HUD Loan in Laguna Scrutinized : Weinberger, Friend May Have Pushed for Vista Aliso Funds

At the urging of then-Secretary of Defense Caspar W. Weinberger, former Housing and Urban Development Secretary Samuel Pierce Jr. overruled his staff to approve a $4-million housing project for the elderly in Laguna Beach, according to the Newsday newspaper in Long Island, N.Y.

Newsday reported that the 71-unit project--called Vista Aliso--was ranked a low priority by Department of Housing and Urban Development staff and was not in line for program funding, according to a handwritten memo by Pierce assistant Silvio deBartolomeis dated Sept. 1, 1983.

But the aide, noting that Weinberger had written to Pierce endorsing the project, recommended that Pierce skirt the low ranking by using his discretionary fund for the project, according to HUD records. The records included another handwritten memo to Pierce from his top aide, Lance Wilson.

Rocked by Scandal

For several months, HUD has been rocked by a scandal that includes charges of influence peddling and has raised the question of whether Pierce has approved projects because of politics, not merits.

Pierce gave the Visa Aliso elderly housing project--which opened in April, 1988--an initial loan of $2.9 million, which later swelled to about $4 million, according to Reed Flory, the consultant who won HUD’s backing for the project. Flory is president of Shelter Ventures in Laguna Beach.

As part of the application process, Flory told The Times, the sponsor of the project--St. Mary’s Episcopal Church in Laguna Beach--was required to obtain reference letters from as many prominent officials as possible. In addition to Weinberger’s letter, he said, the church’s application included letters from both of California’s U.S senators as well as former Rep. Robert E. Badham (R-Newport Beach) and Orange County Supervisor Thomas F. Riley.

Flory said he believed that Robert Morse, a member of the church, knew Weinberger and when the project was proposed, asked that he write a letter in support.

No Comment

Morse, who lives in Laguna Niguel, declined to comment to The Times on Saturday. “He is my friend, and I have no comment,” he said.

Weinberger, who worked in Ronald Reagan’s gubernatorial administration in California in 1968 and 1969, is a former treasurer of the state’s Episcopalian Diocese.

Flory told The Times that he has no knowledge of Weinberger’s letter making any difference in the church obtaining funding for the project.

But Flory credited Weinberger’s helping hand with getting the project unstuck. “It was going nowhere when we first proposed it in 1981,” he told Newsday. “So I instructed every person involved to get support wherever they could. It turned out one of the members of St. Mary’s Episcopal Church either worked or went to school with Cap (Weinberger), wrote to him, said this was a good project, and Cap responded.”

Wilson and Pierce have used their Fifth Amendment right against self-incrimination in refusing to answer all questions put to them in recent weeks by the House panel investigating the scandal at HUD, where fraud, waste and influence-peddling to win HUD money allegedly ran rampant during the Reagan Administration. Neither Pierce nor Wilson could be reached for comment on the Laguna Beach project, which came to light in documents from the files of Pierce assistant Deborah Gore Dean.

Pierce’s attorney, Paul Perito, refused to comment “specifically on actions that the secretary (Weinberger) may or may not have taken.”

St. Mary’s was listed as a project sponsor, according to HUD documents, but a church spokeswoman said that only the former rector, who could not be reached, was involved.

Among the HUD reforms being considered is the abolition of the secretary of housing’s discretionary fund, from which grants or loans can be made without having to run the normal gantlet of review.