The City Council allowed the Davis Area Cooperative Housing Association to take one step closer toward dissolution Tuesday night when it voted 4-1 to approve the co-op’s application to dissolve. Mayor Joe Krovoza dissented.

DACHA filed for dissolution after Neighborhood Partners LLC, the affordable housing developer that created DACHA in 2002, cleaned out all of the co-op’s remaining assets by successfully suing DACHA for illegally terminating its contract.

The City Council’s decision, however, only plays an advisory role in what the state Attorney General’s Office ultimately will decide when it reviews the case to determine whether dissolution is appropriate.

However, with ongoing lawsuits leveled against DACHA and the city of Davis — who took over as landlord of the 20 homes after the city’s Redevelopment Agency foreclosed on the properties in July 2010 — there’s a question about whether the attorney general will even make a decision.

David Thompson, president of the Twin Pines Cooperative Foundation and Neighborhood Partners, both of which are suing DACHA and the city, said after the meeting Tuesday night he has received word from the attorney general that it won’t make any decisions until the lawsuits have been resolved.

But Elaine Roberts Musser, DACHA’s attorney, reminded the council during public comment that it was not there to put DACHA on trial, but to process the dissolution application.

“There is absolutely no legal basis upon which the city could refuse to make a finding that DACHA has not met all the requirements of California Civil Code 8172,” Roberts-Musser said. “DACHA has done everything that is legally required and then some.

“DACHA may not even be subject to (the civil code’s) provisions; it is very likely that DACHA can dissolve of its own accord without the city’s permission. … What is important now is for the city to do what it is legally required to do.”

But because Thompson believes the pending lawsuits precluded the city from making any objective decisions about dissolution, he laid out before the council the myriad allegations against DACHA and the city.

“DACHA has become a landmark case of the largest looting of a limited-equity cooperative in the nation,” Thompson said. “DACHA’s neglect of its corporate responsibilities as a public benefit corporation, the breaking of articles and bylaws and state laws, make DACHA the poster child of a board gone bad.”

Thompson also said DACHA has been in violation of California state law since 2005 when its members asked to own their homes.

About 20 other Davis residents and friends and family of Thompson also spoke during public comment to urge the council not to approve the application for dissolution.

Several speakers alluded to another lawsuit against the city for the misuse of public funds.

“Three quarters of a million dollars of public money has been squandered on legal fees attempting to defend an untenable position,” said Davis resident Brian Johnson.

When it came time for council questions, Stephen Souza asked the city’s attorney, Harriet Steiner, exactly how much the city has paid in legal fees for DACHA.

“I think the best that I can say is those numbers (given during public testimony) are significantly in excess of what I believe the city has spent on legal fees,” Steiner responded.

Regardless of the outcome of the lawsuits against DACHA and the city, Ethan Ireland, acting board president of DACHA, just wants to be able to move on.

“DACHA has no assets of any kind, has massive liabilities and frankly no conceivable way to continue operating,” Ireland said. “Its membership has no interest in remaining members of an organization that is being so heavily sued and their only wish is for it to be dissolved so they can get on with their lives.”

The City Council in the end elected to fulfill its duties as the entity required to process the application by making the findings to approve dissolution, but it also added stipulations to the recommendations offered by Danielle Foster, the city’s housing and human services superintendent, and Elvia Garcia-Ayala, the city’s community development coordinator.

In reference to the pending lawsuits, the council approved a motion to “task the city attorney to work diligently to mediate or otherwise settle this matter.”

That work is already under way, Steiner said.

The council also directed city staff to commission an independent objective examination of the situation with an eye toward the proper disposition of the DACHA homes. About half of the homes are occupied; the tenants are paying rent to the city.

— Reach Tom Sakash at [email protected] or (530) 747-8057. Follow him on Twitter @TomSakash

The following correction was published Sunday, Feb. 12: A story published Wednesday about the Davis City Council’s vote on dissolution of DACHA, the Davis Area Cooperative Housing Association, reported that the council voted 4-1, with Mayor Joe Krovoza dissenting, to approve DACHA’s application to dissolve. Krovoza clarifies that he supports the dissolution but disagreed with the wording of the motion.

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