04
Mon, Mar

Big Real Estate Shells Out Staggering $86.2 Million to Kill California’s Prop 21

LOS ANGELES

ANALYSIS -In its successful push to stop California’s Proposition 21, Big Real Estate shelled out a shocking $86.2 million to fund a statewide TV ad blitz that confused and tricked voters.

The driving force behind the death of Prop 21 was Essex Property Trust, the top contributor to the No on Prop 21 campaign and one of the largest Wall Street landlords in the nation. Activists, though, say they’ll continue the fight to rein in corporate landlord greed. 

Prop 21 was the California ballot measure that sought to put limits on unfair, sky-high rent increases, stop runaway corporate landlord greed, and prevent homelessness. Top experts at USC, UCLA, and UC Berkeley agree that sensible rent limits are key for stabilizing California’s housing affordability crisis. It’s why more than 340 civic leaders, social justice groups, and political organizations, including U.S. Senator Bernie Sanders, labor and civil rights icon Dolores Huerta, Congresswoman Maxine Waters, and the California Democratic Party, endorsed Prop 21. California’s housing justice movement strongly supported the initiative.

The need for stable, affordable housing in California took on added urgency this election season because of the COVID-19 pandemic — people must have shelter to stay safe and healthy.

Corporate landlords, though, banded together to stop Proposition 21, fearing that rent limits would rein in their ability to charge wildly inflated rents and make massive profits on the backs of renters. 

In the 2010s, according to Zillow, U.S. renters paid a staggering $4.5 trillion to landlords.

“On Dec. 1,” Zillow reported last year, “the nation’s renters didn’t just make their last rent payment of the year – their landlords also collected their last rent payment of what was a very lucrative decade. All-in-all, U.S. renters paid roughly $4.5 trillion in rent during the 2010s, capped off with $512 billion in 2019 alone.”

California landlords were especially making gigantic profits.

Zillow found that in 2019, Los Angeles renters paid an incredible $39.2 billion to landlords. San Francisco renters shelled out $16.4 billion. San Diego renters forked over $10.3 billion. Riverside renters wrote checks totaling $7.4 billion. San Jose renters paid $6.5 billion. And Sacramento renters delivered $4.8 billion to landlords. Massive amounts paid by seniors living on fixed incomes, working-class families, recent college students, and teachers and nurses.

The real estate industry also worried that if Prop 21 passed in California, a burgeoning rent control movement would spread throughout the nation and hurt its outsized profit margins in other states.

According to state filings examined by Housing Is A Human Right, Californians for Responsible Housing sponsored by the California Apartment Association was far and away the leading fundraiser among five No on Prop 21 committees. The CAA-sponsored committee raked in $74,330,213 in campaign contributions from 697 entities, including Essex Property Trust, Equity Residential (led by co-founder and billionaire Sam Zell), and AvalonBay Communities.

Behind Californians for Responsible Housing, Californians to Protect Affordable Housing raised $10,578,691; Issues PAC of Apartment Association of Greater Los Angeles – No on 21 collected $620,735; Multi-County Property Rights PAC, No on Proposition 21, sponsored by the Apartment Association of Orange County hauled in $466,416; and Californians for Affordable Housing sponsored by the California Rental Housing Association raked in $211,651.

The five No on Prop 21 committees raised an astounding $86,207,706.

Out of the $74.3 million raised by Californians for Responsible Housing sponsored by the California Apartment Association, 72 percent came from 15 contributors, seven of which are publicly traded real estate investment trusts (REITs). They shelled out $53,719,244.

Top Contributors to Californians for Responsible Housing sponsored by the California Apartment Association: ($1 million or more)

  1. Essex Property Trust (REIT): $15,013,300
  2. Equity Residential (REIT): $11,052,800
  3. AvalonBay Communities (REIT): $8,779,500
  4. Prometheus Real Estate Group: $3,134,600
  5. UDR (REIT): $2,525,042
  6. Apartment Investment and Management Company (REIT): $2,036,900
  7. Sequoia Equities: $1,821,260
  8. George M. Marcus and Affiliated Entities: $1,713,000
  9. Invitation Homes (REIT): $1,231,290
  10. General Investment and Development: $1,146,000
  11. R&V Management Corporation: $1,100,000
  12. Camden Development (REIT): $1,082,000
  13. Jackson Square Properties: $1,061,600
  14. Californians for Responsible Housing – General Purpose Committee: $1,012,219
  15. Richard Tod Spieker, including Spieker Companies: $1,009,733

The leading contributor to No on Prop 21: Californians to Protect Affordable Housing was the California Business Roundtable Issues PAC, delivering $7,250,000. The PAC was used by Blackstone Group and CEO Stephen Schwarzman and billionaire landlord Geoffrey Palmer, among others, as a kind of shell committee to quietly funnel money to Californians to Protect Affordable Housing. The PAC also delivered tens of millions to the No on Prop 15 campaign.

Top Real Estate Contributors to California Business Roundtable Issues PAC: ($1 million or more)

  1. Blackstone Group: $7,006,000
  2. Kilroy Realty LP: $5,000,000
  3. Hudson Pacific Services: $5,000,000
  4. Michael Hayde, including Western National Group: $4,560,000
  5. Douglas Emmett Properties: $4,250,000
  6. Cypress Management Company: $3,500,000
  7. Geoffrey Palmer: $2,075,000
  8. Lewis Investment Company: $2,000,000
  9. Macerich Management Company: $2,000,000

Interestingly, Stephen Schwarzman, Geoffrey Palmer, and Michael Hayde have been major contributors to Donald Trump, shelling out millions either directly to Trump’s presidential campaigns or to political committees linked to Trump, such as America First Action, Rebuilding America Now, and the Republican National Committee. Since 2016, Palmer delivered $14.8 million to Trump and associated political committees, according to Federal Election Commission filings. Schwarzman shelled out $4.4 million since 2017. And Hayde contributed $209,500 since 2016.

During the campaign, Yes on Prop 21, led by AIDS Healthcare Foundation and Housing Is A Human Right, filed a formal complaint with California’s Fair Political Practices Commission, charging that Californians to Protect Affordable Housing and Californians for Responsible Housing sponsored by the California Apartment Association violated the Political Reform Act by engaging in money laundering activities. The FPPC is currently investigating Californians for Responsible Housing.

The California Apartment Association has long been known for using strong-arm tactics, campaign cash, and controversial methods to oppose renter protections through the state. The CAA, led by CEO Tom Bannon, recently attempted to repeal a temporary rent freeze in Santa Ana during the COVID-19 pandemic.

Essex Property Trust was clearly the most powerful force behind the No on Prop 21 campaign. In addition to shelling out more than $15 million to Californians for Responsible Housing, Essex Property Trust executive John Eudy was co-chair of a secretive “executive committee” that called the shots for the CAA-sponsored committee. And billionaire George Marcus, who founded Essex Property Trust, contributed a hefty $1,713,000 to Californians for Responsible Housing.

Essex Property Trust is the tenth largest apartment owner in the U.S. — with more than 60,000 units and a worth of $25 billion. The vast majority of those apartments are located in the Bay Area and Southern California. The Wall Street landlord has been known to slam seniors with huge rent increases, improperly increase rents, and allow substandard living conditions. Essex Property Trust was also ranked the 17th worst real estate investment trust for gender inequity on its board of directors, according to a Wells Fargo report.

(Read:“Will the Corporate Greed of Essex Property Trust CEO Mike Schall Destroy California?”)

Wall Street landlords prevailed in this battle in California, but, housing justice activists say, the fight to bring more sustainable, fair rents through rent control and other ways is far from over.

(Patrick Range McDonald is the award-winning advocacy journalist for Housing Is A Human Right.)

(Picture above: Equity Residential co-founder Sam Zell, left, and Essex Property Trust CEO Mike Schall)

-cw