Last fall, the Davis City Council was ready to proceed with dissolution procedures for DACHA (Davis Area Cooperative Housing Association). This public hearing was initially scheduled to take place on September 20, 2011. In preparation for the September 20, 2011 public hearing, staff sent notice of the hearing to the 159 organizations on the list obtained from CCCD (California Center for Cooperative Development) with a postmark date of May 20, 2011.However, there were complaints by David Thompson and Luke Watkins that some of the organizations had been improperly noticed. Out of the abundance of caution, the city council very reluctantly postponed the dissolution over the objections of the DACHA residents and an attorney for one of them.
Elaine Roberts Musser argued at the time it was overly cautious: “To what purpose? The city properly noticed all cooperatives in the region 4 months ago, including TPCF [Twin Pines Cooperative Foundation], an organization David Thompson himself represents. All that was required by statute was notice by first class mail, postage prepaid, which was accomplished as required.”
Concerns by the DACHA residents had to do with the fact that they were facing lawsuits with no assets or ability to defend themselves. Ms. Roberts Musser argued, “DACHA is left incapable of defending itself, because corporations are required to be represented by an attorney, and no lawyer has been willing to take the case.”
The dissolution of DACHA would enable the residents to move along with their lives.
“As long as DACHA technically remains in existence, burdened with two more potential default judgments, DACHA’s judgment creditors will use these judgments to continue severely abusing legal process,” Elaine Roberts Musser argued.
“DACHA is dead,” DACHA President Ethan Ireland explained to council. “It went into cardiac arrest when its accounts were levied, and it finally expired when its properties were foreclosed upon and sold at auction. It’s a corpse; it has nothing but liabilities and it exists on paper only.”
However, it represents a very dangerous corpse. “As long as this corpse – the corpse of DACHA – remains unburied, DACHA’s creditors, represented by Neighborhood Partners and Twin Pines, will never stop in their efforts to revive it – to save their own business reputations. Their desperation to exact vengeance has driven them to attempt conjuring up the dead,” he said.
“We live in fear,” he said. “Fear of our doorbells and mailboxes. Fear that upon opening the door there will be yet another process server with yet another subpoena in hand ordering us to yet another round of questions structured to only have wrong answers. Fear that there will be yet another shrewd and legally questionable attempt to levy our personal accounts.”
The dissolution process is quite complex, and requires documented and certified statements of DACHA’s acting president.
The staff finds the following:
1. The process of dissolving DACHA has thus far met any applicable requirements of state and federal law. Additional requirements have not yet become applicable and, therefore, a finding with respect to those requirements would be premature.
2. The City has reason to believe that DACHA will continue to have no assets at the time of dissolution and, as a result, the dissolution of DACHA will meet the donative intent standards of the Internal Revenue Service; and
3. The City has reason to believe that DACHA will continue to have no assets at the time of dissolution and, as a result, the dissolution of DACHA will be free of private inurement.
Therefore they recommend: “that the City Council adopt the attached resolution, to approve the dissolution of DACHA and for the purpose of making the findings required under Section 817.2.”
Last week, the Vanguard published an editorial from Twin Pines Cooperative President David Thompson. Earlier this week, the Vanguard published a letter from former Mayor Ann Evans (the wife of David Thompson) to the city arguing that there needs to be lobbying for the council and city to “rise to the occasion and direct your staff accordingly. There is so much to be done on your watch, but affordable housing availability is not the least of those important items.”
Now Councilmember Sue Greenwald responds:
“I would like to respond to a recent letter by Ann Evans, the wife of DACHA developer David Thompson and a former mayor like myself. Evans makes a number of claims that are incorrect or misleading, but I want to correct the record on the fundamental premise.
“Evans claims that: ‘There’s a pattern of abuse by (city) staff and blindness to that abuse by the council that is deeply disturbing, and it’s not limited to housing.’ She feels that her husband has been punished for ‘whistleblowing.’ “
“I am the only current council member who was on the council when DACHA was approved. Thompson’s ‘whistleblowing’ consisted of expressing concern about the lack of equity caps on some for-sale affordable houses in Wildhorse, and the resultant large profits that were made. The entire council and staff shared his concern. I did not detect any anger at Thompson for ‘whistleblowing,’ i.e. speaking out against the lack of equity caps. Everyone agreed.
“Thompson was not punished for whistleblowing. To the contrary. When Thompson and Luke Watkins proposed the DACHA project, I had expressed my concern to staff that the DACHA business model was problematic. I was concerned because, in addition to a large membership fee and a relatively high carrying cost, Watkins had told me that any equity would go into co-op expansion rather than toward paying off the co-op mortgage. I feared that the expansion-based model could collapse, because a low- to moderate-income person might be better off renting under these circumstances.
“City staff told me that they understood my concerns about the business model, but that they were going to recommend approval of the project because they wanted to support innovative projects and new developers.
“This certainly doesn’t sound like a staff that was out to punish Thompson.
“Evans calls on the council to ‘solve DACHA immediately.’ And that is exactly what we are trying to do. I hope that we all keep in mind the fact that a lot of low-/moderate-income tenants have been hurt because of the DACHA failure.”
—David M. Greenwald reporting
Why are so many DACHA units vacant? What has been done to rent them?
After an investigation the Yolo County Grand Jury in their 2010-11 report concluded that
“No inappropriate gift or use of public money was made at any time, for any purpose by the City in connection with DACHA. However, the City has incurred losses that may not be recovered and may increase in the future. Better initial oversight of DACHA could have prevented this.”
The full report is available at http://www.yolocounty.org/index.aspx?page=2043.
Also, applications for the 2012-13 Grand Jury are now available at http://www.yolocounty.org/Index.aspx?page=786#Grand Jury Service. Perhaps some Vanguard readers might wish to apply.
[quote]However, the City has incurred losses that may not be recovered and may increase in the future. Better initial oversight of DACHA could have prevented this.” [/quote]
Better initial oversight by the city would have saved the financial damage that was done to DACHA residents as well…
David and Elaine,
I was wondering if you could post the Attachment 3 of the Organizational Dissolution Plan which starts on page 13 of the staff report: [url]http://cityofdavis.org/meetings/councilpackets/20120207/07 DACHA Dissolution.pdf[/url]
(Elaine, do you have a clear copy of this — the website copy is somewhat blurry and hard to read. I will try to get the city to post a clearer copy).
Only if people read the complete attachment 3 carefully will we have an informed discussion of this matter.
[quote]Why are so many DACHA units vacant? What has been done to rent them?–SODA[/quote]Because we are selling them in order to return to funds to the affordable housing program.
The link to attachment to the staff report didn’t work. Let me try it one more time. Attachment 3 starts on page 13 of the staff report. I believe it was prepared by DACHA. So far we have heard from David Thompson and Luke Watkins and from the City, but this is the first time that we have heard DACHA’s point of view, so the public should carefully read it. It would be easier to read if the Vanguard could just post it; it is a little over two pages long.
Here is the staff report:
http://cityofdavis.org/meetings/councilpackets/20120207/07 DACHA Dissolution.pdf
I will try again to see if the link works:
[url]http://cityofdavis.org/meetings/councilpackets/20120207/07 DACHA Dissolution.pdf[/url]
The link isn’t working. David, perhaps you can get a copy from Elaine and post it.
I will post it for part of tomorrow article
[b]@Elaine Musser:[/b]In retrospect, the I believe firmly that we should not have approved the project. But the initial board non-member board that was appointed by David Thompson and Luke Watkins was independent.
There was no way that we could have predicted, when we voted for this project, that David Thompson, in his role as advisor, preparer of the agenda and keeper of the minutes (according to the DACHA statement) would enter into a contract binding future boards to expand by over 60 units regardless of the economic circumstances of DACHA and regardless of the desires of the future boards who would include more members who would actually have to pay the bills. We had no way to know that these contracts would involve a payment to David and Luke for each future unit included in the contract, and no way to know that they would sue DACHA to collect these fees even though DACHA, staff and our auditor had said that carrying costs had exceeded market rate rents.
There was no way that we could have predicted that David Thompson and Luke Watkins would wear the hats of both consultant and developer, especially because Luke had said in writing before DACHA was founded that they would not act as both consultants and developer.
My understanding is that the structure (independent board, etc.) was standard for such enterprises. We had to trust the developers, because we do not have the money, staff or expertise to micromanage such an organization. That is why we hired to people known as experts in the field.
Again, I believe it was a mistake to approve this co-op, and I apologize profusely to the co-op members.
[quote]“Why are so many DACHA units vacant? What has been done to rent them?”–SODA
“Because we are selling them in order to return to funds to the affordable housing program.”–Sue Greenwald [/quote]I still haven’t seen any plan for this. Has the council decided how to sell the houses? A major question, of course, is how to maximize the profits. Just like selling our own houses–how much to invest fixing up, how to pick a Realtor to handle the transactions, sell all units at the same time or spread out sales, etc.?
Where can we see the scheme for selling them? Do the funds have to go to the affordable housing program or is that a council choice? How much is the city taking to cover the costs of managing DACHA’s foreclosure?
Here is the document Sue is referring to above:
[url]http://davismerchants.org/vanguard/07DACHADissolution.pdf[/url]
Big document @ 9+ MB, so be patient.
Neighborhood Partners tried numerous ways to keep the DACHA members in their homes. Here is a letter from NP to Cat Huff, then President of DACHA.
April 16, 2010
To: Cat Huff, President, DACHA
Fr: David Thompson, Neighborhood Partners, LLC.
Re: California Law relating to Dissolution of a limited equity housing cooperative
Dear Cat:
As a limited equity housing cooperative the DACHA board has the responsibility of following California law on dissolution of a limited equity housing cooperative AB1246, Chapter 520, section 817a. The law was designed after a number of laws for cooperatives in Europe which allow existing cooperatives to support and strengthen distressed cooperatives. Allowing the foreclosure to occur and then planning to dissolve would appear to be a pre-meditated choice. Not following California law does have legal implications.
The California Law has a lot of sensibility surrounding it with some interesting positive possibilities for DACHA and its members as well as NP, TPCF and the City. The City would not be economically harmed by following existing and required law.
The dissolution process outlined by the law requires that other limited equity housing cooperative throughout California be notified of the dissolution of DACHA. It would allow other limited equity housing cooperatives to step forward and propose a merger that would help retain the co-op. At the same time, because most other co-ops are 40-80 units, it would add strength to DACHA. A merger would also provide DACHA with a structure that could preserve a level of local autonomy and require specific board representation.
A merger agreement could also be written to allow for DACHA to return to independence. That could occur if at a later time additional units had come into the co-op and it made more sense for DACHA to return to being independence.
A merger should substantially reduce the administrative and management costs per each DACHA unit. A merger would also allow for a stronger partner to come into the situation.
A merger would allow each DACHA household to remain in their homes, retain their homeowner mortgage and interest deductions, keep their credit rating and in the agreement hopefully retain their share value.
The claims of NP and TPCF could also be better handled as part of a merger. A number of TPCF’s concerns would definitely go away. In a merger, the monetary claims could obtain security and therefore be paid less up front and more over time. This would mean less immediate economic burden to present to DACHA members.
My assumption is that the merging cooperative would step into DACHA’s shoes and assume in full the economic responsibilities to the City of Davis.
Everyone upholds California law, the process works. DACHA stays as a limited equity housing cooperative, the members stay in their homes. Everyone is made whole, agreements are made and the law suits end.
This would be seen by everyone as a win-win outcome. The cooperative name would be restored, the difficult chapter would have a positive ending and the acrimony would go away.
I am going to share this option with other responsible people in the community. I would appreciate feedback from the DACHA board.
David Thompson
Neighborhood Partners, LLC.
Twin Pines Cooperative Foundation 216 F St. #1844Davis, CA 95616
April 22, 2011
Dear Mayor Krovoza:
It has been brought to the attention of Twin Pines Cooperative Foundation that the Davis City Council recently adopted a process for the part required of the City by AB 1246. We recognize that this is the first time and there is no past experience to learn from. Therefore, Twin Pines Cooperative Foundation will be happy to meet with appointed representatives of the City of Davis to arrive at agreement on how best the required process and hearing should be conducted.
The first intent of this element of the law was intended to be proscriptive. That is to strive to save any LEHC that appeared to be on its way to dissolution. The process was meant to take what was likely a weak LEHC (dysfunctional, not in compliance with the law and twinning it with a strong co-op that would have the capacity to bring the dissolving co-op back to health.
Under California Law a Public Benefit Corporation (such as DACHA) is required to notify the Attorney General’s office if a major part of its assets are about to be disposed of. It would appear that DACHA did not notify the Attorney General’s office that its major asset was about to be lost. So that opportunity to save DACHA was lost.
Secondly, Associated Cooperatives and the Twin Pines Cooperative Foundation will both provide extensive written testimony for the hearing and at oral remarks at the hearing that we think calls into question that the activities of DACHA have met the requirements of (817. 2 (1) below. For example;
1) The present board is composed of only two members neither who have never actually fully owned a share in DACHA. By their own testimony they show that their funds were never owned by DACHA and unlike all other members, their funds were returned.
2) The previous board members of DACHA from 2005 on were ineligible to serve.
3) The membership of DACHA did not have a legal quorum to remove Twin Pines Cooperative Foundation as the recipient.
4) The board and members of DACHA are accused of illegally returning value to the members ahead of leaving the co-op and ahead of dissolution and ahead of other legitimate claims.
5) There is a judgment against DACHA that has not been honored. Therefore, corporate value has a priori been illegally distributed to members, and that until the funds have been returned and the judgment satisfied there should be no dissolution.
6) There are existing law suits against DACHA for breaking numerous California laws.
7) The disposition of corporate assets prior to dissolution, the self-dealing transactions, loans to board members, the previous and existing delinquencies, the lowered carrying charges for which members were not eligible, the lowered rents being paid now, the City deferring loan payments so that DACHA could pay its legal bills all point to hundreds of thousands of dollars of what might be illegal distributions, private inurement and payment in excess of transfer value.
8) Twin Pines Cooperative Foundation has filed a formal request to the Attorney General asking that DACHA not be dissolved until an investigation has occurred. We think that the City of Davis should also review the evidence, conduct a hearing and then submit a report to the Attorney General that the City does not feel capable of ruling that the dissolution meets the requirements of AB 1246.
9) Having received public funds, DACHA’s lawyers attempted to dissolve DACHA, and avoid its’ legal obligations without following the requirements of 817.4 (b) and therefore attempted “to avoid compliance with this chapter”.
10) Associated Cooperatives and Twin Pines Cooperative Foundation will provide thousands of pages of evidence relative to the hearing and we would expect that at least 30 but possibly 50 people will wish to give testimony.
11) Given the existing law suits surrounding DACHA and the City should the City just conduct the hearing and state to the Attorney General that due to conflict of interest the City will conduct the hearing, state that they cannot rule on dissolution, make no attestation and just pass the information along to the Attorney General.
As this is the first time that this law and process is being used we can understand that carrying out the meaning of the law could be difficult to ascertain.
As the key organizational sponsor of AB 1246 we offer our assistance in arriving at a process that fully carries out the intent of the sponsor and of the author former Assembly Member Dave Jones.
Sincerely yours,
Cathy Murnighan Board Secretary
ERM is incorrect in her comments that TPCF was notified and that the requirements of the law were met. My memo to Council last September clarifies what the law requires of notification of interested parties which the City Attorney and City staff neglected to follow the law on. One can see why the City Attorney recommended that the Hearing be re-noticed. The City Attorney could have easily follwoed the law, figured out the interst parties and notified them. She did not!
TPCF was not notified.
David Thompson, TPCF
Memo to City Council in September
Part of the blame for last night’s unnecessary fiasco of an improperly noticed dissolution hearing lies at the feet of city staff. It did not need to be that way.
TPCF wrote a long letter to the City in April this year offering to help structure the dissolution hearing as it was the first one under the new law. In the letter, TPCF made it plain that we wished to participate in the hearing and would provide extensive testimony.
The law governing the dissolution of a housing cooperative requires:
(b) The city or county shall provide notice to all interested parties. The notice shall be given at least 120 days prior to the date of the hearing.
City staff completely ignored our letter offering help and then went on to notify only the second group (housing cooperatives) required by law.
The City chose not to notify any interested parties. Did staff honestly believe that there were no interested parties? How about Neighborhood Partners to whom DACHA owed a judgment of $330,000? How about other creditors to whom DACHA owes over $100,000? How about banks that wrote down loans? DACHA was the subject of a number of law suits would they not be interested parties? TPCF was the sponsor, a lender, the beneficiary and a plaintiff would we not be an interested party. Among the many responsibilities DACHA has for the dissolution of a public benefit corporation is an accounting of all its assets and liabilities and to who it owes money and how much.
When asked last week by City staff for a list of ”Interested Parties” I gave them names of 20 entities and asked them to get a list from DACHA of who they owe money to. Send out to that list and TPCF is satisfied on that matter.
The Twin Pines Cooperative Foundation was not noticed. Twin Pines Cooperative Community. Inc. is a 90 unit housing cooperative in Santa Clara with a business address on Capri Court, in Campbell. The City mailed to them on Capri Court in Davis of which there is no such street in Davis. The City also mailed to Twin Pines Community which was then also on F Street.
When I asked at a Council meeting in August when might the dissolution hearing be? No one on the Council answered, the City Attorney did not answer and City staff did not answer. They all knew…
It would have been so easy to follow the law and surely we are an interested party. The City and DACHA do need to follow the law.
David Thompson, President
Twin Pines Cooperative Foundation
The law requires that all interested parties be notified of the dissolution. This includes all creditors. The City notification process did not even include Neighborhood Partners, an entity that had a $330,000 judgment against DACHA. There is no gray area about it. The city did not meet the standard of the law.
The city council postured in public like they were delaying the hearing “out of an abundance of caution”, but privately they knew, or should have known if they had read the letter from our attorney, that they absolutely failed to notify Neighborhood Partners, an interested party. They postponed the hearing because their staff messed up and we made clear that they would be challenged in court, and they knew they would lose.
Any comments by Sue Greenwald on the DACHA matter should be evaluated within the historical context of the situation between herself and Neighborhood Partners.
While Sue was running for city council and was finally elected on her third try, I watched her comments very carefully to see what her attitude was towards low-income people and the city’s obligations to require affordable housing in new developments. She made an occasional comment during those years that I found disappointing, but once elected seemed to be supportive of the development of affordable housing. We had no problems talking to her about the issue and finding her supportive.
However in about 2004, we obtained approval from the city to develop a 53-unit affordable apartment complex on Olive Drive. It was to be all one bedroom apartments, and provide workforce housing for single Davis employees. Sue voted for the project.
During the predevelopment phase of that project, some specialized financing became available to allow us to make 35% of the units affordable to extremely low-income disabled households, with a mental health disability. Since there is a dire shortage of housing available in Davis for residents at that income level (rents of $225 per month for a one bedroom apartment), and since many of these disabled households held or wanted to hold part-time jobs in the downtown area,we quickly opted to secure a $3 million commitment of the funds.
Sue reacted in a very hostile manner to the idea that the disabled households would be providing housing “so close to the downtown”. I read “downtown” to mean her house on Rice Lane. At one point she indicated that a) some of them would be just pretending to be mentally ill, so that they could prey upon the others living in the complex and b) that these types of disabled people should be living in a locked facility. She also said that when she had voted for the zoning of the project, that she had thought that it would be a place where local artists could live, and that these disabled people would be incompatible with that vision. Sue will likely deny that this discussion happened, but it shockingly did.
Despite her efforts in various ways, Sue was unable to stop the development of what is now Cesar Chavez Plaza apartments. Ever since that time, Sue has been extremely hostile to us. She twists some facts and omits others to use her time on the dais to viciously attack us, regardless of the reason why we might be appearing before the council.
My opinion is that this DACHA mess occurred because in late 2005, when the DACHA President Stephanie Teague approached the city accusing us of misleading the DACHA residents and then then promoting the dissolution of DACHA, Sue enthusiastically encouraged her, as an opportunity to make us look bad. She essentially used the DACHA people to carry out her own vendetta.
In the citywide affordable housing debate, Sue has clearly emerged as no friend of low-income people. She has a pet project of turning the PG&E corporation yard into high density housing, which she wants to have exempted from any obligation to provide affordable housing. She also argues against any kind of housing growth, unless it is for very high-end homes that will pay-in a lot of property taxes. She really want more high tech industry, but wants the lower paid workers to live somewhere else, where some other city can pay for their services needs.
You know, Luke, your accusations here are neither provable nor falsifiable, so it is hard to give them much weight. I can discern that you have a personal animosity to Sue, and that animosity may be reciprocated. Beyond that, I don’t think this post does you or your business interests much good.
If I were on the city council I would take action to put this entire mess behind us, with the least harm to the most vulnerable parties, and then consider some entirely new approach to providing affordable housing in Davis. Unfortunately, the back and forth on this blog and elsewhere leads me to conclude this will only be resolved, ultimately, by a judge. What a waste of time and resources.
I most definitely had no animosity towards Luke Watkins. Although I was sceptical about an expansion-based business model of the DACHA model, I voted for it, assuming that, as a highly-regarded co-op expert, he and David would be flexible if problems arose. I had a high opinion of Luke and David when I joined the council, because they had a very good reputation in the community.
I have voted for the vast majority of affordable housing projects that have come before the council, including Luke and David’s DACHA project, their Wildhorse project, etc. (David sent me a letter that he claimed to have sent to everyone I responded to that falsely accused me of opposing “almost all” of Davis’ affordable housing projects). About the only truth in Luke’s assertion is that I have disagreed with Luke’s tendency to want to concentrate homeless housing and services downtown.
Because I have been outspoken about the what how DACHA was handled by David and Luke, I am being personally attacked by him.
So far, City Staff, DACHA members and myself have been personally attacked.
Also under fire have been the Yolo County Grand Jury, Yolo County, the auditor, i.e., anyone who has been critical of their role in DACHA.
I have apologized for my role in bringing a flawed project to Davis, and IMHO, it is Luke and David’s turn to apologize as well, because a lot of harm has been done to a lot of vulnerable people, including people with English as a second language and a family with disabilities.
The City Staff of Davis (Cochran & Foster) pinpointed for their role in DACHA have a pattern it seems of improper actions against the nonprofit clients of Neighborhood Partners, LLC. Here’s an instance where that hostility if effective would have robbed 15 extremely low income seniors (a number with disabilities) of savings in rent of $54,000 a year.
______________________________________________________________________
On behalf of the residents of Eleanor Roosevelt Circle (ERC), Neighborhood Partners, LLC fought to get 15 extremely low income seniors $54,540 a year in rent. This obtained a savings of $303 per month per extremely low income senior (many of them earning only per month in SSI).
Who tried their hardest to stop those 15 extremely low income seniors from being eligible for a Section 8 Project Based Voucher at ERC and $303 less per month in rent?
Who tried hardest of the council members to stop this was Sue Greenwald and the two people who have done the most harm with this at ERC and at DACHA are the same two City Staff people (Jerilyn Cochran and Danielle Foster). See the pattern?
_____________________________________________________________________
As part of our planning for ERC, NP included using project based Section 8. However, City staff refused to allow that to go forward without going through a hearing before the Social Services Commission and then receiving an affirmative vote by the City Council. Of the Council members, Sue Greenwald had been the most opposed to ERC getting project based vouchers. The HUD office does not know of any city that made it so difficult for seniors to get access to this program.
ERC had not planned on there being a requirement that we receive City approval so that Council members Greenwald’s & subsequently staff resistance was not anticipated. Given that PBV’s were part of our original plan, ERC could at some point later have become economically infeasible if the Council had turned us down.
ERC does not believe that is appropriate for the City staff to oppose ERC receiving PBS8 program. ERC also thinks it may be against Fair Housing Law to have that restriction placed on us. I have contacted Legal Services of Northern California and they too are concerned about this restriction.
Let’s also see the outcome of us being able to use Project Based Section 8 Certificates.
The last three seniors being awarded a certificate are now paying:
$599 down to $91Savings of $501 per month for every month they now live at ERC
$599 down to $137Savings of $462 per month for every month they now live at ERC
$599 down to $267Savings of $332 per month for every month they now live at ERC
Can you imagine what a difference these three people now have? They can buy food, medications and extras and they no longer have the stress about how to pay their rent.
Added to the previous 12 recipients we arrive at the following:
$8245/15 = $550 Average paid at ERC before receiving PB Section 8
$3699/15 = $247 Average paid at ERC after receiving PB Section 8
Average savings per unit of $303 X 15 X 12 months = $54,540 per year for 15 seniors.*
Even more if we measure against what they were paying before living at ERC. Previously, residents were paying up to $1010 to live in Davis. The average one bedroom unit in Davis in 2009 was $947.
That is $54,540 that will mostly be spent in Davis so it certainly helps the local economy. *All 15 seniors have incomes of $8,000-$15,000 a year.
It did not make sense to prevent us from using the program. However, the same two staff members (Cochran and Foster) are frequently behind the hostility to the role of NP and favoritism to others. City Staff’s economic harm to the low income population of Davis is measurable.
As the residents of Rancho Yolo Will tell you, they became collateral damage in the war of staff on NP.
There is pattern of what looks like improper actions by City staff that the Attorney General should investigate.
NP built ERC exactly according to the approvals we got from the City. Sue opposed our efforts all the way. If Sue had had her way there would be no ERC today as it is. ERC is the best of our low income senior communities partially because of NP’s commitment to our projects.
February 4, 2012 David Thompson, Neighborhood Partners, LLC
Just as with DACHA, Ms. Greenwald has made comments about a number of other NP projects, even when NP had nothing to do with them. Don Shor has asked for more valid information re DACHA, Sue Greenwald etc. NP has told most of the Council members there is a problem in the City staff running of our housing programs. It is a long term problem that I saybegan with
Jerilyn Cochran and continues with Danielle Foster and Elvia Ayala Garcia.
But the role of Sue Greenwald is also to be questioned, especially as to the veracity of her remakrs about NP. Here is a series of emails about Ms. Greenwald’s incorrect statements about Eleanor Roosevelt Circle.
April 9, 2007
To: Mayor Sue Greenwald
Fr: David J. Thompson, Neighborhood Partners, LLC.
Re: Your public and printed remarks about ERC and NP, LLC.
Dear Sue:
I recently received your response to our memo to you on March 28, 2007. I thank you for replying. However, I strong differ with you on both these topics. I reprint your response first and then follow with a detailed response relating to the two topics. At the conclusion and in the quest for fairness I ask you to take certain remedies to rectify these accusations.
David Thompson
Neighborhood Partners, LLC.
Subject:: Letter to Mayor Greenwald about ERC
3/28/07 5.19.43 P.M. Pacific Daylight Time
suegreen@dcn.davis.ca.us
Sent from the Internet (Details)
Hi David,
Thanks for writing.
First, I have a very clear recollection that I asked you specifically if we could build the senior housing closer to downtown, and that you specifically answered that you needed the larger parcel in order to accommodate “the continuing care facility”. I am sorry that you do not recollect this conversation.
Secondly, I never said that you presented Eleanor Roosevelt as being “all” moderate income. My understanding is that it was to be a mixed-income facility with a focus on the moderate income component, because Margaret Milligan felt that the University Retirement Community, which she had supported, accommodated the low and very low income groups and those better off, but did little to serve the moderate income individuals such has herself.
Sue
Second part of correspondence
April 9, 2007
Dear Sue: In terms of your first paragraph.
I never ever said that ERC would be a “continuing care facility” to you or anyone. I never said that to my business partner Luke, Davis Senior Housing Cooperative, City staff, banks, funders or state housing officials. Luke assures me he never heard me say that nor did he ever say that nor was there any conversation ever with anyone about a “continuing care facility”. Bill Powell, President has assured me that DSHC never suggested, proposed or asked for a “continuing care facility.” None of us ever said that and I repeat, I never said that.
The claim that I said that it would be a “the continuing care facility” has no merit in rationality. In meeting the city affordable housing requirement at the Cantrill site the site is too small, has too few units and has the affordability requirements for 47 very low and low income units. All of these together would preclude us from having a “continuing care facility.” There is only one continuing care facility in the entire county and that is University Retirement Community. URC is the only ”continuing care facility” in Yolo County because it has about 240 units of higher income households. (There are 224 independent units plus some assisted living units and skilled nursing units). There are a total of 260 residents at URC, all higher income, all paying huge monthly rents and all having paid a large entrance fee amounting in total to about $60 million dollars.
I have obtained the most recent Fee Schedule from URC. The cheapest entry fee at URC is $77,880 for a 563 sq ft one bedroom apartment. The highest entrance fee is $359,683 for a 2 bedroom apartment or a 3 bedroom cottage. The monthly income derived from the one bedroom unit is $2,360 for a single person and $3,522 for the cottage for a single person. The health care center rate is $155 per day. (You can live at ERC for $220 a month). With these kinds of entrance fees and these high monthly rents a project can operate as continuing care facility. Notwithstanding the other major issues, just the city restrictions on affordability alone would it impossible to do a “continuing care facility.” The URC site has to be at least 10 acres in size to accommodate the residential units and the skilled nursing facility. There are no low or very low income seniors living at URC.
ERC has a site of 2.31 acres with 47 low and very low income units and 13 units for those between 80 and 120%. There is absolutely no way a continuing care facility could be done at Cantrill given the small site, the few units and no upper income residents. It costs a lot of money to be part of URC and that kind of money allows them the expense of the continuing care facility.
Finally, a” continuing care facility” requires a skilled nursing center, state licensing as a health facility and numerous other 24 hour care requirements. That cannot be done with 60 units nor would any of us associated with ERC be qualified to apply for or run such a facility.
I am just sorry to say Sue that I could never in my right mind say what you claim I said. It does not make sense.
third part of correspondence
Your second paragraph begins,
“Secondly, I (SUE) never said that you presented ERC as being “all” moderate income.”
However, you are quoted in the Davis Enterprise (February 5, 2007) as saying, “It was supposed to have a continuing care facility and be available to moderate income (seniors) and that’s how it was brought to me,” she (Greenwald) said.
You are also quoted in the Davis Enterprise (March, 22, 2007) as saying, “I am very disturbed by the whole M.O,” Greenwald said, pointing out that the project was approved to provide moderate-income housing to seniors.”
We have said this publicly at meetings but it bears repeating – Luke and I and our families put our houses on the line to guarantee the equity financing for ERC. There is a lot that we can lose. No one, nor any affordable housing organization has taken that risk in Davis to create affordable housing. We are proud to have done that and proud of the outcome we are achieving. All with fewer Davis city dollars required per unit than any other affordable housing in Davis!
The remarks you make about us that have been quoted in the newspaper and repeated elsewhere damage our business reputation yet neither claim is backed up by any facts. One might ask, however are those remarks intended to harm our business?
David Thompson, NP.
@David and Luke: It really is time to stop attacking people personally, just because they disagree with you over a policy or a procedure.
The issue with project-based section 8 vouchers had nothing to do with any personal “hostility” by anyone on staff or council to you.
I was opposed to the use of project-based section 8 vouchers, and prefer the tenant-based section 8 vouchers. There are many reasons for this.
Chief among them is my preference that the Davis affordable housing program serve the needs of the low and moderate income citizens who live in Davis or who work in Davis or who have family ties in Davis. There are a number of lawful means by which our program can serve more or less of the Davis-based need.
I prefer tenant-based section 8 vouchers because, with these section 8 vouchers, the city can oversee the tenant selection according to our own procedures, while with the project-based section 8 vouchers, tenant selection is usually done by the county from a county-wide list.
We have a legitimate disagreement about this; it should not be a cause for personal attacks and it is motivated in any way by a desire to victimize David and Luke.
Correction: We have a legitimate disagreement about this; it should not be a cause for personal attacks and it is [b]NOT[/b] motivated in any way by a desire to victimize David and Luke.
Fourth part. I provided all the cityapproved documents to the Vanguard for their review as to what was promised and what was built.
In the People’s Vanguard of April 2, 2007, Doug Paul Davis wrote.
One strong critic is Mayor Sue Greenwald who complained that this project was supposed to be primarily a moderate-income project.
The Davis Enterprise quoted Greenwald as saying:
“I am very disturbed by the whole MO,” Greenwald said, pointing out that the project was approved to provide moderate-income housing to seniors. “It’s bait-and-switch, where we end up with a project that’s all supportive housing. I’m not saying that’s a bad thing, but it was not planned.”
David Thompson, one of the principal partners along with Luke Watkins, disputes that claim: “Nowhere in any of the documents I have that were approved by the city is there either a mention of, description of or promise that: The project would be all “moderate income housing” or that it would be a “continuing care facility”.”
Mr. Thompson sent me (David Greenwald) a number of documents used in 2002 when the City Council first approved this project and his claim appears to be accurate.
Fifth and last part:
After your most recent attack on Eleanor Roosevelt Circle and Neighborhood Partners on both these issues I asked City staff to send me all of the approval documents used for ERC. These are all documents that you as a Council member received and should have read during the process and certainly voted on. Neither of the two items you have accused us of not doing are mentioned or promised. You started on the Council in 2000 and the first documents began circulating in 2002. You have been a participant in every approval of ERC. You have received all of those documents and there is no mention of or commitment on either of your two repeated accusations.
You on your part have presented no evidence at all that either of your accusations are true.
You appear to be admitting in your email of March 28, 2007 that the second accusation that you have been quoted as saying is now not true. However, that is an email only to me and not a public statement.
Would you therefore be fair enough to issue an apology and a retraction to the Enterprise and to the Davis Vanguard and from the dais at an upcoming Davis City Council meeting? I think it would be fair for you to acknowledge that there is no evidence for either of the two harmful public accusations you have made about ERC and NP.
David Thompson, Neighborhood Partners,
Davis Area Cooperative Housing Association
Questions for the City Council
(assembled by David Thompson, Twin Pines Cooperative Foundation)
•Why as a lender did City Staff allow DACHA as a borrower from the City to break its articles and bylaws?
•Why as a lender did City Staff allow DACHA as a borrower from the City to break numerous state laws applying to public benefit corporations and limited equity housing cooperatives?
•Why did staff ignore the wrongdoings that went on at DACHA? The City Appointee to the board was supposed to report back to City staff. Did the City Appointee to the DACHA board ever report on wrongdoings?
•Why did the City ignore the legal opinion it had received from Goldfarb and Lipman that informed DACHA and the City that what they were planning to do (and then did) did not meet the requirements of the law?
•Why did the City Attorney allow DACHA to return over $200,000 of corporate assets to the members when that was not allowed under the law according to the legal opinion provided by Goldfarb and Lipman?
•Why did the City Attorney tell the Council that over $200,000 could be returned to the DACHA members because there were no encumbrances when there were?
•Why did City Staff forebear on the repayment of over $100,000 in public funds for DACHA to fight DACHA breaking a private contract?
•Why did City Staff agree to forebear on the repayment of over $100,000 of public funds in March of 2007 when at the time the DACHA members were delinquent over $38,000 to DACHA?
•Why did City Staff approve the forbearance of almost $7,000 a month for about 16 months and then watch the DACHA members use the cash flow to increase their delinquencies from $38,000 to $75,000? Was that an appropriate use of public funds?
•Why was DACHA’s board and membership allowed to borrow $4 million in public funds when both the board and members were ineligible to be seated and to vote and could not achieve a legal quorum for either the board or membership?
•Why did the City Attorney need a second vote from the DACHA board and membership to borrow the $4 million in public funds?
•Why did the City Attorney need a second vote to confirm that the Officers could sign the various loan documents?
•Why has the City Staff continue to turn a blind eye to a board that has been meeting without a legal quorum for now six years?
•Why did City staff allow DACHA to use over $50,000 of borrowed public funds to pay for lawyers when the City Mayor and City Attorney have said that none of the public funds were to be used by DACHA for lawyers?
Dear Sue:
My critiques are based upon facts and information. They are not personal attacks. You can pose them that way but that deflects from the topic.
My critique is based upon things you have said wrote or done in your role as a Council member as they affect the nonprofit clients NP serves.
You are known to us by your record as being the least friendly and least supportive member on the City Council to affordable housing and the housing needs of the most vulnerable population in town.
IF NP had been less tenacious in the face of your opposition there would be hundreds of low income families who would not be living in Davis today.
David Thompson, Neighborhood Partners, LLC
[quote]The remarks you make about us that have been quoted in the newspaper and repeated elsewhere damage our business reputation yet neither claim is backed up by any facts. One might ask, however are those remarks intended to harm our business? — [b]David Thompson, NP[/b].[/quote]David, I have NEVER said anything that is not truthful. Any conversation that I report is a conversation that I remember having with you. I have absolutely no reason to make up conversations.
This sounds like more threats to attack and litigate. If I report a conversation that I had with you or if I describe an action you have taken, you claim that it has damaged your business reputation and imply that it is an intentional attempt to damage your business reputation.
Nothing could be farther from the truth. The continual steam of allegations from you and the continual lawsuits brought by you have forced me to explain why I and the city have taken the positions that we have.
And when I answer these allegations, you claim that it has hurt your business reputation.
I have apologized for my own role in the DACHA failure, and it is time for you to apologize for your roles.
[quote]There was no way that we could have predicted, when we voted for this project, that David Thompson, in his role as advisor, preparer of the agenda and keeper of the minutes (according to the DACHA statement) would enter into a contract binding future boards to expand by over 60 units regardless of the economic circumstances of DACHA and regardless of the desires of the future boards who would include more members who would actually have to pay the bills. We had no way to know that these contracts would involve a payment to David and Luke for each future unit included in the contract, and no way to know that they would sue DACHA to collect these fees even though DACHA, staff and our auditor had said that carrying costs had exceeded market rate rents.
There was no way that we could have predicted that David Thompson and Luke Watkins would wear the hats of both consultant and developer, especially because Luke had said in writing before DACHA was founded that they would not act as both consultants and developer.
My understanding is that the structure (independent board, etc.) was standard for such enterprises. We had to trust the developers, because we do not have the money, staff or expertise to micromanage such an organization. That is why we hired to people known as experts in the field. [/quote]
The city would have known these things had it exercised any prudent fiduciary responsibility to prospective homeowners in this project – especially because red flags had been raised about potential conflicts of interest with respect to the developer. The city had a duty to make sure those conflicts of interest did not become part of any contracts involving DACHA…
[quote]If I were on the city council I would take action to put this entire mess behind us, with the least harm to the most vulnerable parties, and then consider some entirely new approach to providing affordable housing in Davis. Unfortunately, the back and forth on this blog and elsewhere leads me to conclude this will only be resolved, ultimately, by a judge. What a waste of time and resources.[/quote]
In reference to the first part – exactly on point. As to who will decide, it ultimately may be the AG of the state…
[b]Regarding the “back and forth”[/b], I for one, have had only two options.
The first was to allow David Thompson and Luke Watkins to very publicly and repetitively present their point of view in the press, on the blogs, in e-mails, etc., and allow the DACHA members and the City appear to be greedy, vengeful, etc. in the eyes of the public, or to answer these allegations and present my own and the city’s point of view in order that the public can make up their own minds.
If this involves a tiresome “back and forth”, so be it. From my point of view, the first option was not acceptable. I wish that the rest of my colleagues would speak out as well, but I have to do what I think is right.
The public deserves to hear explanations from the council.
[quote]The public deserves to hear explanations from the council.[/quote]
Yes, especially from any Council members who were seated at the time DACHA was approved. I very much appreciate your perspective on what happened at that time…
Ms. Greenwald: You said “I am very disturbed by the whole MO,” Greenwald said, pointing out that the project was approved to provide moderate-income housing to seniors. “It’s bait-and-switch, where we end up with a project that’s all supportive housing. I’m not saying that’s a bad thing, but it was not planned.”
David Thompson, one of the principal partners along with Luke Watkins, disputes that claim: “Nowhere in any of the documents I have that were approved by the city is there either a mention of, description of or promise that: The project would be all “moderate income housing” or that it would be a “continuing care facility”.”
Mr. Thompson sent me (David Greenwald) a number of documents used in 2002 when the City Council first approved this project and his claim appears to be accurate.
In your own words publically you said:
“I am very disturbed by the whole MO,” Greenwald said, pointing out that the project was approved to provide moderate-income housing to seniors. “It’s bait-and-switch, where we end up with a project that’s all supportive housing. I’m not saying that’s a bad thing, but it was not planned.”
You (Ms. Greenwald) said the project was approved to provide moderate income housing to seniors.
I (DT) had the City Staff send you all the approval documents for ERC, I also sent a set of the approval documents for ERC to the Vanguard.
The facts you said publically are not true. Your claims about what was approved are not true. The Vanguard looked at all of the documents and stated on line:
“Mr. Thompson sent me (David Greenwald) a number of documents used in 2002 when the City Council first approved this project and his claim appears to be accurate.”
Yes our reputation is at stake and yes we will defend it and what you said was untrue and the City approval documents do not uphold your statement,
“Greenwald (Sue) said, pointing out that the project was approved to provide moderate-income housing to seniors”
Sue. The public record shows that what you said about NP is not true.
David Thompson, Neighborhood Partners, LLC.
[b]@David Thompson:[/b]
Here we go again. “The best defense is always a good offense” principle.
Very quickly, did feel mislead on a couple of fronts. I felt it was better planning to put the senior low/moderate income housing near the downtown and the housing for the able-bodied, more mobile low-income housing out further out Fifth Street, and when I brought this up, you told me that the 5th Street site wasn’t large enough because it had to accommodate a continuing care facility. That is what you told me, David.
I stand by the rest of my comments as well. I was led to believe that the project would have have a wide mix of income levels with a continuing care facility. As you quoted me, I said that what we ended up with was “not bad”, but that I would prefer that projects not stray far from the way they are initially presented to me.
That’s fair, IMHO.
Sue Greenwald: Please stay with the facts.
“You said “I am very disturbed by the whole MO,” Greenwald said, pointing out that the project was approved to provide moderate-income housing to seniors.”
ERC was not approved to provide moderate income housing to seniors so Sue that is not true.
The City affordable housing site does not allow that
The City regulations do not allow that
The City requirements for low and very low income do not allow that
The financing for tax credit housing does not allow that
What you said we were approved for is just not true.
David Thompson, NP
Erm: thanks for the invite tocomment. I was there for most of it. NP and Twin Pines are right ; Sue’s summary is not
I will be happy to discuss the ins and outs ERC process and project history, but that that is a topic for another day. As David acknowledged, I said that turned out fine.
Today we are talking about DACHA. David and Luke should not keep deflecting the discussion.
[quote]I was there for most of it. NP and Twin Pines are right ; Sue’s summary is not–[b]Michael Harrington[/b][/quote]I don’t know what Mike is referring ti — what specific aspects of “Sue’s summary”?
My impression at the time was that Mike Harrington was the DACHA project application’s strongest supporter on the council.
Mike was not present when Luke called me and told me, in answer to my question, that equity would go into expanding the co-op rather than paying down the co-op loans.
Almost everything else that I referred to happened after Mike left the council only two years later.
[quote]“The city would have known these things had it exercised any prudent fiduciary responsibility to prospective homeowners in this project – especially because red flags had been raised about potential conflicts of interest with respect to the developer. The city had a duty to make sure those conflicts of interest did not become part of any contracts involving DACHA…”[/quote]I think Elaine certainly reflects what citizens have a right to expect of their municipal government, both elected leadership and city staff.[quote]“If this involves a tiresome “back and forth”, so be it. From my point of view, the first option was not acceptable. I wish that the rest of my colleagues would speak out as well, but I have to do what I think is right. The public deserves to hear explanations from the council.”[/quote]I agree with Sue, and am not troubled by the “back and forth” except to be frustrated that the participants keep talking past each other and are not responsive to the questions and statements made by others.
I’m also concerned that participants can have such contrary claims about what happened in a public project that should have had a high level of transparency for years. There’s too much secrecy even now. With such divergent realities, this only gets sorted out in a courtroom.
Now, I’m getting concerned about whether the sale of these houses is going to be managed by the city in a better way than DACHA has been handled all these years.
@[b]JustSaying:[/b] Most of the houses have been sold. We did not want to evict the DACHA residents who are still remaining, so we are renting those houses to the current residents and will sell them when the residents decide to leave.
The proceeds belong to our affordable housing fund, and will be used for affordable housing.
Again, JustSaying, if you feel that I have not answered any questions posed by you, David or Luke pertaining to DACHA (not tangential issues brought up by David and Luke) please pose them and I will try to answer the best I can (I do have to stay mindful of the fact that the city is being sued.)
[quote]“Most of the houses have been sold. We did not want to evict the DACHA residents who are still remaining, so we are renting those houses to the current residents and will sell them when the residents decide to leave.”[/quote]Thank you, I guess I just haven’t been paying attention. Seems like this would have been in the news, discussed at council, etc. Seems considerate and appropriate to allow residents to rent the houses the city took from them. (Interestingly, this is more considerate than Fanny Mae/Freddie Mac are when they foreclose on behalf of banks. They do not allow owners to remain on as renters, apparently fearing that a foreclosed homeowner might be ticked off and take it out on the property.)
Don Shor: I see your point. And I feel that you heard what I was trying to point out. The animosity between Sue Greenwald and myself (and David T.) has escalated to a level where the readers here should be very sceptical about the “facts” that she asserts concerning us. I seldom choose to comment on this blog, because of the often unpleasant nature of the discussions. However when I do, it is because Sue or someone else has stated something that is just not accurate. For example, her comments about tenant-based housing vouchers versus project-based vouchers several posts above this are just not correct. The city has no role at all in the assigning of tenant-based vouchers, just as it has no role in assigning project based vouchers. Both of these processes are administered by Yolo County Housing.
[b]@Luke Watkins[/b]: There is absolutely no animosity on my part toward you or David Thompson. I just want the facts out and the case resolved.
Luke, I will not let you deflect this discussion into one of personalities. It won’t work. This has nothing to do with personalities; it has to do with DACHA.
I would like to see David and Luke respond directly to the specific issues that have been raised by the DACHA board — directly, succinctly and without reference to personalities, other projects, other situations or other people.
We shouldn’t be going off topic into our legitimate disagreements about general affordable housing policies which we can discuss in the future, but I realize I should clarify my position on project-based vouchers: I prefer to have our city affordable housing units controlled by our city tenant selection process, rather than through a county list. I support tenant-based section 8 vouchers, because they do not remove our city affordable housing units from city control, but rather can be used in any housing unit whose landlord will accept them.
[b]JustSaying[/b]: I have to make a clarification about the DACHA units. I was engaged in some wishful thinking that this issue was behind us. We sold the units at auction as I remembered, but I should clarify that we bought them back. The assets belong to the city’s affordable housing fund, not the cash. The potential resale of the unoccupied units will be back to us this month. If you have any preference about whether they should be sold as market-rate houses with the cash going to our affordable housing fund or sold as affordable for-sale units with equity caps, you should weigh in.
Sue, you’ve really got me confused. This little side discussion started when someone asked why so many DACHA houses are vacant. As I remember, you responded saying that it was because they were being sold. I don’t think you meant that to describe the foreclosure “sale” where the city ended up with the full inventory, right?
Your clarification suggests the city has NOT sold any of the DACHA units, maybe not yet put any up for sale or even developed plans to sell them. When will you be considering this?
My first weigh-in thoughts would be:
1. The city should sell these houses on the open market, putting the DACHA fiasco as far behind us as possible and getting as much cash in the city coffers as possible.
2. The proceeds should be first used to repay the city for any expenses we’ve incurred in managing this mess, paying off anyone we lose to in court and/or settle with to avoid more legal costs, then to pay for expenses to plan out an affordable planning program that doesn’t suffer from the same fatal flaws that have plagued most of our past programs. This last comment assumes you’re correct is saying the proceeds have to go to future affordable housing ventures.
3. No homeowner who finds himself in typical foreclosure is permitted to buy up the house after foreclosure–for a variety of obvious reasons. If the city chooses to sell these units as affordable housing, and allows former DACHA members to get great deals on their old houses, what a scandal this would be. On the other hand, how heartless it would be to prohibit them from participating at all as ineligibles, even if they’ve ruined their credit with bad payment histories in their DACHA housing deals.
But, If even one DACHA member ends up in such a favorable situation after all the questions about the city’s activities with the DACHA co-op, it would affect the trust people have in city government. (Certainly, it would play into the hands David T. and add support his favoritism charges.) Yet another reason to go the market-rate route.
Thank you for asking.