Why the City Needs to Come Cleaner on DACHA

housingThe City of Davis took a battering on the issue of DACHA (Davis Area Cooperative Housing Association) at the recent council meeting – many of those who called for further scrutiny into the city’s role have cited an often repeated figure for the city’s legal costs – 800,000 dollars.

Former Davis Mayor Anne Evans, the wife of David Thompson, one of the principals at Neighborhood Partners and Twin Pines, cited the figure in her recent letter to the city, in which she lobbied city leadership 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.”

She writes, “The legal battle has cost the city over $800,000.”

In a conversation that the Vanguard had with City Manager Steve Pinkerton, that figure came up and he told me at the time that the figure was not true, that the total cost to the city from day one until now was about half that – that figure includes not just legal fees but all costs.

One of the things that I have learned in my time in this role is to trust no one and verify everything.  It sounds cynical.  It sounds like there is some conspiracy theory.  But it is a healthy cynicism because it forces everyone to be accountable and to lay their cards on the table.

The city manager’s response to my cynicism was to send him a public records request and he would get me an answer.

Fine, I sent him the public records request on February 7, 2012 and was told he was getting me the answer and would have it to me by the next day.

Ten days later, at the end of the statutory period at 3:37 pm on a Friday before a three-day weekend, I got the city’s response.

City Attorney Harriet Steiner wrote, “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 has not provided records of litigation expenses, including attorneys’ fees during the pendency of litigation.”

I was not aware of that nor did I realize that is something the city could actually withhold.  But apparently she has legal justification for that.

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).”

In other words, my request, which really was not meant to seek billing records so specific as to require the city to breach attorney-client privilege, were taken to seek such.  I had no idea when I made what I saw as an innocuous way to set the public record straight that these records had even a possibility of being withheld from me – unbeknownst to me, under the guise of attorney-client privilege and protected work product.

But don’t worry, the city has decided to be nice and release this information.

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.”

So let me recap what has happened here.  The city manager cited a number that I wanted to verify more closely as it runs counter to the number presented by those supporting David Thompson and Luke Watkins.  When I asked for that information, I was promised it shortly, but in fact it took a long and drawn-out process to get, and it eventually required council action to release.

I will get those figures this week, but the city will redact information that I never requested.  However, now that they are redacting this information, I am now forced to want to see what it is that they are trying to hide.

Gee, I wonder why I would fail to trust the word of the city when, in fact, they have made so transparent their efforts to hide information from the public under the guise of the Public Records Act.

The irony is that all I really wanted to know is how they arrived at the figure that is roughly $400,000 for all costs associated with DACHA.  Now I have a big mess on my hands that I never asked for in the first place.

The further irony is that for the past several years, there is apparently a running joke, which is closer to a persistent whine, that I have wasted inordinate amounts of staff time and money making numerous public records requests – requests that are overly-complicated, in part because the city never bothers to call to find out what I actually want, and requests that, by the way, I am entitled to as a member of the public.

As I said, with such transparent efforts to cover up information, who can blame me for being suspicious.

The city has been under fire for failing to come forward with answers to the public about DACHA, and perhaps this is all an illustration as to why that is.

I have no dog in this fight, I understand that the city is being sued on this matter, but matters of public record should be matters of public record.

There is a maxim that I adapt to fit this case: Those who have nothing to hide, hide nothing.  Those who hide behind exemptions to the Public Records Act probably have something to hide.

Until the city shows me otherwise, I have no choice but to accept that maxim as true.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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107 Comments

  1. highbeam

    Thanks, hp, and you realize that i don’t have access to the articles until they are posted, until they are available to all? And the rest of my life often keeps me up late the night before…

  2. medwoman

    David

    I also have no stake in this issue and I interpret events somewhat differently than you. Please correct me if I am misstating your position. From your post “So let me recap what has happened here.  The city manager cited a number that I wanted to verify more closely as it runs counter to the number presented by those supporting David Thompson and Luke Watkins.  When I asked for that information, I was promised it shortly, but in fact it took a long and drawn-out process to get, and it eventually required council action to release.

    I will get those figures this week, but the city will redact information that I never requested.  However, now that they are redacting this information, I am now forced to want to see what it is that they are trying to hide.

    Gee, I wonder why I would fail to trust the word of the city when, in fact, they have made so transparent their efforts to hide information from the public under the guise of the Public Records Act.”

    1) You were promised information sooner than it was able to be delivered. This happens in my office frequently. A mammographer or ultrasound tech will for example tell a patient that she will receive her results the next day. She will do this whether it is a Friday or a Monday, whether or not I am in the office or on vacation, or independent of countless other variables and despite system wide instruction that only the doctor should notify of anticipated response time. The tech is not lying, from her point of view the results will be available, nor I am I trying to cover anything up.
    The tech is simply unaware of my other obligations and therefore may be unreasonably optimistic about turnaround time.

    2) As for redacted information, why would that automatically make you think there is nefarious intent. Why could not a reasonable alternative be that they incorrectly but innocently assumed that your request included legally confidential material that needed to be redacted ?

    3) “I am now forced to want to see what it is they are trying to hide.”
    I do not see how anyone is forcing you to want anything. You have told yourself a story about what their motivations must be and are now trying to flesh it out into some conspiratorial plot.

    To any of you who may be my patient’s, please do not apply this line of reasoning to me. And if you do think that I am not being fast enough in addressing your concerns, please send me an email or leave me a message and I promise that I, or one of my partners will address it promptly.
    No need to post it on the Vangard ; )

  3. Problem Is

    [quote]“One of the things that I have learned in my time in this role is to trust no one and verify everything. It sounds cynical. It sounds like there is some conspiracy theory.”[/quote]
    [b]Neither Cynicism Nor Conspiracy Theory [/b]
    David, it is your job as a reporter and all of us a citizens to verify positions and information that is presented to us. None of us can accept anything at face value with so many interested and biased parties involved. Verify the facts, filter the opinions based on the personal interest of the party. You are doing excellent work that benefits your readers, not only on the DACHA Debacle… but many other topics.

  4. David M. Greenwald

    Medwoman:

    Perhaps I did not explain my position well enough:

    1. I felt this was a simple matter of getting my financial records which are always considered public documents – now I find out that they may not be and it’s not nearly as simple as I was hoping

    2. I feel like information is not coming forward in a straightforward manner and that is a common complaint that I have about the city

    3. When I use the force, I use it in a less than literal sense. In this case, it means that I want to find out what the city might be trying to hide.

    I hope that better explains my position

    I think “Problem Is” lays it out a bit more clearly – I view it was my job to not accept things at face value – even if I agree with them – and question things. I have found that I am really good at questioning things when I disagree with them, I am trying to get better at questioning things when I agree with them.

  5. hpierce

    So… are you accepting NP/Watkins/Thompson’s positions at face value? Will you request information from them (tho’ they are NOT subject to PRA)? If they decline, will you assume they have something to hide?

  6. hpierce

    All you said was that you asked for the CITY’s attorney fees… have you asked the ‘developer’ how much they received in payments from DACHA? How much additional money they are seeking, including THEIR legal fees if they are awarded them in future litigation? Will they provide numbers even if some details are “redacted”?

  7. David M. Greenwald

    “One of the things that is getting lost in this discussion is WHY the city WAS FORCED to expend the money on legal expenses… “

    That’s certainly true, though I suspect a more complex answer than simply because the city was being sued.

  8. JustSaying

    David, good on you! I hope you’ve completed the paperwork for the invoices themselves, in spite of Harriet’s transparent efforts to discourage you from doing so.

    (“I should be providing you these invoices in response to your original, written request for public documents, but since your wording was awkward, we’ll make up a new public document that might not tell the whole story but that we hope quiets you down if we say the invoices will be worthless to you ’cause we’ll mark them up so you can’t tell whether they’re bills for DACHA work or something else and, even though we could have met the public records request deadlines by providing copies of the invoices to which we have almost immediate access, we’re adding the unnecessary work of preparing a summary to build in delay to let you know that we’ll be resisting any future requests you might have using this technique in combination with the questionable PRA exclusion claims at which we’ve hinted here,” the city attorney might as well have told you and pretty much did.)

    Time for you to stop saying you “have no dog in this fight.” Everyone who lives in Davis has an interest in how the city staff and city council spend massive amounts of our tax money and how they manage municipal programs and projects.

    Furthermore, you don’t need to be apologizing for or justifying your routine use of public records requests. Every one of us has such a right; we pay for the work that results in public documents; we pay for staff time to respond to such requests and on the timely basis required by state law.

    I’m surprised that Sue’s so unconcerned about this aspect of the DACHA fiasco and just writes it off by repeatedly but vaguely telling us how the whole thing’s that big bad David Thompson’s fault.

    Please post copies of your original records request and of Harriet’s response(s). Including the actual correspondence makes your reports more powerful and can result in bigger impacts for improved government. This is a VDR (Vanguard Documents Request).

    Again, great job, David!

  9. David M. Greenwald

    I appreciate your comments – by no dog in this fight, I mean I have not taken sides in the issue of DACHA or the consultants. I have a dog in the fight as you describe – an interest in knowing what city staff and council have done with public money.

  10. JustSaying

    “One of the things that is getting lost in this discussion is WHY the city WAS FORCED to expend the money on legal expenses….”

    I don’t think that question’s getting lost at all, Elaine. All of us have been asking that very question for months–it’s THE major unanswered question of this whole debacle: what happened to DACHA? Maybe the original invoices will help David get closer to an answer, but it’s questionable, given the city’s apparent desire to hide everything about its dealings with DACHA.

    The answer to the question about how DACHA (maybe with city legal/monetary help) and the city itself ended up getting sued looks like it’ll be answered in the courtroom and/or (as you supported before) by an eventual, independent investigation.

    I’d prefer an arbitrated or negotiated settlement to this unending public screaming about who did what to whom. However, as the mayor and David both have publicly noted, the person who has raked in $400,000-$800,000 in this case and who personifies the city-as-defendant hardly is the one who can effectively represent us in the effort.

  11. Sue Greenwald

    [quote]“”One of the things that is getting lost in this discussion is WHY the city WAS FORCED to expend the money on legal expenses… “…[b]E.Musser [/b]
    That’s certainly true, though I suspect a more complex answer than simply because the city was being sued.” –[b]David Greenwald[/b][/quote]Why?

  12. David M. Greenwald

    Sue:

    1. I have questions about the city’s role in this to date
    2. The easy answer is that if the city is being sued they should defend themselves legally but the more complex answer is that the city is a public entity and as such their first responsibility is not to protect themselves 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. That’s where the complexity enters into this equation.

  13. David Thompson

    The citizens do deserve to know how much cost/waste there has been by City staff on DACHA. At the core of this has always been the questionable role of the City Attorney.

    What should be asked for are all of the billings of the law firm to the City so that each billing can be looked at to determine whether it was an expense charged to the City that was related to DACHA.

    I fear what Davis will get are only those expenses that Ms. Steiner believes are related to DACHA. David’s request to the City should also ask for a description of all uses of Davis’ public funds in relationship to DACHA.

    Her report will not detail the legal expenses paid by DACHA or for DACHA from public funds. Those should be definitely included in the overall cost of public funds expended on DACHA.

    There is a lot that will be hidden by City staff. Let’s take a look at the public funds used for legal expenses by DACHA that won’t be in Ms. Steiner’s accounting.

    The loan of $4 million to DACHA which was finally made in August of 2008 clarified the purposes for which the loan was made with clarification at subsequent Council meetings that none of it should go for legal costs or litigation.

    We will show that in fact against the staff report, public funds lent to DACHA were used for legal costs.

    Staff report on DACHA to City Council December 7, 2007
    1.The loans must be used for the following purposes:
    Purpose Current Estimate
    Purchase of primary loans (includes existing City/Agency assistance to DACHA) $3,501,000
    Repayment of Secondary Loans $172,000
    Establishing Reasonable General Reserves (Capital, Maintenance, Administrative And Vacancy Reserves, as well as reserves for other share price stabilization) $415,000
    Total Estimate: $4,088,000(Rounded)$4,100,000.

    The City confirmed that none of the public funds were to be used for legal costs.

    David Thompson, Neighborhood Partners, LLC.

  14. Sue Greenwald

    [b]@David Greenwald:[/b]You said that you need an answer to the question of why the city is forced to spend money on a defense, and that the answer that we are being sued is not sufficient for you, when I ask “Why?”, you give two reasons. The first is that you have questions about the city’s role in this to date.

    I have answered these questions at length, but you don’t accept the answers.

    Second, you answer: [quote]The easy answer is that if the city is being sued they should defend themselves legally but the more complex answer is that the city is a public entity and as such their first responsibility is not to protect themselves legally per se but to be open and forthcoming with the residents of this community about their use of public money.–[b]David Greenwald[/b][/quote]But I think you forget that we are not “trying to protect ourselves”, we are trying to protect that City’s affordable housing funds, so that we can build more affordable housing. And we have been open and forthcoming. Staff wrote thorough op-ed piece explaining what happened last year. There are many available public documents and staff reports. I have tried to answer questions on this blog.

    Again, you just don’t like our answers.

  15. E Roberts Musser

    [quote]ERM: “One of the things that is getting lost in this discussion is WHY the city WAS FORCED to expend the money on legal expenses… ”

    DGM: That’s certainly true, though I suspect a more complex answer than simply because the city was being sued.[/quote]

    Some answers are quite simple…

  16. Sue Greenwald

    [quote]My concern is primarily with the behavior and conduct of the city –[b]David Greenwald[/b][/quote]Again, why? Shouldn’t your concern be analyzing the answers that you have gotten from DACHA members, David Thompson and Luke Watkins, and the city?

    It seems to me that you are playing GACHA, not examining DACHA.

  17. David Thompson

    So at the moment on this issue:

    $171,000 Public funds borrowed by DACHA used to pay for (unauthorised)litigation expenses (est.)

    $130,000 Unpaid legal bills for work done by lawyers for DACHA at City staff’s request that we think were anticipated to be paid from public funds.

    $301,000 legal expenses billed to DACHA

    $116,510. In March, 2007, DACHA’s illegal board (only two of eight board members were eligible to serve) asked the City of Davis if they could forebear paying their entire publicly funded mortgage so they could pay lawyers to defend themselves in a private matter (breaking a private legal contract).

    City staff recommended to Council that DACHA be allowed for six months to forebear repaying public funds to the City in an amount of $6, 427.79 per month.

    However, the forbearance went on for almost 19 months and finally amounted to $116,510. Did the Council approve all of the required six month 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.

    By the end of the forbearance the trend would show DACHA members owed DACHA $75,000.

    So DACHA appears to have 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 to address their delinquencies. As a result, DACHA delinquencies increased by $37,000 during the public fund forbearance.

    $93,000. Amount presently owed to DACHA’ lawyer (Nossaman). What was done with City’s $116,510 forbearance? How much did Nossaman get paid of that $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 borrowed public funds 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).

    $30,000. April 23, 2010. DACHA lawyer asks City Attorney to fund $30,000 retainer for litigation costs from public funds repaid to City. City agrees and Danielle Foster of City staff sends funds from City to Hefner.

    Did Council approve either of these disallowed expenses from borrowed public funds?

    According to DACHA Dissolution Report two law firms are owed money by DACHA:
    Nossaman is owed $93,000 and
    Hefner is owed $37,000

    The $116,000 was intended to pay Nossaman but did it?
    About $55,000 was funneled to Hefner and what happened to that?

    The only way in which these two law firms obtained payment was from City Attorney blessed transfers of DACHA’s borrowed public funds. So one has to think that both law firms anticipated that given that the City Attorney wanted to support DACHA’s efforts against NP and TPCF that in the end the City would find a way to pay their bills?

    After all, we have the billing records of Hefner deciding only to take the case for DACHA after the City Attorney approved the release of public funds to them.

    City Attorney and City staff actions on DACHA we think place the City Attorney in a very conflicted postion. NP does not understand why Ms. Steiner and her law firm are continuing to represent the City in these matters.

    City staff’s use (or misuse) of public funds relating to DACHA should indeed be investigated.

    David Thompson, Neighborhood Partners, LLC

  18. David M. Greenwald

    “:You said that you need an answer to the question of why the city is forced to spend money on a defense, and that the answer that we are being sued is not sufficient for you”

    actually I didn’t say that at all. What I want to know is how much the city spent on DACHA, period, not just defense. The issue of why came from Elaine, not me. I simply suggested the why is not as simple an answer.

    Let me give you a completely unrelated example. A car company designs faulty brakes that decay over time with use. The car company decides a recall is too expensive and so they simply wait and hope for the best. Inevitable, the brakes give out, a person is critically wounded and sues the car company. Who is responsible for the legal costs? Well the direct answer might be the person who sues the company but realistically they brought it on themselves through their own incompetence and mismanagement and that is precisely what *could* happen here. Hence the answer is more complex, but it was not my question.

  19. Mr.Toad

    I’m curious about the role of your wife, Anne Evans in all of this. The reason I ask is because it seems she is acting like a disinterested party advising the city when in fact she is a likely beneficiary of your lawsuit should it be successful. It looks like a blatant conflict to me, the wife of a litigant telling the opposing side what they should do. Am i missing something?

  20. Mark West

    Sue: [i]”But I think you forget that we are not “trying to protect ourselves”, we are trying to protect that City’s affordable housing funds, so that we can build more affordable housing. And we have been open and forthcoming. Staff wrote thorough op-ed piece explaining what happened last year. There are many available public documents and staff reports.[/i]”

    I think there is a great deal of concern about the actions of the City’s staff with regards to the affordable housing program as a whole, not just DACHA. Since the concerns are focused on the actions of staff, I don’t think staff reports and op-ed pieces are the appropriate way to answer these concerns.

  21. E Roberts Musser

    [quote]Let me give you a completely unrelated example. A car company designs faulty brakes that decay over time with use. The car company decides a recall is too expensive and so they simply wait and hope for the best. Inevitable, the brakes give out, a person is critically wounded and sues the car company. Who is responsible for the legal costs? Well the direct answer might be the person who sues the company but realistically they brought it on themselves through their own incompetence and mismanagement and that is precisely what *could* happen here. Hence the answer is more complex, but it was not my question.[/quote]

    This example is completely inapposite. In the instance of the car, the purchaser is the person suing, and is a completely innocent party, having nothing to do with the creation of the defective product. In the case of DACHA, NP created the defective product, and is suing the purchaser of that product (city; DACHA members)…

  22. E Roberts Musser

    [quote]Since the concerns are focused on the actions of staff, I don’t think staff reports and op-ed pieces are the appropriate way to answer these concerns.[/quote]

    So what are you requesting? An independent investigation? By whom? Certainly the city is not an independent party, so they cannot investigate themselves. So who would do it, and how would you make sure there was no taint from friends of NP? Wasn’t the grand jury investigation “independent”?

    Secondly, for what purpose are you demanding an independent investigation (assuming that is what you are asking for)? Is it to make sure our affordable housing program is run appropriately? It seems to me it would be easy enough to come up with sound recommendations to ensure the affordable housing program is run correctly, so that nothing like DACHA ever happens again. Or is it to find out if there was wrongdoing and punish those engaging in malfeasance? Those are two completely different agendas…

  23. David M. Greenwald

    You are missing the point I am attempting to make here: it is quite possible that the city shares blame in the faulty design of DACHA and also steps taken afterwards, if that is the case, then part of the cost of legal expenses could be seen a created by the city.

  24. E Roberts Musser

    [quote]I’m still waiting for an answer to my question from the last time as to what risks you disclosed to the co-op members when they were signing up? [/quote]

    Bingo!

  25. JustSaying

    Sue, I guess one might assume that the fight between NP and the city eventually will be sorted out and get resolved.

    The concerns that some of us have developed during this debacle have to do with what how our city operates, what role the city attorney and staff independently play, what decisions (some still secret) got made about spending public funds for questionable purposes, whether we should continue with the same kind of “affordable housing” projects that have failed in the past, whether the DACHA members got city funds and whether they’ll be given some windfalls or special benefits in the future, etc.[quote]“But I think you forget that we are not “trying to protect ourselves”, we are trying to protect that City’s affordable housing funds, so that we can build more affordable housing. And we have been open and forthcoming.”[/quote]If you’re simply engaged in fight “to protect (the City’s) affordable housing funds,” I can see why you’ve been unable to hear our questions and concerns.

    In fact, the city hasn’t been open and forthcoming about these questions at all. We appreciate your participation here, but I agree with Mark West that staff reports and an op-ed hardly are adequate. So far, they appear to be a way of diverting attention.

    Some kind of independent investigation is needed that includes at least what happened up to the point of the city’s decision to close down DACHA by foreclosing.

  26. JustSaying

    [quote]“@David Greenwald: Another question: What do you think David Thompson and Luke Watkins’ hope to achieve by launching this lawsuit?”[/quote]@Sue Greenwald: Why are you asking such a question? Do you really not know what’s in the lawsuit they filed? Are you hinting or stating that they have some secret, ulterior motive?

    Is there some innuendo here, something so vague we won’t pick it up unless you get a lot more specific? I, for one, sure don’t get it.

  27. JustSaying

    [quote][u]Mr. Toad[/u]: “I’m still waiting for an answer to my question from the last time as to what risks you disclosed to the co-op members when they were signing up?”

    [u]Elaine[/u]: “Bingo!”[/quote]Why is this a “bingo,” Elaine? I’m still waiting for the answer too. Why do you suggest that risks weren’t disclosed?

    My guess is that the contracts were clear about this being a co-op, a business that could end up going bankrupt or being forced into foreclosure by the City of Davis or any other creditor. If you have any evidence that my uneducated guess about their contracts is incorrect, why don’t [u]you[/u] produce it?

    Usually the accuser has the burden first. The only thing I’ve seen so far is a description of sales materials that talk about benefits of home ownership gained by buying into a co-op.

    Added to that is the innuendo you and Sue drop to suggest that DACHA members were so misled and so stupid they didn’t know that they weren’t buying houses the way people who actually buy houses buy houses. And, that eight years later, they still hadn’t figured out David Thompson’s vile business practices and, therefore, lost their $20,000 when the city foreclosed on DACHA.

  28. E Roberts Musser

    [quote]Usually the accuser has the burden first. The only thing I’ve seen so far is a description of sales materials that talk about benefits of home ownership gained by buying into a co-op. [/quote]

    Now how can you not see that mentioning [b][i]home ownership[/i][/b] with [b][i]cooperative ownership[/i][/b] is [b][u]misleading/confusing[/u][/b]? These two terms are antithetical to each other; the first term is far better understood than the second term; why wasn’t the cooperative model clearly delineated without bringing in misleading terms? Only one reason comes to mind – if prospective members had fully understood what they were getting into, they wouldn’t have touched it with a ten foot pole…

    Secondly, there are far more things that went wrong with this model than meets the eye, e.g. predatory loans with no paperwork, invoices w/o specification, etc.

  29. E Roberts Musser

    [quote]You are missing the point I am attempting to make here: it is quite possible that the city shares blame in the faulty design of DACHA and also steps taken afterwards, if that is the case, then part of the cost of legal expenses could be seen a created by the city.[/quote]

    Who is missing the point? You are painting NP as if it was the purchaser of a defective car it had not hand in creating! From where I sit, it appears you have bought NP’s version of events hook, line and sinker…

  30. David Thompson

    Let me ask Sue again why is it alright with you that the DACHA board and members broke their bylaws and state law and had the City staff help them?

    Sue, you have been provided with the Rent Rolls and the bylaws and you know that due to delinquencies the DACHA board was illegal and the members ineligible to vote and yet City staff were there when DACHA went on to break numerous state laws. If you as a Council member will not uphold the law then where are we? Please answer me that question.

    Now to my answer:

    The set of documents (bylaws, Membership Information Report, Regulatory Agreement, Budget, Subscription Agreement, etc) that were provided to the DACHA members are those required by law. Those documents and all the budgets were approved by City staff.

    The City Attorney approved all those documents as meeting the requirements of the law.

    The City Attorney specifically attested to the State that the DACHA documents met State law.

    The one thing I missed out was warning the residents that there are consequences for the residents and board members of DACHA if they themselves choose to break the articles of incorporation, break the bylaws, public benefit law, loan documents, contract law, nonprofit law, corporate law and laws governing limited equity housing cooperatives. See the lawsuits for those consequences at http://www.community.coop/davis click on DACHA. The loan documents from the City required DACHA to follow its bylaws and state law but DACHA did not.

    There are mechanisms in the bylaws for the members to take action against their illegal board but they did not.

    The big questions is did DACHA do all of this by itself or on the advice of their own lawyers or did DACHA do what the City staff wanted because after all the City staff were paying for DACHA’s lawyers and communicating with DACHA’s lawyers on strategy? That certainly is how DACHA’s attorney Hefner listed the City’s role in their legal billings.

    Was DACHA a pawn in City’ staff’s antagonism to NP?

    David Thompson, Neighborhood Partners. LLC.

  31. Sue Greenwald

    [quote]I think there is a great deal of concern about the actions of the City’s staff with regards to the affordable housing program as a whole, not just DACHA. Since the concerns are focused on the actions of staff, I don’t think staff reports and op-ed pieces are the appropriate way to answer these concerns–[b]Mark West[/b][/quote]If I am not mistaken, I think you are concerned about that fact that affordable units in Wildhorse were sold without equity limitations, there was concern that windfall profits were made by the original owners.

    That happened back in the 1990’s. The department head, the affordable housing supervisor and the council that were responsible for this are long gone. By the time I joined the council in 2000 and by the time that David Thompson and Luke Watkins proposed DACHA, there was unanimity on the part of council and staff that the Wildhorse scenario should not be allowed to occur again.

    The staff that responsible for the handling of Wildhorse is gone. We now have a new staff.

  32. Sue Greenwald

    [quote]You are missing the point I am attempting to make here: it is quite possible that the city shares blame in the faulty design of DACHA and also steps taken afterwards, if that is the case, then part of the cost of legal expenses could be seen a created by the city.–[b]David Greenwald[/b][/quote]Personally, I agree with you that should not have approved this business model. That goes without saying, doesn’t it? And it is obvious that we will be examining what went wrong in order to assure that it doesn’t happen again. Again, we will be examining what we could have done to avoid this. Okay?

    I am disappointed in your coverage of the case because it appears to be limited to this rather obvious point.

    You seem to think it is a scandal that an attorney who has billed the city for handling this lawsuit is still involved in our defense. By this logic, a public agency would have to hire a new attorney every time they paid a legal bill.

    But you have neglected to explore why this business model didn’t work. For example, you have neglected to explore the nature of the contracts written between Neighborhood Partners and the Board that they appointed which were the basis for the judgment. You comments have mostly revolved around innuendos that the city has not been transparent, even though the documents relating the the case have all been published.

    I expect a whole lot more from investigative journalism.

  33. David Thompson

    Dear Sue:

    How you can say that the staff associated with Wildhorse have gone with a straight face is humorous.

    The City Attorney that admitted to forgetting to put a community equity second on 52 homes and therefore lost us a share of $11 million in gain is still here and nothing seems to have happened to her has it?

    I think Katherine Hess had a role in Wildhorse and she is still here?

    The member of City staff who worked on Wildhorse and mysteriously got one of the “affordable homes” and made $200,000 in two years is still working for the City.

    I pointed that City staff member to you and the Council and you all chose to do nothing. You are letting Davis become a third world country!

    The City staff member who made the $11 million dollar mistake and the city staff member who made the biggest windfall are still here.

    David Thompson, Neighborhood Partners, LLC.

  34. Sue Greenwald

    [quote]Was DACHA a pawn in City’ staff’s antagonism to NP? — David Thompson[/quote]The entire time that I have been on the council, I detected no antagonism on the part of staff towards David Thompson and Luke Watkins. There was no hint of any conspiracy against them.

    Staff recommended the project despite the concerns I expressed about the business model, and I voted for the project despite my reservations about the business model.

    There was no conspiracy or antagonism toward David Thompson and Luke Watkins. In fact, they were given the benefit of the doubt.

  35. Michael Harrington

    As I have said for years, the City Council should:

    1. Retain separate defense counsel on the entire DACHA mess;
    2. Retain specialty counsel to evaluate the correctness of the legal advice and strategy given by the City Attorney on this entire matter.
    3. Retain separate counsel to audit the billings of the City Attorney and evaluate conduct of staff.

    The NP posts above remind me of something: who has standing to go to court and force the disgorgement of public money when it is used by private parties for their own gain? In other words, would a taxpayer in Davis have the right to sue to force the recipients of the tax money that was used by DACHA for its own gain, to disgorge the money?

    Is there what amounts to be a possible “theft” of public money, even if quietly sanctioned by staff? Or even if sanctioned by the CC itself?

    I think the City of Bell is going after former staff, and the City Attorney, for disgorement of public money allegely taken?

    Is the former law firm that represented the City of Bell the one that our current City Attorney is now associated with?

  36. Michael Harrington

    Sue: I think you should admit to being duped by city staff and the City Attorney, that you made a mistake allowing the City Attorney to litigate her own work product and strategies, and that you fully support the independent audit, getting to the bottom of what happened in 2004-current.

  37. Sue Greenwald

    [quote]The member of City staff who worked on Wildhorse and mysteriously got one of the “affordable homes” and made $200,000 in two years is still working for the City.–David Thompson[/quote]I was not around during this period. However, right or wrong, one of the affordable housing goals was to help city staff to be able to afford to live in Davis. This goal does leave the city open to charges of favoritism, particularly if there are mistakes in the conception or execution of an affordable housing model.

    Katherine Hess is not to my knowledge working on the DACHA case now.

  38. Michael Harrington

    Sue: you know that Ruth and I caught a senior housing staff member and her then-junior partner attempting to give away $5 million to a affordable housing organization that was her favorite, and a rival to NP, and the City Manager and CC chose to do nothing to staff about it.

  39. Sue Greenwald

    Again, these accusations about past concerns with our affordable housing program are a diversion. For the past twelve years, staff and council have been in agreement that we don’t want to see the old Wildhorse situation again.

  40. JustSaying

    [quote]“Now how can you not see that mentioning home ownership with cooperative ownership is misleading/confusing? These two terms are antithetical to each other; the first term is far better understood than the second term; why wasn’t the cooperative model clearly delineated without bringing in misleading terms? Only one reason comes to mind – if prospective members had fully understood what they were getting into, they wouldn’t have touched it with a ten foot pole…” [/quote]A cooperative housing operation provides members many of the benefits of owning homes (tax and otherwise) without many of the problems of home-ownership. This single sentence shows why your claim that the two terms are antithetical.

    To claim DACHA members didn’t know what they were getting into is insulting and speculative. To say they “wouldn’t have touched it with a ten-foot pole” if they’d “understood” what a co-op was is just ridiculous on its face; there have been such co-ops all over the country for years. There is nothing untoward about the concept.

    Please see: http://www.coophousing.org/DisplayPage.aspx?id=122&bMenu=76&bItem=122#whatis
    website for the National Assn. of Housing Cooperatives.

    If you think such uneducated, unsophisticated folk would have made different decisions than they did, how do you account for the fact that the city experts and leaders responsible for advancing this project must have been just as dumb?

    Furthermore, for your initial claim that members were snookered at the start means nothing, even if true, about the decisions they made over and over for years to remain after they became “enlightened” and had the ten-foot-pole available (to leave).[quote]“Secondly, there are far more things that went wrong with this model than meets the eye, e.g. predatory loans with no paperwork, invoices w/o specification, etc.”[/quote]First, things that you say don’t “meet the eye” are up to you to reveal if you’re the one making charges. You’ve listed three (predatory lending, which violates the law, some vague invoices issue and the even-more-vague “etc.” charge).

    First, who has been charged with the law-breaking you claim? Second, what do these things that “went wrong” with this model have to do with David’s call for more transparency?

    You and I certainly agree that lots of things “went wrong” with DACHA and, as I remember, we disagree with Sue about whether the city has any responsibility for DACHA’s failure and whether we should have some kind of independent investigation to find out what things went wrong.

    I’m not sure at this point whether we think the same things “went wrong,” but I hope the city council gets around to wondering what did and finding out.

    I’m really disappointed that David finally is squeezing some actual public documentation out of a city government that hasn’t been close to forthcoming about DACHA for months–and here you, Sue and David T. (and JustSaying) are back to the same old back and forth, unenlightening posts. It’s as though we’re reliving last month’s agonizing discussion.

  41. Mark West

    Sue: “If I am not mistaken, I think you are concerned about that fact that affordable units in Wildhorse…That happened back in the 1990’s. The department head, the affordable housing supervisor and the council that were responsible for this are long gone…The staff that responsible for the handling of Wildhorse is gone. We now have a new staff.”

    Thank you Sue for your clear statement on this matter. Unfortunately, what you said, and what David T. said in response, cannot both be true. I know both of you, and I have no reason to believe that either one of you is not telling the truth. Therefore we have a conundrum and the only certainty is that the answer will not be found in another staff report.

  42. David M. Greenwald

    Sue:

    “You seem to think it is a scandal that an attorney who has billed the city for handling this lawsuit is still involved in our defense. By this logic, a public agency would have to hire a new attorney every time they paid a legal bill.”

    Scandal is the wrong word, but a lot of cities and entities use different advise counsel from litigating counsel precisely because there is the potential of a conflict.

    I don’t think you are being fair on the coverage, we have covered this story from everyone’s angle.

  43. JustSaying

    [quote]“However, [quote]right or wrong, one of the affordable housing goals was to help city staff to be able to afford to live in Davis.[/quote] This goal does leave the city open to charges of favoritism, particularly if there are mistakes in the conception or execution of an affordable housing model.”[/quote]Sue, you’re kidding for sure. There’s no question in my mind whether a city “affordable housing goal” of providing “affordable housing” to city staff (or city council?) members would be opposed by citizens (and you?) as a flagrant conflict of interest.

    It actually seems as though any such city benefit would specifically exclude the project and program overseers from participation and, if not, the practice would be prohibited by general employee ethics rules.

    Are you positive there ever was such a city policy? Where did you find it documented? What do you mean that “mistakes in the conception or execution of an affordable housing model” have a particular application of such a conflict issue?

    Please clarify about whether this exchange with David T. has you two agreeing that Katherine Hess was one of the beneficiaries of our affordable housing program–I know of another.

    Or. are you two just arguing about whether Ms. Hess is “the staff that (was) responsible for the handling of Wildhorse (who) is gone” if she’s still employed by the city?

  44. Sue Greenwald

    [b]@Mark West[/b]I’ll eliminate the discrepancy by restating my comment more accurately:

    If I am not mistaken, I think you are concerned about that fact that affordable units in Wildhorse…That happened back in the 1990’s. The department head, the affordable housing supervisor and the council that were responsible for this are long gone.

    Katherine Hesse, who might have also worked on the Wildhorse affordable housing (I don’t know whether she did or not) is not to my knowledge working on DACHA now.

    The staff now working on DACHA was not, to my knowledge, working on the decisions involving the Wildhorse affordable housing.

  45. JustSaying

    [quote]“You seem to think it is a scandal that an attorney who has billed the city for handling this lawsuit is still involved in our defense. By this logic, a public agency would have to hire a new attorney every time they paid a legal bill.”[/quote]Maybe David doesn’t see that it’s just stupid to ask an attorney who has this many years of decisions (many of them questioned for their reliability or accuracy) assigned to negotiate settlement with the plaintiff, but I do.

    Your expression of logic about hiring “a new attorney being required every time they paid a legal bill” hardly reflects what David has noted.

  46. Mr.Toad

    “The one thing I missed out was warning the residents that there are consequences for the residents and board members of DACHA if they themselves choose to break the articles of incorporation, break the bylaws, public benefit law, loan documents, contract law, nonprofit law, corporate law and laws governing limited equity housing cooperatives. See the lawsuits for those consequences at http://www.community.coop/davis click on DACHA. The loan documents from the City required DACHA to follow its bylaws and state law but DACHA did not. “

    It would be nice to see the disclaimers for ourselves to help us determine if the members clearly understood that they were essentially getting an interest in an investment where they would never be out of debt. Anyway, you seem to be saying there were undisclosed risks but they were not your responsibility to disclose.

    I guess that is why we have courts to decide who is responsible and to what extent they are responsible.

    It does seem strange that this issue is being tried in the court of public opinion. I don’t see why you keep trying to play this in the press except maybe to try to salvage your reputations in the community? But why have your wife do it?

  47. Rifkin

    DAVE: [i]”it is quite possible that the city shares blame in the faulty design of DACHA …”[/i]

    David, who designed DACHA? Who wrote the bylaws? Who made thousands of dollars as DACHA’s consultant?

    I think the question you need to be asking is how much revenue (including proceeds from lawsuits) has NP made from the DACHA scam that NP created? Is it $1 million? $3 million? $10 million? I don’t know the answer. It seems to me that figure would expose just how avaricious Mr. Watkins and Mr. Thompson have been from the time they wrote up their first designs on DACHA.

  48. David Thompson

    Today, Sue made a claim that none of the City staff who worked on Wildhorse are still there. I replied that that statement is not true.

    Sue would appear to be challenging my claims about Wildhorse which I have refuted with written information for all the facts until now except one. The one fact I have not provided detail to so far is that of a City staff member having received a set aside below market affordable home in Wildhorse.

    I attach Title Company report and documentation (sent to City Council) to support my claim.

    I have just emailed this information to Sue and other City Council members so they have proof of these statements.

    At least one City Employee, who was then and is still a member of the City staff of Davis relating to planning did receive one of the 52 set aside affordable homes in Wildhorse. I think she played a role relating to the Wildhorse development.

    That City staff member paid $143,000 for the below market Wildhorse home.

    I think she already owned a home so she was not a first time home buyer. Her next door neighbor sold his house 25 months after he bought it and immediately made $187,000 above the purchase price. The average windfall for getting an “affordable” home in Wildhorse was over $200,000 per home. That is how much the City staff member made on the home.

    One of the questions here is whether it was appropriate for a Davis city staff member who appears to have worked on the subdivision to be provided with an assured two year windfall by a developer of houses in the subdivision?

    The home on Carravagio was transferred to the City staff member on November 3, 2000 by Charles Waxted, then the Controller at Morrison Homes.

    The re-capture note required by City policy that was forgotten by the City Attorney was not applied to the sale of the home.

    The attached document I sent to the City Council is from the public record obtained by the Title Company.

    Excerpts from Ms. Steiner’s memo to Council on Wildhorse (October 20, 2002).

    “Based on the minutes of the City Council meeting, the council directed staff and the city attorney to implement a “recapture system”

    “With respect to the recapture note, we can find no record in either the City files or in our files that this note was drafted or implemented.”

    “It is possible that the “recapture note” was put on hold or, more likely, was delayed and then forgotten,…”

    “However, as stated above, neither city files nor my files show any action on this matter after the Council action in 1995.”

    A share in $11 million dollar gain gone but never dealt by City Council?

    A City staff member makes a windfall of $200,000 never looked into?

    David Thompson, Neighborhood Partners, LLC.

  49. David Thompson

    Dear Rich:

    All the key documents were drawn up by Goldfarb and Lipman who did the same set of documents for Dos Pinos and for most of the other scores of co-ops around the state. Their documents were all approved by the City Atorney.

    As I now repeat for the fourth time I am quite happy to sit down with you and go over any of the financial details you wish. I am reachable at 530-757-2233.

    David Thompson, Neighborhood Partners, LLC.

  50. David Thompson

    Sue:

    Wildhorse did not happen: “back in the 1990’s” as you just said. I blew the whistle on the “Wildhorse Windfall” in late 2002 and in 2003 when you were on the Council. I do not remember you doing anything about it.

    In late 2002 it was clear that:

    Six Wildhorse homes were sold illegally before the two year City deed restriction expired. Staff knew threw the title reports that those 6 people had gained over $954,000 illegally but nothing was done by either City staff, the City Attorney or the City Council?

    City Staff were asked to look at all 52 of the Wildhorse” affordable transactions” and report back to the Council on what had happened.

    City staff had to know from a review of the 52 title reports or just gossip at City Hall that YO on City staff had obtained one of the Wildhorse Wildfalls.

    Sue,you were there there when I blew the whistle.

    Explain to us what did you do?

    David Thompson, Neighborhood Partners, LLC.

  51. Rifkin

    [i]”All the key documents were drawn up by Goldfarb and Lipman …”[/i]

    Unless what Mr. Gianola wrote was made up of whole cloth — “NP was responsible for the drafting of the bylaws, articles of incorporation, occupancy agreements and various other contracts and agreements” — then your pointing to some lawyers and claiming they were the authors is, at best, not the whole truth, Mr. Thompson. I believe Mr. Gianola’s point is that these documents were created because you and Luke Watkins had them created.

    As to my meeting with you … but for serious family obligations which have me tied up (I am working full time and caring for my 90-year-old mother and I am helping out with my quite ill sister) I would not mind doing so. But I still have no money of my own in this fight (save that small part which is being lost as a taxpayer due to mistakes the City has made in this case), so it does not matter that much to me that I hear your words in person. I have read your positions on these matters over and over and I have read the views of Ms. Musser and I have talked to a number of city staffers (three come to mind) about DACHA and I have talked with (and exchanged emails with) two people who were residents of the DACHA co-op. I feel like I have enough information to draw conclusions as to which parties made mistakes and which ones were out to make money for themselves and did not care if their actions harmed others.

  52. Mr.Toad

    So one real estate scam rationalizes another? What is the point? Sue should have said mostly gone, so what?

    If anything it all undermines affordable housing programs in general. It also calls into question Davis’ model of restricting growth thereby driving up prices and placating a few with alternative ownership schemes.

  53. David Thompson

    Elaine, I am still waiting for your response as to any role you played in writing the DACHA Dissolution Report or who were the authors of the DDR.

    The DACHA Dissolution Report is full of errors and makes false accusations about a number of lawyers, including a sitting judge (who worked pro-bono for quite a while for DACHA). After all of that and postponing being appointed judge, unnamed writers for DACHA kick him in his professional teeth.

    Will there be a public apology for the lies from anyone?

    David Thompson, Neighborhood Partners, LLC.

  54. Michael Harrington

    ERM: I do not understand your seeming advice to DACHA to continue to duke it out with NP and Twin Pines. DACHA should actually point the finger at city staff, if those DACHA members were following city staff advice as I know they were for some years. In other words, ERM, why aren’t you taking the obvious path as counsel for DACHA? The idea is that you give advice that leads to the quickest, cleanest, least cost final resolution to end this mess and walk away from it. However, from reading your Blog posts, that is not your strategy. Your posts show a desire to continue to side with city staff and continue to fight it out, when in fact your clients have terrible facts and law behind their defense.

    DACHA should cross-claim against the City for indemnity, attorneys fees, etc etc. I flat do not know why DACHA does not do that? It’s been a mystery to me for some years as this mess has unfolded, and I do not know why DACHA has not done it.

  55. Rifkin

    Re: low-income single family homes owned by the low-income residents:

    As a general policy question, I don’t think ownership housing is the best idea for providing affordable housing. I think we would do the most good for most low-income residents by:

    1) building a lot more rental apartment units so that the vacancy rate stays at 5% or higher and so that renters of all incomes would have better leverage; and

    2) giving housing vouchers to poor people (largely how some federal housing programs work) to help them pay their rent*.

    *I realize that there are problems with Section 8 vouchers, that many landlords will not accept them and that the amounts are sometimes too small to help many poor renters. I think these sorts of problems are easily solvable at the local level, if such a program is legal.

  56. Rifkin

    If we are going to have ownership housing for low-income residents, I think the best method of helping those in need of buying their first home would be to have a city bank fund which would specifically help people to make a down-payment on a house or a condo.

    It never makes sense (in my opinion) to have ownership housing where the equity of the owner is restricted. Ultimately, what that does, is makes the owner effectively a renter. And worse, it takes away the incentive of the owner to keep his home in good condition or to ever improve it by adding a room or upgrading its curb appeal. After not very long, these capped equity homes look like no one cares about them.

    Under my city banks scheme lower-income, lower-wealth borrowers would have to qualify for a bank loan for the remainder of the purchase price. And when they paid back the loan for their down-payment, that money would replenish the city’s bank fund, so that a new generation of first time home-buyers would have access to it.

    A second aspect of having more ownership affordable housing is to have more apartments (as condos) and more small single family lots with small homes designed in to a larger development. As long as the sales prices of these units are decided by market forces, including them will not harm the interests of the City. If they are small, and especially if they are prefabricated, no one should be harmed. … And speaking of prefab homes, this USA Today story about Brad Pitt’s pre-fab zero energy houses which sell for $179,000 ([url]http://content.usatoday.com/communities/greenhouse/post/2012/02/low-cost-zero-energy-homes-to-benefit-brad-pitts-charity/1[/url]) strikes me as a great idea: [quote] California-based LivingHomes, a developer of high-end, ultra-green, factory-built homes, is debuting its lowest-cost model ever — the C6 — that will be available in most states. The 1,232 square-foot. $179,000 prefab, which is about half the size of the average new U.S. home, has three bedrooms and two baths as well as a courtyard that blends indoor and outdoor living. Part of the proceeds from each home’s sale will be donated to Make It Right. [/quote]

  57. Don Shor

    Rich: I am going to paste and bold this. You and I are in complete agreement. I hope people will send this to all the city council members. I urge the council to scrap the current affordable housing requirements and implement the following:

    [b]”I think we would do the most good for most low-income residents by:

    1) building a lot more rental apartment units so that the vacancy rate stays at 5% or higher and so that renters of all incomes would have better leverage; and

    2) giving housing vouchers to poor people (largely how some federal housing programs work) to help them pay their rent.” — Rich Rifkin [/b]

  58. JustSaying

    [quote]“It seems to me that figure would expose just how avaricious Mr. Watkins and Mr. Thompson have been from the time they wrote up their first designs on DACHA.”[/quote]Maybe, maybe not. Since we’re not likely to ever see NP business books, it’s a pretty safe way to imply something bad’s in there.

    I was surprised the see David Thompson accept your offer to interview him and look at his documentation, given your announced predisposition that he was running a scam on the city with DACHA. I was more surprised when your [u]Enterprise[/u] piece ran with the same bad player conclusion but no indication that you’d met with him for the interview.

    I don’t know any of the players that you’ve mentioned as your sources, but I haven’t seen anything in the [u]Vanguard[/u] that gets me to your conclusion. If, however, NP was as crooked as you, Sue and Elaine claim, I don’t see how the responsibility for DACHA’s failure and its members financial loss falls to Watkins and Thompson alone.

    I’m as interested in the public financial picture here as you are about Neighborhood Partners’ financial picture. It’s the city that decided to close down DACHA via foreclosure, and I think that situation needs public exposure.

    Whatever NP was able to do appears to have happened with the approval or acquiescence of the city. The NP contention that the city encouraged the DACHA members to believe they could maneuver to allow the city to take over the non-profit’s properties and sell them to ex-DACHA members is confirmed by the city staff’s own report.

    The massive amounts of information David Thompson has been dumping here are as confusing to me as are the unproved charges that others are tossing around. But, there’s enough there for me to accept that the city needs to answer his claims.

    I agree with many of your “general policy question” comments, but would like Davis to get to the bottom of the DACHA failure before we undertake another affordable housing venture.

    I’ve developed a complete aversion to the idea that we should be in the business of ownership housing that provides hundreds of thousands of dollars in profits for a few dozen selected (even worthy) people.

    Lately, I’ve come to even wonder why we should be subsidizing anyone’s house purchases here when there are equivalent homes a few miles north that cost $200,000 less.

  59. SODA

    So most of us agree that Wildhorse and DACHA had serious structural and oversight problems. It seems Davis should stop this program until the whole model/dept is analyzed and revamped.
    And again, have any of you traveled to South Davis to see the latest, massive project. New Harmony?
    I hope it looks better when done. So far it looks too big, too same, too too.

  60. David Thompson

    So going back to the topic of DACHA!

    Two law firms (Nossaman and Hefner) appear to have been led down the garden path by either DACHA and the City or both.

    Together the two law firms are owed $130,000 for work done for DACHA that was previously paid for from public funds that were provided by City staff and approved by the City Attorney but were not an allowed expenditure under the Staff Report.

    Under questions in Council both the Mayor and City Attorney have both stated that DACHA was not to use any funds for lawyers or litigation. But DACHA did!

    Hefner Billing to DACHA provided to Court on September 20, 2010 (Hefner being paid at the time by public funds from DACHA sent by City Staff).

    4-22-2010 Conference Call with M. Steiner and Mark Gorton (another Atty for City of Davis)

    4-22-2010 Telephone Conference call with City Attorney re Bankruptcy Filing and Foreclosure

    4-23-2010 Emails and Telephone Conference with M. Gorton (Atty City of Davis) Re Status and issues Involuntary Bankruptcy Case: Options and Strategy. Also Re: Turnover of Funds (rest of entry redacted)

    Shortly thereafter, Danielle Foster (after having been told by Ms. Steiner) instructs the City of Davis Finance Department to send a check in the amount of $29,000 to Hefner so that they will act on behalf of DACHA.

    However, here are some questions?
    Why no minutes available of any DACHA action re Hefner engagement?
    Why no board meeting minutes available to show board actions?
    Why no engagement letter available to see who authorized what?
    Who really hired Hefner?
    Why no minutes to show how Hefner was paid?
    Who signed the contract with Hefner?
    Were they a valid and eligible board member?

    Why does Ethan Ireland (DACHA Treasurer at the time I think) not remember how Hefner was paid $29,000?

    Transcript of Court appearance by Ethan Ireland. Q by NP lawyer. A By Ethan Ireland

    7 Q Do you remember if everyone voted to oppose
    8 the involuntary bankruptcy?
    9 A I don’t know. I can’t remember.
    10 Q Did DACHA receive any financial assistance
    11 from the City of Davis?
    12 A Not that I’m aware of.

    How could the DACHA Treasurer not know how $29,000 of DACHA’s funds was sent to their lawyer by City staff?

    Oh what a tangled web!

    This is “Why the City needs to come cleaner on DACHA?

    David Thompson, Neighborhood Partners, LLC.

  61. David Thompson

    Rifkin’s Question is it $1 million? $3 million? $10 million?

    I think the question you need to be asking is how much revenue (including proceeds from lawsuits) has NP made from the DACHA scam that NP created? Is it $1 million? $3 million? $10 million? I don’t know the answer. It seems to me that figure would expose just how avaricious Mr. Watkins and Mr. Thompson have been from the time they wrote up their first designs on DACHA.

    The answer Mr. Rifkin is that DACHA received $143,000 for DACHA.

    It is irresponsible to charge NP publicly with avariciously having made $1 – $10 million from DACHA when NP has made only $143,000.

    Meet with us and learn the truth about DACHA!

    You seem to have been sold a story by someone and that story has no validity and does an injustice to the validity of the facts in your other columns.

    – I can be reached at 757-2233.

    David Thompson, Neighborhood Partners, LLC.

  62. Mr.Toad

    Its all a bunch of double talk so let’s apply Occam’s Razor. Who made money and who lost money? Who sold people an interest in something that would never be paid off? I think I have it figured out now.

    What seems odd is that all of this pressing the city. Is it about money or reputation or both? Why would you have your wife to publicly tell the city what she thinks they should do? Doesn’t this open her up to be forced to testify and remove her spousal privilege?

  63. Mark West

    Sue: “The staff that responsible for the handling of Wildhorse is gone. We now have a new staff.”

    Do you say that unequivocally? All of the people responsible for the Wildhorse fiasco are gone? Including the City’s attorney?

    For the record Sue, I am not asking these questions as a diversion, but to understand how the City has handled the affordable housing program over time. From what I have seen here and elsewhere there is a history of poor management by City staff that predates DACHA, and there are very serious questions about the current staff’s actions with regards to DACHA. When has this program worked properly?

    Were there any successful programs started during this same time period (from Wildhorse to present) that would indicate that the City is able to managing this type of program effectively? If not, why are we in this business at all?

  64. Sue Greenwald

    @Mark WestI’ll eliminate the discrepancy by restating my comment more accurately:

    If I am not mistaken, I think you are concerned about that fact that affordable units in Wildhorse…That happened back in the 1990’s. The department head, the affordable housing supervisor and the council that were responsible for this are long gone.

    Katherine Hesse, who might have also worked on the Wildhorse affordable housing (I don’t know whether she did or not) is not to my knowledge working on DACHA now.

    The staff now working on DACHA was not, to my knowledge, working on the decisions involving the Wildhorse affordable housing.

  65. Sue Greenwald

    [b]@Mark West:[/b]Mark, if you look back on page 2, you will see that I entered the above clarification at 4:20 PM.

    No one on the council or staff defended the Wildhorse situation. Everyone thought that it was a bad thing.

    Clearly, these limited-equity ownership and cooperative programs have been fraught with difficulties. Limited equity has always been problematic to administer. Depending on market conditions, we err on the side of windfall profits or on the side of locking the participants out of the ability to enter the housing market in later years.

    I would agree that whether or not it is worth continuing with them is something the council should consider.

  66. JustSaying

    Sue, please resolve the dates of the Wildhorse staff investigation about the windfall profits. If you were on the council when that happened, will you please tell us how to find the report. What actions did the city take to keep this from happening again? I’m skeptical that the staff and council solved anything because I’m aware of post-1990 problems of the same type affecting later developments.

    It sounds as though we’ve got another example of a failed business model for Davis affordable housing in the Wildhorse case.

    I’ve asked before whether anyone has figures that would indicate how many affordable housing units the ciy has supported over the past, say, 25 years and how many units are considered “affordable” today. Can you help with this question?

    I’d like you to answer Mark West’s question: “Were there any successful programs started during this same time period (from Wildhorse to present) that would indicate that the City is able to managing this type of program effectively?” I’ve asked a somewhat similar question many times and got no takers: “Does anyone have a single Davis affordable housing project in which they take pride because it served its purpose well and didn’t attract successful attempts at fraud or favoritism?”

    “Depending on market conditions, we err on the side of windfall profits or on the side of locking the participants out of the ability to enter the housing market in later years.” Sue, to what “limited equity” projects are you referring? The only projects I’ve heard of generated substantial windfall profits because housing values continued on an upward trend until the crash, but only benefited a select few of course. Maybe I’m missing your point about how “we err…depending on market conditions….”

  67. E Roberts Musser

    [quote]To claim DACHA members didn’t know what they were getting into is insulting and speculative. To say they “wouldn’t have touched it with a ten-foot pole” if they’d “understood” what a co-op was is just ridiculous on its face; there have been such co-ops all over the country for years. There is nothing untoward about the concept.

    Please see: http://www.coophousing.org/Dis…122#whatis
    website for the National Assn. of Housing Cooperatives.

    If you think such uneducated, unsophisticated folk would have made different decisions than they did, how do you account for the fact that the city experts and leaders responsible for advancing this project must have been just as dumb? [/quote]

    If DACHA was to be a cooperative only and not an investment scheme, then why mention “home ownership” and “land trusts”? If the city experts and leaders were misled, how much of a chance do you think the DACHA members had to understand, when most spoke English as a second language? Why weren’t the DACHA homeowners warned of the risks involved in this investment, as Mr. Thompson concedes he did not do…

  68. E Roberts Musser

    [quote]ERM: I do not understand your seeming advice to DACHA to continue to duke it out with NP and Twin Pines. DACHA should actually point the finger at city staff, if those DACHA members were following city staff advice as I know they were for some years. In other words, ERM, why aren’t you taking the obvious path as counsel for DACHA? The idea is that you give advice that leads to the quickest, cleanest, least cost final resolution to end this mess and walk away from it. However, from reading your Blog posts, that is not your strategy. Your posts show a desire to continue to side with city staff and continue to fight it out, when in fact your clients have terrible facts and law behind their defense. [/quote]

    For the umpteenth time, I do not represent DACHA, nor have I ever represented DACHA. I have never advised DACHA to continue to “duke it out” with NP. I’m all for ending this mess, but WHO REFUSES to allow that?

  69. Michael Harrington

    ERM: THanks for the clarification, but I am pretty sure that you have publically proclaimed several times that you are representing (or were) DACHA and its members pro bono. Anyone representing them (for free or not), with the facts indicating that they listened to city staff and followed their advice, simply has to strongly recommend that they file a cross complaint against the City. DACHA also may have a claim against its attorneys for failing to file the cross complaint, unless DACHA was advised of that option, and the Board voted to not do it.

    The Cross Complaint for indemnity, among other things, would certainly be obvious to anyone with a couple of years of civil litigation experience.

    I dont know the procedural posture of the case, but it might be possible for DACHA to still file that Cross Complaint, if the two plaintiffs agree.

    The Cross Complaint would by far be the easiest and quickest way out for DACHA and its members.

    To date, the City Attorney and housing staff have relied upon DACHA and its members keeping quiet and not rocking the city’s boat. This should end, and now, for DACHA to be settled.

  70. David Thompson

    TO: Mark West. Good question

    Between 1995 and 2004 over 200 “single family affordables” were built according to our inclusionary policy.

    The program was rife with favouritism for family and friends and had no requirements such as lotteries, first time home buyer, income restrictions, equity caps etc.

    Many of the self-help homes were never built as self help.

    For the most part, City staff ignored or turned a blind eye to the game.
    But if you got one in that era you were guaranteed of making about
    $200,000.

    Every one of those 200 homes is now market rate. And $40 million of value, part of which the City should have shared in has evaporated.

    I have blown the whistle on a number of those “get rich quick through who you know” schemes.

    Creation of DACHA was an effort to stop the “family and friend” favouritism and windfalls.

    DACHA was the first to:

    Publicly advertise the opportunity
    Have a public lottery
    Use an income requirement as a screen
    Apply a first time home buyer requirement
    Verify the income of the applicants
    Have City staff verify approve the applicants

    Yet, Dos Pinos, created with my help in 1985 is the only ownership model that still works today as it did then. No one has tried to run away with the value, the board members are all eligible, there are no delinquencies, the units are all owner occupied.

    And the members in a three bedroom unit save about $10,000 a year versus a comparable Davis rental. So for every 60 families we could move into Dos Pinos we would be saving those Davis families $400,000 a year. And they are eligible for the home ownership tax deductions that come with ownership of a co-op unit.

    Co-ops could have done so much more with that $40 million of value that was wasted on windfalls.

    David Thompson, Neighborhood Partners, LLC.

  71. JustSaying

    [quote]“If DACHA was to be a cooperative only and not an investment scheme, then why mention ‘home ownership’ and ‘land trusts’? If the city experts and leaders were misled, how much of a chance do you think the DACHA members had to understand, when most spoke English as a second language? Why weren’t the DACHA homeowners warned of the risks involved in this investment, as Mr. Thompson concedes he did not do…”[/quote]What points would you have made with the people who were considering DACHA membership? Make your payments or something bad would happen? Read and understand contracts before you sign?

    English as a second language or no, this is pretty standard stuff for people moving into any kind of housing. I don’t buy ignorance as an excuse for this basic personal life business and the choices they made for the following eight years or so.

    Would you have given warning that they could be wiped out by the City of Davis which would foreclose on their co-op? Their contracts probably have something in them that accommodates such a move by the city, but who woulda’ thunk it at the beginning.

    But, the whole “dumb victim” concept falls apart as soon as the allegedly ignorant DACHA members realize they bought into a co-op. They could have left with all of their money plus interest within 60 days or whatever.

    Sue responded to this easy-leave right before, calling out David T. for trying to change it, but it appeared she didn’t know what she was talking about. She didn’t respond and moved on to other such charges that she drops out there without support. [quote]“If the city experts and leaders were misled, how much of a chance do you think the DACHA members had to understand…?”[/quote]What a pass you’re giving the “city experts and leaders” with this attempt to relieve DACHA members of their responsibilities, Elaine.

    David Thompson continues to claim that the city attorney reviewed and the city signed off on all the DACHA paperwork. If this is not true, please speak up. If it is true, the city bears much more responsibility for “misleading” the residents.

    In addition, the city was advising and participating throughout DACHA’s decade-long existence. What did the city tell DACHA members over the years, once NP had been eliminated from the picture, up until the city foreclosed?

    There’s also the lingering question about how much DACHA members actually lost in the transaction. You suggest they had no individual debts at the time of foreclosure while David T. publishes figures that suggest otherwise while Sue says her eyes and ears are closed to anything David T. says.

    Furthermore, there appears to be some kind of city money that went into reducing the amount of cash some individual members put into the venture. At some point, one has to wonder how significant the real loss if you add up the alleged delinquent payments–still owed to the city as “accounts receivable”?–and the other kickbacks from the city.

    What role do you think the staff report accompanying the audit had, Elaine, in misleading the membership that the city would be a party to them getting windfall profits by buying their homes via a city-sponsored dissolution venture?

    The staff proposed this questionable home-ownership scheme to the council, DACHA members and the public five years before foreclosure. The way I read the strategy, the city proposal had to have been a source of DACHA thinking it was on a home-ownership track.

    Why do you (and Sue and, now, Rich) keep pointing back to NP for misleading folks when there so much more culpability obvious on the city’s part during the many years since DACHA was formed? And, since everyone who joined the co-op at David T.’s urging could have walked away years ago with their investment intact?

  72. Sue Greenwald

    [quote]But, the whole “dumb victim” concept falls apart as soon as the allegedly ignorant DACHA members realize they bought into a co-op. They could have left with all of their money plus interest within 60 days or whatever.

    Sue responded to this easy-leave right before, calling out David T. for trying to change it, but it appeared she didn’t know what she was talking about. She didn’t respond and moved on to other such charges that she drops out there without support.[/quote][b] Wrong.[/b] I cited chapter and verse.

    Here it is yet again in David Thompson’s answers to the auditor report on p.53
    [url]http://cityofdavis.org/meetings/councilpackets/20060627/11_DACHA_Audit.pdf[/url]

  73. JustSaying

    [quote]“Between 1995 and 2004 over 200 “single family affordables” were built according to our inclusionary policy. The program was rife with favouritism for family and friends and had no requirements such as lotteries, first time home buyer, income restrictions, equity caps etc.”[/quote]I have to tell you this is the first of you postings that I think I really understand. So many of your earlier offerings have been so full of figures, it’s been hard to get to the facts. Consequently, it’s been easy for Sue to say, “Don’t believe anything he says.”

    Is it possible that the city council has been ignorant of the sorry picture you paint of how the City of Davis has managed our affordable housing programs?[quote]“Yet, Dos Pinos, created with my help in 1985 is the only ownership model that still works today as it did then. No one has tried to run away with the value, the board members are all eligible, there are no delinquencies, the units are all owner occupied.?[/quote]

    Additional questions:

    –How is Dos Pinos different from DACHA, the “failed model”?

    –How many years did DACHA operate without your involvement before the city foreclosed?

    –Do you have adequate records to determine how much “share investment” and earned interest each member lost in the foreclosure (and how much these members got in rebates or whatever to reduce their $20,000 share costs)?

    –Do you know of specific city and developer/contractor employees or family members who ended up as affordable housing beneficiaries? If there were not lotteries or income requirements, how were participants selected?

    –Do you have any evidence that DACHA members thought they were buying their houses rather than buying into a co-op, and, if so, when did they realize they were wrong and what did they do about it? This is key to whether the NP businessmen “were out to make money for themselves and did not care if their actions harmed others.”

    –How would you summarize the top, say, five reasons (if that many exist) that DACHA didn’t make it? Sue and others who’ve written here blaming you completely for DACHA’s failure using odd “innuendo questions” (of the “Why did you try to lengthen the waiting period when you’re saying anyone could have walked away?” type), the “mis-guided ESL” clientele and your avarice.

    –What was your responsibility in getting DACHA off the ground. Rich suggests you did something slippery or illegal by being involved in developing the “key documents.”

    –What makes you think there were $200,000 in reserves available to DACHA to pay its judgment to you? If money existed to pay the arbitration amount, why wasn’t it paid? Why would the city foreclose if DACHA could pay its bills? Again, key to the issue of whether you “were out to make money for themselves and did not care if their actions harmed others.” because you asking for your money is called by some as the reason for the DACHA failure.

    Sorry to be repeating questions that I asked in my earlier post, but the timing had me writing at the same time you were posting.

  74. Sue Greenwald

    [quote]Yet, Dos Pinos, created with my help in 1985 is the only ownership model that still works today as it did then. No one has tried to run away with the value, the board members are all eligible, there are no delinquencies, the units are all owner occupied.[/quote]Read today’s Enterprise letter from three Dos Pinos members who outline the critical differences between Dos Pinos and DACHA.

    For starters, only members were on the board and only members controlled the decisions. Also, they had one mortgage and regular audits.

  75. Mark West

    For years now the City has demanded money or property set-asides from developers to fund affordable housing projects in town. If these projects were/are being properly managed, than a significant proportion of the original value of these fees/set asides should still be in our affordable housing program, either in the form of shared equity in the properties themselves, or the cash value from the sale of those properties.

    So my questions are:

    In the history of this program, what is the value of the fees/set-asides collected by the City from developers for the affordable housing program?

    What is the current value of the properties in the program, and what percentage of the original total does that number represent?

    I am concerned about what happened with DACHA, but to me the most important question is what has happened throughout the history of the affordable housing program. From David T.’s comments it appears that millions of dollars of value in public funds have been squandered. I would love to see evidence that what David says is wrong because I would hate to think that the City has mismanaged our public funds to this degree. If anyone has information that contradicts David’s comments, I hope that they will post it here.

  76. Sue Greenwald

    [b]@Mark West:[/b]There have certainly been some huge mistakes, like DACHA (IMHO the mistake here was in approving it in the first place) and the Wildhorse houses. That said, affordable housing programs are a public subsidy whether it comes in the form of developer extractions as in the DACHA units, tax credits, city staff time and legal expenses, federal or state grants or city affordable housing funds. The public will not break even on them.

    How large our program should, what degree of help we offer, what population we want to serve — these are all legitimate questions that deserve a public discussion.

  77. Mark West

    Sue: [i]”Again, these accusations about past concerns with our affordable housing program are a diversion.” [/i]

    [i]”There have certainly been some huge mistakes, like DACHA (IMHO the mistake here was in approving it in the first place) and the Wildhorse houses.”[/i]

    I think that many want to use DACHA as a diversion to prevent a look at the program as a whole. The affordable housing program may have a good basis in theory, but there is scant evidence that it has been operating as intended, unless of course the intent all along was to take public money and funnel it to a select group of individuals. Whether DACHA was a problem of design, implementation, management, or a combination of all three will be hotly debated and most likely decided in court. The more important question though is what has happened to the public monies funneled into the affordable housing program over the past 20-30 years. Can we account for those funds, did the intended populations actually benefit, and what percentage of the funds were misappropriated. I think that is the audit that needs to be performed before another dime of public funds are spent.

  78. JustSaying

    [quote]“Read today’s Enterprise letter from three Dos Pinos members who outline the critical differences between Dos Pinos and DACHA.”[/quote]I just wish you’d make your points instead of hinting and asking questions that cast aspersion on David T. and NP without quite coming out and saying it. It’s always a questionable tactic and is starting to look dishonest.

    –Was there a difference in [u]governance[/u]? “Since the time that members took ownership from the developer…” What “critical difference” do you see here?

    –Was there a difference in [u]financing[/u]? Since 1992 the Dos Pinos HUD-guaranteed mortgage had certain HUD-required annual demands (inspection, management review, audits, reserve analysis, HUD-certified management). Who held the DACHA mortgage before the city foreclosed. Were the HUD requirements followed or some other requirements imposed?

    –The difference in 60 units being in one occasion or around town is obvious. Did you and the rest of the council approve this approach. If so, why, if you see it as a “critical difference. Do you think this decisions reflects badly on NP or the council?

    –Public funding is a fascinating “critical difference” to which you point us. Obviously, the Dos Pinos op-ed writers are proud of the success of their independent success. Are you suggesting the city withdraw from getting involved in financing affordable housing? (I personally don’t see a problem with the city helping if the city would be responsible overseers of the projects it approves.)

    Why did you direct us to today’s op-ed in the first place? The innuendo isn’t as clear as usual.

    You keep pointing out that you wouldn’t or didn’t vote for the past affordable housing programs–or that you did vote for them but got tricked into it by David T. What type of affordable housing would you champion, or even support, if you’re reelected?

  79. preston

    [quote]She writes, “The legal battle has cost the city over $800,000.”[/quote]
    Would have been nice to spend some of this money on “unmet needs”.
    Maybe the city could just “reorganize” some more, cut some more services, and lay off some more rank and file employees to cover the costs.

    Speaking of re-org, and way off topic, I was at city hall recently, does anyone know how much the city is spending on the construction there, and moving departments around? All of this waste seems a bit silly when the city is crying poor.

    IMHO the city needs to find new legal representation. The current city attorney has made too many costly mistakes (DACHA, impasse on employee groups, etc.). I wonder what they charge by the hour, on top of their retainer……

  80. Luke Watkins

    Sue Greenwald makes the following comment several posts above about the Dos Pinos Housing Cooperative:

    [b]For starters, only members were on the board and only members controlled the decisions. [/b]

    This is not entirely accurate. Dos Pinos was developed by a private for-profit developer. It was done largely because the City of Davis had a housing allocation system that limited the number of ownership units that could be built annually. The City created an exemption for 120 units of limited-equity housing cooperative units. The developer of Dos Pinos took advantage of that exemption.

    All 60 of the shares at Dos Pinos were initially owned by the developer. As the units were occupied, the residents gained an increasing level of control over their cooperative.

  81. Luke Watkins

    If you want to learn more about the City’s affordable housing programs, and are in the mood to wade through a lot of verbiage, you might want to go to the City’s website and find the links for the Housing Element and the Affordable Housing Ordinance. These are the guiding policy documents that we all fought over in the 1980s and 1990s to create the affordable housing requirements that have largely been in place since then.

    As affordable housing advocates, one of the policy goals that we achieved was to require that all single family subdivisions include multifamily land dedication sites for the development of very low-income rental housing. This policy has resulted in very low-income rental housing being dispersed throughout almost every new single family subdivision built since the 1987 General Plan was adopted. It has allowed the city’s local resources to leverage a great deal of state and federal funding that would not have otherwise come to Davis. And it produced more than 1,000 units that are affordable to the most financially vulnerable residents in our comunity, including many elderly and disabled households.

    Unfortunately, I feel that we lost the struggle during those policy debates when it came to providing affordable ownership housing units. There was a great deal of support for the idea that the City should provide entry level homeownership opportunities. But there was not a commitment to ensure that these units would be made available on an equal access basis to local residents who most needed them. Initially there was no requirement for a lottery, or income screening. Some of the units even went to individuals who had already purchased one and were turning it into a rental, while they then purchased a second one. The City over time adopted policy goals to tighten up this type of abuse, with various forms of resale controls, but failed to follow through on implementation of them in the late 1990s (the much talked about Wildhorse era).

    I wish the City’s new affordable housing advisory committee much luck and patience in sorting out the competing policy goals.

  82. JustSaying

    [quote]“For starters, only members were on the board and only members controlled the decisions.”[/quote]Luke, I think Sue didn’t notice the nuance: “Since the time than members took ownership from the developer….” It appears Sue figures today’s op-ed somehow reflected badly on DACHA’s development and developers, but I don’t see it that way.

    I hope Sue gets back re. the points she meant to make about the “critical differences” between DACHA and Dos Pinos as well as Mark West’s and my earlier questions. But, feel free to wade in if you wish.

    I have a specific question for you about how DACHA began. Much has been made about how you and David T. had significant control over the beginning paperwork development and in establishing the first board. This has been used to criticize your motives and your actions, to the point that what you did then provided a “flawed model” that made collapse inevitable even without your selfish attempt to collect DACHA’s debt.

    However, my experience starting non-profits paralleled this pattern for establishing an organization, with the boards expanding after 501c3 approval and membership assuming full control at a later point. So, I don’t view it in the same scandalous way Sue, Elaine and, now, Rich see it. In fact, it seems exactly what one would think you should have done. Maybe I’m wrong.

    Why did you, David T., NP or whatever assume such a leadership role when DACHA began. Was that your responsibility at the beginning? Was this done surreptitiously? Did the city staff and council know of your actions at the time? Was there any official link to you while you were developing the papers and establishing a board?

  83. E Roberts Musser

    [quote]SODA

    02/21/12 – 09:01 AM

    Elaine. Whom then do you represent?

    Michael Harrington

    02/21/12 – 09:09 AM

    ERM: THanks for the clarification, but I am pretty sure that you have publically proclaimed several times that you are representing (or were) DACHA and its members pro bono. Anyone representing them (for free or not), with the facts indicating that they listened to city staff and followed their advice, simply has to strongly recommend that they file a cross complaint against the City. DACHA also may have a claim against its attorneys for failing to file the cross complaint, unless DACHA was advised of that option, and the Board voted to not do it.

    The Cross Complaint for indemnity, among other things, would certainly be obvious to anyone with a couple of years of civil litigation experience.

    I dont know the procedural posture of the case, but it might be possible for DACHA to still file that Cross Complaint, if the two plaintiffs agree.

    The Cross Complaint would by far be the easiest and quickest way out for DACHA and its members.

    To date, the City Attorney and housing staff have relied upon DACHA and its members keeping quiet and not rocking the city’s boat. This should end, and now, for DACHA to be settled.[/quote]

    I have never proclaimed I represented DACHA. I represent one DACHA member; and I worked on helping DACHA with its dissolution, period.

    Michael, will you take DACHA’s case pro bono against the city? DACHA has no funds to hire an attorney…

  84. E Roberts Musser

    [quote]Why did you, David T., NP or whatever assume such a leadership role when DACHA began. Was that your responsibility at the beginning? Was this done surreptitiously? Did the city staff and council know of your actions at the time? Was there any official link to you while you were developing the papers and establishing a board?[/quote]

    Directly from a letter between city staff and David Thompson/Luke Watkins: “The composition of the LEC board excludes a resident member until such time as the LEC owns 20 units or more. Is this fair representation? How will board members be chosen?

  85. David Thompson

    There was no resident on the Dos Pinos board until 48 shares were sold and that was about four years after the co-op board was formed.

    The first board of the Dos Pinos Co-op were the principals of Sweetwater Development. The two Sweetwater principals acted as the board of the Dos Pinos Co-op from about 1982 until 1986.

    What I am about to show is how almost all co-ops get started.

    Someone, almost always a developer, decides they want to do a co-op, and they go about doing it with their own resources, money and skills.

    Very few co-ops are ever member driven and developed.

    The two Principals of Sweetwater acting as the board of Dos Pinos Co-op
    Purchased the land (from their own company)
    Hired the Architect, Engineer and other professionals
    Paid for the entire cost of the development of Dos Pinos
    Paid Goldfarb and Lipman for all the documents to be created: Regulatory Agreement, Membership Information Report, Subscription Agreement, etc,
    Borrowed the Construction Loan
    Had the co-op board have their company build Dos Pinos
    Borrowed the Permanent Loan from the National Cooperative Bank
    Set the initial rents which were the minimum rents for the next ten years
    The rents set at Dos Pinos were all above market at the time
    They marketed Dos Pinos to the public
    They signed people up
    They built it
    They hired the initial management company and in 1986 they turned the whole package over to the residents
    Amost all the major decisions had been made by the Co-op board composed of the two principals of Sweetwater over a four year period.

    Without the two principals of Sweetwater doing this with some guidance from me, Dos Pinos would never have occurred.

    The board elected by the resident members of Dos Pinos then had to learn how to manage the project, steward the assets, meet the needs of members etc.

    But the major decisions about documents, funding, building and management, rent levels had been made before residents got on the board.

    That is how most co-ops get started and I am grateful for the few developers willing to walk down another path.

    I am always thankful that Sweetwater Development stepped forward and put their assets on the line to create Dos Pinos. I worked for five years with the developers, the community and then later the residents of Dos Pinos to help bring it into existence. I have never received one penny for all the time I gave to Dos Pinos and have given in the ensuing 25 years. I contunie to be proud of what was created by a few of us and what has been done now by many boards and members at Dos Pinos.

    I have met many developers in Davis willing to do good things for our community and I am grateful for the developers who entrusted their “affordable homes” to NP in the hope that with DACHA there would be an end to windfalls.

    David Thompson, NP.

    ERM There was a resident on the DACHA board after 9 shares were sold. The letter you quote (20 shares)is not what actually occurred.

    ERM: You have said in a number of venues that you were pro bono representing DACHA. You were at Yolo Superior Court Court acting as though you represented all the members. Today, is the first time you have distinguished that you represent only one DACHA member.

    So who else beside you at DACHA worked on a DACHA Dissolution Report full of inaccuracies?

    David Thompson, NP.

  86. JustSaying

    [quote]“Not true…”[/quote]Elaine, why not just explain instead of playing this run-around game? There’s nothing to hide here.[quote]“Directly from a letter between city staff and David Thompson/Luke Watkins: “The composition of the LEC board excludes a resident member until such time as the LEC owns 20 units or more. Is this fair representation? How will board members be chosen?”[/quote]Elaine, you’re responding to my question, but I don’t understand what you’re saying here. Is this really a direct quote from “a letter”? What letter? The city really is asking “Is this fair representation?” or are you asking? What came of this “letter”? Any response to the “letter” from DT/LW?

    In any case, what David T. has described immediately above is consistent with my experience in group organizing. Are you satisfied with his description of how these things typically play out and what happened in Davis?

    Or, now that you know what happened (according to someone involved), will you continue to join Sue in vague charges and innuendo in spite of knowing how boards are developed and change over the life of an organization?

    I’m still hoping to hear from DT or LW about my questions. I’m particularly curious about how long DACHA has operated without the two of them involved, and if it’s been more and a year or two how long we think it’s fair to blame their initial development efforts for the downfall of DACHA by way of the city foreclosing.

    I hope someday we’ll hear the story and see the books that reveal what the situation really was at the time of the city’s foreclosure.

  87. Luke Watkins

    Just Saying:

    NP assumed the role of developing DACHA because it was our idea, and our area of professional expertise – cooperatives ownership structures and affordable housing development. As we’ve mentioned before, we were very frustrated by the windfall profits that were being taken by individuals in some of the single family affordable housing situations. And we knew that Dos Pinos had proven itself to be a very effective permanently affordable housing model. Also we knew that many other successful limited-equty housing cooperatives existed around the country, including scattered site projects.

    The city council and staff were fully aware of what the proposed structure of DACHA was to be. The city attorney reviewed all of the organizational documents, including the recently much maligned bylaws. These documents were drafted by Karen Tiedemann of the law firm Goldfarb & Lipman, which is one of the top five or so firms in CA specializing in affordable housing and redevelopment law; Karen has a particular expertise in the law governing limited-equity housing cooperatives.

    Someone of course had to select at least one board member, before the board could begin to select itself. We selected Dallas Kassing, the former President of the Davis Food Co-op, because he had expertise in the field. Then, together with Dallas, we selected a local architect, a local school teacher and the former executive director of the chamber of commerce. The city was aware of this process and never objected to it. Eventually the board formalized the appointment of specific representatives from the City of Davis, DJUSD, UCD and the Chamber.

  88. David Thompson

    ERM There was a resident on the DACHA board after 9 shares were sold. The letter you quote (20 shares)is not what actually occurred.

    Sue Greenwald has taken the information written about Dos Pinos and shaped it to suit her point of view. She said, “For starters, only members were on the board and only members controlled the decisions.”

    This is what the three members of Dos Pinos wrote:

    * Governance: Since the time that members took ownership from the developer in 1986, the first and each subsequent board of Dos Pinos has been composed exclusively of shareholders (co-op members) as required by the Dos Pinos bylaws.

    I know this statement was not meant to mislead. However, because the authors were not aware of the facts, the statement is quite incorrect about the “first board” and therefore regretfully it does mislead.

    But then their unintended mistaken statement and the facts were further misused by Sue.

    The “first” board of Dos Pinos Housing Cooperative was set up by the two Principals of Sweetwater Development probably in 1982 or 1983.

    The Dos Pinos Housing Co-op was in existence as a corporate entity for at least three years prior to the residents of Dos Pinos being elected to the board. So the residents who replaced the first and original board in 1986 were in fact the “second” board of DACHA. In 1986, the Dos Pinos residents did not take ownership from the developer they were elected into the seats of the existing three year old housing cooperative which was already the owner.

    By that time all of the major decisions about the co-op had been taken such that the existing co-op had bought the land, lent the funds, designed and built the co-op, developed all the documents, hired the management company and set the rent levels for a decade to come and marketed 80% of the units. After all those decisions, and when 48 units had been sold and Dos Pinos was almost fully occupied the residents replaced the two developers who had been serving as the first board of the Co-op for the first three years of the existence of Dos Pinos Housing Co-op.

    Almost every housing co-op is started by a group that is not the eventual residents of the cooperative.

    David Thompson, Neighborhood Partners.

    Just so it is known, I never received a penny for all the time and effort I put in for about five years to get Dos Pinos going and have never received a penny from Dos Pinos for the advice on refinancing and property taxes I have given them nor for the consultations asked of me by the Dos Pinos board over the past 25 years.

    I am proud of what Sweetwater did to get Dos Pinos started and proud of the residents of Dos Pinos for what they have done for themselves.

  89. Mark West

    [i]”I’m particularly curious about how long DACHA has operated without the two of them involved, and if it’s been more and a year or two how long we think it’s fair to blame their initial development efforts for the downfall of DACHA by way of the city foreclosing.”
    [/i]
    The residence took over the board in 2006 (2005?) and the City foreclosed in 2011.

    2011-2006=5 years

  90. Luke Watkins

    DACHA was organized in about 2002. Near the end of 2005, the residents held a meeting and recalled Dallas Kassing as the President, and board member. Shortly thereafter, our contract was terminated. At the time of Dallas’s recall, the property was being managed by Madsen & Walton, a professional property management firm with experience in housing cooperatives. NP was not managing the accounting. The readily available financial reports will show that there were no significant vacancy or delinquency issues.

    Once the resident board took control of the organization, many of the members began to fall behind in their monthly payments to DACHA, including the treasurer of the board. The City replaced all of the private sector financing with city loan funds in 2008, reducing the rents by about 35% in order to make the units more affordable. When they refunded member shares down from approximately $20,000 per unit to $6,250 they made everyone catch up on their delinquencies by not refunding the amount of their individual delinquencies. Even with the greatly reduced monthly charges, the residents soon fell in arrears again.

    After attempting to mediate our legal dispute for more than a year, and being offered only a fraction of our legal fees to settle, we began the arbitration process, which resulted in our $331,000 judgment in 2009. Immediately after the award, I was told by a city council member that we “would never see a dime of that money.” Naturally we wanted to recoup some of the legal fees that it cost us to win the judgment, so we levied DACHA’s bank account in October 2009 and collected $58,000.

    The city declared DACHA in default shortly thereafter and began the process of wiping out our judgment lien. At the time of the notice of default, the DACHA residents were once again significantly in arrears. If they had paid their past due charges, they could have paid their past due city payment. In addition, the City was holding approximately $200,000 of their reserve funds, which could have been tapped to pay the past due loan payment. Or the City could have simply deferred the loan payment for a month or two. During 2007-08, they had done precisely that (for 18 months), so that DACHA could re-direct its funds from paying the City’s loan payments to paying legal fees to fight our lawsuit.

    In 2010 we met with the DACHA President, who told us that they had considered filing for bankruptcy in order to stall the foreclosure proceeding, but that they could not afford to do so. Shortly thereafter, we put the organization into involuntary bankruptcy, which we could do as a creditor.

    The City told the DACHA residents that they should fight the bankruptcy, and funded their legal fees to do so, promising that they could still rent their units at the same rates after the foreclosure. Unfortunately the federal bankruptcy judge made a bad decision, ruling that DACHA was essentially a charity, which could not be put into involuntary bankruptcy by a creditor. In his comments, he said cited the fact that the city was loaning them funds as proof that they couldn’t possibly be a for-profit business, because the city would never loan funds to a for-profit business. The City of Davis has made numerous redevelopment loans to for-profit businesses.

    We had hoped that the bankruptcy process would finally throw the mess into the hands of an impartial third party – the bankruptcy trustee. That could possibly have saved the organization.

    Madsen & Walton continued to manage DACHA’s properties up until the foreclosure in 2010. If there had been terrible mis-management of the accounting going on in 2006, as the “audit” inferred, why would DACHA not have replaced their management agent shortly therafter? And why was no follow-up financial audit done by the City to confirm that the shortcomings were being addressed?

  91. JustSaying

    Thank you for these very responsive comments following up on my questions. The story you tell bears so little resemblance to what Sue Greenwald (speaking out for the city council view of events) and Elaine Roberts Musser (speaking our for at least one of the last DACHA members) have been writing as long as the co-op has been a major Vanguard topic that I’m just flabbergasted.

    You and the city appear to have been living on different planets for the past decade, or, at least, in the five or six years since you’ve been involved in DACHA management, etc.

    Luke, your description of the city using city funds in 2008 to pay DACHA members back for most of their member shares (“$20,000 per unit to $6,250”) still leaves me confused. Sue calls the $20,000 “effectively a down payment” when it seems much more like “buying into” a co-op with an amount of money that doesn’t come close to the down payment required for any house we’ve purchased. In any case, the picture being painted is that these folks lost their life’s savings because of your “failed model” and your bad management of DACHA.

    If the city gave DACHA members, say, $13,000 of their original share cost back in some kind of generous rebate program, could they still reasonably said to have lost their $20,000 buy-in funds? Do you see where your response still leaves me confused?

    I hate to see anyone lose on any kind of housing venture, but it’s difficult to gin up too much sympathy after watching one of my family members lose a house to foreclosure, along with their actual down payment of $50,000 plus closing costs, etc.

    If the DACHA members got out of the city foreclosure during the housing collapse losing just a couple month’s pay, I’d say they came out pretty good. And, if they’re still sitting in their houses paying some reasonable rent, I’d even move their classification up to “fortunate.” And, if they were fortunate enough to be in arrears at the time the city foreclosed–and, as Elaine noted, their debts were “taken care of” by the foreclosure–I’d go as far as suggesting they hit a City of Davis jackpot.

    Correct me if I’m mistaken about how the city’s major subsidy of the members’ original $20,000 share payments impacted their eventual amount of loss.

    Who, specifically, in city government made the decisions to: 1.) give each member thousands of dollars in tax monies in 2008? and, 2.) then foreclose on DACHA a couple years later when the co-op could have met its obligations with available reserve or other funds and still been operating today?

  92. Luke Watkins

    In 2008 the city refinanced all of the perfectly good private commercial financing from First Northern Bank and River City Bank with one big city loan. They increased that loan amount by approx. $200,000 to allow DACHA to refund the member shares down from about $20,000 to $6,250.

    At the time of foreclosure many of the members were in arrears on their monthly charges to DACHA, so their net loss was only a fraction of that $6,250.

    The decision to refund that $200,000 was made by the city council in open session, and the foreclosure decision was made by the council in closed session.

    In addition to then city manager Bill Emlen, and city attorney Harriet Steiner, there were several city staff members involved in these decisions. The key staff have been Danielle Foster, Jerilyn Cochran (now gone), Elvia Garcia-Ayala and Katherine Hess. During discovery, we were disgusted to see e-mail correspondence indicating that DACHA’s attorney had sent the city an advanced draft of a communication that he wanted to send to us. Incredibly all four of these staff people were involved in the review of his letter.

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