Persistence of 2 Gadflies Led to Housing Commission’s Fall

They are hardly imposing figures: Hans Jovishoff leaning on his cane and Mel Shapiro dressed in his baseball jacket. But these two retirees from New York have been scratching and clawing to expose a scandal at the San Diego Housing Commission that they outline in epic proportions.

They label it a scandal “reminiscent of Watergate and the Dominelli affair,” a “saga of extravagance at taxpayers’ expense” by “insensitive” housing commissioners, who are running a public agency that is “completely out of control.” The commission’s executive director, Jovishoff claims, is a “liar” and an “eel” who has run up “obscene travel expenses” that are “just the tip of the iceberg.”

Worse yet, this has been happening without the public knowing. “They got away with it by supplying misinformation and withholding information and nobody seemed to care enough to dig deeper,” Jovishoff said.

Nobody, that is, except Jovishoff and Shapiro.

And, oh, have they stirred up trouble! The self-appointed guardians of the public interest have tracked the doings of the housing agency with an uncommon zeal that some City Hall insiders swear borders on obsession.

Convinced there is something terribly amiss, they have picked through mountains of public records, fired off a barrage of letters to newspaper editors, buttonholed politicians, phoned radio talk shows, hounded news reporters and helped initiate at least two federal probes of the commission.

In May, the men even filed suit against the commission because it was charging them a quarter a page to copy documents they hoped would expose the agency. Actual copying costs, they claimed, are less than a dime a sheet. The suit is pending and has so far cost the agency $4,074 in legal fees, according to commission records.

Although none of the investigations has yielded anything stronger than a charge of “questionable practices” against the commission, there was a profound political reaction when, last month, the San Diego City Council voted to oust five commissioners from the embattled agency and to put council members in their stead. The reason for the dramatic takeover: The housing agency had been stripped of its credibility by the constant whirlwind of controversy.

You can thank Hans and Mel.

“You have a couple of people with an intense personal interest in a very vital issue,” said Paul Peterson, a local land-use attorney. “Their contribution has been very significant in terms of acting as self-appointed overseers of a very complex agency. I think that they have made a substantial impact on the situation through their intensity and dedication, and I think essentially what they’ve done is very positive.”

Others disagree. Councilman Bill Cleator dismisses Shapiro and Jovishoff as “destructive” gadflies and hints that Jovishoff, at least, is a socialist.

Housing Commission Executive Director Ben Montijo, on the receiving end of their most pointed allegations, refers to them as “old coots.”

Veterans of political battles over rent control and preserving senior citizen housing, Shapiro and Jovishoff have been fighting on behalf of tenants for years as founders in 1977 of the Housing Coalition of Greater San Diego.

Jovishoff, a 72-year-old widower, walks with a cane and speaks with the thick accent of his native Germany, which he fled in the early 1930s because of the rise of Hitler. Once an owner of a New York City lithography business, he retired to San Diego in 1972 with a healthy distrust of government.

Shapiro, 59, is a short, bespectacled, life-long bachelor, a former industrial accountant from New Jersey who secured an early retirement in 1968 by speculating in the stock market. Active in local Democratic Party politics, he has served on a state committee to award government loans and grants to cities for housing. His trademarks: A baseball jacket and a penchant for detail.

As a team, the men have packed a one-two punch. Jovishoff inveighs against the commission with biting, sometimes bombastic, rhetoric; Shapiro quietly bleeds it with questions and requests for documents.

Their target has been a formerly obscure city agency that was created in 1979 to provide housing for moderate- and low-income families, as well as the handicapped and the elderly.

Much of the oversight responsibilities has been delegated by the City Council to a board of seven appointed commissioners. That way, city officials argue, they can inject the expertise of business people into the municipal housing program and avoid what they say are the mistakes of older cities, where city-run tenements have degenerated into crime-ridden slums.

So far, the commission has helped build 11,500 housing units in San Diego. About two-thirds of those were constructed after the commission floated low-interest bonds for private developers, who promised to set aside 20% of their units for commission clients in exchange for the savings on the financing.

Council members, content with the hands-off approach to the politically nettlesome housing problem, would approve commission items at the end of long meetings and after only light review.

“When you’re sitting in closed session starting from 9 in the morning and you have housing at 5:30 in the afternoon, who’s going to pay much attention?” said Joann Johnson, an aide to Councilwoman Abbe Wolfsheimer.

One item that drew a bit more attention, however, came up in June, 1984. The council was asked to give its blessing for the commission to purchase a warehouse building at 1625 Newton Ave., in Barrio Logan.

The complicated transaction called for the commission to use $1 million in federal funds to purchase the land under the building, while a private investor--Robert J. Lichter, president of John Burnham & Co., a commercial brokerage--would buy the building itself for $1.5 million. The commission had agreed to lease the land to Lichter for $100,000 a year, and Lichter would rent 37,000 square feet in the building back to the commission for the fixed rate of $221,000 a year.

At least these were the facts presented to the council members during two public hearings on the matter, transcripts show. Montijo assured council members that such a “public-private partnership” would reap a $2-million long-term boon for the housing agency, which had been renting space in the Spreckels Building downtown.

At first blush, the deal even looked good to Shapiro, who has barely missed a commission meeting in seven years.

“It sounded good, and I didn’t oppose it,” he said. “However, I was tipped off by a guy that there was more to it.”

Shapiro asked to see documents other than the written report it had submitted to the City Council.

The item that shocked Shapiro most was that the commission itself would be loaning Lichter $1.5 million in federal housing funds to buy the building in the first place. Lichter would be borrowing the money at an average interest rate of 10.5%--much lower than the rate of conventional loans--and he was obligated to pay only the interest for 10 years, with the $1.5-million principal due if and when the Housing Commission moved out.

“I said, ‘Gee, this is a major omission,’ ” Shapiro said. “They were lending this guy $1.5 million, and they didn’t tell the council they were lending it to him. It basically means that he’s getting a building for nothing, no cash.

“They were not giving the council all the facts.”

So began the crusade.

Shapiro gathered up the documents and tried to peddle the story to the media. The Times published an article in December, 1984, analyzing the deal and concluded that it was legal and could net Lichter as much as $1.1 million.

The San Diego Union, which passed on the story at first, followed later in the month with an article under the headline, “Taxpayers and Renters Both Aided; Public Housing Agency Actually Shows a Profit.”

Hardly a paroxysm of outrage. Even Shapiro’s attempt to get the federal government concerned fell flat.

At his request, an inspector general from the U.S. Department of Housing and Urban Development examined the transaction and wrote in a December, 1984, letter that the purchase-lease arrangement was a “valid housing purpose” for the federal funds.

Still, the transaction bugged Shapiro, who eventually picked up an ally in Jovishoff, himself a critic of the deal.

The outspoken widower said he had nagging questions about the “arithmetic” of the Lichter deal: Why was a public agency using federal housing money to “feather its own nest” rather than building shelter for the poor? If this was such a good deal, why did the commission eventually spend $637,000 in federal money to convert the warehouse into office space?

While the men mulled that over, Shapiro went to the commission in mid-1985 with a new request.

“I just said I’d like to see all the bills for remodeling, refurbishing, anything that had to do with the building,” he said. “That was a shot, a shot in the dark.”

It hit the bull’s-eye.

Shapiro found bills for the $7,000 Montijo spent to furnish his new office with a walnut desk, credenza and custom-built wall unit with space for a television, refrigerator and bar supplies. There was the $1,000 for a new countertop in his private bathroom.

Other expenditures included a $1,500 pectoral-flex machine and a $3,600 piece of gym equipment for Housing Commission employees.

It was a crucial discovery that did two things. First, it brought Montijo, a $79,000-a-year administrator, into the center of the controversy.

But most importantly, it galvanized the interest of a public--and media--already primed for scandal by the cases of former Mayor Roger Hedgecock and Councilman Uvaldo Martinez. Although many couldn’t fathom the fine points of the real estate deal, nobody had a problem understanding a public employee using public funds to buy an expensive desk.

“It’s one of those things that is just so sexy, like the gym equipment,” Montijo admitted recently. “If I had it to do over again, I wouldn’t do it. I’d sit at an orange crate.”

Shapiro brought the story to the Reader, a local weekly newspaper, which ran an article in September, 1985, accompanied by a picture of Montijo’s desk.

There was an immediate ripple effect. The following weekend, KCST (Channel 39) broadcast an editorial blasting the commission for a “scandalous waste of taxpayers’ money.”

In October, the Tribune published a front-page story about the remodeling, along with a picture of Montijo’s secretary doing a bench press on the new gym equipment.

The men rode the wave of publicity. Letters and phone calls from Jovishoff and Shapiro became well-known in newsrooms throughout the city. Their letters and commentaries were published in The Times, the San Diego Union, the Tribune and the Reader.

“City officials won’t do anything unless there is public pressure, and the only way to do it is through the media,” Jovishoff said.

Information the men supplied to KGTV (Channel 10) became the starting point for that station’s seven-part series in mid-March criticizing the commission and Montijo.

“Every single story that has emanated on the Housing Commission, of any impact, the seeds of those stories were planted by Hans and Mel with some fact,” said Ted Dracos, a Channel 10 reporter. “It may be that the news organizations nourished those seeds with a lot of legwork and some tough, painful interviews. But the original Johnny Appleseeds were Mel and Hans.

“Take 100 Hans and Mels and let them loose in this county and, first of all, you’ll see chaos. Then you’d see a lot of people leaving town.”

Dracos credits the retirees for tipping him off to Montijo’s travel and credit card charges, which totalled $21,235 in 1985. He found that Montijo billed the City of San Diego for $225 of a $668 trip to San Francisco in August, 1985, although the excursion was for a job interview with the San Francisco Housing Authority.

Acting on a tip from the men, the Reader also reported in mid-March that Montijo’s secretary accompanied him on trips to San Francisco in July and November, 1985, to close bond issues in San Francisco.

Montijo was clearly put on the defensive. He bared credit card statements and checks. He explained that he charged the City of San Diego for part of the August trip because some commission business had been conducted.

He brought his secretary, Rourke O’Neill, along on the other two trips in question because she needed to be a signatory on bond documents, he said.

Under fire, Montijo took the advice of a “variety of persons” and used commission funds to take $3,000 worth of private lessons from a speech coach to “improve presentations to the council and the public.”

In May, he offered an olive branch to Jovishoff and Shapiro when he met with them at the Housing Coalition offices.

“He said we should forget about the past,” Jovishoff said.

“We’re not the type of people who would say we’re going to forget about it,” Shapiro added.

Privately and publicly, the men heaped criticism on Montijo.

“I think you can probably say that they’ve dogged Ben Montijo wherever he has gone,” Councilman Ed Struiksma said.

In conversation, Jovishoff often refers to the executive director as “a liar” and, recently, he had this to say about the time Montijo once traveled to Monterey for a seminar but billed the city for a hotel room in Fresno:

“He seems to be extremely flexible. Like an eel, he can be in three places at once.”

Meanwhile, the men brought their case to people other than journalists, who had begun scratching around the commission on their own.

They wrote to U.S. Rep. Jim Bates (D-San Diego), who was sufficiently intrigued by the real estate deal that he asked the U.S. General Accounting Office to examine the transaction. The GAO released a report in April that concluded that it was proper to use federal funds to purchase the Newton Avenue building but that there were “questionable practices” in the way it was acquired and subsequently remodeled.

The issue of the Housing Commission also bled over into the mayor’s race. With the primary election just days away, mayoral hopeful Floyd Morrow filed a lawsuit against the agency on Feb. 18, claiming that the Lichter real estate deal was a “highly irregular transaction” that essentially deprived low-income people of federal housing funds.

Morrow said he consulted with Shapiro, but that the housing activist was not involved in the genesis of the lawsuit.

In July, a federal judge rendered the matter moot when he ruled that the Housing Commission had the right to enter into the real estate partnership. It was the third time a federal authority had found nothing inherently wrong with the deal.

But Jovishoff and Shapiro were undeterred. The same month the federal judge said the Lichter deal was OK, Jovishoff sent a 19-page, single-spaced essay to the City Council and newly elected Mayor Maureen O’Connor. The title: “A Documented Report on How the San Diego Housing Commission and its Executive Director Duped the Housing Authority.”

Jovishoff warned that the Housing Commission had engaged in a “cleverly orchestrated effort to fool” the City Council. The method, he wrote, was to employ “misstatements,” “myths” and “self-serving statements by the executive director.”

“From the foregoing, it should become abundantly clear that a concerted effort has been made to mislead the (City Council), and to deprive the people of San Diego of much-needed, affordable housing . The entire matter seems somewhat reminiscent of Watergate or the Dominelli affair,” he wrote.

Some people weren’t impressed. “I think the rhetoric you get from the two of them is destructive,” Councilman Cleator said.

Singling out Jovishoff, Cleator said the retiree has “been on my back about free buses, rent control, all things that basically are products of his European background. And all you have to do is look at the countries he’s come from and see the mess that they’re in and see if his basic philosophy is worth a darn.”

Councilman Struiksma added: “Their credibility isn’t that good.”

But others, like Montijo and Housing Commissioner Mac Strobl, say Jovishoff and Shapiro were “certainly instrumental” in causing trouble for the agency.

“They successfully pursued a strategy of showing that the Housing Commission was out of control, it was not accountable,” said Charlie Wolfinger, attorney for the two commission critics.

Such an impression eventually emerged from the furor. A $25,000 audit of the Housing Commission’s travel by Peat, Marwick, Mitchell & Co. found that the agency had no dollar limits on meals and hotel rooms, and had no guidelines on how many commission employees could attend a single out-of-town function. It also noted that Montijo had the power to approve his own expenses.

During summer budget hearings, council members heard about a $1-million “discretionary” fund of federal monies that Montijo controlled, a detail that had been omitted by mistake from the printed budget. In addition, said Councilwoman Judy McCarty, “none of the figures jived” in the housing agency’s proposed $36-million budget.

“To me, it was like they pulled the figures out of thin air,” she said. “Nobody knew what was going on. Nobody had a handle on it.”

Council members asked City Manager Sylvester Murray to take a close look at the agency, and last month he prescribed tougher administrative guidelines.

“Most of the current problems of the commission stem from administrative actions of the executive director and the lack of control and approvals of his actions,” he wrote.

While Murray suggested keeping the agency independent, O’Connor urged her colleagues to stage the takeover to reestablish public confidence in the agency. Her proposal, which passed 6-3 on Sept. 23, came on the heels of news reports that the federal grand jury had requested records of the Housing Commission’s real estate deal with Lichter.

The takeover, said Lichter, is a “sad commentary” on what people are willing to believe in San Diego.

“The public is cynical and maybe it has a right to be,” said the president of John Burnham & Co. “So if you create the illusion of smoke, somebody’s got to presume there’s a fire.”

Jovishoff and Shapiro say the fire of fraud, waste and deceit is still smoldering at the Housing Commission and they vow to fight on. They are not pleased that the council action did not dismiss Montijo.

“The real estate deal has not really been examined by the City Council, and it should be examined. And they are currently employing a staff which repeatedly conceals information from them,” Shapiro said.

“It’s a matter of a job that we took on and didn’t finish.”