Florida Businessman Withdraws From Housing Deal With City

Alvin Malnik, a Florida attorney with reputed ties to organized crime, has pulled out of a $38-million deal in which he would sell low-cost housing units to the San Diego Housing Commission, a spokesman for Mayor Maureen O’Connor said late Tuesday.

Paul Downey, the mayor’s spokesman, said that Malnik has written a letter to Evan Becker, executive director of the housing commission, in which he says he has decided to pull out of escrow, thus canceling the sale of two low-income apartment buildings in Rancho Penasquitos and Clairemont.

Earlier this year, the Housing Commission agreed to purchase Penasquitos Gardens and Mt. Aguilar Apartments with $38 million in bonds. The San Diego City Council approved the sale by a 6-2 vote.

Only O’Connor and Councilman Bruce Henderson voted against the project, which continued to be discussed even after the vote. The mayor announced recently that inspections had detected levels of asbestos that would cost up to $5 million to remove.

She said the deal posed “major liability and major problems” for San Diego taxpayers.

During council debate in January, O’Connor compared Malnik to Iraqi leader Saddam Hussein and former Panamanian dictator Manuel Noriega. She later retracted her comments at the urging of Councilwoman Judy McCarty.

At the time, council members Wes Pratt and Linda Bernhardt chastised the mayor, saying the 816 units provided necessary housing for the city’s poor.

“Malnik’s attorney indicated in the letter that they had been delayed several times and expressed concern about that,” Downey said. “Obviously, from our standpoint, the mayor had significant objections--which turned out to be true. The delays have proven she was right. The (apartments) are loaded with asbestos.”

Downey said the units are in “a state of disrepair,” but rather than taxpayers being “on the hook” for upgrading the apartments, “Mr. Malnik will have to do it. He still owns the properties and will continue to do so.”