L.A. council members call for more control over housing authority

Angered by reports of lavish, taxpayer-funded restaurant meals and a high-priced payout for the fired executive director of Los Angeles’ housing authority, city leaders on Tuesday pushed for more direct, local control of the beleaguered agency.

Council members Jan Perry, Eric Garcetti and Dennis Zine introduced a motion calling on the governor and state lawmakers to work with housing officials in Washington to overhaul the governance of the $800-million-a-year federally funded entity responsible for sheltering 60,000 needy Angelenos.

During a lengthy hearing, two other council members — Richard Alarcon and Jose Huizar — called for city staff to explore how the council could seize more power over the housing agency. And Mayor Antonio Villaraigosa’s office released a statement joining the calls for greater city oversight.

Under a hybrid governing structure, Villaraigosa appoints the authority’s seven board members. But the council lacks the ability to review, approve or reject spending decisions — a power it has over many city departments.

Perry said the council should be able to review expense reimbursement practices — the focus of recent critical reports by City Controller Wendy Greuel and KCET-TV — as well as a $1.2-million payout to Rudy Montiel, who was fired last spring as the housing authority’s top executive.

“It’s not only the magnitude of the settlement but the actions [at the housing authority] that led up to it,” said Perry, who like Garcetti and Greuel is a candidate for mayor.

The proposal drew a favorable response from Montiel’s lawyer, Michael Posner. “Considering that there was clearly an absence of oversight by the mayor, I think that’s a great idea,” he said.

Greuel released an audit Tuesday that she said showed “out of control spending and fraudulent activity” at the authority. Greuel placed part of the responsibility for the expenses on Montiel, but also said some blame should fall on Villaraigosa.

“Clearly they needed to be minding the store better,” she said. “This was an agency that felt no one was watching.”

Villaraigosa was in Asia on a 10-day trade mission, but his office released a statement saying he had “taken immediate steps” to fix spending problems after they surfaced last spring, including asking Greuel to do her audit. The mayor also said he “urged a top-to-bottom review of policies and personnel” at the housing authority.

Later Tuesday, the housing authority board voted to appoint Villaraigosa’s chosen candidate, Doug Guthrie, as interim chief executive of the agency. Guthrie, who will remain the head of the city’s housing department, a separate agency, said he will focus on cleaning up the authority until a permanent head is chosen.

The previous interim head, Ken Simmons, stepped down last week at the mayor’s request. He had filled in since Montiel was fired. Authority board members quietly agreed to pay Montiel the $1.2-million departure settlement after he claimed he was a victim of retaliation for reporting improper spending practices and other wrongdoing by board members, many of whom have since stepped down.

Summoned before the City Council on Tuesday, Simmons said he opposed the lavish spending from the start. Most of the controversial expenses took place under Montiel’s leadership, he said, adding that he tried to stop them. He said he registered his disapproval with Montiel and reported some of the questionable outlays to the district attorney and the federal housing department’s Office of Inspector General when he took over this year.

“I didn’t agree with it,” Simmons said. “It gets to the point where you argue with your boss, and your boss says, this is the way we are going to do it.”

Posner, Montiel’s lawyer, accused Simmons of trying to “duck and cast blame” and said his comments violated the terms of the separation agreement between Montiel and the housing authority, which bars each side from disparaging the other.

“This is exactly what the contract prohibited,” he added.

Housing authority officials say the practice of dining in expensive restaurants has ended. They also said many of the most expensive tabs were run up recognizing tenants and large groups of employees.

In summer 2010, housing authority board members and more than 20 public housing residents dined at McCormick & Schmick’s as part of an “etiquette training” graduation ceremony, according to officials. That meal cost $2,000. Two months earlier, the agency held a $2,233 luncheon at Harold & Belle’s restaurant to honor 50 employees as Four Star Performers.

Simmons said those meals were purchased with funds from nonprofit groups the housing authority uses to manage its housing units and help with contracting decisions — not federal money intended for poor tenants.

That drew an angry response from Zine. “To me, that is washing money. That is washing money so we can spend it the way we want and not be accountable for anything,” he said.

david.zahniser@latimes.com

jessica.garrison@latimes.com