S.D. Delays Vote on Buying Low-Cost Housing : Government: Two-week postponement will be used to probe allegations that the owner has links to the mob.

With San Diego Mayor Maureen O’Connor expressing concern that the city “might be doing business with the mob,” the City Council on Monday postponed a decision on whether to buy two low-cost housing projects from a Florida man with a lengthy history of purported underworld connections.

By a unanimous vote, the council--acting in its capacity as the city’s Housing Authority--approved a two-week delay on the possible $38.5-million purchase of two housing complexes in Clairemont and Rancho Penasquitos, to give local officials more time to investigate the allegations about Alvin A. Malnik’s background.

“What we know so far . . . is very troubling to me,” O’Connor said, referring to reports of the Nevada and New Jersey gaming commissions, newspaper stories and books that link Malnik to a variety of alleged organized crime figures. “At this point, I have enough facts to cause great pause.”

At a news conference last week, Councilman Bruce Henderson traced Malnik’s alleged involvement with longtime underworld financial figure Meyer Lansky, other organized crime figures and the Teamsters Union--reason enough, Henderson argues, to scrap the deal, unless Malnik can satisfactorily explain away the damaging charges.

Although he did not appear before the council Monday, Malnik last week denied any involvement or links with organized crime, characterizing the charges as “total falsehoods and innuendo.”

Under sharp questioning from several council members, Housing Commission Executive Director Evan Becker acknowledged that his agency was unaware of the allegations about Malnik’s background until they were revealed by Henderson. The Housing Commission typically analyzes the financial backgrounds, not the personal histories, of the individuals it deals with, Becker added.

O’Connor and other council members, however, argued that before proceeding with the proposed purchase of the Mt. Aguilar and Penasquitos Gardens apartments, the city needs to be assured that Malnik has no ties whatsoever with organized rime.

“We don’t do business with people who associate with the mob,” O’Connor said. “What does that say to our children? The taint is too great.”

Some city housing officials have warned, though, that unless the proposed sale proceeds, the city could lose 816 scarce low-income apartments housing more than 3,000 people. Under congressional legislation authorizing the owners of low-income housing projects to prepay the low-interest federal loans used to construct them, Malnik would be eligible to sell the two projects to a private buyer or convert them to market-rate rentals next May.

That same concern was underlined by several public speakers at Monday’s meeting, as typified by one man who said that, to preserve low-cost housing, the council should be willing, if necessary, to “work with the devil himself.”

“As a private business, you have that right to make a deal with the devil,” O’Connor replied. “As a public agency, I think we have a higher standard.”

Low-income housing activists also encouraged the council to weigh the merits of the proposed sale against what Becker described as the “moral question” posed by it. Several council members said, however, that they do not have enough information before them to do so at this point.

“If we’re going to be making a deal with shady characters, we ought to do it with our eyes open,” Councilman Ron Roberts said.