The Deceptive, Shameful, Lucratively Funded War Against Rent Control In California and across the country, landlord groups are waging a disinformation campaign to squash efforts to make rent more affordable. By SOPHIE KASAKOVE October 18, 2018
On August 24, the tenants of two buildings near the Hollywood Forever Cemetery in Los Angeles received letters from their landlord notifying them of a rent increase of over $800 a month. The increase was not a result of repairs or tax increases but rather, the letter said, of the upcoming election in November.
MOST POPULAR The Backlash to the GOP’s Union-Bashing Has Begun in Earnest It’s Time for a New Voting Rights Act Facebook Betrayed America A Democrat Ran on Climate Change in a Republican Stronghold—and Won The Punctured Myth of Sheryl Sandberg Like this article? Support our work. Subscribe today. The section of the ballot in question is Proposition 10, which, if it passes, would repeal a 1995 state law prohibiting local governments from enacting rent control on apartments and homes built after that year (or even earlier in cities like Los Angeles and San Francisco). According to the letter: “Although you don’t want higher rent and we did not plan on charging you higher rent, we may lose our ability to raise rents in the future. … Therefore, in preparation for the passage of this ballot initiative we must pass along a rent increase today.” If the ballot initiative failed, however, the landlord, Rampart Property Management, promised to “revisit the rent increase with a desire to cancel it.”
For Maria (who prefers not to use her real name out of fear of retaliation by her landlord), waiting to find out was too big a risk. An immigrant from Guatemala, she pays $600 a month to share a bedroom with her 11-year-old son in a two-bedroom apartment—another family lives in the second bedroom, with a fifth tenant taking the living room. A couple hundred dollars extra in rent would not be feasible for Maria, who lives off welfare after losing her job last year. A month later, Maria received a second letter billed as an “olive branch”—a reduction of the increase to $238 a month. When Maria and several other tenants went to the property manager to ask for an explanation, he told them that so many tenants had threatened to leave that the landlord had no choice but to lower the proposed rent hike.
As the vote on rent control approaches, tenants across California have been harassed, served with eviction notices, and forced to pay more rent. In Concord, an entire building of 29 families was given 60-day eviction notices, with landlords explicitly citing Proposition 10 as the cause. In Modesto, tenants of a single-family building were not only notified of a rent increase, but also encouraged to vote against Prop 10, which the landlord said would “eliminat[e] the current availability of single family homes to rent.” Shanti Singh of the California renters’ rights organization Tenants Together says these are not isolated incidents: “This is punishing renters for participating in the democratic process. And we’re expecting to see a lot more of this in the coming month.”
These efforts are part of a massive attack corporate landlords have been waging on rent control across the state. And though they claim to be speaking for the mom-and-pop landlords of California, the leaders of this campaign are some of the largest property owners in the country. Blackstone, the world’s largest real estate management firm, has spent nearly $7 million to defeat Prop 10. Other top donors include Equity Residential, the third-largest apartment owner in the country, and AvalonBay Communities, the twelfth-largest property owner. These mostly Wall Street–based moguls have pooled as much as $60 million (with as much as $2 million raised in the last week alone) primarily to fund an enormous advertising blitz, eclipsing the $22 million raised by the coalition of over 150 housing advocacy, community, political, and faith-based organizations that, along with the California Democratic Party, has rallied around the ballot initiative.
If Proposition 10 passes, it would be not only the most significant attempt to roll back state limitations on rent control, but also the greatest success to date of the burgeoning national tenants’ rights movement—and real estate groups are responding with full force. Rent control, which is illegal in 27 states, has become a campaign issue across the country, and the landlord lobby has been rushing to squelch tenants’ rights campaigns wherever they spring up.
Get the latest from TNR. Sign up for the newsletter. In Boston, a bill far more modest than Prop 10—it was intended merely to track evictions and give the city a way to notify evicted tenants of their rights—was killed in the state legislature this past May after landlord groups put pressure on lawmakers. In Oregon, the landlord lobby has already launched a multimillion dollar super PAC, More Housing Now!, to oppose an anticipated Prop 10–like bill in the 2019 legislative session. In New York City in April, a proposal to freeze rents for nearly one million rent-stabilized apartments was defeated after the city’s main trade group for residential landlords, the Rent Stabilization Association, reportedly spent over $1 million on lobbying in 2017.
To owners, landlord groups seek to portray renters as poor, unpredictable, and conniving. A mailer sent out to condo owners across Boston by the Small Property Owners Association in 2017 warned owners that if tenant protection legislation were to pass, “[d]isruptive renters will learn they can do anything with no consequences, no fines, no evictions.” It added, “Unevictable renters can pass their units & low rents on to their heirs. It never ends.”
To renters, real estate groups characterize rent control as anti-renter. In one recent ad, the executive director of the deceptively named California Council for Affordable Housing tells voters that Prop 10 will “drive up rents, take rental housing off the market, and make it harder to find a place to live.” Amy Schur of the Alliance of Californians for Community Empowerment, one of the organizations leading the “Yes” campaign on Prop 10, explains, “They are using that message because they read the same polls we read, which show that a majority of likely voters in California support rent control and want fast action to prevent rent gouging.” A 2017 poll by the Institute of Governmental Studies at the University of California, Berkeley, found that 60 percent of likely voters in the state support rent control. In Oregon, a research firm this past May found that nearly two-thirds of those surveyed support expanding rent regulations.
The anti–rent control rhetoric rests on the argument that rent control discourages developers from constructing new buildings, further aggravating housing shortages. But advocates say that landlord groups are blowing this threat out of proportion. Of all of the cities that have floated rent control legislation in the past few years, none have proposed extending rent control to include new construction. Even officials in Berkeley—who have been some of the strongest proponents of rent control—have proposed transitioning apartments into rent control on a rolling basis, exempting newly constructed buildings for 20 years. And, a report published out of University of Southern California last week shows that cities with rent stabilization ordinances for existing units have seen no decline in new construction.
Studies have indeed shown that rent control can affect existing housing stock—but for reasons real estate groups avoid spelling out. By taking advantage of loopholes for averting rent control requirements, landlords end up pulling more properties from the rental market, converting rent-regulated apartments into condos and reducing the overall supply of affordable housing. While rent control advocates acknowledge these risks, they maintain that rent control is necessary as a stopgap measure for tenants facing eviction in an extremely hostile rental market. Even a widely cited recent paper highlighting the potential negative effects of rent control found that, of tenants in San Francisco, beneficiaries of rent control are between 10 and 20 percent more likely to have remained in the same apartment since 1994 and that “absent rent control essentially all of those incentivized to stay in their apartments would have otherwise moved out of San Francisco.”
Despite these benefits, the real estate lobby’s scare tactics appear to be working. A poll this week shows that 46 percent of likely voters oppose Proposition 10 and only 35 percent are in favor. “We are finding voters in our community who are crystal clear that they support rent control, and then say, ‘So we should vote no on Prop 10, right?’” says Schur. In Mountain View, this summer, San Jose Inside reported that nearly 300 voters had been misled by paid signature-gatherers (some of whom said they were paid $40 per signature) into thinking that a rent control bill was pro-rent control, when in fact it aimed to repeal a rent control ordinance.
In some ways this is an old story. “The mobilization of networks of local politicians and homeowners, the explicit use of race and class stereotypes, the references to renters as second-class citizens,” says Tony Roshan Samara of Urban Habitat, a grassroots advocacy organization for low-income communities of color in the Bay Area. “All of this goes back to ‘30s, ‘40s, ‘50s. We’re seeing the same politics of who gets to control land and who doesn’t.”
But the scale of today’s opposition campaign is a distinctly post–financial crisis phenomenon, dictated by a race-to-the-bottom rental market. Since 2013, private equity firms like Blackstone have been purchasing tens of thousands of homes, converting them into rental properties, and bundling and securitizing them to create triple A–rated “single-family rental bonds.” Unlike “mom-and-pop” landlords, who tend to rely on a single-fixed rate loan from a bank, this new model relies on big investments from Wall Street investors, who expect firms to extract ever-higher returns from their tenants.
“The financialization of the rental housing market has had profound ramifications,” explains Schur. “This is rip and run—the Blackstones of the world are not investing long-term in our communities, they are extracting wealth from California to give to investors in the global financial market.” The impact of legislation like Proposition 10 on a local landlord is nominal compared to the impact on a group like Blackstone, which has a portfolio of around 13,000 single-family rentals in California and a 40 percent stake in Invitation Homes, a property management group with another 13,000 homes in the state.
The viability of this profit structure relies on a great degree of political intervention, not just in ballot initiatives, but also into elected offices across the country. In Oregon, filings from the secretary of state’s office show that the More Housing Now! PAC and its member organizations have contributed thousands of dollars to help County Commissioner Loretta Smith defeat vocally pro-tenant candidate Jo Ann Hardesty for one of Portland’s open city council seats. The PAC of the California Apartment Association, one of the groups behind the No on Prop 10 campaign, was among the top donors to the campaigns of incumbent candidates in four different city council districts in Sacramento, all four of whom won reelection. And there’s likely far more money flowing behind the scenes: In 2015, the Mountain View Voicereported that the California Apartment Association had quietly funneled $90,000 to three city council candidates opposed to rent control through a PAC called Neighborhood Empowerment Coalition.
For tenant advocates working to advance rent control across the country, these tactics haven’t come as a big surprise. “Everyone expected to be out-funded by the real estate industry. It’s just standard practice, especially during a housing crisis, when rents are really high,” says Singh of Tenants Together. This election may be the first where the landlord lobby’s influence has emerged into full view, but as campaigns at all levels of government continue to embrace affordable housing as one of the most pressing domestic policy questions, it won’t be the last.
Sophie Kasakove is a reporter-researcher at The New Republic. Read MorePolitics, Housing New arguments. New insights. Get TNR’s latest every weekday.
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Joe Raedle/Getty Images The Backlash to the GOP’s Union-Bashing Has Begun in Earnest After a string of attacks on organized labor across the Midwest in recent years, Republicans are starting to pay at the polls. By LAUREN KAORI GURLEY November 13, 2018
Has the Republican Party’s grand experiment in union-busting finally come to an end? Scott Walker, the Republican governor of Wisconsin, rose to national prominence in 2011 when he passed a landmark bill dealing a blow to unions in the state and across the country. With Act 10, Walker stripped public workers of their right to collectively bargain, gutting their salaries, health care, and pensions. He then survived a vigorous recall effort, which featured 100,000 protesters storming the capitol rotunda in downtown Madison.
Walker was the face of an anti-union movement championed by Republicans and backed by libertarian financiers like the Koch brothers. But seven years later, in the midst of an ostensibly booming state economy, Walker narrowly lost his reelection bid on November 6—and he was not the only anti-union gubernatorial candidate to go down this election season.
The defeat of Walker in Wisconsin, as well as Bill Schuette in Michigan, Bruce Rauner in Illinois, and Kris Kobach in Kansas, is evidence that union-bashing politicians are finding it difficult to appeal to workers in a humming economy, which would otherwise seem to validate their claims that low wages and right-to-work laws have unleashed the prosperity-making powers of the market. In fact, national support for unions is at 62 percent, a 15-year high, with particular muscle in the Midwest, and among women and millennials. “There’s a sense in which Scott Walker and his ilk have overplayed their hand,” said Lane Windham, the associate director of the labor center at Georgetown University. “People understand that unions counterbalance corporate power, and corporations are too powerful..”
This was not the sense observers had two years ago when Donald Trump outperformed past Republican presidential candidates with union households and carried a string of states that formed the backbone of the old industrial Midwest. But his message—hostile to both trade and immigrants—went against the grain of Koch-style economic orthodoxy. While certain working class voters did gravitate toward Trump, the midterm election results in Wisconsin and elsewhere suggest that they have not been convinced by his party’s economic agenda and may even have soured on Trump himself. According to a Reuters-Ipsos poll released earlier this year, Trump’s support among union voters has fallen 15 points.
Many voters living under Republican leadership are reacting to stagnant wages and the rise of underemployment. (Despite working fewer hours than they would prefer, underemployed workers get counted as “employed” in official statistics.) In 2011, when Amy Mizialko, president of the Milwaukee teacher’s union, first checked her pay stub online after Act 10 passed, she broke into tears. “Those cuts were devastating,” said Mizialko, who took a $10,000 cut in wages and benefits in the first year alone. Since the passage of Act 10, membership in Wisconsin’s largest teacher’s unionplummeted from 98,000 to 32,000. Once the progressive heart of the labor movement in the United States, Wisconsin saw its union membership drop 46 percent between 2011 and 2017.
While Walker’s campaign underscoredWisconsin’s 3 percent unemployment rate (below the national average), workers in the state were fighting to find enough work and wages remained low. At $7.25 an hour, Wisconsin’s minimum wage has not budged since Walker took office seven years ago. And because of Act 10, many teachers and government workers—disproportionately women and African Americans—have had to find additional sources of income. “In Wisconsin, people are working three or four jobs,” said Mizialko. “They are driving Uber. They’re delivering groceries. They’re picking up jobs at the state fair. They’re just stitching together little stints of work to make ends meet for their families.”
Get the latest from TNR. Sign up for the newsletter. They also bristled at Walker’s cozy relationship with big business. In July 2017, he pledged $4.5 billion in state tax credits for the Taiwanese manufacturing giant FoxConn to build a state-of-the-art plant outside of Kenosha that promised to bring 13,000 jobs to the area. But as David Dayen wrote last week in The New Republic, the FoxConn deal has been a disaster and was an important factor in Walker’s fall. The subsidy is the largest to a foreign corporation in U.S. history, and it comes at an enormous cost to taxpayers. Most of the subsidy will be delivered to FoxConn in direct cash payments—at an estimated 18,000 in tax dollars per Wisconsin household.
Walker was among a handful of Republican governors—including Rauner, Rick Snyder in Michigan, Eric Greitens in Missouri, and Mitch Daniels in Indiana—who transformed the Midwest with their ideas about small government, austerity, and free market solutions. The Koch brothers’ Americans for Prosperity initiative (AFP) poured millions of dollars into the region to pass legislation that would hobble unions and freeze minimum wages. Meanwhile, gerrymandering and new voter restrictions that favor conservatives prevented voters from overturning those laws at the polls—with the exception of the upset victory of a proposition that repealed right-to-work in Missouri in August.
Over the past decade, this right-wing alliance has reshaped the Midwest by decimating private and public sector unions. Right-to-work laws, which drastically undercut union power in the private sector, have passed in Michigan, Missouri, Indiana, Kentucky, and Wisconsin since 2012. Public sector unions underwent similar attacks in Wisconsin, Ohio, and Michigan. Such laws make union dues optional, thereby draining unions of the funds they need to fight for workers. Workers in right-to-work states earn $1,558 less on average per year than similar workers in non-right-to-work states. When right-to-work passed under Rick Snyder in Michigan in 2012, Americans for Prosperity hailed the legislation “as the shot heard around the world for workplace freedom.”
The passage of right-to-work laws has gone hand-in-hand with declining support for the Democratic Party in the Midwest. Until Trump’s victory in 2016, Michigan and Wisconsin had not elected a Republican president since the 1980s. “Unions have a long history of turning out Democratic voters,” said Windham, the labor expert from Georgetown. “Without unions to promote a working-class agenda, people are left to listen to right-wing radio. We have to think about that to understand what happened in Michigan, Wisconsin, and Pennsylvania in 2016.”
But there is also a strong feeling that the Democratic Party has lost touch with its union roots, allowing a supposed populist like Trump to make inroads with working voters. That is starting to change, thanks in no small part to the wake-up call delivered by the 2016 election, which made it clear that Democrats cannot take those voters for granted. But there are other reasons some Democrats are re-embracing union politics, including a wave of teacher strikes in West Virginia, Oklahoma, Arizona, Kentucky, and Colorado that galvanized voters this year, as well as a growing realization that the face of union membership has changed, from the white industrial worker of the past century to a diverse coalition of women, immigrants, and minorities working in industries like hospitality, telecommunications, nursing, and media.
Ironically, low employment across the Midwest gives workers the upper hand. Last year saw a slight uptick in union membership in the United States. Employers are eager to retain and hire workers, giving workers leverage to form and expand unions. Alongside fresh leadership, this provides an opportunity for workers to stage strikes, form unions, and restore the rights they have lost.
The backlash to the GOP’s anti-union efforts is also producing tangible results. Voters in Michigan elected Gretchen Whitmer as governor with the backing of the state’s unions. In Illinois, voters ousted the union-busting Republican incumbent Rauner, who vetoed a $15 minimum wage bill and fought to pass right-to-work laws. “I think the public perception of unions is getting better each and every day. We are seeing young people responding very well to unions,” said Stephanie Bloomingdale, president of the Wisconsin AFL-CIO. In Missouri’s August referendum on the state’s right-to-work laws, a full 65 percent of voters opted to overturn them.
Still, rebuilding the labor movement in the Midwest will be a herculean task. Although the majority of Americans say they support unions, only 11 percent of U.S. workers belonged to unions in 2017. “A defeat of Walker is a major victory,” said Nelson Lichtenstein, a history professor at the University of California at Santa Barbara, “but there is much ideological and organizational work to be done before liberalism and unionism are once again joined at the hip.”
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