SOUTH LAKE TAHOE, Calif. — The California Department of Justice is threatening litigation against the nonprofit Tahoe Coalition for the Homeless for an alleged breach of contract with the Department of Housing and Community Development.

In a letter sent Nov. 16, deputy justice Carlos Mejia called for the coalition to “respond to information concerning TCH’s financial status” that was shared by TCH with the Department of Justice via email Oct. 20 and 28. 

TCH’s efforts to remedy the breach have been “woefully inadequate,” the letter states. The letter continues that the department’s concerns about TCH’s performance have grown since reviewing the nonprofit’s provided financial information, calling its financial state “precarious.”

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“As a consequence, the department can no longer tolerate the status quo and will require judicially-approved action to ensure the continued use of Bear’s Den for affordable housing and a means of operating it should TCH cease to function,” warns Mejia.

The Tahoe Coalition for the Homeless, previously led by Executive Director Cheyenne Purrington, purchased South Lake Tahoe motels Red Lodge, El Nido Motel and Bear’s Den in 2020 to convert into long-term housing via Project Homekey. Purrington left the coalition in September 2022 and now lives in Oregon, working as executive director for the Coordinated Houseless Response Office in Deschutes County. 

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DOJ officials state they are ready to draft a stipulated judgement with terms such as TCH’s admittance of its breach of agreement. Department of Housing and Community Development staff declined to comment on the specifics of the breach. 

The judgement would call for TCH to consent to an amendment eliminating requirements that DOJ offer a 90-day cure period to correct the breach of contract and consent to the immediate recordation of a lien against Bear’s Den for the $2.8 million in Project Homekey funds received to purchase the property. Should DOJ determine the coalition is no longer capable of managing Bear’s Den, the department may by “ex parte application secure the appointment of a receiver to assume full control and operation of Bear’s Den.”

The letter states the terms are “not subject to negotiation” and if TCH fails to accept the terms, litigation will be initiated. 

The Department of Housing and Community Development awarded the funds to the Tahoe Coalition for the Homeless, whose mission is to support people at risk of or already experiencing homelessness. Monies totaled $2.6 million to operate at Bear’s Den, $2.4 million for Red Lodge and more than $2.3 million for El Nido in late 2020.

Tahoe Coalition for the Homeless Board President Tom Makris in an email response to the Mountain Democrat states he cannot comment on legal issues but his organization is “committed to working with HCD and the Attorney General’s Office to try to ensure that we continue to house more individuals, upgrade our current housing facilities and remain in compliance with HCD’s requirements.”

The coalition is currently housing approximately 40 individuals, according to Makris. 

In a Nov. 23 response letter from TCH’s lawyer Gabrielle Janssens to the deputy attorney general, she asks for clarification on the stipulated judgement’s terms “not subject to negotiation,” including why the lien would be $200,000 over the amount of funds provided under the agreement.

“TCH has worked towards meeting HCD requirements for the Bear’s Den property and desires to work collaboratively with HCD,” the letter states. “As you know, TCH has encountered significant challenges since the contract was executed.”

Some of those challenges include finding labor for site rehabilitation work, with many of the hotel units deemed unsafe to inhabit. The letter also addresses the coalition’s “precarious financial state” naming plans to conduct a major fundraiser with a goal of $250,000 to help with cash flow related to the hotel’s operation. 

“If TCH were to no longer operate, it would have a tremendous impact on the South Lake Tahoe community,” states Janssens in the letter. “TCH is the lead homeless provider in South Lake Tahoe and El Dorado County and provides the only option for sheltering unhoused adults in the city of South Lake Tahoe.” 

Janssens also points out TCH complied with all requests made in an Oct. 10 letter, which included the coalition achieving 50% occupancy of units at the Bear’s Den no later than Dec. 31.