 40% of income, with more downside than upside potential on their membership share value (which is the functional equivalent of a down payment).
Neighborhood Partners can’t have it both ways. If you want to claim that the DACHA members are well off in order to deny them sympathy, then why is it important to maintain the co-op? Why not support the dissolution? According to you, the whole point of the co-op was to provide permanently affordable housing for those who need it.
[quote]”Neighborhood Partners can’t have it both ways. If you want to claim that the DACHA members are well off in order to deny them sympathy, then why is it important to maintain the co-op? Why not support the dissolution? According to you, the whole point of the co-op was to provide permanently affordable housing for those who need it.”[/quote]I’m assuming that even people earning $90,000 need “affordable housing” if they can’t come up with a sizable down payment and/or have inadequate credit ratings for conventional financing. However, I have to admit I’m a little surprised that anyone then could describe DACHA as “low income housing.”
I’m further assuming that this has nothing to do with NP’s contesting the dissolution. My guess is NP’s desire to maintain DACHA as a legal entity has to do with NP’s complaints of wrong-doing and lawsuits and whether dissolution would negatively affect these actions.
[quote]”No, it does not satisfy my concerns. Secondly, there should be no refusal to withdraw such a subpoena, once a mistake like this is realized. It should be rectified immediately…”[/quote]So, realizing that it wasn’t intentional, that it was based on an accurate report from DACHA and that (as soon as they saw that this person was a minor) no further action was taken isn’t adequate? And what does eagleeye’s allegation today (since disputed) have to do with this ancient issue?
You suggest, Elaine, that there’s more to this minor story than’s been told, that David T. continued to take actions agains this minor. But, does it just depend on what your definition and David T.’s of “immediately” is?
The “rest of the story” that interests me is knowing what business a minor has getting a $18,000 payment from DACHA. Was this a legal payment? Some kind of fraud? How does a minor get credit qualification to buy into a coop if that’s what happened? Or enter into a contract? You’re upset that this wasn’t “rectified immediately” whatever that means; I’m surprised that NP didn’t pursue this more. [quote]”Perhaps you should ask yourself the following questions:
Who proposed this flawed model?
Who drew up the governing documents for this flawed model?
Who provided the misleading advertising for this flawed model?
Who is the only one who made any money from this flawed model?
Who is the one who levied this flawed model’s accounts so it collapsed and the city had to foreclose?”[/quote]You’ll note that I was challenging Michael’s claim that David T. should be commended for stopping the DACHA member efforts to illegally obtain full equity in their units. Anyway, I’ve considered most of these questions already. The first two, asked and answered many times. As I read it, NP, the DACHA board and the city are responsible for the “flawed model” and for developing and approving the documents implementing the project.
I don’t know about advertising or whether it was “misleading” in any significant way (more than any other advertising?!). If anyone else noticed it was misleading, what actions were taken to challenge it? But, what difference does it make? What’s your point?
I suspect that many people “made money” on this “flawed model” over these years, and still are. Developers, builders, city employees in a number of departments, attorneys (don’t they always find a way), DACHA’s various management companies, you probably could add to this list. But, what difference does it make? What’s your point?
The final one is a little too complicated for me to answer. DACHA owed NP money (maybe still does). Your question assumes that the city “had to foreclose” because NP “levied this flawed model’s accounts.” I call “facts not in evidence” on this one. I’ve yet to see anyone try to make a convincing case that the city “had to foreclose” at the time it did. But, once it did, it was that decision that permanently sealed the fate of DACHA members. Hence, my point that David T. shouldn’t get 100% “credit” for putting out these folks.
Where do I get to by answering the questions? It’s not as though there’s some way to pin all the blame on David T. when there’s so much to go around and so many people who deserve a big share.
[quote]”One side in this dispute has many friends and supporters in the community who will never follow this issue closely and who have already made up their minds. Some of them are my own friends as well.”[/quote]It isn’t going to ingratiate you with your friends to imply that they’re ill-informed and not thoughtful if they support David T.’s “side”! Anyway, I expect you’ll vote the dissolution question based on the legal issues involved rather than on the “sides” or political expediency or whose got power.
[b]@JustSaying:[/b]My friends who have solicited my opinion as councilmember are well-aware of this assessment. I will vote on the dissolution based on what I think is best for the city and for the citizens we have pledged to serve.
Any lender who has looked at DACHA has responded with the same puzzled look.
I think the City initiated foreclosure for the amount of about $50,000. At that time, DACHA had reserves of over $200,000 and the DACHA members had delinquencies of about $50,000.
DACHA took no action to save itself.
NP and TPCF took them into Federal Bankruptcy Court which would have been an advantage for the DACHA members, would have kept the co-op, saved their shares and would have been settled in fall of 2010.
The four person illegal board (three had no shares in DACHA as required by law and bylaws)voted in an illegal quorum.
The loan from the City said it could only be used for certain expenditures. Legal or litigation was not one of them.
Danielle Foster at the City sent about $30,000 directly to DACHA’s lawyer for them to fight the suit for DACHA.
Whose pulling DACHA’s strings?
David Thompson, Twin Pines Cooperative Foundation
David, I’ll put aside for a minute the question of why — as a consultant for the DACHA founder board that you appointed — you advised them to enter into a binding contract with yourself as developer to expand the co-op and pay yourself a fee for each new unit regardless of the future financial conditions and regardless of the desires of future boards that would contain more members who actually had to pay the bill.
Regardless of this question — why would you fight the dissolution of a co-op that the independent auditor said was risky, that is insolvent and that the members now despise? The members don’t stand to make any money from the dissolution and in fact will lose their substantial investments. Yet they have appealed to us to please, please, please dissolve the co-op. Why fight it? I don’t understand.
Sue, just to make sure my comment about how I anticipate you’ll vote isn’t misunderstood because of difficulties in communicating this way, I was trying to say in a complimentary way the same thing you just did. And the “friends” comment was intended as a friendly, light-hearted observation. I hope both remarks came across the way I intended. If not, no more jokin’ around on the Vanguard….
I look forward to reading David T.’s response to your two questions. My guess is that losing DACHA might somehow put NP at a disadvantage in the ongoing legal battle and/or he feels the investigation(s) of the DACHA actions (and/or the city’s dealings with the “illegal” board) might not be completed if the organization is dissolved. In addition, I think someone mentioned as a matter of law the last officer standing had to stick around for some reason.
Your first question might be partly answered by the arbitrator’s finding that David G. published this morning. The “economy of scale” benefits would have benefited both NP and the existing DACHA members–the developer makes money while the individual members’ costs get reduced by having more members to share the costs. So, they enter into a “binding contract”–the only type of contract that would mean anything.
I wonder why the repeated references to the founding board’s appointment? Do you think something illegal or even unusual went on as the DACHA coop was being formed? Should the city have appointed the first board?
Is it possible that the DACHA members could be disadvantaged in any way by the organization’s dissolution? If the organization no longer exists, will the former members still have standing and be able to negotiate with or sue the city, NP, etc. for any real or imagined wrongs they suffered?
“Gail Madsen doesn’t manage other NP projects.”
David’s wording is tricky: Gail Madsen has been managing Leisureville
Mobile Home Park for too many years to count. The Woodland project was David’s AND a major part of his sales pitch to Rancho Yolo residents.
David didn’t have Luke on board for Leisureville so it technically isn’t an “NP” project. But it was David’s project, and Gail was and still is the manager. David recommended that she manage Rancho Yolo when residents complete park purchase. David also arranged for her to be paid with city funds for a very sketchy and mistaken analysis of upkeep costs in Rancho Yolo.