Contrary to charges by some that the city has spent over 800,000 dollars defending itself on the DACHA issue, the true cost, at least according to the city’s disclosure in response to a Davis Vanguard Public Records Act requests, is about half of that.
The request was sparked by public claims by those associated with Neighborhood Partners and Twin Pines Cooperative principals David Thompson and Luke Watkins, claiming the higher figure.
She writes, “The legal battle has cost the city over $800,000.”
In the city’s response, they told the Vanguard, “The following are the attorney costs for the City and the Redevelopment Agency related to DACHA from January 2007 through December 31, 2011.”
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“The City and Agency were sued by Twin Pines in April 2010 and by Neighborhood Partners in March 2011. In 2007, the City voluntarily participated in mediation with DACHA and Neighborhood Partners that, unfortunately, did not result in a settlement of the DACHA/Neighborhood Partners dispute,” the city attorney reports.
She continues, “In 2008, the Agency refinanced all of the DACHA secured debts culminating in a $4 million secured loan to DACHA.”
In 2009, Neighborhood Partners was awarded $331,000 against DACHA. DACHA went into default on its loan after Neighborhood Partners levied on and emptied DACHA’s bank accounts.
On July 1, 2010, the Agency foreclosed on the DACHA units to safeguard the public funds loaned to DACHA.
“2011 costs include litigation expenses and other legal services related to DACHA. No other legal fees were expended by the City and the Agency,” Harriet Steiner told the Vanguard.
The records show over three-quarters of the legal costs were incurred between April 2010 and December 2011, as legal maneuvering by both sides ramped up leading up to and following the foreclosure by the City of Davis and efforts by Mr. Thompson and Mr. Watkins to prevent that action on the part of the city.
However, as the Vanguard has written a number of times here, the easy answer to that question is that the city is being sued and therefore entitled to expend money to defend itself legally.
But, we also argue, the more complex answer is that the city is a public entity and, as such, their first responsibility is not to protect itself legally per se, but to be open and forthcoming with the residents of this community about their use of public money.
In short, if the city’s conduct itself led to it being sued, then the amount spent on legal defense is actually the fault of the city not the fault of plaintiffs.
Our chief concern here is the behavior and conduct of the city. We remain particularly concerned about the apparent conflict that exists in this city in the dual roles that the city attorney plays, first as the attorney that advises the council on how to proceed and second as the attorney who charges the city hourly when it needs to defend itself in litigation matters.
Other entities, including other municipalities, have resolved this conflict by having separate attorneys function in those capacities to avoid an appearance of a conflict of interest.
We also note the lengths that it took to get the city to release even that information.
City Attorney Harriet Steiner wrote earlier, “On February 7, 2012 you asked Steve Pinkerton for documents that would substantiate the fees that the City/Agency have spent on litigation costs related to DACHA. This e mail is in response to that request.”
The city continued, “After approval by the City Council, the City has determined to release a summary of attorneys’ fees related to DACHA, and, if you so request, redacted invoices. We are in the process of preparing the summary for release, which should be available next week.”
In other words, the simple request for information about legal costs on DACHA – something that the city manager asked me to request, something that should have helped the city, something that was intimated to me would take a day, had to get city council approval – I assume in closed session.
But there is more: “As you are may be aware, the City and the Agency have not provided records of litigation expenses, including attorneys’ fees during the pendency of litigation.”
Ms. Steiner goes on to add: “Since early 2010, the City of Davis and the Davis Redevelopment Agency have been parties to two lawsuits – Twin Pines Cooperative Foundation v. Davis Cooperative Housing Association, Yolo County Superior Court Case No. CV PO 08-3424, as well as a related bankruptcy action in which the City and Redevelopment Agency are creditors, In re Davis Area Cooperative Housing Association, United States Bankruptcy Court, Eastern District of California, Sacramento Division, Case No. 10-30314-E-11, which has been dismissed.”
Ms. Steiner writes, “With respect to pending litigation, section 6254, subdivision (b) of the Act exempts from disclosure ‘[r]ecords pertaining to pending litigation to which the public agency is a party . . . until the pending litigation . . . has been finally adjudicated or otherwise settled.’ Subdivision (b) ‘was primarily designed to prevent a litigant opposing the government from using the [Public] Records Act’s disclosure provisions to accomplish earlier or greater access to records pertaining to pending litigation or tort claims than would otherwise be allowed under the rules of discovery . . .’ Roberts v. City of Palmdale, 5 Cal.4th 363, 372 (1993). This ‘pending litigation’ exemption covers documents protected by the attorney-client privilege and the work product doctrine.”
Of course, one can question whether legal expenses are really covered under this exception to the Public Records Act. And they probably are not. However, as always, the city uses the backdoor to prevent the release of such material.
Ms. Steiner suggests that, by writing: “Section 6254, subdivision (k) of the Act further exempts documents covered by the attorney-client privilege or attorney work product doctrine regardless of whether there is pending litigation on the subject covered by the privileged documents. Id. at 372-73.”
Now we get to the crux of the argument: “The billing records you requested contain attorney-client privilege and work-product protected information, and communications with other law firms related to the above litigation matters are protected by the common interest doctrine. See Meza v. H. Muehlstein & Co., Inc., 176 Cal.App.4th 969 (2009).”
Ms. Steiner continues: “The City Council has determined to release information related to the costs of the DACHA litigation because of the public statements that have been made related to these costs. Staff is in the process of preparing this information and will provide it to you next week.”
She goes on to say, “If after reviewing the summary information, you would like to review the actual invoices, these will also be made available. However, please be aware that attorney-client privilege and work product information will be redacted from the invoices, as will any information that may impair the City and the Agency’s defense in the pending litigation matters.”
It is questionable, at least at this point, how useful it would be to request the invoices themselves, as they would be redacted. We could perhaps legally challenge any decision to withhold public records by the city. I will be reading and gauging the reader response to this point and see if it is worth the trouble.
—David M. Greenwald reporting
David,
“legal battle cost the city $800K”
VS attorney costs of $400K
I would argue there is more cost than Just the billed hrs from attorneys. How about staff time, ?depositions, etc.
How do you resolve that?
Thx for ongoing discussion of this messy topic.
Staff time is kind of nebulous in that unless we are paying out overtime, staff are salaried and there is no direct cost.
Advice for the City of Davis:
Next time, don’t go into business with an avaricious company like NP. You now know what to expect.
[quote]The records show over three-quarters of the legal costs were incurred between April 2010 and December 2011, as legal maneuvering by both sides ramped up leading up to and following the foreclosure by the City of Davis and EFFORTS BY MR. THOMPSON AND MR. WATKINS TO PREVENT THAT ACTION on the part of the city.
Many have noted, in defense of the city’s expenditures, the reasons why the city has been “forced” to expend money on legal expenses.[/quote]
Bingo!
[quote]Advice for the City of Davis:
Next time, don’t go into business with an avaricious company like NP. You now know what to expect.[/quote]
It is important that the city properly vet any company it does business with; and if any potential conflicts of interest happen to rear their ugly heads, there should be proper supervision to make sure those conflicts of interest do not seep their way into any contracts, processes, appointments to Boards, etc.
Do these figures include what the City paid for fees for DACHA counsel?
We have three attorneys on the CC; they should know a basic cannon for attorneys: the one who created the documents and gave advice related to later litigation cannot be the one to litigate her own work product, because the client is entitled to independent advice, and a lawyer defending her origianl documentation and counsel to a client cannot be independent. Why is anyone surprised by this?
Mayor Krovoza and Colleagues: why were you asking Harriot Steiner for advice from the dais during the last CC meeting about DACHA? She should not have even been in the room, let alone providing the CC with advice.
It seems strange that city staff were busy promoting NP to Rancho Yolo residents in 2006. And of course similar problems developed: lack of agendas, lack of minutes, lack of treasury reports for board members and
residents.
NP insisted that its tweaked financial analysis of Rancho Yolo purchase be kept secret from the city council, city commission, residents and
some board members. It was a public record, yet Harriet Steiner agreed to keep it secret for a while. Curiously, staff kept no records of the
meeting at which it was decided to violate public record law. Also
curious, the city council approved more funding for the project, without
demanding the financial analysis. (At various times Saylor, Sousa, and Ruth A. proclaimed themselves to be “friends” with David T.)
Harriet was paid for litigating the claim for attorney costs to obtain the financial analysis Harriet illegally withheld.
City staff admittedly socialized with NP. Staff claimed it promoted a good working relationship with the contractors. To residents it appeared a direct conflict of interest, an overly friendly relationship.
The city has no conflict of interest code, per the city manager’s ofc.
It’s noteworthy that the financial models for DACHA, Rancho Yolo, and
Eleanor Roosevelt were each faulty.
And it’s interesting the city supported 3 affordable housing plans
which required share purchase so that people who are truly in dire need of affordable housing would not qualify. Is that the attraction of NP’s
plans? Affordable, but not TOO affordable housing?
[i]”It’s noteworthy that the financial models for DACHA, Rancho Yolo, and
[b]Eleanor Roosevelt[/b] were each faulty.”[/i]
ERC was sold by Neighborhood Partners as “middle income senior housing” where Davis residents could go to live to downsize from their current single family homes.
I spoke with a city staffer last year and was told that “it is now entirely Section 8” residents and that as far as that staffer knew “every resident was recruited from outside of Davis.”
Personally, I don’t have a problem with Section 8 housing or with new people moving to Davis for new housing.
But, given what I know about the way NP operates, and given that the Davis City Council gave a lot of money in subsidies*, it feels like we were sold a bag of goods.
One footnote: There is a note on the Davis Wiki site which says that the Common Room at ERC is no longer avaialbe to its residents. That does not sound good**.
*I don’t know how much those subsidies added up to, but I would guess it was in the millions of dollars for those 5 dozen apartments.
**2011-08-11 14:34:32 Unfortunately the Community Building has essentially been locked up and use denied to ERC residents since November 1, 2010. Before that, since it opened, ERC Community Building was open 7 days a week, from 9am until 9pm. The residents were responsible for closing up the building every night and opening it up on holidays and weekends. That system worked very well and the place was a busy social hub. Since last November the place has become socially isolating and dismal. —AnnRichards
David, this report raises more questions than it answers.
Please post links to the correspondence between you and the city–your original request, the initial response that you wrote about when you first reported about your public records request and whatever they’ve given you now. You definitely need to get copies of the billings themselves (which you were warned might include redactions).
Why is there nothing listed prior to January 2007? I’d assumed this would resolve the question about whether the city provided/authorized spending of funds for attorney costs (as NP claimed). If the charge is true, why would this
Who billed for and received the charges you show here? What services were provided?
It looks like this report, if left as is, will just generate more back-and-forth nasty comments about how bad the NP business people are–look for the other side to join in soon to point out how bad the city staff is.[quote]”Many have noted, in defense of the city’s expenditures, the reasons why the city has been “forced” to expend money on legal expenses.”
“Bingo!”[/quote]David, who are the “many” who’ve noted this? No need to list Ms. Bingo.[quote]”In 2009, Neighborhood Partners was awarded $331,000 against DACHA. DACHA went into default on its loan after Neighborhood Partners levied on and emptied DACHA’s bank accounts.[/quote]Who said this, Harriet or you? Where do the DACHA reserve funds fit into this; are they stored somewhere than in “DACHA’s bank accounts”?[quote]”As you are may be aware, the City and the Agency have not provided records of litigation expenses, including attorneys’ fees during the pendency of litigation.”[/quote]What does this mean? Does it mean there’s already been more spent that isn’t being reported to you and won’t be for months or years to come?
Are you really “aware” of what records aren’t being “provided” (not provided to whom?) I know who “the City” is, but who is “the Agency” that “you may be aware….(has) not provided records of litigation expenses.”
What does the city “defending itself on the DACHA issue” really mean. Are all of these charges specifically dealing with the lawsuit? How much is the suit for? It must be for much more that $400,000 (or whatever) in order to have spent that much so far, and looking at spending much more “defending itself.”
There is something that isn’t being brought forward here. It would be nice to get to the bottom of it before we spend much more on legal costs “defending ourselves.”
[quote]It’s noteworthy that the financial models for DACHA, Rancho Yolo, and
Eleanor Roosevelt were each faulty. [/quote]
Bingo again!
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