I have avoided really weighing into the situation involving DACHA. I have stated on numerous occasions that I lack a dog in this fight. The matter is complex, I do not believe I know all of the facts, and so it is difficult to come to a meaningful conclusion.
That said, this is a troubling matter for me in a lot of ways. There have been insinuations made that the residents of DACHA were greedy and attempted to cajole, from the city, ownership of cooperatively and publicly owned housing units.
Second, it is unclear whether or to what extent the residents were misled about the nature of the DACHA membership and their commitment as members of a housing cooperative. It is a complex matter, but to date I have not seen material that was misleading in this regard. Whether at one point they were trying to either profit from this arrangement or gain private ownership of their houses – it is clear in the end that they will neither profit nor own their houses.
In the end, they seem to be resigned to getting on with their lives and escaping the financial and legal burdens and obligations of DACHA. On that point and really that point alone, the mission should have been accomplished on Tuesday night with the council’s actions to refer the dissolution plan to the Attorney General.
My beef has never been with the DACHA residents – most of whom, I believe are innocent victims in this power struggle and legal fight.
I am disturbed at the notion that residents have been referred to as deadbeats. What really happened was that when the carrying charges were set as high as $1700 or more per month, it was a struggle for people of modest incomes to pay those charges and some did fall behind.
This was a crucial mistake really made, I think, by both the original consultants as well as the city. I do not really understand how the city allowed the carrying charges to become this high. One explanation offered to me is that the city council originally got rolled on this issue and the members of the cooperative suddenly realized that they had signed up for something that turned out to be much more expensive than they thought it would be, that it was not the low-income project they were sold.
This is also the basis for the claims by David Thompson and Luke Watkins that decisions were made by residents of DACHA, who served on the board while behind on their payments – which they argue, probably correctly, is precluded in the bylaws of DACHA.
But the city put the loan in to reduce both the initial share charge as well as the monthly charges to residents.
What unfolds is a long and protracted legal struggle in which both sides (and really there are three sides in this story, not two) point fingers at each other.
The courts will ultimately weigh in on these disputes. However, from my perspective I remain concerned about several aspects of what went down here.
The biggest problem is that the city is simply wearing too many hats here.
I listened very carefully to public comment on Tuesday night. It is easy to suggest that there were people down there speaking on behalf of David Thompson and Luke Watkins, because they were.
But several people I spoke to really do not have a dog in the fight. What they see is a clear conflict of interest by the city in trying to deal with this matter when in fact they are a party to this matter.
I keep being told by some members of the council that the public really does not understand this issue and that it is only in closed session that some of the real truth comes out. Well, that is one reason I urged back in 2009 that we have an independent third party review this – because they are right, I do not know what happened.
I do think there is animosity toward David Thompson and Luke Watkins on the part of both the staff and council. I am not weighing in on whether or not this animosity is justified, only that, justified or not, it will tend to color one’s judgment.
Moreover, Harriet Steiner should have conflicted herself out of this matter. People have varying opinions on Harriet Steiner, but I do not have a particular bone to pick with her either way, and I like her personally.
However, even a cursory look at this suggests that the city should have independent counsel examine this matter more fully. Ms. Steiner, after all, gave the city legal advice on the creation of DACHA, she gave advice on the refinance, she gave advice on foreclosure, and she is the counsel of record in the litigation.
I remained troubled that the city allows the natural conflict between advice counsel and litigation counsel to persist for an employee that is a contract employee and gets paid by the hour, not by contracted salary.
Whether real or perceived, the situation allows those critical of the city to exact the charge that the Davis City Council, facing lawsuits, acted to foreclose DACHA and then dissolve it as a means to mitigate legal damage and liability. I am not saying that that is true, but their many hats allow this charge to have resonance.
I talked to a number of people on Tuesday night and Wednesday, none of them have a dog in this fight, and they are troubled by that very fact. And so am I. The appearance of a potential conflict of interest is damaging to the city’s reputation, whether there is actual nefarious activity or not.
My chief concern is not with the actions of the private parties in this matter but the actions of the City of Davis.
So with all of these conflicts and charges in mind, the city council then acted to move the dissolution of DACHA to the Attorney General. I think the Attorney General is going to take one look at this mess and determine that the dissolution was improper and that the city should have conflicted themselves out of the matter.
That said, it should be noted as it was to me yesterday, that in effect that is all the council did anyway. They used a legal basis to send the matter to the Attorney General, who will likely examine this matter through impartial eyes and be able to determine what the proper thing to do is.
From that perspective the council, I think, may have gotten things right on Tuesday. I agree with their decision to create some sort of independent and objective examination of the matter. That very much sounds like the independent investigation we were calling for nearly three years ago, that was denied by a 3-2 vote of the council.
That vote, which was opposed by Councilmembers Stephen Souza and Sue Greenwald who remain on the council, perhaps prolonged this agony.
I am sympathetic to the points raised in objection to lumping the issue of the dissolution together with the operational and fact-finding inquiries of the council.
As Sue Greenwald argued, the last part of the motion “is problematic being in a lawsuit. It’s terribly problematic. It’s not wise from a fiduciary responsibility to do this.”
She was exactly right. It was problematic to include those provisions in the motion when the city is part of the lawsuit, but I believe so too was acting at all on the dissolution. Sue Greenwald admitted that the council was both an interested party and was constrained by legal considerations. Perhaps the best thing to do would have been simply to have forwarded the matter directly to the state.
Mayor Joe Krovoza said, “I don’t know how you send to the Attorney General findings that are narrow under section 817 and share with the Attorney General the process that this community might want to engage in with regard to limited equity co-ops going forward and how we might heal the situation.”
He called it “nonsensical to me” and said, “it even borders on embarrassment.”
Mr. Krovoza pointed out an obvious conflict when it comes to tasking the city attorney to mediate this matter. “There’s no way the City Attorney can mediate this matter when they’re a party defending itself in a lawsuit and as we’ve already heard, we’re working to settle this matter.”
The problem is that he sees that conflict in one sense, but not in the other. There is also a conflict in the fact that the city attorney is the one who created this structure to begin with, and now is being paid to defend the city in litigation.
“As the council, we should take our responsibility and decide what to do with the units,” Councilmember Greenwald argued.
The problem I see with that solution is that you have two members who were involved in this almost from the start and you have three members who are relying on staff and legal counsel – two parties that are potentially culpable in this mess for their information.
It is clear that this is a mess. We have had an arbitrator make one ruling. We have the Grand Jury report. But there is a lot we do not know and will not know unless someone looks into everything that happened.
Maybe this process is a way forward, but I think it is too limited to really address a lot of core problems with the way this was handled by the city, that continue to trouble me. So at the end of the day, I am where I started in this process – troubled by what I see, not knowing whom to believe, and having no clear process by which to rectify this dilemma.
—David M. Greenwald reporting
“Mayor Joe Krovoza said, “I don’t know how you send to the Attorney General findings that are narrow under section 817 and share with the Attorney General the process that this community might want to engage in with regard to limited equity co-ops going forward and how we might heal the situation.’ “
Why would the city want to continue with a program that has failed so badly? It would be better to build market rate housing making housing cheaper for all. A problem has been restricted growth causing the city to try to fix the unintended consequences with pie in the sky solutions dribbling out, through some sort of system of chance or privilege, housing for the those that are unable to afford market rates. The only reason such deals ever would pencil out is because of the huge markup on new houses. Increasing supply reduces margins making housing more affordable for all including those renting.
[quote]Whether real or perceived, the situation allows those critical of the city to exact the charge that the Davis City Council, facing lawsuits, acted to foreclose DACHA and then dissolve it as a means to mitigate legal damage and liability. I am not saying that that is true, but their many hats allow this charge to have resonance.[/quote]
This is nonsense. NP levied a writ of execution on DACHA, and wiped out all of DACHA’s funding. In consequence, DACHA could not pay any bills. Therefore the city, as DACHA’s primary lender, had no choice but to foreclose. It matters not one whit how some want to spin this – it is the writ of execution that emptied DACHA’s accounts that triggered the city’s foreclosure. It did not have anything at all to do with the city’s ostensible desire to mitigate legal damage/liability.
[quote]From that perspective the council, I think, may have gotten things right on Tuesday. I agree with their decision to create some sort of independent and objective examination of the matter. That very much sounds like the independent investigation we were calling for nearly three years ago, that was denied by a 3-2 vote of the council.[/quote]
“Independent investigation”? How do you ensure that no friends of NP/TP will not wind up on that committee? There certainly will not be anyone representing DACHA’s viewpoint on the committee, but can we guarantee we won’t have shills for NP/TP on that “independent” committee? We have a developer here w a lot of connections/friends in town…
[quote]This was a crucial mistake really made, I think, by both the original consultants as well as the city. I do not really understand how the city allowed the carrying charges to become this high. One explanation offered to me is that the city council originally got rolled on this issue and the members of the cooperative suddenly realized that they had signed up for something that turned out to be much more expensive than they thought it would be, that it was not the low-income project they were sold.[/quote]
Egads, but WHO set those carrying charges/share costs too high, knowing full well they violated the City’s own Regulatory Agreement? There is no question the city is taking the position they had no duty to supervise (which I strongly disagree with), but ultimately who is to blame for setting those charges/costs too high?
Finally, an article on the city attorney and housing staff conflicts
[quote]Second, it is unclear whether or to what extent the residents were misled about the nature of the DACHA membership and their commitment as members of a housing cooperative. It is a complex matter, but to date I have not seen material that was misleading in this regard. Whether at one point they were trying to either profit from this arrangement or gain private ownership of their houses – it is clear in the end that they will neither profit nor own their houses.[/quote]
Again, this is just nonsense. The documents to prove home ownership was represented to prospective DACHA members is in Attachement #1 of the dissolution plan. The actual application form has in bold letters at the top “Co-op HOME OWNERSHIP Application for Information” with “home ownership” in all caps…
[quote]In the end, they seem to be resigned to getting on with their lives and escaping the financial and legal burdens and obligations of DACHA. On that point and really that point alone, the mission should have been accomplished on Tuesday night with the council’s actions to refer the dissolution plan to the Attorney General.[/quote]
You’ve got to be kidding… it is not over for DACHA homeowners, not by a long shot…
[quote]The biggest problem is that the city is simply wearing too many hats here.[/quote]
The one hat the city did not wear and should have was the supervisory hat…
” Therefore the city, as DACHA’s primary lender, had no choice but to foreclose.”
I disagree that they had no other choice but to foreclose. They could have carried the loan and allowed the DACHA residents to payoff the judgment and then collect on their loan. They chose to foreclose. I’m not saying it’s the wrong decision, but it was a choice.
“How do you ensure that no friends of NP/TP will not wind up on that committee?”
They put in a conflict of interest clause. I don’t think being friends with someone is a conflict of interest. So I don’t think you can legally ensure that. Nor do I think you should.
“There is no question the city is taking the position they had no duty to supervise (which I strongly disagree with), but ultimately who is to blame for setting those charges/costs too high?”
You and I are in agreement here.
[quote]So with all of these conflicts and charges in mind, the city council then acted to move the dissolution of DACHA to the Attorney General. I think the Attorney General is going to take one look at this mess and determine that the dissolution was improper and that the city should have conflicted themselves out of the matter.[/quote]
I have no idea where you get this from… the city HAD to make the findings; the city HAD to hold the hearing – BY LAW…
[quote]They used a legal basis to send the matter to the Attorney General, who will likely examine this matter through impartial eyes and be able to determine what the proper thing to do is.
From that perspective the council, I think, may have gotten things right on Tuesday.[/quote]
Precisely…
“You’ve got to be kidding… it is not over for DACHA homeowners, not by a long shot…”
For a lawyer Elaine, you have a tendency to miss words… key word was “should have been” as in applying it is not over.
[quote]It is clear that this is a mess. We have had an arbitrator make one ruling. We have the Grand Jury report. But there is a lot we do not know and will not know unless someone looks into everything that happened.[/quote]
We also have John Gianola’s letter, which was particularly damning, and backed up the Grand Jury report…
“I have no idea where you get this from… the city HAD to make the findings; the city HAD to hold the hearing – BY LAW…”
The council could not have recused itself and had the AG’s office handle the matter or designate the county to do so? That’s what I was told could have happened.
Elaine, Your comments are full of hate and really do not help your clients.
If the DACHA members felt that it was too expensive to live there, why didn’t they just move? After the City loaned DACHA money to lower the initial investment cost and stabilize the carrying cost, why did DACHA members continue to be delinquent in their payments? If the “books were a mess” when the new Board came on board, why didn’t they hire a bookkeeper or accountant to help them straighten it out and get a clear picture of their financial status and obligations? Why didn’t DACHA members understand that they were buying into a Co-op? When they first asked about dissolving the Co-op and have members own the homes, why didn’t someone educate them on what a co-op was and how it worked? Why can’t Sue understand this and, through her votes, has supported the waste of our public funds for the benefit of these few citizens? Is the City of Davis currently paying the bank loans for the project or did they pay them off during the foreclosure? If the City is paying the mortgages on the property, are the rents being collected enough to pay these or are we continuing to subsidize the tenants? How much is this mess costing the City on a monthly basis?
[quote]”…it is unclear whether or to what extent the residents were misled about the nature of the DACHA membership and their commitment as members of a housing cooperative.”[/quote]For the sake of discussion, let’s say gaining benefits of home ownership (tax-deductible payments, etc.) through ownership in a co-op really was confused as buying a house in the regular sense. What does that matter?
If the confused individual continued through the process, it would have become more clear that shares in a co-op is different than a house. Is still confused, a person would have been quickly disabused of the notion each and every time it was expressed aloud.
At every point, the confused DACHA member was free to leave the co-op with their investment–a benefit real homeowners caught in the housing bubble did not have.
But, let’s say someone got through the co-op purchasing process and years of co-op ownership still ignorant of any particulars of their membership purchase. How did it affect anything that went on in this experiment?
What are we to gather from the many times that you and Sue have related this proposition of poor, uninformed, unsophisticated co-op folks who might have bought in because of confusing advertising? Simply that David T. and Luke are poor communicators or that they mislead buyers on a matter that ultimately means nothing?
[quote]”Independent investigation”? How do you ensure that no friends of NP/TP will not wind up on that committee?[/quote]That concern is not unique to this situation.
For example, how do you ensure that no friends of JPA staff, West Yost Associates, city staff or anyone else who stands to gain financially or politically (directly or indirectly) from the surface water project (or any alternative) wound up on the water advisory committee? Shouldn’t [i]that[/i] committee also be “independent?” (Clearly it is not, given that all members were appointed by the council, most or all of whom are strongly committed to a particular course of action.) If you are concerned about independence of a DACHA investigative committee, I would think you would be far more concerned about the independence of the WAC.
I have no idea what really happened with the DACHA mess and offer no opinion on the matter. All I know is that it has cost our financially-distressed City a boatload of money. Davis residents deserve to know what happened.
[quote]Simply that David T. and Luke are poor communicators or that they mislead buyers on a matter that ultimately means nothing? [/quote]To judge which of the two hypotheses are true… follow the money.
We have raised the “conflicted” role of Ms. Steiner and her law firm for a long time.
Reason 1.
In answer to a question from Lamar Heystek, Ms. Steiner said that the members could take $200,000 of public funds and refund it to themselves because there were no “encumbrances: at the time.
However, NP has shown the Council the City loan documents that there were encumbrances when the distribution was made. The only way, DACHA could refund over $200,000 to the members was by borrowing it from the City and the Loan documents from the City show they had an encumbrance on DACHA.
It was after than legal encumbrance when DACHA had the $4 million from the City that they had the capacity to refund $200,000 to the members.
At this time the City had a Legal Opinion from Goldfarb and Lipman stating that this action was against California Law. Still the City Attorney went ahead and did it.
When this was challenged by NP/TPCF, DACHA’s lawyer chose not to respond. So DACHA has no defence from their own lawyer on this action.
So in fact, DACHA seems to have relied upon Ms. Steiner’s opinion.
But she is not the lawyer for DACHA. This action is part of why DACHA is being sued. Is this not a conflict?
David Thompson, Neighborhood Partners. LLC.
Ryan – You should study all the documents on this matter. DACHA residents had invested all their savings into DACHA.
That the “books were a mess” is explained in the audit: Someone “lost” –
not a DACHA resident! – the records, both the meeting minutes and treasury reports. This is similar to incriminating
records being altered at Rancho Yolo to cover up NP’s misdeeds, possible
criminal activity.
Re NP’s lawsuit, if you read it you will see that NP billed for work done
outside the contract, hundreds of thousands of dollars, even though NP knew DACHA didn’t have the money to pay for the “work”.
Along that line, NP refused for years to provide Rancho Yolo with the
invoices that their contract called for semi annually.
David G. – Regarding conflict of interest, I heard one councilmember
say that if David T.’s name is on a project, he’ll vote for it no matter
what. “We’re friends, I don’t have to know and don’t care what the project is, I’ll vote for it.” (Councilmembers who take positions like this would seem to make it difficult for Harriet and city staff to freely do their work.)
There’s little point in people submitting negative questions and comments here if they haven’t read all the documents.
[quote]”I keep being told by some members of the council that the public really does not understand this issue and that it is only in closed session that some of the real truth comes out. Well, that is one reason I urged back in 2009 that we have an independent third party review this – because they are right, I do not know what happened.
I do think there is animosity toward David Thompson and Luke Watkins on the part of both the staff and council. I am not weighing in on whether or not this animosity is justified, only that, justified or not, it will tend to color one’s judgment.”[/quote]”I have here in my hand a list of…,” said old Joe McCarthy. No one gets to know the “real truth” if it’s kept in an envelope.
One has to assume that the refusal of the staff and city to welcome or even permit the independent evaluation for which you’ve called is a fear that the “real truth” is something different from what they’ve implied to you. The animosity you observe is, as they say, palpable. It’s reflected in the only comments that are coming from city leaders–short on facts and long on nasty portrayals of Thompson and Watson as bad people.
The way the city is dealing with the conflicting DACHA claims is causing a schism in the community. People who know the developers feel compelled to provide public character testimony because the only word coming out of city hall is derogatory–“The bad, bad developers cheated the DACHA poor folks.”–and self-serving–“We weren’t responsible for watching the store.”
Another third-party review likely will echo the fairly recent unbiased review, the arbitrator’s findings. Critical of the city’s handling of this affordable housing project and of the DACHA board’s illegal(?) conduct. Whether the developers’ choice to levy the accounts was “wrong” will get a closer look. It certainly appears a strategic error not to anticipate the city would foreclose on DACHA, and eliminate any chance for the co-op to pay its debt.
The council’s desire to settle instead of defending ourselves in court seems appropriate. How any of them think Harriet is an appropriate selection for this job is beyond me. Better to see if the developers will agree to third-party binding arbitration. Then, send Harriet in to the arbitrator with all this secret “closed-session” dirt.
“Elaine, Your comments are full of hate and really do not help your clients.”
Oh please Ryan! Elaine is representing, pro bono I believe, the poor against the rich. As an attorney in the case she has an understanding of the facts that most others do not have. Her vitriol has no bearing on the facts and is not detrimental to her clients. Any judge would be used to attorneys vigorously representing their clients in this manner.
As for myself, I’m still stuck on how you never get out of debt due to the way this deal was constructed. How is that not usury or predatory lending. Please all of you defenders of the developers, please explain that to me. If the materials say ownership but ownership is impossible how is that not fraud? The idea that the realities of the deal should have been clarified as people were lured deeper into the trap does not absolve anyone for baiting and switching from ownership to whatever tenancy the buyers ended up having. Bait and switch, defrauding people as to the nature of the title to their home, probably the largest investment they will ever make, is so reprehensible I beg someone to clarify why the facts stated above are not true!
[quote]”There’s little point in people submitting negative questions and comments here if they haven’t read all the documents.”[/quote]eagle eye, where does one read NP’s lawsuit?
Reason #2. Conflict Issue for City Attorney
DACHA has a contract, they break it. NP initiates its contract rights to arbitration. This is a private matter. The City decides to fund DACHA’s legal costs. Does the City do this for all or any other borrower? No.
DACHA’s board (illegally seated) asks City to forebear on paying their borrowing of public funds to the City to the tune of $116,000.
The reason given by DACHA is they need to pay their lawyer. At the time DACHA obtains forbearance of about $7,000 a month (DACHA does not pay anything to the City for 16 months). Would anyone on this blog like this kind of deal from the City?
At the time of forbearance (Mar 2007) the DACHA members owe DACHA $38,099.
At the end of forbearance (Sep 2008) the DACHA members owe DACHA $75,000.
The lawyer who helped DACHA has now filed a claim for $93,000 in unpaid services.
From a cash flow perspective, DACHA used the $116,000 in forbearance of a public funds repayment to extend their own personal debts by $37,000 but was the rest used to pay the lawyer?
The City Attorney had to be part of this approval process.
Was it right for the City’s public funds to be provided to DACHA’s illegal board for a private party dispute?
The $116,000 was never paid back. It was instead rolled into the new loan which of course was foreclosed upon by the City, so in a way was never fully repaid. The contract was upheld to the tune of $330,000. So the City funded defense of a losing contract dispute. What a waste of public funds?
David Thompson, Neighborhood Partners. LLC.
.
You can read the two law suits against the City and DACHA at http://www.community.coop/davis and click on DACHA.
David Thompson, Twin Pines Cooperative Foundation
[quote]As for myself, I’m still stuck on how you never get out of debt due to the way this deal was constructed. How is that not usury or predatory lending. Please all of you defenders of the developers, please explain that to me. If the materials say ownership but ownership is impossible how is that not fraud? The idea that the realities of the deal should have been clarified as people were lured deeper into the trap does not absolve anyone for baiting and switching from ownership to whatever tenancy the buyers ended up having. Bait and switch, defrauding people as to the nature of the title to their home, probably the largest investment they will ever make, is so reprehensible I beg someone to clarify why the facts stated above are not true![/quote]
Nicely said…
As a consumer advocate, I am appalled that people would “blame the victim”…
Not to put to fine a point on it, and as I said before, this case just goes to show how difficult it is for the victim of fraud to obtain redress if the perpetrator of fraud is a well liked developer/consultant/salesperson who has lots of friends in town willing to shill for him/her regardless of the facts/situation…
As someone said, if they did not like it they should have left.
The bylaws stated that you could give 60 days notice and leave the Co-op and be done.
Does that sound the same as “home ownership”?
No sale of the home, no realtor, no waiting to sell the home, no documentation, just 60 days notice?
So $2.4 million has now been spent or wasted by the City because a group of the DACHA members wanted to dissolve the Co-op and own the homes and you have the staff supporting you funding your legal costs to fight. If you might get $200,000 of restricted value why give 60 days notice and leave?
David Thomspon, Neighborhood Partners. LLC.
[quote]I disagree that they had no other choice but to foreclose. They could have carried the loan and allowed the DACHA residents to payoff the judgment and then collect on their loan. They chose to foreclose. I’m not saying it’s the wrong decision, but it was a choice.[/quote]
DACHA the corporation owes the judgment, NOT DACHA residents… Argggghhhhh this is so frustrating… The problem here, and forgive my impatience, is that people do not understand this case at all bc so much misinformation has been floated out there…
[quote]”Elaine, Your comments are full of hate and really do not help your clients.” [/quote]
Who called the DACHA homeowners “deadbeats” over and over again, in CC chambers, in public emails, on this blog?
Elaine: As I understand it, DACHA was a cooperative. Its money came from its members paying their monthly carrying charges. After the judgement, NP/ TP put a levy on their account to collect that money. That money was going to the city in the form of loan repayment. The city could have allowed the money to go to pay off the judgment, forgive their delinquency and continue to collect on the loan repayments once the judgment was paid off. Again, not saying that they should have done so, only that they could have.
To Eagle Eye:
The resident controlled board of DACHA did not provide to the Auditor the minutes that they had. The lack of minutes harmed the Auditor’s efforts resulting in an Audit not being done. See my report to Council. The Auditor said it was against the law for there to be no minutes. On being told by an Auditor that an organization is breaking the law did the City staff, the City Attorney or the City Council act?
No and Why Not?
Chronology of the “Missing Minutes”
of the Davis Area Cooperative Housing Association
relating to the Audit of 2004 and 2005.
September 3rd, 2009 (updated February 23, 2010)
From David J. Thompson of Neighborhood Partners, LLC.
This material was provided in part to the Arbitrator during the arbitration process. Additional information gathered during the complete arbitration process has been added.
The key element here is that an audit of DACHA was done for the City of Davis by Gilbert and Associates.
DACHA Audit Davis City Staff Report: June 21, 06 p8, “NP believes that Board minutes are available for all the dates mentioned during 2004-05.”
DACHA Audit Davis City Staff Report: June 21, 06 p8: “Minutes unobtainable since 2004-legally required”
Gilbert & Associates, Inc. Letter to City of Davis, June 20, 2006
“We requested minutes from the DACHA board meetings for the 2005 and 2004 calendar years. We received minutes only through March 2004 (Feb 2 and March 11 2004). Board minutes are required by law for all corporations. They are an important record of an organization’s significant decisions, maintaining accountability to members, funding sources, and other stakeholders. They are also a prime source of audit evidence for significant events, transactions, and obligations that might not come to an auditor’s attention in any other way. Board minutes might have provided documentation and background information on unclear matters such as those discussed above – e.g., the transfer of documents between management companies, the unidentified cash account, the member share loans, and the three years of disputed services. Likewise, board minutes might have demonstrated whether the board devoted sufficient attention to such matters, or whether it relied excessively on (or was unduly influenced by) outside parties in how it approached those matters.”
Of the 16 meetings that occurred during the two year audit period the DACHA Board provided through their President Stephanie Hinkle minutes for only two of those 16 meetings. I placed the two meeting dates in italics in the paragraph above.
Although they were provided to DACHA by the former board and NP, the lack of those minutes provided by the following board reflected badly on NP and the previous DACHA board. Here is the chronology of the missing minutes.
About November of 2005 Stephanie Hinkle (recently elected President of DACHA) contacted me to ask me for all the minutes of the meetings that I had of the Davis Area Cooperative Housing Association (DACHA).
I immediately contacted Karen Newton (the previous Secretary of DACHA) to obtain the minutes from her. Karen delivered them to me. I placed all of the minutes from Karen and all the minutes that I had and placed them in manila folders with the dates of the meetings on them. I made a copy of each of those. I still have those copies. I called Stephanie Hinkle, she picked them up in my office.
Stephanie Hinkle also emailed Dallas Kassing (date and request), the former President of DACHA and asked him for a series of documents (minutes, etc). Dallas gathered those together and provided them to Stephanie Hinkle.
Juan Arredondo (a DACHA resident at Tufts) was a DACHA board member from January of 2004 to 2007. In that role he generally received minutes of the previous meeting at the next meeting. Juan Arredondo was Secretary of the DACHA Board from November 2005 to ?
The audit of DACHA (for the years 2004-2005) was completed in 2006.
At the very end of the audit the auditors told David Thompson that they were having many difficulties with the audit because they had so few minutes of board meetings. I was of course surprised and told them I wish you had mentioned that early I have a copy of almost all the minutes in my office. I said I had given an almost full set of minutes of every board meeting to Stephanie Hinkle. The auditor said it was too late to use them and they were going to complete the audit without having had access to about 75% of the DACHA minutes. (See Attachment A) I asked why did they not have the set of minutes that I had provided to Stephanie Hinkle. They did not know.
The audit required that 16 sets of minutes should have been provided to them. Dacha appears to have provided only two sets of the 16 required.
The audit stated that only the minutes of two board meetings in early 2004 were made available.
A board has the legal responsibility to maintain minutes of each board meeting. Until removed, the previous board and NP maintained that responsibility. Clearly the lack of most of the minutes being available had a major impact on the audit.
As minutes of almost all of the DACHA meetings were provided to Stephanie Hinkle in late 2005 why were they not passed onto the Auditor?
Juan Arredondo was elected to the board of DACHA in October 2003 and attended almost every board meeting during 2004-05 and as a board member received most of the minutes for 2004 and 2005. Why did he not provide any of those minutes to the Auditor?
As Juan was elected Secretary of the Board on October 12, 2005 and was directly responsible for taking and maintaining the minutes for the remainder of 2005 why were those minutes not provided to the Auditor?
Stephanie Hinkle had received from Dallas Kassing sets of minutes for the audited period. Dallas retained his email traffic on the subject. Why were they not provided to the Auditor?
Juan Arredondo was asked to bring any additional materials to his deposition. None of the materials he brought were minutes during his time in late 2005 as Secretary of the Board.
However, Juan Arredondo brought to his deposition minutes of some DACHA meetings
In 2003 and 2004. As Juan Arredondo was Secretary of the DACHA board from Oct. 12, 2005 and during 2006 when the audit took place and had minutes of board meetings why did Juan Arredondo not turn those minutes over to the Auditor?
During this time, Stephanie emailed me to challenge a board action. In that email she said that the minutes of June? 2005 showed an event. If she was quoting from the minutes of that meeting why did she not provide those minutes to the Auditor?
The Case of the Missing Minutes?
David Thompson, Neighborhood Partners LLC.
The President of DACHA tells Danielle Foster they are now keeping good minutes. But none of the minutes were provided to the auditor.
Stephanie Hinkle wrote to Danielle that the new board was now doing everything right and keeping minutes. However, DACHA did not provide the minutes for the four meetings that Stephanie said they were now keeping good minutes for.
DACHA Audit Staff Report: June 21, 06 p8, “NP believes that Board minutes are available for all the dates mentioned during 2004-05.”
DACHA Audit Staff Report: June 21, 06 p8: “Minutes unobtainable since 2004-legally required”
David Thompson, Neighborhood Partners. LLC.
[quote]Elaine: As I understand it, DACHA was a cooperative.[/quote]
DACHA was a publicly subsidized non-profit public benefit corporation that was a cooperative…
[quote]The city could have allowed the money to go to pay off the judgment, forgive their delinquency and continue to collect on the loan repayments once the judgment was paid off. [/quote]
In so far as I am aware, there was very little money in DACHA when the writ of execution was levied…
Bottom line – this was a flawed model from the get go, and hopefully will never be repeated…
David Suder brilliantly commented: ” … For example, how do you ensure that no friends of JPA staff, West Yost Associates, city staff or anyone else who stands to gain financially or politically (directly or indirectly) from the surface water project (or any alternative) wound up on the water advisory committee?”
West Yost designed, implemented, wrote the analysis, created the implementation plan, and carried out the implementation plan for the City surface water project. In other words, they were in a position to create the need for their future services, and billing. Duh … the CC, led by Saylor and Souza, set it up and let them do it.
Staff? Oh, they created the need for expensive, long term engineering jobs for themselves, then they can “retire” with the big fat pensions, and then go to work for the JPA that they created, and earn well into the six figures.
Look at Diemer: he’s getting $200K for part time work?
What’s Saylor get? big contributions from the water gang of consultants. He wants the Assembly and Senate jobs, and needs those big contributions for his career.
Why do you think Saylor was running around town in September asking developers for $10K or more cash contributions to stop the referendum? His words were “I need the money NOW to stop Harrington and the referendum.”
This water plant is necessary for Saylor’s developer friends to upzone their ag and open space lands to urban development; this thing is worth billions to them, and Saylor gets richly rewarded. Of course, there is no link, is there?
Folks, tie it all together.
Using Delaine Eastin’s words, staff and the City Attorney “cut a fat hog” on the DACHA mess. Well, the water plant was going to be the “fat hog” for Saylor, Souza, senior water staff, and the water consultant and attorney gang who tried to take our money for a plant that lacked justitification and had fraudulent rates.
Watch who gives money to Souza for his re-election. Tie it up, folks.
David Suder: brilliant post, once again. THank you.
[quote]”Who called the DACHA homeowners “deadbeats” over and over again, in CC chambers, in public emails, on this blog?” [/quote]
Those who did not pay carrying charges while living in the houses and continued to not pay even after the City of Davis gave them money to lower their initial investment and stabilize the carrying charges, meet the definition of “deadbeat.” But this is a slang term. How about “defaulter?”
Reason # 3. Attorney Conflict of Interest
NP took the case to US Bankruptcy Court. A route we think that would have kept the co-op and better protected the members. If DACHA had not fought it, the Co-op would have been saved, the members would have been in a better position and this would all have been over.
The DACHA President said their lawyer Heffner was leaving and they had no money so to Bankruptcy Court we would go.
Then up pops Heffner to defend DACHA, how (we have the billing records) because the City Attorney in a phone call agrees to turn over about $30,000 in public fund loan repayment from DACHA to the City directly over to Heffner.
Danielle Foster of City staff instructs the Finance Department of the City of Davis to send a check for $30,000 to DACHA.
Yet, in the approval of the loan, it was clarified that the loan proceeds were to be used only for specific purposes and lawyers and litigation was not one of the defined purposes.
And the Mayor and City Attorney said publicly that loan proceeds were never to be to be used for lawyers or litigation.
Now I see that Hefner is owed $27,000 by DACHA probably for doing work with the City?
So now DACHA owes $120,000 to six lawyers for working for them with the City of Davis. A lot of people have lost money.
So why the unapproved subterfuge?
David Thompson, Neighborhood Partners. LLC.
One more thing: Sorry, Steve Boeshkin, but once again I saw you sitting down there with staff at the DACHA meeting. I saw it at the water meetings, too. Now you are on the WAC, correct? You were one of the big opponents to the water referendum.
Now, why is that? You own lots of rentals in town; you should be supporting the referendum, to try and keep the costs down for your profits, and the rents for those poor and struggling students.
Steve, you need the water to upzone your exterior lands, out west of Sutter Hospital. Your land is the key to that entire quadrent, and it all needs the water plant in order to have a bat’s chance in heck of getting regulatory approval in our lifetimes for urban development out there.
Anyone want to see the land maps?
David G, please post that surface water usage may from the JPA that I sent to you. Shall I post a red pin for Steve Boeshkin’s parcels?
Did the WAC check out the potential conflicts of its members?
David G: you need to do a story on the conflicts of the WAC members.
D Thompson: “As someone said, if they did not like it they should have left.
The bylaws stated that you could give 60 days notice and leave the Co-op and be done.
Does that sound the same as “home ownership”? “
Musser: “Again, this is just nonsense. The documents to prove home ownership was represented to prospective DACHA members is in Attachement #1 of the dissolution plan. The actual application form has in bold letters at the top “Co-op HOME OWNERSHIP Application for Information” with “home ownership” in all caps…”
Please reconcile when they were told that “HOME OWNERSHIP” didn’t mean home ownership. I will not claim to know who is owed what in this deal gone bad. Lots of deals went bad when the bubble burst but I do know what home ownership means, at least I thought I did, until I read this story that the buyers never would be out of debt. So please tell me how this was all explained to the buyers? Answering my question with a question just doesn’t cut it? Seems like ownership was misrepresented please explain how it was not?
[quote]”DACHA the corporation owes the judgment, NOT DACHA residents… Argggghhhhh this is so frustrating… The problem here, and forgive my impatience, is that people do not understand this case at all bc so much misinformation has been floated out there…”[/quote]Please clarify. What did the members get for buying into the co-op if not some ownership benefits (and some responsibilities) in the corporation? Where did their continuing payments go if not to the corporation.
Does not the corporation have less ability to pay its debts if members are delinquent and fail to meet their legal financial obligations to their corporation.
In any case, David is correct. The city did not [u]have[/u] to foreclose at the very time it did. The city [u]chose[/u] that point to take that action. It had chosen not to foreclose many times before as it continued to pour in money to provide relief to the DACHA folks themselves (as members of the co-op).
Did the city have an interest in keeping DACHA from paying out any more on its debt to David T. and Luke. Certainly, but it didn’t [u]have[/u] to act then. An alternative consideration would have been to continue assisting (financially and in helping restructure the co-op) the company maintain viability.
The city [u]chose[/u] to close down the co-op through foreclosure. It may have had logical reasons to make this choice instead of helping keep the group in operation. Since the city has made little effort to explain its reasoning, it’s not surprising that some people speculate the choice was designed to keep NP from collecting its legitimate judgment.
City leaders have a [u]choice[/u] now, however, to correct this if it’s just a misunderstanding. The campaign to blame NP’s collection effort for DACHA’s collapse (to the exclusion of the DACHA members’ actions and the city’s management practices ending with the decision to foreclose) isn’t convincing.
Foreclosure
I think the City initiated foreclosed on the basis of being owed about $50,000.
As someone said, the City could have made adjustments to get past this.
Secondly, at the time of foreclosure the members owed almost $50,000 in unpaid rent so they could have cured the foreclosure against them.
Thirdly, I am surprised ERM does not seem to know this but DACHA owned over $200,000 in reserves at the time. DACHA should have used the $200,000 in reserves it owned.
Does DACHA have an accounting of what happened to that $200,000 in foreclosure?
Rather than doing what was good for their members the DACHA board seemed to do only what the City wanted which was not always in the best interests of the DACHA members.
David Thompson, Neighborhood Partners, LLC.
My point with the water comments above, in a DACHA article, is that the article talks about conflicts of interest corrupting the public process and using taxpayer resources. DACHA and the water project are part and parcel of the same subject, and will be my political theme for some time to come.
Also, in both DACHA and the surface water project, there is been ZERO, and I mean ZERO, accountability where any staff or city paid consultants have been fired or removed from the projects or at least something to demonstrate some public accountability.
I dont think any future city parcel tax has zero chance at passage until these messes are publically investigated, appropriate persons are held accountable, and there are good, transparent plans going forward.
Correction: ” I think any city parcel tax has zero change at passage until …”
Of course, in DACHA, we all know that one of the primary housing staff persons who set this up and helped to create the mess is now safely retired, full pension and benefits, and probably enjoying herself as she reads this DV Blog, sipping a latte from her East Coast home, and looking forward to the ++ $100ks in benefits to come for herself, all care of the city taxpayers.
“Please clarify. What did the members get for buying into the co-op if not some ownership benefits (and some responsibilities) in the corporation? Where did their continuing payments go if not to the corporation. “
Thank you for asking it succinctly.
1) The city is an interested party in every decision we make.
2) he city has already had an independent investigation of DACHA, which was the audit that said that DACHA was a fiscal at the time the residents took over with a huge number of irregularities.
3) The grand jury investigated the city’s action, and found them to be legal.
4) During the involuntary bankruptcy judgement, the courts said that the city’s actions regarding the financial aid were legal.
5) It would be a breach of our fiduciary responsibility to have an “independent” investigation while we are being sued.
So what is the purpose of this article? It goes without saying that we are going to examine our affordable housing program and what went wrong with DACHA will certainly be a part of it. Until the lawsuit ends, we are going to have constraints.
Again, on the subject of conflicts of interest, what is Jim West, of West and Associates, doing as an appointee? Doesn’t his firm makebig money if the WAC votes to recommend moving forward with the water project?
Anyone look into the occupations and employers and financial interests and holdings of the other members???
correction:
2) The city has already had an independent investigation of DACHA, which was the audit, and the audit said that DACHA was an unsustainable fiscal mess with many irregularities at the time the residents took over the board.
Attorney Heffner jumped in there to represent DACHA in the BK case, then was paid by the City???
Is the City paying for ERM’s legal services?
NP and Twin Pines: you have subpoena authority in the legal case. Who else is the City or DACHA paying, but out of pbulic site? Can you get records?
Different people say the rents were too high. But the missing piece are real numbers and city requirements.
The budget for each of the DACHA homes was reviewed and approved by City staff. The rents for each unit was required to be no more that 30% of income for housing for the target income groups. The rents were all approved by City staff as meeting the requirement.
The management company then did an income check on every applicant. Those that met the City requirements were then forward to City staff for review.
City staff checked the documentation of the applicants and then signed off on each one as meeting the City requirements.
Everyone who moved into a DACHA home met the City requirements and was approved by City staff.
David Thompson, Neighborhood Partners, LLC.
David G: have you sent a PRA request for accountings of all city funds spent on staff and attorneys to support the DACHA defense litigation? NP or TP: do you have these records, and can they be posted in an article?
My sense of it, from reading the files and generally knowing what it cost to litigate, is that the City Attorney plus her related attorneys for DACHA have spent well north of $500K, not what she claimed at the DACHA hearing this week.
Check the billings, check her bald statements to the CC, and see what matches up.
Presumably knowing that Nossaman was owed $90,000 by DACHA it was hard to get another lawyer to represent DACHA.
So Heffner pops up. How we do not know?
Heffner tells DACHA we won’t work for you unless we get $25,000 paid up front.
DACHA takes $25,000 from the public funds it had borrowed from the City and sends Hefner $25,000 of our public funds.
But the loan approvals from the City made clear that the loan funds from the City were to be used for specific purposes and purposefully none of them were legal.
The President of DACHA dropped a note to City staff that they hardly had any money left in reserves as they had just paid the lawyer.
City staff allowed the unauthorised use of our public funds to be spent on a lawyer.
So now $55,000 to Hefner in borrowed public funds not authorised by the loan details.
City Attoreny and Mayor are on tape saying these uses were no allowed.
But no action by anyone.
These are our public funds?
David Thompson, Neighborhood Partners. LLC.
“Different people say the rents were too high. But the missing piece are real numbers and city requirements.”
So what you are saying is that these people were just renters? So why were the given documents leading them to think they would be owners?
[quote]I have no idea what really happened with the DACHA mess and offer no opinion on the matter. All I know is that it has cost our financially-distressed City a boatload of money. Davis residents deserve to know what happened.–[b]David Suder[/b][/quote]I am sympathetic the citizens who don’t feel that they understand what happened. I am frustrated that I had to spend countless months wading through the details of so many unusual transactions and complicated reports myself.
Did you read the entire audit carefully, David? I don’t see how any “independent investigation” will be more satisfying to citizens than the audit, because the complexity of the arrangements made by Neighborhood Partners dictates detailed and hard to follow discussions which will end up saying that there are missing records, a confusing trail, and a flawed business model. Will that satisfy citizens? No more than the last independent investigation.
The courts will give us a decision, but it will be costly and whoever loses will say the decision was wrong and call for another independent investigation.
[quote]”Who called the DACHA homeowners “deadbeats” over and over again, in CC chambers, in public emails, on this blog?”[/quote]I saw Ethan Ireland, Sue and you repeat this “deadbeat” mantra over and over again. I have seen the original statement reprinted a few times.
But, by repeating it in protest over and over again, you are the ones who have popularized it and kept it in the public consciousness. And, to what purpose?
It’s not a nice term, and I wouldn’t use it myself. I don’t want to be called a deadbeat* either, and I avoid that label by paying my debts in full and on time.
But, this reference is the least of the DACHA members problems.
“““““““““““
*deadbeat: n. One who does not pay one’s debts, or one who persistently fails to pay personal debts or expenses. (On-line: thefreedictionary and merriam-webster.com) Examples: 14 DACHA members who owed rent, etc., totaling about $50,000 of whom eight are former board members.
I’ll try again.
“Please clarify. What did the members get for buying into the co-op if not some ownership benefits (and some responsibilities) in the corporation? Where did their continuing payments go if not to the corporation. ”
[quote]”Does DACHA have an accounting of what happened to that $200,000 in foreclosure?”[/quote]More to the point, do [u]we[/u] have an accounting of what happened to the $200,000 in reserves? I don’t know why you are concerned that Elaine might not have known about this; you should be more concerned our city council members don’t know this.
If what you claim is true, all this talk about the city [u]having[/u] to foreclose to get its $50,000 is bs.
If DACHA had $200,000 in reserves, why would the city not demand that DACHA pay off you and the city? Why would the city instead chose to shut down the coop, take over the members financial interests and have to deal with as a landlord with all the the properties?
What you say may be accurate, but it makes no sense for the city to have foreclosed if the financial picture is as you describe. What the city has gained by the action looks more like a loss.
Sue, what do you know is the truth of this?
[b]@David Suder:[/b]Here is a link to the independent auditor’s report: [url]http://cityofdavis.org/meetings/councilpackets/20060627/11_DACHA_Audit.pdf[/url]
Michael: no more about the water project on this thread, please.
[b]@David Suder[/b]: The auditor’s report was done before David Thompson and Luke Watkins sued DACHA for developer fees for units that DACHA hadn’t added to the co-op. They won a judgement of $331,000 for these developer fees. The issues around this occurred after the auditor’s report, and hence were not explored by the auditor, so I will summarize it:
The background is: Thompson and Watkins acted as both developer and consultants to the organization, which, prior to council approval of the project, Luke had said in writing that they wouldn’t do, and which seems to me to have at least the appearance of conflict of interest.
Luke also said in writing, prior to the council approval, that he knew that the city had no obligation to provide more units.
David and Luke chose the first board. I have been told that David and Luke often prepared the agendas and took minutes for the board meetings.
A few days after the organization was formed, Watkins and Thompson started writing contracts with this board to expand the co-op by additional units, and to give themselves a fee for each unit expanded. These contracts ultimately added up to over 60 units, I believe.
These contracts were binding to future boards which would contain more DACHA members who actually had to pay the bills for these developer fees.
When the DACHA member-controlled board finally took over, carrying costs were already equal or above market rate rents, vacancies were rising, and members feared that they couldn’t wouldn’t be able to get their $20,000 membership share back (the functional equivalent of a down payment).
They turned to the city, and we commissioned an independent audit. When the auditor said that the project was unsustainable, the city gave aid to the co-op to try to make it more sustainable.
At that point David Thompson and Luke Watkins sued the organization for developer and consulting fees. There were no invoices for much of the consulting fees. The low/moderate income DACHA members had insufficient funds for legal representation.
The arbitrator awarded Thompson and Watkins $331,000, mostly for development fees for units which had not been acquired by DACHA, which the city had not agreed to provide, and many of which had not even been built, including homes hypothesized to be built in Covell Village.
David Thompson and Luke Watkins levied the accounts of DACHA. This wiped out the organization, and the city moved to protect our affordable housing investment by foreclosing.
So what did people get for their $20,000? Nothing?
Thank You Sue
It does seem like an odd stance and it also is interesting that the three parties here point to different supporting documents to back their case. I’d really like to see one definitive independent review.
David, what on earth makes you think that here is such a thing as “one definitive independent review”? This only definitive independent review is a court decision that has exhausted all appeals, and although I would welcome it in principle, it is unfortunately very expensive.
Sue’s continues her mantra about the horrors of NP serving as both the developer and the consultant. We served as the “development consultant”. So what. It does not imply any misdeeds in itself. Her diatribe is irrelevant to getting at the facts surrounding the finances of DACHA in 2005 when our contract was breached.
She claims that an auditor hired by the city was “independent”. No, the audit firm was taking direction from the city. For example, we have an e-mail from Jeff Dale, the auditor’s staff member, to Danielle Foster, the city employee supervising the audit. In it he said approximately “Danielle please tell me the points that you want me to make that would best support your position that the cooperative was not a good idea.” In another e-mail, he said “Danielle, perhaps it is best that we could not conclude the audit, because it better supports your contention that the co-op was not a suitable option for homeownership.”
The “emperor wears no clothes” facts surrounding this audit are the following:
1) Despite the supposed dire financial mess that DACHA was in according to the auditor, he produced no financial statements showing that the co-op was losing money. All financial records prepared by DACHA’s management agent Madsen & Walton from that time show DACHA in the black.
2) If the finances were in such a shambles, why was Madsen & Walton, the property management agent responsible for these records, not immediately terminated? Madsen & Walton continued to serve DACHA until just prior to the foreclosure in 2010.
3) With the result of the audit being that the books were in such a terrible state that they could not even be audited to completion (preparation of financial statements), why did the city never require that DACHA or the city itself have another follow-up audit done in subsequent years?
I think you’re parsing my words here. The point is that each side will point to one favorable finding when I think the overall body of work is pretty muddled in terms of what went wrong and why. Courts may as you say, ultimately making the ruling on that, but if that happens I think everyone loses.
Don: OK, but the thread is also about conflicts of interest, which is also front and center in the other city program, the surface water plant.
The common link is the CC and City Manager’s failure to supervise, at least until recently, and to ensure things were being handled without conflicts of interest.
Don: thank you for writing.
[quote]I do think there is animosity toward David Thompson and Luke Watkins on the part of both the staff and council. I am not weighing in on whether or not this animosity is justified, only that, justified or not, it will tend to color one’s judgment.-[b]-David Greenwald[/b][/quote]David, should we have an independent body investigate the contractor who recently put down chip seal that didn’t work out?
We might or might not have feelings about that company, or about the individuals in charge. What difference does it make?
David, the City always takes actions on contractors, fund recipients and others with whom we do business. Sometimes the projects don’t work out, sometimes there is litigation, sometimes we are unhappy with the way the people with whom we have done business have carried out the project, etc. No one challenges our right to conduct business and to make decisions because we might or might not have feelings about other contractors or fund recipients or partners.
I have no personal feelings other than would be expected with a contractor, etc. for a project that didn’t turn out and who then turned around and sued us.
I think you are asking for favored for Neighborhood Partners because they are very well connected and have a lot of friends.
I believe that you would not be arguing that the council has too many conflicts, feelings, emotions, etc. to deal with other contracts, etc. that have gone bad. You might argue that we should be dealing with them differently, but you would not be carrying on a campaign to have us the problem over to a third party to investigate.
[quote]”As I understand it, DACHA was a cooperative. Its money came from its members paying their monthly carrying charges. After the judgement, NP/ TP put a levy on their account to collect that money. That money was going to the city in the form of loan repayment. The city could have allowed the money to go to pay off the judgment, forgive their delinquency and continue to collect on the loan repayments once the judgment was paid off. Again, not saying that they should have done so, only that they could have.”[/quote]Sue, Elaine has attempted to contest David G.’s observation, but obviously doesn’t have a handle the information needed. Please weigh in; is David correct about the city’s options.
I read the repeated point about DACHA not having the money to pay NP. But, of course, that’s not the point that David is evaluating.
David G: the record is not muddled, not in the least.
For example, note the email quoted about where the consultant was asking Danielle to tell him what she wanted him to say to support her position that the co-op was not a good idea. This is exactly why our water initiative is going to require an independent review of the ground water system.
Given Danielle manipulating the consultant, why would ERM or anyone trust what else she said or did with the DACHA? (Sorry, Danielle, but you should have known better.)
ERM: why do you swallow the city’s stuff hook, line and sinker? The audit was conceptually written by the City, using the guise of an independent consultant.
BTW, as part of the settlement, NP should force the audit consultant to disgorge his fee, for a report mostly outlined and written by Danielle, who was trying to cover for her, the City Attorney, and the retired staff member I wrote about earlier. I am serious.
Sue: doesn’t it bother you, just a little, that Danielle was manipulating the audit consultant to reach the desired conclusion that the coop was a bad idea? It should bother you a lot.
[quote]”David, what on earth makes you think that here is such a thing as “one definitive independent review”? This only definitive independent review is a court decision that has exhausted all appeals, and although I would welcome it in principle, it is unfortunately very expensive.”[/quote]I, for one, would be completely satisfied with an independent arbitrator, sanctioned by a court and agreed to by the city and NP and with a binding resolution.
Going through a lawsuit with appeals, etc.,–that you suggest meets the “only definitive independent review” definition alone–can’t be a serious alternative for meeting the public disclosure needs in this case. It’s good only for fighting out something to the bloody end. And the past audits, staff reports, findings are old and haven’t done much to reveal truths to which everyone agrees.
I agree with the council’s expressed effort to settle this mess, although it didn’t make sense to included it with the dissolution motion. But, why did you vote to have Harriet handle this, given her obvious conflicts? Would you agree to an arbitration solution to this mess?
[quote]”The rents for each unit was required to be no more that 30% of income for housing for the target income groups.”[/quote]
Sue stated that the carrying charges were too high for some DACHA owners, up to $1700 per month. For $1700 to be 30% of income, DACHA members would have to make $68,000 annual income or two people making $34K each. This sounds right. If they bought the house at market rates, I wonder what their payment would have had to have been.
This from the Loan Recomendation from the staff to the City presented
at the Social Services Commission of June 16, 2008.
Staff also recommends the following final allocation of refinance funds:
PurposeCurrent Estimate
Purchase of primary loans (includes existing City/Agency assistance to DACHA)$3,483,000
Repayment of Secondary Loans$255,000
Establishing Reasonable General Reserves (Capital, Maintenance, Administrative and Vacancy Reserves, as well as reserves for other share price stabilization)$432,000
Total$4,170,000
Of the $432,000 in reserves, etc about $230,000 was illegally refunded to members. So that left $200,000 in reserves which were DACHA’s money borrowed from the City.
David Thompson, Neighborhood Partners LLC.
[quote]”David, should we have an independent body investigate the contractor who recently put down chip seal that didn’t work out? “[/quote]Sue, you’re diverting the discussion–again–to hypotheticals when there is a very real, serious case in front of our noses.
Millions of dollars, lawsuits, serious charges of fraud and theft from all sides, name-calling at levels not seen in Davis government in some time, questionable city staff conduct over many years, a cloud over future affordable housing potential–this is not just a typical city contract that didn’t work out as anticipated. It is not even close to chip seal deal.
I’m surprised you haven’t noticed “animosity toward David Thompson and Luke Watkins on the part of both the staff and council,” including your own open contribution to these bad feelings. If the only thing you see is a routine city project dispute, don’t you think that gives weight to his view that he sees animosity that “will tend to color one’s judgment”?[quote]”I have no personal feelings other than would be expected with a contractor, etc. for a project that didn’t turn out and who then turned around and sued us. I think you are asking for favored for Neighborhood Partners because they are very well connected and have a lot of friends.”[/quote]Why would you continue to resist a new look at this unfortunate city disaster. How does calling for an independent review of some kind suggest David wants favored (treatment) for his NP buddies? It suggests you know you would not like the results you already anticipate, no?
[quote]”Of the $432,000 in reserves, etc about $230,000 was illegally refunded to members.”[/quote]There you go again. What do you mean “illegally refunded to members?” What was the mechanism and purpose for this refund? Did the city know about this $432,000 as it was getting ready to foreclose? (Maybe they were just trying to stop the actions you say were illegal?)
Also, you keep claiming city staff “illegally” paid for DACHA’s legal services. Sue repeatedly has said the city could not pay for DACHA legal expenses because it was illegal (and you would have called them on it and sued them, as you apparently did) and did not pay for or provide DACHA legal advice. Do you have proof that this actually and clearly happened or are you just guessing that this must have gone on in some round-about way?
In 2005 the average rent for a (20 year old) 3 bedroom apartment in Davis was $1,648.
The average rent for a new DACHA single family home was $1,450
The monthly tax deduction available (property taxes & mortgage interest paid)co-op members have the same deductions as other home owners) was $400 net a month. So the net cost of a new home was $1,000 a month.
We arranged with the County Assessor for the property taxes to be substantially reduced because it was a co-op meeting affordable housing needs. This reduced the property taxes paid on each unit to the benefit of the resident.
The average cost of a newly built 3 bedroom apartment in Davis at the time was
$1,995 for Lexington (built 2003)
$1885 for Greystone (built in 1994)
The market value of these home about 2006 was just over $400,000.
David Thompson, Neighborhood Partners. LLC.
PS: Soon after leaving Gilbert I think the lead accountant on DACHA was hired by Danielle Foster to do contract work for the City.
yan: the rule of thumb with a conventional mortgage is the amount you borrow (say, $200K) times .01 percent equals the amount of your mortgage payment with an impound account for property taxes and fire insurance.
I’m not sure, but with the hot housing market in full force at the time the DACHA homes were built for the City program, for those families to have gotten into those homes, my rough calculation would be a $400K home (rounding way DOWN, BTW) should have produced a monthly of $4,000. That was way, way below what DACHA was billing its numbers. Maybe half?
Sue and ERM: get off that “poor DACHA members were being overcharged in a non-sustainable model” wagon that you ride on, over and over. They paid 1/2 of what they should have paid.
Also, rents on those NEW homes can be calculated from rental ads of that day, but I think + $2,000 per month would have been in the ballpark, certainly more than DACHA billed its members.
NP: I dont know what the tax advantages to the members would have been. It would have to be included in the calculations for an apple to apple comparison.
Correction, again: “”That [$4000 monthly] was way, way ABOVE what DACHA was billing its MEMBERS.” Sorry, I’m working on court papers and deadlines around blogging on the DV.
Goldfarb and Lipman (specializes in affordable housing projects) provided this legal Opinion to TPCF which was forwarded to DACHA and the City in 2007, a year before the City loan and transactions.
The entire three page Legal Opinion is available at http://www.community.coop/davis click DACHA.
“Health and Safety Code Section 33007.5 provides that members are only allowed to receive a distribution of “transfer value” at such time as
the members ceases to be a permanent member of the corporation.”
California law states that to receive “transfer value” the word for share value, the member must have left the organization. None of the members were leaving the organization thus they were not legally entitled to have any part of the over $200,000 of public funds they received.
The intent of this action is also a part of our suits.
Breaking the law makes it illegal. See our lawsuits at the same site for the TPCF claim against DACHA which has this issue as one of the causes of action.
That is why we claimed the City had a conflict of interest in ruling on the request for dissolution.
In additional meetings held without legal quorum by ineligible boards and members are liable for legal challenge as DACHA is by our lawsuit.
David Thompson, Neighborhood Partners. LLC.
[quote]”When the DACHA member-controlled board finally took over, carrying costs were already equal or above market rate rents, vacancies were rising, and members feared that they couldn’t wouldn’t be able to get their $20,000 membership share back (the functional equivalent of a down payment).”[/quote]Why call a membership share “the functional equivalent of a down payment”? Who applied that language in the first place, NP? It certainly would confuse the uneducated about whether they were buying co-op shares or some functional equivalent to something or making a down payment on a house. [quote]”This wiped out the organization, and the city moved to protect our affordable housing investment by foreclosing.”[/quote]This is exactly the contention that should be looked into when we get David G.’s independent investigation. There’s certainly plenty of unverified evidence around now to dispute this simple explanation.
With respect to the rest of your summary for David Suder of what happened after the audit and as part of the arbitration, I’d suggest he go directly to David posting of the arbitration finding. It varies somewhat from your account. Still, just more reason to encourage a current independent investigation.
I located the presentation made to prospective members. I think it speaks clearly to the restrictions and limitations of a co-op in the affordable housing program of the City of Davis. This is the same presentation I made to the propsective members of Dos Pinos many years ago.
Informational Meeting for Franklin Cooperative Housing Community
Sunday October 6, 2002 Presentation Program 2-3.15pm
2-2.45pm Presentation 2.45-3.00pm Q&A 3.00-3.15pm Presenters available
2.00- 2.10pm Welcome: David Thompson, Co-Principal Neighborhood Partners
Introduction: Luke Watkins, Co-Principal Neighborhood Partners
2.10. 2.25pm Presentation: David Thompson, Neighborhood Partners.
These seven units are part of the Affordable Housing Program of the City of Davis. Three units are required to be available at 90% of Yolo County median income and Four units are required to be available at 100% of Yolo County median income
Preference for households where at least one person is employed in Davis or on UCD campus
Limited Equity Cooperatives
Permanently affordable home ownership
Blanket mortgage on property
The cooperative owns the homes and you are owner of the cooperative
Co-op ownership same tax benefits as home ownership
(Can deduct mortgage interest and property taxes on proportional basis)
Membership is transferred from co-op to you and then you back to co-op
There is no selling or buying between individuals
There are no real estate transaction costs associated with unit transfer This is a savings to both seller and buyer
There are no windfalls upon sale, the additional growth in equity stays within the co-op and the community
The share is set by law at no more than 10% of the development costs of the units
In the case of the Franklin Co-op $18,000 and $20,000
CA law states that you receive a return on your investment not to exceed 10%
DACHA annual return is set at five year treasury bills plus 300 basis points, today 8.75%
One member one vote and member representation on the board
Dos Pinos on Sycamore Lane is the other Davis Co-op 60 units built in 1985.
Introduction Steve McElroy, Vice President John Stewart Company
2.25-2.45pm Presentation and Materials from the John Stewart Company
2.45-3.00pm Questions from Audience
3.00-3.15pm Presenters available for additional questions
[quote]But, why did you vote to have Harriet handle this, given her obvious conflicts? [b]JustSaying[/b][/quote]I didn’t like this part of the motion, and I made motion to separate the different items out, but Joe and I lost that vote 3/2.
First, I want to clarify that Harriet is not our litigator.
I do not believe that Harriet has a conflict. She takes direction from the council.
Council has made many settlement officers to Neighborhood Partners in order to avoid an expensive lawsuit, even though we believe that we would win the lawsuit.
To date, our offers have not been accepted.
I didn’t like the motion because it implies that Harriet is doing the negotiating. She isn’t.
[b]@Michael Harrington:[/b]When I first looked at the total carrying charges paid by DACHA members, they were higher than single-family/duplex market-rate rents from my personal experience. Plus they had to by $20,000 and had no equity stake.
My first reaction when looking at the rents in 2005 was that someone would be better off renting, and that this spelled big trouble.
The auditor came to the same conclusion after studying the project and its finances in depth.
“Limited Equity Cooperatives
Permanently affordable home ownership
Blanket mortgage on property
The cooperative owns the homes and you are owner of the cooperative
Co-op ownership same tax benefits as home ownership
(Can deduct mortgage interest and property taxes on proportional basis)
Membership is transferred from co-op to you and then you back to co-op
There is no selling or buying between individuals
There are no real estate transaction costs associated with unit transfer This is a savings to both seller and buyer
There are no windfalls upon sale, the additional growth in equity stays within the co-op and the community
The share is set by law at no more than 10% of the development costs of the units
In the case of the Franklin Co-op $18,000 and $20,000
CA law states that you receive a return on your investment not to exceed 10%
DACHA annual return is set at five year treasury bills plus 300 basis points, today 8.75% “
Sure seems like the buyers were gaining an ownership interest. So you can claim you disclosed the set up and you lay out the limitations and benefits. I wonder did you disclose the risks because it seems people have lost a lot of money?
As for the market rate on rentals the difference isn’t that great and can be explained away by the risk that the cooperative investors took on and the down payment to get in.
Mike the .01 factor you cite doesn’t really apply to Davis because the rent versus owning ratio is off the charts in favor of renting because of growth restrictions. Using your value my house would rent for about 5000/month. If I could rent my house for that I would move into an apartment and live off the difference.
@[b]JustSaying:[/b]I repeat that I have no special personal animosity toward David and Luke; my feeling are pretty much the same as they would be with towards anyone who put themselves in the same situation vis-a-vis the city.
I voted for DACHA and many of David and Luke’s other projects. It is ridiculous to say that I have any particular personal feelings against them other than how I would feel about anyone in this situation.
Here’s the illegal use of City funds. We consider it illegal in the first instance due to the inability of DACHA to have a legal quorum of board members, secondly because they illegally used public funds for a purpose not allowed by the loan, and thirdly public funds are paying for actioons not allowed by cooperative law.
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.)
“There are no windfalls upon sale, the additional growth in equity stays within the co-op and the community.”
Upon further review this seems quite deceptive because it doesn’t point out that the notes are never paid off and the community is not limited to the Co-op members at the time of purchase and the dilution of taking equity for reinvestment in addition units. Is this the extent of the disclosure? Were the people ever told that for $20,000 dollars they were buying something that would never be paid off?
Also it seems people are being promised increasing equity at 3% above the five year T-Bill rate. Didn’t really work out that way did it? So were the risks of loss of all equity disclosed, because, it seems, that is what happened? When I make an investment that promises me the 5 year T-bill plus 3% there is usually a prospectus with a discussion of the risks. After all, the greater the return the greater the risks. You would think that there must be a disclosure that if other Co-Op owners fail to make their payments you could be wiped out. A disclosure, by the way, that would make me walk away in about .01 seconds.
David Greenwald:
A few posts above this, Sue made the following statement:
[quote]Council has made many settlement officers to Neighborhood Partners in order to avoid an expensive lawsuit, even though we believe that we would win the lawsuit.
[/quote]
Readers from yesterday’s comments may recall that she made a similar statement. I responded that in all these years of arguing, we have only received one written settlement offer from the city, which was 14 days ago. We appreciate their offer, and hope that they are now seriously interested in resolved the issues.
But we are amazed that Sue can actually say the above quote, two days in a row, when there is absolutely no truth to it, not even any grey area. Perhaps this is petty, but it exemplifies to us why we are having such a difficult time agreeing to basic facts here.
Perhaps I’m making a mistaken assumption, but in negotiations I would imagine that offers are often broached informally and don’t get put in written form if there is no likelihood of acceptance. So, in all these years of arguing, were informal unwritten offers put forth to see if any settlement could be achieved?
Regarding offers to settle: See Don Shor’s comment above.
[b]@Mr. Toad:[/b]A related question that I have posed is whether the liability for the for approximately $500,000 in developer fees for units that had not been added but for which David Thompson and Luke Watkins sued the co-op disclosed to prospective members?
Was the liability for the consulting fees that were never invoiced but for which David Thompson and Luke Watkins sued DACHA disclosed to prospective members?
I watched the CC mtg this afternoon and Harriet said there had been many offers so again there is disagreement between the two, to me would be a black and white issues, yes/no and why this mess is so very frustrating for us trying to understand. Grrrr.
Sue, the same back and forth that SODA questioned before is going on again. I was depending on you helping get to the truth of some very specific claims, since you have been closely following DACHA since you first were elected to the council. I can see why Elaine doesn’t provide straight answers to straight questions–she is a newcomer to the matter and she feels confidentiality restrictions as the attorney promoting dissolution.
You, however, imply you’re trying to clarify for the public benefit. I’m struggling to see how that’s accurate. I’ll take two examples, DACHA members’ alleged delinquency and settlement efforts between the city and NP. After repeatedly trying to get a straight answers about the delinquency question–and getting only whining about maligning and comments about “why don’t people ask some questions of NP?”–SODA gets it down to a simple observation:[quote]”Claims are made that DACHA members are and have been delinquent. No one disputes it.”–SODA
“Elaine says that the organization owes DACHA members money. We know that they have been paying rent since they have been our tenants.”–Sue[/quote]Instead of dispute it, you quote Elaine’s comment about how the co-op owes members. Elaine was non-responsive and you quote her non-response comment apparently because it [u]seems[/u] to provide a denial of the charge, but doesn’t of course. So, here’s SODA still facing a most sophisticated level of obfuscation and still without an answer.
Second, there’s been lots of discussion at trying to settle this mess, with Elaine suggesting that it’s understandable that the city won’t try to settle because of NP’s avarice. The issue of settlement is a good one because the alternative seem to be a drawn-out civil trial in the midst of a city being torn apart by charges and counter charges.
Out of the blue, you state NP repeatedly has refused to enter into negotiations (which you point out include “generous” offers from the city. Luke immediately says you are not accurate, that the one and only city offer came less than two weeks ago. You do not deal with Luke’s contention, but are back again with no additional details just a stronger assertions about “[u]many[/u] settlement offers,” adding the self-serving money-saving comment and some speculation about the strength of the city’s legal defense: [quote]”Council has made many settlement officers to Neighborhood Partners in order to avoid an expensive lawsuit, even though we believe that we would win the lawsuit.”[/quote]It’s nice you’re so confident, but what’s the truth about the settlement offers? Someone is not telling the truth; it should be easy for you to give some details to expose Luke’s claim. I’m sure you can see how unenlightening this back and forth is the the rest of us.
So, how about trying once more to answer SODA’s question:”Claims have been made that DACHA members were delinquent and some still were at the time the city foreclosed. Is that true?”
Luke or David: At any time were informal unwritten offers put forth to see if any settlement could be achieved?
[quote]”I watched the CC mtg this afternoon and Harriet said there had been many offers so again there is disagreement between the two, to me would be a black and white issues, yes/no and why this mess is so very frustrating for us trying to understand. Grrrr.”[/quote]Sorry, SODA, I messed around, ate a few snacks, etc., while making my comment and therefore missed your latest note until now. More grrr.
So, that’s where Sue came up with the comment about the “many settlement offers.” This is getting weird. It’d hard to make out what’s going on here since, as you might have noticed, Sue clarified that Harriet is not conflicted in that she isn’t involved in any settlement efforts(“…Harriet is not our litigator….”)–which, of course, conflicts with the [u]Vanguard[/u] and [u]Enterprise[/u] reporting and the Mayor’s expressed concern about her role.
I get the feeling that Sue has gotten some new input from somewhere today, including the “clarification” about Harriet’s responsibilities and the oddest bit of new legal insight for the frustrating week:[b][quote]”It would be a breach of our fiduciary responsibility to have an ‘independent’ investigation while we are being sued.”[/quote][/b]
[quote]”Luke or David: At any time were informal unwritten offers put forth to see if any settlement could be achieved?”[/quote]Are you asking if the city put forth–a question for Sue–or if NP put forth? Sue claims the “council has made many settlement officers to NP.” Are you thinking such officers might be informal? Interesting if they might have been so informal that NP didn’t notice or acknowledge their existence. What a strange thing to be disputing at this point.
February 9, 2012
Fr: David Thompson, President, Twin Pines Cooperative Foundation
Re: “Settlement Negotiations have begun” Not True at the time.
As required by the Yolo County Grand Jury, the City of Davis sent its response to the Yolo County Grand Jury Report. The response, (as required) was voted on by the City Council at the June 28, 2011 meeting and later signed by the City Attorney (Harriet Steiner) and the Mayor (Joe Krovoza) and then sent to the Grand Jury.
TPCF takes issue with a number of elements of the City’s formal and signed response.
However, first is that the following sentence in the City’s submitted response to the Yolo County Grand Jury was from our perspective completely untrue.
“Settlement negotiations have begun.”
In an attempt to arrive at a resolution both Twin Pines Cooperative and Neighborhood Partners offered on a number of occasions to sit down with the Council. In late May this year both TPCF and NP agreed to formal mediation with the City. However, at the conclusion of their closed session on DACHA at the Council meeting of May 25, the Council made no reference to our offer to mediate and stated only that they would continue to trial.
Subsequently, and to this date, TPCF has received only one settlement offer from the Council (three weeks ago).
Two weeks later at a Mandatory Court settlement on June 10th, 2011, the City Attorney argued before Yolo County Superior Court that there was no point in having settlement discussions until the City knew what there was to litigate. As required, I was there on behalf of Twin Pines Cooperative Foundation with our lawyer. The City Attorney as I believe is required did not have her client with her. Her report to the Court repeated the point that there was no point having settlement discussions at that time.
So on May 25 the Council turned down our offer to mediate and on June 10 the City Attorney said to the Court on behalf of the Council that they don’t want to have “settlement discussions”.
Yet by June 20, the City Attorney was writing a public document to you the Yolo County Grand Jury that; “Settlement negotiations have begun”
From TPCF’s perspective the approval of the statement to the Grand Jury on June 28, 2011 that; “Settlement negotiations have begun” was the opposite of the truth and was either an untrue, incorrect or misleading statement or all of the above, for the City Council to place before the public and send to you.
By June 28, the Council had turned down two different offers to arrive at settlement mediation and in two different venues.
Yet the Council sent a signed legal response to the Grand Jury and made available to the public a report that says; “Settlement negotiations have begun.
Is it not inappropriate for the City Attorney and the City Council to use a statement that is the opposite of what they had told us?
David Thompson, Twin Pines Cooperative Foundation
JustSaying: my question was for Luke or David. Sue said many offers have been made. Luke said only one written offer was made. These statements are not contradictory if unwritten offers were made. That is my question.
Since Luke said “But we are amazed that Sue can actually say the above quote, two days in a row, when there is absolutely no truth to it, not even any grey area. Perhaps this is petty, but it exemplifies to us why we are having such a difficult time agreeing to basic facts here.”
… then I think he would be the one to answer my question. But I’m sure David could answer it.
[quote]”In an attempt to arrive at a resolution both Twin Pines Cooperative and Neighborhood Partners offered on a number of occasions to sit down with the Council. In late May this year both TPCF and NP agreed to formal mediation with the City. However, at the conclusion of their closed session on DACHA at the Council meeting of May 25, the Council made no reference to our offer to mediate and stated only that they would continue to trial.”[/quote]Sue, is this true? If so, it’s difficult to believe your comment about offering to settle to “in order to avoid an expensive lawsuit…”
Sue, Harriet seems to referenced a lot for someone you say isn’t involved. Is it possible that David T.’s 9:14 p.m. comments are news to you and the rest of the council? Or, would you say, again, that all of this just is no true?
Boy, I hope you’re really confident for reasons that aren’t coming out. I’m a little uneasy for the city at this point. More back and forth, SODA. Who do we trust?
Thanks, I see what you meant, Don. I’m not reassured that this is simply a confusion of terms, written or verbal, based on how David T. responded.
No one at this point which once again begs the question of an independent invesitgator, but really independent; not Harriet, not Sue, not David r Luke or Elaine. I have been so frustrated by all of them. Perhaps the AG? But that seems too much to expect.
Delinquencies. Here is the information on the Delinquencies of DACHA members from 2005 to today. I hope my table will show up correct?
Here is what is interesting. Delinquencies ran up through August of 2008.
Sue and others would say because the rents were too high.
However, delinquent renters need to be managed. No property owner in town would allow the delinquencies that occurred at DACHA. But the City staff turned a blind eye to delinquencies and more questionable the breaking of the bylaws and laws that ensued.
So here is the $2.4 million dollar question.
So if as of September i, 2008 the Council then dropped everyone’s rent by about $300 a month bring most people to about $1,100 average monthly rent. Should that not have cured the problem. Should we no longer have delinquencies. Yes there should be no more.
What do the rent rolls show:
That starting immediately after the residents got over $230,000 in cash they went back to being delinquent again. And from September the delinquencies rose every month until they had reached $35,000 in December 2009.
The same people were again delinquent and the same ex board members were delinquent.
And yes indeed, the residents living in DACHA today have not paid off the $47,000 in outstanding delinquencies they have.
And when the new board asked City staff for $800 to evict the two former board officers, the answer from Danielle Foster was no.
So why would anyone not be delinquent.
Of the five DACHA households at the meeting Tuesday night four of them are delinquent.
Delinquency Amount QuarterYear
$47,000 June 2010
$35,000 Oct-Dec*2009
$22,063 July-Sept.2009
$18,582 April-June2009
$22,087 Jan – March2009
$12,912 Oct.-Dec.2008
$10,436 July-Sept.2008
$64,713 April-June2008
$54,239 Jan – March2008
$54,123 Oct.-Dec.2007
$44,090 July-Sept.2007
$39,356 April-June2007
$38,099 Jan – March2007
$37,011 Oct.-Dec.2006
$32,841 July-Sept.2006
$32,543 April-June2006
$21,983 Jan – March2006
$19,165 Oct.-Dec.2005
$17,317 July-Sept.2005
$15,323 April-June2005
$19,003 Jan – March2005
David Thompson, Neighborhood Partners, LLC
Sorry, SODA, Sue now argues “fiduciary responsibility” as a justification for avoiding getting to the truth of the DACHA disaster. The council can’t afford to know what really went on until we proceed through with the lawsuit–fully confident that we’ll win even if don’t know (and don’t want to know) what happened.
I’m worried. Do we know what we don’t know? Do we even know what we know? And around we go.
Don, in answer to your questions and to cover all uses of the terms let us say there have been two from the City!
One of them would have been illegal for me to accept.
David Thompson, Twin Pines Cooperative Foundation
And the beat goes on. I ask Elaine to respond to the delinquency statistics cited by David T above. I can’t imagine there isn’t a yes/no answer to that one. It seems there were 2 offers of settlement according to David. Sue or Elaine, your side?
[b]@JustSaying:[/b] I am just going to say this once. Take it or leave it.
Staff has told me that DACHA members have all paid their rent since we have owned the property. Staff told me that DACHA membership share (the functional equivalent of a down payment) have been wiped out; they have lost their savings.
I am absolutely not going to comment alleged carrying cost delinquencies before that. I know that, during that period, first carrying costs rose above market rates. Then people were leaving and vacancies were growing. Then Neighborhood Partners put a lien on the account. Members were afraid, rightfully so in my opinion, that they were losing their membership shares. Before the city aid came, those shares were as high as $20,000 or more. The books were chaotic.
I certainly don’t trust any numbers that David Thompson puts out. The auditor said that he didn’t even have invoices for his bills or records for the share loans. From what I have seen of David’s numbers that I know something about, his figures have been wrong. For example, the figures he has given for our city legal expenses have been completely incorrect.
I don’t know much about the detailed financial history from that period; one of the auditors chief complaints was that he couldn’t get the information.
Now I will say that I am very unhappy with what, in my opinion, is a “blame the victim” approach and a constant shifting of attention from what I believe is the weakness of Watkin’s and Thompson’s business model and some of what seems to me to be potentially questionable consulting practices away from them and onto the low/moderate income citizens that the city entrusted them to help, and paid them to help.
[quote]”Delinquencies. Here is the information on the Delinquencies of DACHA members from 2005 to today. I hope my table will show up correct?”[/quote]David, the table is clear but discouraging. Rather than the delinquency levels starting to go down following the city audit the second quarter of 2006, it appears that there an immediate jump instead.
It seems an audit would shake delinquent folks into catching up and staying there. However, I noticed today that the city report accompanying the audit recommended that the city get DACHA to dissolve and have individual members buy back their houses at favorable rates after the city paid off DACHA’s debts.
Do you think the DACHA board would have been aware of this city scheme to dispose of DACHA and the properties? I can’t imagine it would have encouraged delinquents to be anything but even more delinquent from 2006 until foreclosure? Was this staff proposal common knowledge?
[b]@David Thompson and Luke Watkins[/b]:Rather than blame the DACHA members, who lost their savings in your co-operative, why not answer the fundamental question:
Why did you sign a binding contract with an DACHA board to expand the co-operative and to pay you for each unit in the contract, when you knew full well that the city had not agreed to provide the units and you did not know what the fiscal advisability of expansion would be in the future?
[quote]”Now I will say that I am very unhappy with what, in my opinion, is a ‘blame the victim’ approach and a constant shifting of attention from what I believe is the weakness of Watkin’s and Thompson’s business model and some of what seems to me to be potentially questionable consulting practices away from them and onto the low/moderate income citizens that the city entrusted them to help, and paid them to help.”[/quote]I’m disappointed in your take it or leave it final answer. But you’re the one with the power to find out answers and get to the truth.
I’m disappointed that you don’t care to look at the delinquency question. You have no trouble claiming the “victims” lost their life savings ($20,000) but fail to consider that the city’s decision to foreclose when it did was at least a significant part of what made them victims. You assure us that they lost $20,000 when it would have been much less than that for the ones who were delinquent.
I’m disappointed that you don’t want to look at anything since the “weakness of the business model” when years of actions and inaction obviously led to the collapse of DACHA.
I thought you were offering to answer specific questions. But the more specific they grew, the answers were avoided. Who cares if the staff assures you that people are paying their rent today when the question has to do with the “accounts collectable” from the foreclosure period?
I hope you change your view on how to approach this. If you don’t trust NP’s massive amounts of figures, you certainly could have the staff check them out. You need to know these things before you decide how to best represent us.
This obviously has gotten way too personal. I hope this doesn’t mean you’ll be supporting any plan to sell the houses to the same people who were delinquent for all these years. I hope you’ll find out what’s going on with the supposed announcements by Harriet that the city won’t (or will, then won’t) negotiate.
There is something really wrong going on here, and it can help to have our best rabble-rouser closing her eyes because she’s caught up protecting the little guy. If you’re not willing to even look at NP massive document dumps, how can you ever decide what’s right for the city?
Anyway, thanks for your active involvement in this matter until you finally got fed up with the whole dang discussion. Right on.
@[b]JustSaying:[/b]You have to understand that DACHA is being sued, and I believe that the DACHA members are afraid they are under threat of being sued by NP personally as well. They feel that they have lived under the treat of lawsuits for years now.
I can’t talk about things that could bare on their legal situation, even more so because I don’t have detailed information. As I said, it is very difficult to obtain detailed information from the earlier period and there were a lot of confounding factors.
[b]@JustSaying[/b]: Rest assured, I am not fed up with the whole conversation. Also long as charges are being leveled, I will be involved in the situation.
I just have to be mindful that the city and DACHA are being sued by Neighborhood Partners, and there are some topics I cannot discuss.
I mean, as long as charges are being leveled, I will be involved in the conversation.
[quote]I thought you were offering to answer specific questions. But the more specific they grew, the answers were avoided. Who cares if the staff assures you that people are paying their rent today when the question has to do with the “accounts collectable” from the foreclosure period?–[b]JustSaying[/b][/quote]No, go back and look at what I said. I said that I would answer specific questions if I knew the answer, [b][b]but that I had to be mindful of the fact that we were being sued[/b][/b].
[quote]As someone said, if they did not like it they should have left.
The bylaws stated that you could give 60 days notice and leave the Co-op and be done.—[b]David Thompson[/b][/quote]I am happy that you reminded me of another major concern that I have, David. While you were advertising this 60 day notice clause as a major benefit to prospective members, you were actively trying to change it.
[quote]”We had recommended to the board and members of DACHA ..that the member/owner {be} responsible for the costs of their unit until a new member moves in.”– [b]David Thompson[/b] p. 58 audit [url]http://cityofdavis.org/meetings/councilpackets/20060627/11_DACHA_Audit.pdf[/url][/quote]
So if you walked away after sixty days when did you get your money? And what about the risk disclosure? Certainly you didn’t promise 5T +3 without explaining the risks?
[quote]Is the City paying for ERM’s legal services? [/quote]
What part of “pro bono” don’t you understand? From Merriam-Webster dictionary:
[quote]Definition of PRO BONO
: being, involving, or doing professional and especially legal work donated especially for the public good [/quote]
This blog discussion, and the spectacle that took place Tuesday night put on by Thompson & Company, gives a whole new meaning to the term “crony capitalism”… and is the very reason DACHA members are completely defenseless against baseless claims…
I agree w Sue Greenwald – an independent investigation wouldn’t change the minds of Thompson cronies, who will defend to the death regardless of evidence right in front of them…
[quote]SG: “Rest assured, I am not fed up with the whole conversation. Also long as charges are being leveled, I will be involved in the conversation.”
SG: “I believe that the DACHA members are afraid they are under threat of being sued by NP personally as well. They feel that they have lived under the treat of lawsuits for years now. I can’t talk about things that could bare on their legal situation, even more so because I don’t have detailed information.”
SG: “Rather than blame the DACHA members, who lost their savings in your co-operative, why not answer the fundamental question: Why did you sign a binding contract with an DACHA board to expand the co-operative and to pay you for each unit in the contract, when you knew full well that the city had not agreed to provide the units and you did not know what the fiscal advisability of expansion would be in the future?”
DT: “As someone said, if they did not like it they should have left. The bylaws stated that you could give 60 days notice and leave the Co-op and be done.”
SG: “I am happy that you reminded me of another major concern that I have, David. While you were advertising this 60 day notice clause as a major benefit to prospective members, you were actively trying to change it.” [/quote] But, these are examples of what I mean that you’ve moved from viewing this as an open-minded city councilor to a way that’s too personal and closes your eyes because you’re caught up “protecting the little guy.”
Instead of being responsive to questions that are logical to citizens, you’ve come to deflecting them with other questions and charges against NP. Wouldn’t it be better to answer the questions if you know the answer and tell us if you don’t know or if you’re not at liberty to answer because it falls into the lawsuit category.
Right now, it looks like you’re responding as a legal advocate (like Elaine) for the DACHA members against NP:
1. How does your “fundamental question” charge that NP suggested the DACHA board switch from a 60-day to a “until replaced” obligation. Obviously, this change would have been aimed at helping DACHA as an organization and benefit NP in no way. It would have had minimal impact on members (who still would be living in their homes) and may have improved the members’ situation (if they wanted to move and the unit was filled from the waiting list in, say, 30 days instead of 60).
So, instead of dealing with the questions everyone is asking about whether DACHA members could have left with their investments when they “realized” they joined a co-op and the “dead beat” issue–did some members get way behind on their payments for years and what is happening to these debt now that the city has taken over?–you try to turn the issue on NP with some meaningless “fundamental question.”
What was your purpose in making this charge? After all, was the suggested change ever made by the DACHA board? If not, the only reason you could have had to make the point was to imply some defect in David Thompson’s character. Why should [u]Vanguard[/u] readers care about the advocacy role you’ve adopted in this charge? What was your point?
1. This does nothing to advance the discussion. And, it just compounds the back-and-forth insulting and confusion.
2. It doesn’t answer the fundamental questions about the rights of the members and whether their own failure to pay affected the DACHA financial condition the city faced just before foreclosure.
3. It doesn’t answer the important question about what you did, and how it affected the DACHA operation, when the city staff came up with the scheme in 2006 to pay DACHA’s debts, put it into bankruptcy, buy the houses and sell them back to members in favorable deals.
4. It appears to put you directly in an advocate’s position on behalf of the former DACHA members and protecting the little guy–and to weaken your authority as a city council member.
I want to clarify that DACHA members did not lose $20,000 each. Prior to the foreclosure, DACHA members used a City loan to disburse money back to themselves to lower their investment (share) cost to about $6000, I believe. They may have lost this money in the foreclosure, but I wonder how far members were delinquent in paying their carrying costs. Would it be nearly a wash and they have really lost nothing?
I also am very confused about Sue’s advocacy on this. She is usually such stickler for watching over our City’s finances. Is it important that there be a villain and a victim, so that we all won’t be so upset at the loss and misuse of City money here? I suspect that the City is not in a good position here with regards the lawsuit.
To JustSaying: It would seem you are swallowing everything DT says, taking it at face value, without allowing for the possibility that there is a question as to its accuracy/veracity not to mention extreme bias. Secondly, the issue of DACHA members being delinquent (and I do not concede that point for various reasons, not the least of which is perhaps the amount they were being required to pay was fraudulent/improper/violated the city’s housing ordinance) is a red herring. The real issues in this case, and the ones everyone ought to be zeroing in on for the purposes of future affordable housing projects, are: 1) Were DACHA homeowners misled into believing they would be owning their own homes? Was there full and fair disclosure?
2) Did the developer in this case engage in real estate transactions without a real estate license?
3) Wasn’t it a conflict of interest for the developer of the project to also be its consultant and salesperson, especially if the developer advised the city in no uncertain terms the developer would not be the project’s consultant?
4) Why wasn’t an independent consultant used to do the feasibility study for this project, instead of the developer?
5) Why was the bookkeeping, invoices, etc. of the developers so shoddy; and why didn’t the city object?
6) Why did the city not supervise the initial setup of this project, when it was clear there were possible conflicts of interest? Did the city’s involvement on the Board lead homeowners to believe there was city supervision?
Bottom line, in any future city affordable housing project: a developer should not be allowed to be the consultant and salesperson for the project; nor should the developer be allowed to do the feasibility study; prospective homeowners should be forewarned if the city is not going to supervise the project; the city should properly vet all sales literature; the city should ensure the developer or consultant or salesperson has all the correct licenses to do business as is required by the state or locally; the city at a minimum should be checking to see if its own affordable housing ordinance is being violated or not; if the city has a representative on the board, it has a duty to check over all invoices submitted, contracts and documents proffered by the developer or consultant… and that is just for starters…
“I agree w Sue Greenwald – an independent investigation wouldn’t change the minds of Thompson cronies, who will defend to the death regardless of evidence right in front of them…”
It’s not something aimed at the true believers but rather those who are unsure as to what is true. We have Elaine who represents a DACHA member(s), Sue who is governing the city which is a party to a legal dispute, David and Luke who are on the other end of that legal dispute. I don’t mean this in a mean way, but I can’t trust what you guys are saying without a huge grain of salt because you are not only interested parties but litigants in a huge and complex legal dispute.
NP’s suggestion to change the notice period was one that would benefit all DACHA members.
At Dos Pinos,(60 unit limited equity co-op)all the units turn over in about 90 days but seldom more.
NP found that the process of moving in a new member at DACHA was always more than 60 days. Applicants were notified of a vacant unit, they then had to go through a strict application process with the management company showing their income and expenses, proof from employers, bank accounts, etc, and income group they were in, the size of the household they had and whether that fit the requirements.
Once that information was received by the management company they needed to verify the information with the sources. The management company had to send all of that information to the City Staff for their review and final approval.
From the date of being noticed (60 days) from the exiting member that they were leaving the co-op and the length of the process of going down the list to find out who on the wating list wanted to move in and then letting the applicant know they were approved for joining the co-op was always longer than 30 days and often closer to 60 days.
Once the applicant was offered the unit they then had to give notice. Under the Model Lease in Davis you are on a one year lease.
Most applicants had to then negotiate getting out of their lease. Quite often that was a minimum of 30 days to about 60 days.
As a result, every incoming new member came to the co-op between 30 days and 60 days after the old member left.
So on every turnover there was a large vacancy cost that had to be charged to every member. DACHA had to charge that vacancy rate to all members, thereby increasing everyone’s monthly costs. Eventually, the members saw the problem and agreed to extend to a 90 day notice. This action substantially cut down on the need to have high vacancy reserves.
Most people in DACHA knew more than 90 days before that they were leaving town, or leaving the co-op. So the change was I think almost unanimous among the members.
As an aside, Two DACHA members have moved into Dos Pinos and at least one applicant to DACHA now lives at Dos Pinos.
The co-op model works well.
David Thompson, Neighborhood Partners. LLC
C. The DACHA Dissolution Plan omits the following items;
•The $7 million asset it is alleged DACHA fraudulently transferred from TPCF to the City
•The amount of about $230,000 distributed to the DACHA members that according to the Legal Opinion from Goldfarb and Lipman was an illegal distribution of corporate assets not allowed by California Law
•Of the $4 million DACHA borrowed from the City/RDA about $200,000 of that was held in reserves
•The amount of $47,000 is presently owed by the members to DACHA
•Over $50,000 obtained by DACHA from the City for legal costs not seemingly authorized
•All self-dealing transactions not approved by the Attorney General
•All claims for deductions from the IRS not in conformance with IRS regulations
•Under the dissolution of a cooperative, DACHA must first go to outstanding encumbrances and liens. DACHA lists $74,000 in share value which in dissolution must first be used to pay encumbrances and liens
•The gain that any DACHA member may obtain from eventually owning one of the homes would be against the intent of AB 1246
•As that gain cannot be quantified it would be irresponsible for the City to rule that the requirements of Dissolution have been met
David Thompson, Twin Pines Cooperative Foundation
Elaine
To me there are two broad issues that you seem to blur. One is the model and what went wrong and how we should never allow what happened to happen again. To me that is independent of the suit and the arbitration amt and the questions which several of us keep asking. To me the delinquent amts IS germane because at this point in trying to understand this, I think I am more interested in the city’s role (or lack of) than NP or DACHA members. City staff used our monies and perhaps not in a judicious way without the oversight that they should have provided. We have at least one staff whose job is affordable housing. Not all cities have tat I would guess.
So yes delinquent payments and why they were allowed to continue (realizing I believe Mr Ireland that he is current and has been) is important.
With all due respect I believe you are not able to see this whole mess from a global perspective.
[quote]”I agree w Sue Greenwald – an independent investigation wouldn’t change the minds of Thompson cronies, who will defend to the death regardless of evidence right in front of them…”[/quote]Thompson won’t accept the 2006 audit as legitimate even though it was done by an independent auditor. You won’t accept the 2009 arbitration finding as legitimate even though it was done by an independent arbitrator. So, what? Who cares? We’re way past that.
The independent investigation for which David G. and others are asking is not to change anybody’s minds. It’s to find out what happened in a multi-million-dollar municipal “affordable housing” project that went bad and to help decide what to do with this project and potential future projects.
The city may end up losing money on the DACHA debacle (but who knows how much because of all the secrecy?).
The DACHA members may end up losing money (depending on how much their $20,000 investment losses were offset by the city’s “bonus payments” and their own shares of the $50,000 debt NP claims they built up by not making their payments to DACHA). The developers may end up losing more money than anyone else on their DACHA initiative.
What you call the “evidence right in front of them” is a muddled mass of conflicting claims. The citizens of Davis have a right to have this sorted out in an independent venue. This will happen, of course, when and if the lawsuits go all the way.
I can’t imagine that all the important questions for the citizenry will be asked and answered going the lawsuit route, as independent and open as a courtroom forum will be. Once completed, trials still answer only a few of the questions that are important. And the losers still end up publicly insisting that the judge/jury got it wrong in spite of the “evidence right in front of them,” you’ll surely agree.
Let’s move on to Sue’s recent claim that the council would violate its “fiduciary responsibility” if it carried out an independent investigation of the DACHA when lawsuits are pending. What do you think of this one?
She may have something here, especially if council members and staff know that–or have concern that–such a sunlight look might expose evidence of city wrong-doing that could be used by the plaintiffs.
What an awkward dilemma for the council to be facing! “You can’t handle the truth!” How many years before we’ll be able to?
SODA: Well put and those echo my thoughts and concerns on this matter.
[quote]”I want to clarify that DACHA members did not lose $20,000 each. Prior to the foreclosure, DACHA members used a City loan to disburse money back to themselves to lower their investment (share) cost to about $6000, I believe. They may have lost this money in the foreclosure, but I wonder how far members were delinquent in paying their carrying costs. Would it be nearly a wash and they have really lost nothing?”[/quote]Sue, is this true? I’d start getting a little pissed if what appears to be your personal advocacy for the little guy has go so far to be mis-representing facts of which you must be aware.
Is Ryan Kelly’s “clarification” information accurate? If so, did you know it all the time you’ve been talking about how they were victims because they lost everything? If so, there may be some DACHA folks who lost nothing, depending on how the non-payment totals are distributed among the members.
You’ve made a point that what you care about is whether the DACHA folks are paying their current rent to the city on time and in full (not what they did before foreclosure) and that you’re assured by staff that they are faithful in paying rent.
My specific question for you is: What are the city staff established rental rates for the ex-DACHA units? Are we collecting fair market rents for the 50% of the units?
“Are we collecting fair market rents for the 50% of the units…[u]that currently are rented and also advertising fair market rates for the ones that now are empty?[/u]”
[quote]”NP’s suggestion to change the notice period was one that would benefit all DACHA members.”[/quote]This seems obvious on its face. However, Sue originally saw it as somehow as you wanting to take advantage of DACHA and its members.
Was this suggestion supported by the city and/or adopted by the DACHA board? If so, did it work to anyone’s disadvantage. If not, the proposal couldn’t have affected anyone in any way, right?
[quote]To me there are two broad issues that you seem to blur. One is the model and what went wrong and how we should never allow what happened to happen again. To me that is independent of the suit and the arbitration amt and the questions which several of us keep asking. To me the delinquent amts IS germane because at this point in trying to understand this, I think I am more interested in the city’s role (or lack of) than NP or DACHA members. City staff used our monies and perhaps not in a judicious way without the oversight that they should have provided. We have at least one staff whose job is affordable housing. Not all cities have tat I would guess.
So yes delinquent payments and why they were allowed to continue (realizing I believe Mr Ireland that he is current and has been) is important.
With all due respect I believe you are not able to see this whole mess from a global perspective.[/quote]
I don’t disagree that the city’s part in this whole fiasco is problematic. However, what is more important for the purposes of prevention of future fiascos – who perpetrated a fraud and how was it done; or how it was dealt with to correct the situation? In my view as a strong consumer advocate,the more important issue has to do with rooting out the fraud first and foremost, so that the question of how it is dealt with later will never come up!
For me a substantial moment of truth is that in September of 2008 from the borrowed public funds DACHA refunded (illegally see Goldfarb and Lipman Legal Opinion at http://www.community.coop/davis) over $200,000 to its existing members.
$82,000 was in interest on shares. Some members were paid over $7,000 on a $20,000 share. All the members were repayed every penny above $6,250. That was the maximum share held by any member as of September 12, 2008.
The $20,000 loss is bogus.
$40,000 of the public funds was used to pay existing unpaid rents and $190,000 was refunded to the DACHA members.
Everyone’s rent at DACHA in fall of 2008 was dropped to an average of $1,112.
The average (20 year old) apartment in Davis was then renting at $1,848.
Both Sue Greenwald and the City Attorney had said publicly that the reason for the delinquencies was the high rent being charged at DACHA (never quantified or ever being mentioned that existing rents were under the City requirements).
The assumption would be that if the rents had been fair there would not be delinquencies.
In September 2008, the DACHA residents are provided by the City with a loan subsidy that allowed for monthly rents well below any comparable rent in the City. The DACHA members are provided with public funds of over $200,000 in their pockets.
So the City Council adopts a plan that they affirm will cure the DACHA problems.
The Council action adopts most of the suggestions NP had made previously.
So now there would be either none or few delinquencies?
Not exactly!
One year later in September of 2009 member delinquencies to DACHA are up again to $22,063. 12 of the 20 members are delinquent.
The President of DACHA is delinquent $3,433
The Treasurer of DACHA is delinquent $4,009
The members are behind $22,063 in their rent payments and the DACHA board takes no action and City staff takes no action.
The Arbitrator’s document to the Yolo Superior Court is made known to the Council, City Attorney and City staff and yet Danielle Foster continues to meet and communicate with the two DACHA officers above as though nothing had happened.
We now have DACHA delinquencies all over again and no one does anything.
It is not how I want the City funds managed or monitored.
Who at the City is accountable?
David Thompson, Neighborhood Partners LLC.
Arbitrator on June 18, 2009 says;
“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)
“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)
Allow me to confirm that Ethan Ireland is one of the very few DACHA members who was responsible about his obligations.
I respect him for that and for other reasons.
David Thompson, Neighborhood Partners.
The change in the bylaws that NP suggested from a 60 day notice to a 90 day notice was approved by the board and voted on by the members as a bylaw change and approved as a bylaw change by the City as required by the loan agreements.
The change met all the requirements and was of substnatial value to the DACHA members.
David Thompson, Neighborhood Partners. LLC.
[quote]”I don’t disagree that the city’s part in this whole fiasco is problematic. However, what is more important for the purposes of prevention of future fiascos – who perpetrated a fraud and how was it done; or how it was dealt with to correct the situation? In my view as a strong consumer advocate,the more important issue has to do with rooting out the fraud first and foremost, so that the question of how it is dealt with later will never come up!”[/quote]I don’t understand your “however.”
There are three possible perpetrators of DACHA project criminal or non-criminal fraud: the developers/consultants, the membership and the city staff. How do you propose to move on these people without independent investigations of their culpability?
Sue says she doesn’t believe David Thompson’s offerings. NP says you and Sue are not presenting accurate information. You, Sue and Ethan Ireland say NP perpetuated frauds upon the DACHA co-op. The NP reps say the “illegal” DACHA board members and city staffers perpetuated frauds upon the DACHA co-op and NP. The city staff is crouching down, saying “don’t look this way,” and the City Council doesn’t want to have an independent investigation on behalf of the citizenry.
Not knowing whether any or all the three parties that have been charged are guilty of anything, which of these do you want to go after as “a strong consumer advocate”? For which aggrieved party do you want to advocate?
If you are interested in protecting the DACHA members (and future people in a similar position), will you be looking at the “illegal board” and its role in undermining the members’ interests?
The only independent investigation with some legal oversight so far has been the arbitration process. If you don’t want to accept those findings, I’d think you’d welcome an independent evaluation that doesn’t involve such an advocacy atmosphere. You can’t just charge off to “root out” fraud, figuring out that “the question of how it (the fraud? was dealt with will never come up….”
Other than that, I agree.
“$82,000 was in interest on shares. Some members were paid over $7,000 on a $20,000 share. All the members were repayed every penny above $6,250. That was the maximum share held by any member as of September 12, 2008.
The $20,000 loss is bogus.
$40,000 of the public funds was used to pay existing unpaid rents and $190,000 was refunded to the DACHA members.
Everyone’s rent at DACHA in fall of 2008 was dropped to an average of $1,112.
The average (20 year old) apartment in Davis was then renting at $1,848.
Both Sue Greenwald and the City Attorney had said publicly that the reason for the delinquencies was the high rent being charged at DACHA (never quantified or ever being mentioned that existing rents were under the City requirements).”
Or maybe they figured out that the whole deal was a rip off and figured they would out whatever they could. Still did anyone receive their 5T +3 as they were promised over their original investment? Were they ever told about the risk of losing their money?
correction: figured they would get out
[quote]”Were they ever told about the risk of losing their money?”[/quote]What risk are you noting? I can’t imagine anyone anticipating out loud that the city would foreclose–which it appears is the action responsible for the loss of whatever funds members had in the DACHA co-op accounts. However, the short answer to your question would be: take a look at their contracts. They probably were told.
I’d bet that the members signed papers with “In the event of foreclosure against the co-op….” or some such buried in them. I’ve signed all kinds of contracts with fine print that I figured never would come back to bite me.
Mr. Toad, what is the $5,000 (+3?) to which you refer, some kind of interest-bearing account? Was it was some kind of voluntary or required loan or investment being held by DACHA? If so, it probably “was taken care of” by the city’s foreclosure, as Elaine has noted before. If it’s being held by NP, I’d say those people have a claim against NP.
[quote]”The change in the bylaws that NP suggested from a 60 day notice to a 90 day notice was approved by the board and voted on by the members as a bylaw change and approved as a bylaw change by the City as required by the loan agreements. The change met all the requirements and was of substnatial value to the DACHA members.”[/quote]Sue, does this satisfy your desire to have this “fundamental question” innuendo answered?
This is what I’m trying to get at: it looks as though you’re just tossing out irresponsible charges to make David Thompson look like a bad guy. If the “60-day notice” matter was so obviously a phony to those of us casual observers knowing only what you presented here, you must have been more aware since you personally lived through this.
You want us to be more aggressive in questioning NP and stop asking about the city and DACHA member. NP has been much more forthcoming and credible in their answers and this is bothersome.
Are you satisfied with David Thompson’s response as well as confident that it was a positive move for the DACHA members?
If you read back through the thread D. Thompson posted that people could sell their interests and were limited to a return of appreciation on their investment of the rate on the 5 year T-Bill plus 3%. Thompson posted something from the sales pitch and I have asked several times if the risk of losing your money was disclosed. Still waiting for answers.
Interesting question, Mr. Toad. It sounds as though this set the “investment value” of the money members had to put into the DACHA co-op. I’ve wonder how this applies to my money in the Davis Food Coop. I assume that I’d lose part or all of it if the co-op goes into bankruptcy or if someone forecloses on our organization.
In bankruptcy, I’d have some right to get some of my investment if there’s still cash in the register. If someone foreclosed on us, I might be less likely to get something back, I’d speculate.
It seems logical that the bankruptcy option would be seen as more of a possibility, but I can’t imagine either one would get much consideration except as part of a contract.
I wonder how many people left DACHA and got their investment back, along with the T-Bill profit and how many got stuck when the city foreclosed? Does the city plan on keeping their money as part of the DACHA property at foreclosure? If not, how will the city handle the accounting for people who were behind in their payments? Fascinating, Mr. Toad.
How about clarifying this issue, David T. and Sue?
[quote]ut, these are examples of what I mean that you’ve moved from viewing this as an open-minded city councilor to a way that’s too personal and closes your eyes because you’re caught up “protecting the little guy.” –[b]Just Saying[/b][/quote]These are all statements pertaining to the facts of the case.
If I made similar points about the actions of a chip-seal contractor or Union Pacific when we had our legal dispute about billing for the bike underpass, no one would have said that it was “too personal”.
This is a repost Justsaying that was not responded to that provides a little more info.
D. Thompson:”There are no windfalls upon sale, the additional growth in equity stays within the co-op and the community.”
Upon further review this seems quite deceptive because it doesn’t point out that the notes are never paid off and the community is not limited to the Co-op members at the time of purchase and the dilution of taking equity for reinvestment in addition units. Is this the extent of the disclosure? Were the people ever told that for $20,000 dollars they were buying something that would never be paid off?
Also it seems people are being promised increasing equity at 3% above the five year T-Bill rate. Didn’t really work out that way did it? So were the risks of loss of all equity disclosed, because, it seems, that is what happened? When I make an investment that promises me the 5 year T-bill plus 3% there is usually a prospectus with a discussion of the risks. After all, the greater the return the greater the risks. You would think that there must be a disclosure that if other Co-Op owners fail to make their payments you could be wiped out. A disclosure, by the way, that would make me walk away in about .01 seconds.
[quote]”ut, these are examples of what I mean that you’ve moved from viewing this as an open-minded city councilor to a way that’s too personal and closes your eyes because you’re caught up “protecting the little guy.”–]Just Saying
“These are all statements pertaining to the facts of the case. If I made similar points about the actions of a chip-seal contractor or Union Pacific when we had our legal dispute about billing for the bike underpass, no one would have said that it was ‘too personal’.”–Sue Greenwald[/quote]Actually, I think you’re making my point. You didn’t argue that you were protecting the little guy against the chip -seal contractor. You didn’t make similar points about the chip-seal dispute. I don’t ever remember you publicly announcing that you flat out don’t believe the information a contractor provides.
I’m just saying that this seems to be the way the [u]Vanguard[/u] conversation is coming across. If it isn’t apparent to you when it’s pointed out and you reflect on it a little, maybe I’m wrong.
“I’ve wonder how this applies to my money in the Davis Food Coop. I assume that I’d lose part or all of it if the co-op goes into bankruptcy or if someone forecloses on our organization. “
There is a difference of magnitude. You might have a few bucks in the Food Co-Op and if you lost them you would go have a shot of whiskey or something and write it off. In fact, if you left town you might even forget to cash out your investment as I have done with another Co-OP where I once lived.
Not so with Dos Pinos. Few people could afford to lose $20,000 especially those lured in by the use of the word ownership that couldn’t afford to buy title to a home in fee. This was most likely the biggest investment they had and it seems they were taken advantage of by being sold the illusion of home ownership that turned out to be more of a predatory lending situation, where, their loans would never be paid off and their equity would be limited while the developers milked the cash flow for their own development pyramid scheme.
Please someone disabuse me of these conclusions. I have not followed this until it came up here. At the beginning I was neutral and had no prior knowledge beyond some incomprehensible debate in the local press. Now I think I have it figured out but I am still open to being told why I am wrong.
[quote]The only independent investigation with some legal oversight so far has been the arbitration process. If you don’t want to accept those findings, I’d think you’d welcome an independent evaluation that doesn’t involve such an advocacy atmosphere. You can’t just charge off to “root out” fraud, figuring out that “the question of how it (the fraud? was dealt with will never come up….” [/quote]
I welcome an independent investigation…
[quote]Not so with Dos Pinos. Few people could afford to lose $20,000 especially those lured in by the use of the word ownership that couldn’t afford to buy title to a home in fee. This was most likely the biggest investment they had and it seems they were taken advantage of by being sold the illusion of home ownership that turned out to be more of a predatory lending situation, where, their loans would never be paid off and their equity would be limited while the developers milked the cash flow for their own development pyramid scheme. [/quote]
Very astute observation…
[quote] You didn’t make similar points about the chip-seal dispute.–[b]Just Saying[/b][/quote]If a hypothetical chip-seal contractor or Union Pacific had sued us and then spoke voluminously in public forums in defense of their lawsuits and against our actions and positions, I certainly would have.
[b]@David Greenwald:[/b]I would like to bring this discussion back to your article. It is a reasonable summary given the fact that you probably have not spend weeks on end reading all of the detailed, publicly available documents. I think it is fair right up to the point where you say:[quote] But several people I spoke to really do not have a dog in the fight. What they see is a clear conflict of interest by the city in trying to deal with this matter when in fact they are a party to this matter.[/quote]David, we deal with matters that we are a party to every day. That is what we do. That is what we are supposed to do.
[quote]”I’ve wonder how this applies to my money in the Davis Food Coop. I assume that I’d lose part or all of it if the co-op goes into bankruptcy or if someone forecloses on our organization.”
“There is a difference of magnitude. You might have a few bucks in the Food Co-Op and if you lost them you would go have a shot of whiskey or something and write it off.”[/quote]That’s true. I just glanced at my Davis Food Coop contract when I first joined. I know, however, that I’m be more attentive and responsible if I were signing up to join a housing co-op with a $20,000 in shares.
But, it’s barely credible for Elaine and Sue to look back eight years and claim the people who went through the co-op process were ignorant of what they were doing. No matter how often Sue drops in “$20,000 (the functional equivalent of a down payment),” it doesn’t make these people dopes.
If you’ve read all of this interchange, you know there’s much more going on here than some misguided souls who read part of a misleading sales piece but not the rest of it. That a flyer weighed more with them than all of the explanations and paperwork that was legally required at the time they joined the co-op?
What Sue and Elaine seem to peddle as the main argument to generate sympathy is just weak. While it’s possible the least capable and most inattentive of these folks might have joined without being fully aware of what was happening, they could not have held that mistaken impression very long. The instant they shared the view with others, they would have been corrected and that would have been the end of it.
If they had buyer’s remorse because they couldn’t get $200,000 of house equity during the bubble buildup, they could have been on their way with all their money (the functional equivalent of buying shares in a housing co-op!) and any interest that they’d earned within 60 days. So, the impact of any initial buy-in wrong impression would have worked its way out of the DACHA matters within months, long before the new board sent Neighborhood Partners packing.
Is there another, proven explanation for DACHA members to have thought they could end up owning the houses in which they lived as co-op members? Reread the city staff recommendation that accompanied the audit–it seems clear that members would have been totally mislead by the city in 2006 and also were given cash that further confused members about the seriousness of their responsibilities as co-op members.
I’ve asked Sue to give some information about what the council did in the face of the staff proposal to pay off DACHA’s debts, encourage the co-op to dissolve, buy up the houses and sell them to the former co-op occupiers at some undefined good deal. How she can ignore the obvious impact such a publicly announced scheme on how the DACHA board behaved and how the members withheld their payments–and keep pointing at how NP [u]might[/u] have promoted the benefits of the co-op years before–defies logic.
[quote]”Please someone disabuse me of these conclusions. I have not followed this until it came up here. At the beginning I was neutral and had no prior knowledge beyond some incomprehensible debate in the local press. Now I think I have it figured out but I am still open to being told why I am wrong”[/quote]I started as ignorant about this as you, Mr.Toad. I’m evaluating everything being dumped here, and pretty much have weighed in because of my disappointment that Sue’s contribution bas been repeating a half-dozen unproven talking points that match up with Elaine’s understandably advocate views. It’s somewhat disappointing also to have to wade through David Thompson’s massive missives to find answers to our questions, but he’s more responsive than the other parties here.
The most useful information so far comes from (in this order): the 2009 arbitrator’s finding, the staff reports, the 2006 audit, the length NP posts. The NP data probably might rank higher because they’re so specific and detailed and seemingly applicable. But, I’m a little skeptical since Sue says she doesn’t believe anything David is submitting and I have to give her opinion some weight.
It bothers me that Sue tossed out the 60-day allegation instead of dealing with the many questions that mean something in this case, then failed to respond after David provided the background. If David is accurate, this is something Sue should have been fully aware of, and not laboring under the mistaken that this was a strike against NP.
There are several other similar issues that have come up during this discussion (whether DACHA members failed to pay and whether they still owed when the city foreclosed, whether the DACHA board members were legally acting when they met, whether the city had representatives meeting with DACHA these years before the city foreclosed, etc.)
There are issues that may be even more important to the city–what will we be doing with the DACHA properties. But that’ll take time to figure the best route. Finally, everyone seems to want an independent evaluation of what really happened here–mostly to decide how to close down DACHA, settle pending lawsuits and how or whether to move on with any future affordable housing projects.
The fact that the city staff and city council appear to be the only ones who don’t want an independent look speaks volumes. It doesn’t bode well for how the city will do if the DACHA disputes end up in a courtroom (in spite of Sue’s positive outlook of the city’s chances).
The present picture of a city program generating all this anger and mud-slinging amongst city leaders who should be cooperating and at least trying to work out their serious differences is perhaps the most distressing aspect. The current approach also appears to be rewarding and/or requiring municipal secrecy in a town that always has valued open government.
[b]@JustSaying:[/b]I really don’t understand your take on this, JustSaying. If council doesn’t engage in this discussion, you will accept everything that those who are suing say about the city’s role; if we respond, you will accuse us of anger and mud-slinging. Can’t win for trying, can we?
I have answered all your questions very specifically, except for the question about the exact amount in missed rent payment owed by DACHA members, which is more pertinent to the lawsuit against DACHA than the lawsuit against the city.
I told you what I know; the auditor said that the books were a complete mess before the board composed of actual DACHA members took over. Staff told me that there was no back rent at foreclosure or since foreclosure. Obviously, new households joined and old households left during that period. The specifics will come out in court along with everything else, when each sides presents their data.
I have to come to the conclusion that you had your mind made up before you asked me questions.
[quote]”I have to come to the conclusion that you had your mind made up before you asked me questions.”[/quote]Why did you say this?
I’ve spend lots of time reading everything you and everyone else wrote and to which you referred us*–[u]way[/u] to much my spouse correctly observes–until I got to my current summary to Mr.Toad last evening.
Because I got to a point where I’m outlining some of the details where I disagree with you, you [u]have[/u] to conclude I had my mind made up before I asked you questions? How come?
– – – – – – – –
*Not quite everything: I’ve yet to read the lawsuits.
[quote]”I really don’t understand your take on this, JustSaying. If council doesn’t engage in this discussion, you will accept everything that those who are suing say about the city’s role; if we respond, you will accuse us of anger and mud-slinging. Can’t win for trying, can we? “[/quote]I see I need to clarify something here:[quote]”The present picture of a city program generating all this anger and mud-slinging amongst city leaders who should be cooperating and at least trying to work out their serious differences is perhaps the most distressing aspect. “[/quote]I wasn’t referring just to [u]you[/u] when I mentioned “city leaders.” I was was trying to express my dismay about how a city program with a worthy aim of helping people find affordable housing could be the source of such anger and mud-slinging from [u]all kinds[/u] of city leaders weighing in.
I count David T. and Luke and the people who’ve spoken out on their behalf as city leaders as well as you, Ethan, David G. and Elaine and others who have taken sides on this issue. All of these people are “city leaders” in the manner in which I was using the term, and all are people who I wished were trying to resolve their differences instead of litigating them. That’s all.
I didn’t mean just [u]you[/u]; I see how you easily could have taken my comment that way though. I surely don’t want you to feel that speaking out means you “can’t win” in my view.
David T., the point has been made repeatedly that the auditor found the DACHA books “a mess” in 2006. What was the role you, Luke and/or NP played in DACHA book keeping at the time of the audit and before and after?
Also, please clarify the timeline for NP’s connections with DACHA. When was DACHA started, when did the DACHA board “fire” NP, etc.?
What were NP’s associations with DACHA after you were replaced (by whom?), other than as a business trying to collect from the co-op?
[quote]”I have answered all your questions very specifically, except for the question about the exact amount in missed rent payment owed by DACHA members, which is more pertinent to the lawsuit against DACHA than the lawsuit against the city.”[/quote]I don’t think this is accurate. Unless I’ve overlooked something some answers, you haven’t. It may be that you’ve overlooked several of my questions.
With respect to my question about whether DACHA members got behind on their payments and were behind at the time the city foreclosed, you responded with a comment about the people currently renting the houses are paid up on their rent now.
You didn’t answer when I re-asked the same question until last night when you wrote:”Staff told me that there was no back rent (owed?) at foreclosure…” which seemingly contradicts NP’s contentions.
I’ll get back to you on the questions for which I haven’t seen answers yet.
[b]@JustSaying:[/b]The “bank rent” issue is a red herring designed to divert the discussion from the fact that DACHA failed because “rents” became as high as market rate rents and share costs were too high and because, after the city gave even more aid to get share costs and “rent” costs down, Thompson/Watkins sued now possibly sustainable co-op for developer fees they felt due them from houses that weren’t even built.
Typo attack:
I mean:
[b]@JustSaying:[/b]The “back rent” issue is a red herring designed to divert the discussion from the fact that DACHA failed because “rents” became as high as market rate rents and share costs were too high and because, after the city gave even more aid to get share costs and “rent” costs down, Thompson/Watkins sued the now possibly sustainable co-op for developer fees they felt due them from a binding contract that they entered into with early non-member boards — a contract that bound future boards composed of mostly DACHA members to add (I think it was over 60) units even though the units hadn’t been added and city had not agreed to provide the units.