Ousted L.A. Housing Authority chief leaves with $1.2 million

Rudolf Montiel seemed remarkably sanguine last spring, sitting in a meeting room at the Los Angeles Housing Authority headquarters as he was publicly castigated by tenants just before being fired as the head of the largest public housing operation west of the Mississippi.

He even smiled slightly as he threaded his way through an angry crowd. Before he stepped into the elevator, Montiel coolly suggested that his ouster had “an air of retribution and retaliation.”

Montiel may have had reason to smile. Records obtained by The Times show that the housing authority board appointed by Mayor Antonio Villaraigosa has quietly agreed to pay Montiel nearly $1.2 million in connection with his dismissal.

News of the agreement, reached in meetings over the last six weeks, sparked swift, sharp criticism of an agency already buffeted by a criminal investigation, probing auditors and allegations that officials have lavishly and improperly spent taxpayer funds intended for the poor on travel and entertainment.

City Controller Wendy Greuel, who has been auditing the agency’s travel expenses, released information Friday showing that officials billed the public for limousine rides and meals at pricey downtown hot spots, including Bottega Louie, Rivera and The Palm. The same day, KCET-TV’s “SoCal Connected” aired its own report on the restaurant tabs, some of which exceeded $2,000.

Critics described Montiel’s hefty departure package as a symbol of misplaced priorities and poor management at an agency that spends $1 billion a year in state and federal funds.

“How many people can you house for $1.2 million?” asked Larry Gross, executive director of the Coalition for Economic Survival. “It’s outrageous.”

Councilman Dennis Zine compared it to pay and retirement package excesses unearthed in the city of Bell. The “language I would use is not appropriate for publication,” he said.

Montiel, 50, was unavailable for comment. His lawyer, Michael Posner, defended the settlement, saying Montiel’s contract entitled him to 18 months’ pay if terminated. And Posner said his client deserved additional compensation because he was fired for telling investigators about wrongdoing.

“There’s no doubt that Rudy blew the whistle on several of the commissioners for engaging in inappropriate conduct, and his termination was in retaliation” for going to prosecutors and federal auditors, Posner said.

Mitchell Kamin, the new president of the housing authority’s board, said the deal was in the best interests of the agency and would be largely paid for by insurance. “The basic thing was to eliminate any legal liability … close this chapter and move forward,” Kamin said.

Officials now say that Montiel’s contract made it very difficult to fire him without paying him large sums. In recent weeks, he received a $540,000 severance package — including $18,000 in interest payments, paid at a rate of 7% — to make up for time that had passed since his termination. He is scheduled to be paid $645,000 more next month to settle his claims of wrongful termination and whistle-blower retaliation.

Kamin said Montiel’s replacement will not receive “the kind of provisions that somehow found their way into his contract.” The Times reported last year that Montiel’s compensation package totaled nearly $450,000, including 10 weeks of vacation and a housing allowance. One year before firing Montiel, Villaraigosa’s appointees on the board were so impressed with his performance that they extended his contract to 2014 and boosted his pay with a $25,000 bonus.

“His compensation package when he worked for the agency was inflated to begin with,” said Councilman Richard Alarcon, who also called the settlement “outrageous.”

“The good news is, he’s no longer directing the agency.”

Montiel arrived at the authority in 2004 with genteel manners, sharp wit and an encyclopedic knowledge of federal housing regulations. The agency was in crisis and at risk of a federal takeover of its housing projects and vast system of rental subsidies.

Montiel was hailed as a brilliant reformer and credited with weeding out corrupt practices and improving services. He kept a low profile but launched an ambitious plan to redevelop the authority’s dilapidated housing stock, including transforming the troubled Jordan Downs Housing Project in Watts into an “urban village” with shops and market-rate housing mixed in among units for the poor.

Things soured late last year. Montiel came under increasing scrutiny from tenants unhappy with the pace and direction of the changes, including what they feared could be higher rents. In November, dozens of tenants picketed outside Montiel’s Rancho Cucamonga home to protest.

In short order, nine of those tenants were facing eviction, provoking a furious backlash from the City Council, which has little control over the semi-autonomous agency. Alarcon accused Montiel of being “childlike,” paranoid and acting like “Big Brother.” The evictions were rescinded, but Montiel never recovered politically.

Housing authority board members and their lawyer said the agency’s effort to evict the protesting tenants caused them to lose confidence in Montiel. Some went further, publicly accusing him of installing a $30,000 security system at his home and charging it to the authority without authorization.

Days before he was fired, Montiel wrote memos to board members asking them to return thousands of dollars in travel and other reimbursements allegedly obtained without authorization or receipts.

After Montiel was fired, his lawyer demanded $5 million, saying his client was libeled. In his legal claim against the city, the lawyer said Villaraigosa’s staff had “engaged in a pattern of disparaging and slandering Montiel in the business and general community.”

The mayor’s office did not comment, and Kamin said he could not discuss individual legal claims.

As part of the settlement, Montiel and the housing authority officials agreed not to disparage each other publicly. The housing authority also agreed to write a letter stating that Montiel had proper authorization to install the alarm system. The document was to state that the agency “does not have any knowledge” of improprieties involving business expense reimbursements paid to Montiel.

That agreement was reached as current and past authority officials are facing allegations that they improperly charged the agency for such personal items as tourist jaunts, double-dipped on their expenses and used authority-issued credit cards for fancy meals and $100 floral agreements sent to Villaraigosa’s board appointees.

At least some of the accusations have drawn the interest of Dist. Atty. Steve Cooley’s Public Integrity Division. “We’re looking at multiple commissioners on conflict-of-interest issues and double-dipping issues,” said Deputy Dist. Atty. Max Huntsman.

Greuel said she believed that the questionable expenses found by her auditors are “the tip of the iceberg” and that the agency’s spending is marked by “multiple irregularities.” She said authority officials have been hostile toward her inquires thus far, adding that a more comprehensive audit is needed.

Kamin, the housing authority board president, said he would discuss the idea with Greuel’s office “right away.”

“It sounds like a very good idea,” he said.

david.zahniser@latimes.com

jessica.garrison@latimes.com