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Walter Johnston’s record suggests that he might not be the best candidate for a government-funded housing contract. In 1989, he pleaded guilty in the U.S. District Court for D.C. to two felony counts of making false statements to the U.S. Department of Housing and Urban Development (HUD). Johnston, a former Philadelphia cop, had participated in an illegal scheme to obtain a Federal Housing Authority (FHA)-backed loan to buy two dilapidated buildings in Southeast Washington. According to documents in the U.S. District Courthouse, he served three months in a community corrections center and paid a $4,000 fine.

But now Johnston’s back in the D.C. real estate business. He is a leading member of an organization that just won a lucrative and controversial contract to provide transitional housing for homeless Washingtonians. The contract is funded by both the District government and by HUD.

Johnston serves as one of three directors of the Corporation for Community Development (CCD). In November 1995, CCD received a contract to house 16 single-parent homeless families at the 821 Maryland Ave. NE, a building leased by CCD. Johnston’s organization will receive more than $300,000 per year to manage the facility, which works out to approximately $1,650 per unit per month. That is several stratospheres higher than fair-market rent, although a chunk of the money will fund social services provided by the United Planning Organization. CCD has started renovating the facility, and at least a half-dozen families have already moved in.

The Community Partnership for the Prevention of Homelessness, a public/private venture, granted the contract to CCD. Funded with $20 million from HUD, the D.C. government, and other grants, the partnership is attempting to create a continuum of services and shelter for D.C.’s homeless. Federal and local officials are funding the partnership in hopes that it can avoid the corruption and graft that plagued D.C. attempts to shelter the homeless during the ’80s.

But the Maryland Avenue project has provoked a furious response on Capitol Hill. In the past two months, area residents have signed petitions, held demonstrations, blanketed media outlets with faxes, enlisted political support from Delegate Eleanor Holmes Norton and members of the D.C. Council, and threatened lawsuits in efforts to block the project.

Neighbors note that Ward 6 hosts the largest homeless shelter in the country—the Community for Creative Non-Violence—and that there are already 10 other facilities for the needy in the area around Maryland Avenue. They predict that CCD won’t be a good manager, complaining that the Maryland Avenue building has fallen into disrepair since the organization took it over two years ago. And they don’t think an organization guided by a convicted felon deserves their tax dollars.

“I don’t think it’s callous to say, ‘We don’t want it here, and Walter Johnston shouldn’t get public money,’ ” says Marie McGlone, spokeswoman for the freshly minted Neighbors for Responsible Community Services, founded specifically to oppose the Maryland Avenue project. “We’ve been compassionate with the homeless, but at some point you need to say the balance in the neighborhood is being destroyed.”

Bob Stefani, an expert in contract law with the firm Robins, Kaplan, Miller & Ciresi, says the awarding of the shelter contract to Johnston’s organization “smells bad.”

But Stephen Cleghorn, deputy director of the partnership, doesn’t smell anything. He says Johnston and his business associates have done a fine job operating another partnership-funded facility, a transitional shelter at 16 17th St. NE, and he expects CCD to run the Maryland Avenue project equally well.

“If we’re funding a convicted felon, that’s not relevant to how we made our decision. Walter’s past is not at issue with us. He submitted a proposal that ranked high, so he got the contract,” Cleghorn says. “We are not funding an individual. We’re funding an organization, and if one member has a history of criminal activity, we need to ask the question, ‘Is that relevant to what he’s doing now?’ “

In fact, what Johnston is doing now is unclear. Until last week, Johnston had been acting as CCD’s point man on the Maryland Avenue project. He had written letters, testified at an ANC meeting, and, according to Cleghorn, signed CCD’s contract with the partnership. But since Washington City Paper started asking questions about Johnston’s history, he has vanished from the spotlight. He didn’t appear for a scheduled interview, leaving CCD’s other two directors—Art Poms and Irena Karpinski—to speak for him. Poms is a Bethesda real estate investor. Karpinski is an immigration lawyer and former chair of the D.C. Board of Appeals and Review; she has been married to Johnston since 1988.

Karpinski and Poms say Johnston has neither financial nor managerial control of CCD; he simply does public relations for the company. “Walter owns no stock and signs no checks. Never has, never did,” says Poms. Poms and Karpinski would not discuss Johnston’s past, although Karpinski says, “For the past seven years he’s been doing small renovations on commercial and residential buildings. He’s in construction management.”

Even if you ignore Johnston’s history, the record indicates that Poms has had significant financial problems. Superior Court records show that Poms was sued in 1991 by the District in an action of quiet title concerning a Lamont Street NW property. In 1993 and in 1994, Washington Gas sued him in connection with unpaid bills exceeding $15,000 at 1514 Newton St. NW.

In 1994, Mark Silverman successfully sued Poms’ company, Cross Street Venture Limited Partnership, to recover more than $52,000 in unpaid debts and more than $7,000 in legal fees. Poms has still not paid the judgment. “Money was lent and money was never repaid. We’ve been chasing Art Poms around for a long time,” says Silverman’s lawyer, John Wise.

There is also a $310,000 trust mortgage lien on the 17th Street property.

“From our perspective, none of it’s relevant,” Cleghorn says.

Perhaps that’s why Poms bubbles, “It’s nice to have the government as a tenant.”

For now, the shelter’s opponents are counting on D.C. officials, especially Ward 6 Councilmember Harold Brazil, to help them. The neighbors assert that CCD and the partnership must rezone the Maryland Avenue site. The building is currently designated as a regular apartment house, but since shelter residents will receive child care, job and financial management training, and nutritional advice, opponents say it must be rezoned as a special services building.

The Neighbors for Responsible Community Services are hoping Brazil can help defeat the Maryland Avenue project legislatively. The city currently requires no special permits for transitional housing facilities, so on Tuesday, Brazil introduced emergency legislation that would require such institutions to obtain operating licenses.

“If it quacks like a duck and looks like a duck, it is one,” says Sally Weinbrom, Brazil’s spokeswoman. “We say you should need a license to operate a transitional housing facility. If this legislation passes, it would shut down 821.”

Brazil couldn’t muster the votes needed to approve the emergency bill this week, but his staffers say he will continue his effort to block the project. They say that he has written the partnership asking it to reconsider its contract with CCD, and that he will reintroduce the licensing bill as permanent legislation. CP