In December, the Davis City Council behind closed doors approved bringing foreclosure procedures against DACHA. Now in the Davis Enterprise is the public notice of the public sale of DACHA.
The notice in part reads, “Davis Area Cooperative Housing Association, A California Nonprofit Corporation, as Trustor, in favor of Redevelopment Agency of The City of Davis as Beneficiary, WILL SELL AT PUBLIC AUCTION TO THE HIGHEST BIDDER.”
Apparently the plan is that the city will then purchase the property itself and therefore protect its $4.15 million loan that DACHA has been unable to repay since they lost a judgment to Twin Pines Cooperative Foundation. In binding arbitration, they were awarded nearly a $350,000 judgment. Twin Pines was able to levy against the cooperative meaning the cooperative fell behind the city in terms of their repayment of the loan.
According to the city staff report, DACHA was current in its payments on the loan up until September. However the nearly $350,000 arbitration ruling against the organization and subsequent levy on their assets by Neighborhood Partners has put the organization at risk. They missed their October payment.
The city’s action here is simply to protect the $4.15 million that it loaned DACHA in 2008 in order to stabilize the project.
On September 30, 2009, the Vanguard brought to light serious problems of potential misuse of approximately $4.15 million in public funds that were used to loan the Davis Area Cooperative Housing Association. In particular the organization is accused of illegally redistributing cooperative funds to its members.
Vanguard investigative efforts however, determined that documents conclusively show that the share stabilization was used to refund the DACHA residents the difference between their initial payment of $22,000 and the reduced share investment of $6,250. At issue here is whether the council knew it was authorizing such refunds. From our investigation it appears there is considerable disagreement on this point and there is no explicit mention in the staff report from June 24, 2008 (action taken on July 15, 2008).
Moreover, the legality of this action is also in question. A memo from the City Attorney argues that the action is legal. Lawyers for Twin Pines Cooperative Foundation, who are Plaintiffs in a lawsuit against DACHA argue that the action represents a violation of Safety Code Section 33007.5.
This information was brought before council on October 20, 2009, however by a 3-2, they opted against third party review.
David Thompson and Luke Watkins who make up Neighborhood Partners and Twin Pines Cooperative Foundation have pressed council to investigate what has happened. For their part, the members of DACHA believe they have been wronged by David Thompson and Luke Watkins.
There are more questions than answers at this point in terms of whether the taxpayers of Davis will ever know what city staff did with regards to DACHA.
There are also a good deal of questions as to what this latest development means. What happens to the residents of DACHA? Do the members lose their homes or does the city have a plan for housing them in their current residences? Why did all of this occur behind closed doors rather than in the open? Certainly some of these legal matters are sensitive, but there are also policy questions at stake here. Does this action mean that we will never find out what really happened?
The Vanguard will continue to pursue these and other questions.
—David M. Greenwald reporting
Is the city now liable for the $350,000 court judgment against DACHA or is Thompson and Watkins award now moot?
David:
Thanks for posting this city action. Neighborhood Partners and Twin Pines Cooperative Foundation have never ever brought up foreclosure as a solution but the city always has. We are totally opposed to the city’s foreclosure of DACHA and the impact it will have on residents. The City does not need to take this action and have this effect upon people’s lives. It is cruel and uneccessary and continues the strange machinations of city staff and the City Attorney. We urge the City Council to rescind the foreclosure action.
We have offerred to work on solutions with the city but there has been no response. We would prefer to work on solutions than have the City foreclose on DACHA and we urge the Council to take leadership.
The public funds legal costs associated with DACHA are now approaching $500,000. And all of this city expense and public funds cost relating to a DACHA board that has been composed of improperly seated members and an unduly constituted board since 2006.
Quotes from the Arbitration Award filed with the Yolo County Court in June, 2009.
Quotes by Kenneth M. Malovos, the attorney jointly chosen by DACHA and Neighborhood Partners and approved by the Yolo County Court.
“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 Arbitrations 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)
In these times of limited public resources it is painful to watch how city staff is spending public funds
The Council needs to watch what is going on at City Hall.
By the way, It is important to correct an important element which is that Neighborhood Partners won the award not Twin Pines Cooperative Foundation.
DPD: “Apparently the plan is that the city will then purchase the property itself and therefore protect its $4.15 million loan that DACHA has been unable to repay since they lost a judgment to Twin Pines Cooperative Foundation.”
Am I missing something here? If DACHA is put up for public auction, anyone can buy it. Why are you assuming the city will buy DACHA?
Just what I’ve been told.
I would just like to add that the arbitrator specified that[quote]“it is not the task of the arbitrator…to determine the viability of the business model or the financial health of DACHA….”[/quote]We have a lot of low and moderate income tenants who are about to lose their investments in the cooperative, which is the functional equivalent of a down payment on their house. These shares reached as high as $20,000 per member, which is obviously a lot of money for a low income person. Trying to help the cooperative in order keep this from happening has been one of my major concerns during this whole unhappy process.
Sue: NP or TPCF have never wanted or asked for foreclosure. It is only city that has cruelly taken the foreclosure action. I would hope that are you a vote against carrying out foreclosure? The Council must have voted to carry out foreclosure. In public session why not vote against foreclosure, I hope you would?
If you want to call me and start discussing solutions I am here at 757-2233.
David Thompson
This is clearly a complicated situation, but it is my current understanding that after Neighborhood Partners (you and Luke Watkins) sued DACHA, that Neighborhood Partners placed a levy on DACHA’s funds in order to collect the payments due to you according the the private arbitrators’ decision, that you thereby collected a partial payment of $50,000 and that DACHA is currently out of funds.
The Redevelopment agency is foreclosing in order to protect our investment in the property, and to maintain the affordability of the homes.
To the best of my understanding, the low and moderate income DACHA residents’ investment, which is the functional equivalent of a down payment, is in jeopardy whether we go to foreclosure or not, since you still have a very large levy against their account.
I am not the expert in the technical details. I do know that we have always wanted to help facilitate an agreement between you and DACHA that would preserve the DACHA residents’ and the Redevelopment Agency’s investments.
I would suggest that you call our attorneys if you wish to discuss alternative solutions.
Sue: For four years the City’s lawyers have talked with a board composed of ineligible board members. Over that four year period the legal costs and improper distributions of DACHA have amounted to $500,000 of Davis taxpayers public funds.
Your job is to watch over how city staff use public money. In this era of cutbacks in public services this use of a half million dollars of public funds is a scandal. Can anyone borrow $4 million from the City?
DACHA signed a document with the City agreeing to uphold the laws of the state of California and to uphold the bylaws of the association. The City staff knew the board members were ineligible and breaking the bylaws. City staff have taken no action to look into the allegations.
Lamar called for an independent investigation and Don seconded the motion. It is time for that to occur and it needs your vote.
Altogether this has become a ten million dollar public fund fiasco.
$4 million lent to an ineligible board.
$500,000 and soon to be $900,000 in legal and improper distribution costs associated with an ineligible board.
Over $5 million lost to the city over 55 years because staff set the costs at DACHA to be at 80% of median income. And no one at DACHA has been qualified at 80% of median income? The people who moved in qualified at from 90% to 120%. So unqualified households are benefiting from public funds. Is that now a gift of public funds? That is five million dollars that will not be available to help other people with affordable housing.
Sue, I ask you again to share with people that you will vote against foreclosure and help these people. You did not answer this question earlier.
And Sue, if you want to solve it call me at 757-2233. I would welcome your efforts to break the logjam.
You can see many documents at the site that Twin Pines Cooperative Foundation has set up. http://sites.google.com/site/itsthelawdacha/home
[quote]Is the city now liable for the $350,000 court judgment against DACHA or is Thompson and Watkins award now moot?– Davisite2[/quote]The courts were not involved in the judgment against DACHA. When DACHA was set up before the residents joined, it was stipulated that any disagreements between Neighborhood Partners and DACHA had to be settled by binding arbitration rather than through the court system. A private arbitrator made the decision.
To the best of my knowledge, the city has nothing to do one way or the other with the $350,000 judgment against DACHA. Neighborhood Partners sued DACHA; the city was not involved.
So Sue, you’re saying that the city’s move makes the liability go away? That doesn’t make sense, otherwise every organization with liability would go to foreclosure and then re-purchase.
I don’t understand your question. The redevelopment agency does not have a judgment against it.
DACHA does. If the Redevelopment Agency purchases DACHA, how does that judgment go away?
David:… perhaps DACHA remains in existence as a cooperative entity but without the assets that Neighborhood Partners can go after. These assets would belong to the Development Agency.
Sue:
This would be a good place to let everyone know what you will do. Will you please come out against foreclosure of DACHA?
That would be of help to the people living at DACHA and would help solve this situation. And if you want to help solve it you can call me at 757-2233.
When will the Council do an independent investigation of this ten million dollar public funds fiasco?
Time for the truth to be told about this waste of our taxpayer money!
David
One thing that I heartily agree with is that the December closed session vote should have been announced in open session. I do think that the public should know exactly how each council member voted.
Sue:
I am grateful that you would like things to be more open.
As there is no suit against the city I do challenge the closed session on DACHA items. The DACHA issue should not be being held in closed session especially in this situation where now ten million in public funds are at stake. Citizens should know what is going on.
However, if there were a Council vote in open session next Tuesday or anytime in the near future would you vote to suspend the action to foreclose? Will you help find a solution? Sue, I am at 757-2233.
If one substitutes “sub-prime mortgage ” for the DACHA cooperative plan, “investment bankers” for Neighborhood Partners and, “Davis City bailout”(hopefully being successfully resisted) for the Wall St. bailout, doesn’t this look a lot like the political narrative that has come out of Washington D.C. over the past year?
There is only one word that describes the DACHA model and Mr. Thompson’s recent and feigned concern for DACHA residents. That word is BULLSHIT.