Archive for February, 2015

Berkeley co-op directors: Can they pass Civics 101?

Friday, February 27th, 2015

An inspiring idea

The notion of “cooperative housing in Berkeley” may suggest democracy, transparency, free speech, and participation. For over 80 years the Berkeley Student Cooperative has given many UC Berkeley students experience in cooperative housing. Other cooperative and collective residential properties of various flavors dot the Berkeley map.

The gritty reality

Democracy sometimes loses its way, however, even in co-ops and even in Berkeley.

Case in point: Berkeley Town House (known as “BTH” by its residents), a venerable consumer cooperative corporation that owns a 60-unit apartment building 6 blocks south of the UC campus. Venerable, I say, because it reputedly was the first senior housing co-op ever established in the United States.

The year 2015 is opening with a civics lesson at BTH. On 9 January three members exercised their right (under California’s Consumer Cooperative Corporation Law) to call an election meeting of all members to vote on some (democratizing) amendments to the governing documents of the co-op.

What does the law say should have happened next? Once the petition was filed with the Secretary of the co-op, the Secretary should have notified the Board of Directors, which should have called an open meeting to schedule the election, notifying all members in advance and allowing them a reasonable time to speak at the meeting. After the Board chose an election date at that meeting, the Secretary should have “forthwith” (as the law says) arranged for all the co-op’s members to be notified of the election.

What actually happened, instead? The Board of Directors never held the required open meeting to schedule the election. Instead, the Board announced in a letter to the members that the election might take place (or might not). Then, on 25 February, almost 7 weeks after the petition was filed, the President announced at a regular Board meeting that the election would take place. The scheduling of the election was not on the agenda of that or any other Board meeting.

But that’s not all. At the same 25 February meeting Directors denigrated the petitioners and their petition, giving those in favor of it no advance notice and no opportunity to respond. One Director, the Vice-President, complained that none of the three petitioners was in attendance at the meeting. Another Director, the Secretary, stated that the petition had entailed considerable expense on consultations with a lawyer and, if the proposed amendments were adopted, would force the Board to spend yet more on legal fees. A third Director, the Treasurer, warned everybody that adopting the proposed amendments would impose unpredictable costs on the corporation, which the Board would recoup with a special assessment levied against all members.

Civics 101

What did the co-op officials get wrong?

  1. The Secretary didn’t “forthwith” get the election scheduled and give notice to the members.
  2. The Board delayed the scheduling of the election much longer than reasonably necessary to allow notice to be given “forthwith”.
  3. The Board wrote its “maybe” letter in secret and later scheduled the election in secret.
  4. The Board made secret decisions to purchase legal services in connection with the petition.
  5. The Board didn’t tell the members in advance that the above-mentioned secret meetings were going to deal with these topics.
  6. The President announced the scheduling of the election and made further remarks about it, and three Directors expressed animosity against the petitioners and the petition, at the 25 February Board meeting, even though that subject was not on the agenda.

All these acts and omissions violate provisions of the Consumer Cooperative Corporation Law or the Common Interest Development Open Meeting Act.

In addition, legal arguments might, and moral arguments certainly can, be made about:

  • The personal criticism and threats of economic sanctions directed against the petitioners and anybody who might be considering voting for the amendments. Those favoring the democratic reforms embodied in the amendments were caught off-guard and, in any case, forbidden to reply by the President. Madam President, consider this blog entry one of the rebuttals that you didn’t permit at the 25 February meeting itself.
  • The evaporation of thousands of dollars spent on legal advice, even though the law gives paint-by-numbers instructions on processing an election petition. This was, in reality, collective punishment. Don’t you dare use your powers as a member, it said, because, if you do, we’ll deplete all members’ funds and blame it on you.

Democratic transparency may be subdued at BTH, but the autocratic tactics of its Directors are transparent, indeed.

Grade so far in Civics 101 for the spring semester of 2015: F.

Moral of the story

California lawmakers have long struggled to ensure a modicum of democracy in the state’s housing communities, by enacting procedural safeguards. But these are widely violated, including at Berkeley Town House.

So why do BTH officials show such little respect for their members? Perhaps because the Directors have grown accustomed to unchallenged autonomy, and they feel threatened by a grass-roots action that would make governance at BTH more democratic and participatory.

Still, illegally dealing with an election is a risky way to flex official muscle. It threatens the validity of the election. It exposes the corporation to expensive legal challenges and a possible re-run of the election. It cements BTH’s spreading reputation as a formerly democratic but currently dysfunctional community. That’s no good for the resale value of the members’ investments. From legal, moral, and economic perspectives, BTH members are being ill-served by their officials.

Seismic analysis of Berkeley Town House

Sunday, February 15th, 2015

Berkeley seems to be abuzz with seismic upgrades. Two buildings within a block of Berkeley Town House have recently been reinforced to protect them against the collapse of their soft ground floors. But Berkeley Town House itself, a 9-story reinforced concrete structure started in 1960, operated as a senior cooperative, has undergone neither a seismic rehabilitation nor an assessment to determine whether any reinforcement would be a good idea.

Instead, Berkeley Town House is abuzz with seismic conflict. I have yet to meet anybody in the 60-unit co-op who is blasé, and hardly anybody who admits to being unsure, about the seismic risks facing the building. What I have heard, instead, is self-assured declarations ranging from

If there’s an earthquake, this building will collapse!

to

Not one dime for earthquake studies!

to

This is one of the safest buildings in Berkeley.

to

No engineer is going to tell you that the building is safe.

to

When my time has come, I’m ready to die.

to

Any earthquake study is going to force us to spend $2 million to upgrade the building. It’ll bankrupt some of us, and we’ll have to move out while it’s under way.

The closest thing to a seismic assessment of the building so far is a 2002 study referenced in the slides I prepared for a 2010 presentation on this issue. In view of a recent uptick in discussion about the topic, I’m reposting here a copy of that study, which one of the authors has also been making available on his own website. We have been warned that this study suffers from two main weaknesses. (1) It was an educational research project conducted in part by undergraduate engineering students. (2) It was published in 2002, more than 12 years ago, and the power of seismic-response modeling for buildings and ground-shaking prediction has grown dramatically in that interval. So, caveat lector, but you are welcome to read the 2002 LBNL seismic analysis of BTH.

Berkeley co-op waste nears half a million dollars

Monday, February 2nd, 2015

The treasurer of a Berkeley, California, senior housing cooperative announced on 28 January that the co-op had spent or lost more than $224,000 as the result of an ongoing lawsuit.

Berkeley Town House, a 60-unit building, has been involved in the suit for nearly three years. In the suit, I am the plaintiff, and 8 former co-op officials are the principal defendants. The essence of the suit is my complaint that the defendants (1) illegally wasted about a quarter-million dollars of corporate funds, which they owe back to the corporation, (2) recklessly ignored warnings of possible seismic weaknesses in the co-op building, and (3) perpetrated massive violations of legally guaranteed shareholder rights. The co-op’s insurance company has provided attorneys to defend the defendants, and also to represent the co-op, from the time the complaint was filed.

If the insurance company is paying for attorneys for the defendants and the co-op, what accounts for the co-op having incurred almost a quarter-million dollars in out-of-pocket costs? I wish I could tell you, but I can’t, because the basic facts about the co-op’s expenses—whom has it paid, when, how much, and for what—have been kept secret. Five of the co-op’s members asked to see those facts in March 2013. Nearly two years later, we are still waiting, even though state law obligates such corporations to disclose that kind of information in at most 30 days. We have received a small sample of what we asked for, but most of the time period remains an information vacuum.

Bottom line: The co-op’s officials were sued for (among other things) wasting a quarter-million dollars and keeping illegal secrets. How have they and their successors responded? By doing the same thing again, raising the waste to nearly half a million and keeping their shareholders still in the dark about how and why their money is spent.