WASHINGTON — A former regional director of the Department of Housing and Urban Development testified Friday that he endorsed a list of five rent subsidy projects requested by Sen. Alfonse M. D'Amato (R-N.Y.) without proper documentation and in violation of HUD rules.
The witness, Joseph Monticciolo, estimated that at least half of the HUD decisions involving Section 8 moderate rehabilitation projects were made on a political basis instead of on their merits.
Section 8 subsidies for 380 of the 655 units sought by D'Amato in March, 1987, were approved by top HUD officials the next month, congressional sources said. Of those units, 250 were in Puerto Rico and the remaining 130 were in two communities in Upstate New York, congressional sources said.
"You were working hand in glove with Sen. D'Amato on the 'mod rehab' list," Rep. Bruce A. Morrison (D-Conn.) told Monticciolo, who was head of the HUD region that included New York, New Jersey, Puerto Rico and the Virgin Islands from 1981 to 1988.
"There's nothing more political than this," said Rep. Christopher Shays (R-Conn.).
Monticciolo, who got his HUD post with D'Amato's support and later hired one of the senator's former top aides to be his executive assistant at HUD, agreed that he supported the subsidies requested on what a HUD memo termed "Sen. D'Amato's list."
The memo, written by former HUD Assistant Secretary Thomas T. Demery, said that there was "no record of a PHA (public housing authority) application on file" for any of D'Amato's requests. Under HUD rules for rent subsidy grants, requests were supposed to originate with local public housing authorities.
However, previous testimony at hearings of the House Government Operations subcommittee on employment and housing has indicated that public housing authorities often submitted applications after decisions were made on earmarking of government funds for favored developers who had hired Republican consultants.
There was no immediate comment from D'Amato's office on Monticciolo's testimony or the HUD memo indicating for the first time that a GOP senator apparently had benefited from top-level contacts within the housing agency.
Monticciolo, who seemed to contradict himself at times during four hours of testimony, acknowledged also that, while at HUD, he made recommendations favorable to developers who are now his partners in a private business that pays him $125,000 a year.
He said that he arranged the formation of the business, Eagle Capital Group Ltd., during his final weeks as HUD regional director by contacting a New York developer, Sheldon Goldstein. As a result, Monticciolo said, he did not have to put up any money in return for his salary and a 15% ownership interest in the firm.
"There was a quid pro quo," Shays said. "I expect the attorney general's office to look at this. You've cashed in."
However, Monticciolo said that his recommendations regarding HUD actions that eventually benefited Goldstein and others were not decisive because HUD in Washington had the final say.
But Shays argued that the New York developers made a "phenomenal profit" from actions taken by Monticciolo involving their acquisition of HUD-owned properties.
"I made recommendations to Washington that ultimately benefited individuals who are now my partners," the witness acknowledged.
He said also that a Puerto Rican developer who benefited from HUD subsidies administered by the New York regional office is now his partner in an apartment project. While in his HUD post, Monticciolo said, he approved the relocation of the San Juan HUD office to a building owned by the same developer.
Monticciolo said that Deborah Gore Dean, the former top assistant to ex-HUD Secretary Samuel R. Pierce Jr., once recommended a private consultant, Los Angeles lawyer Thomas R. Broussard, for housing work in Puerto Rico.
Dean exercised considerable influence on the allocation of rent subsidies under the Section 8 program, which was designed to provide incentives for the rehabilitation of housing for low- and moderate-income renters.
The former HUD regional official said that he met once with Broussard concerning 300 units available for rehabilitation in Puerto Rico and said that Broussard went there "to make his services available."
Broussard, contacted by telephone, said only that he had worked for a client in regard to a moderate rehabilitation project in Puerto Rico. He refused to answer other questions about his activities for the client.
Broussard said that he had spoken to Dean when she was at HUD but did not know her personally.