Democrats for Rent Control or Democrats for Rent?

When David Chiu came to Sacramento in 2014, he’d already earned a reputation as a cool-headed consensus builder from his three terms as chair of San Francisco’s board of supervisors. He’d mastered the city’s blood sport politics and knew how to walk a fine line between the city’s left-leaning activists and its moderate business community.

But in the state Assembly, on his signature issue of affordable housing and homelessness, the master negotiator who chairs the Assembly Housing and Community Development Committee often ran headlong into brick walls. In one such case, the pushback came not in the form of an envelope of cash or a rat in his mailbox — nothing so crudely 20th century. It arrived at the 11th hour on the Assembly floor when Chiu found himself without enough Democrats to pass what seemed like a commonsense assist to struggling tenants.
 

California Democrats might talk about their votes being guided by moral compasses, but those compasses often point to the magnetic north of cold hard cash provided by the real estate lobby.

 
They didn’t vote against the bill; they simply vanished into thin air when their votes were needed. And this, in a legislature where Republicans are as rare as the California spotted owl. Chiu ended up watering down his bill, and when it finally got a nod from the California Association of Realtors (CAR), his party comrades suddenly materialized.

“They came out as if by Bat-Signal,” remembers Brian Augusta, who lobbies on housing issues for the Western Center on Law & Poverty and the California Rural Legal Assistance Foundation, and watched the vote that day.

Chiu’s measure was hardly radical — it had originally called for doubling the length of time renters had to respond to eviction notices, from five days to 10. But CAR kept such a close watch on the bill that Chiu might as well have proposed the end of private property rights.

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While California lawmakers might talk about their votes being determined by moral compasses, those compasses often point to the magnetic north of cold hard cash provided by powerful lobbies like the California Apartment Association (CAA) and CAR, which between them lavished more than $43 million on California politicians, much of it on the state’s legislators and legislative races between 2017 and Feb. 15, 2020 (the last date for which disclosures are available). By far, most of the money went to Democratic representatives, particularly to moderate Democrats, or Mod Dems.

Even last legislative session’s major tenant win — Assembly Bill 1482, a statewide anti–rent-gouging measure that also bars evictions except for just cause, passed in part because of a last-minute compromise with CAA, which had split with CAR on the bill.

“You ended up with something the owner community didn’t like but could live with,” noted CAA lobbyist Debra Carlton.
 

Lawmakers who gave us six weeks paid family leave and medical coverage for undocumented immigrants have been at a loss when it comes to enacting major tenant protections

 
The enormity of the affordable housing shortage also played a role in the compromise, and in the passage of other recent landlord-tenant reforms, Chiu said. “Millions of renters are hanging on by a thread,” he said, adding that the pandemic has made the state’s worst housing crisis even more acute. “The coronavirus is calling questions we never would have discussed before. Without action, we could see a massive wave of evictions.”

But California lawmakers who gave us six weeks of paid family leave and medical coverage for undocumented immigrants have been at a loss when it comes to enacting major tenant protections, particularly when it comes to the issue that has divided them for decades: rent control.

One of the reasons: the industry’s power to sink enough cash into a political contest to change an easy win into a brutal defeat. These four Mod Dems are among the industry’s largest beneficiaries, shown here with the amounts they received during the last election cycle. (Note: Most of these contributions came from independent expenditure committees to which CAA and CAR contributed.)

Only Senator Susan Rubio (D-Baldwin Park) received more money: $1.1 million. Rubio, however, broke with the industry and voted with the Democratic majority on key housing legislation last year.

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Not so for the next four biggest recipients of industry cash. The four broke with their party to either vote no or sit out votes on at least two of three key housing bills last year: AB 1482 and Senate Bill 329 and SB 529.

In addition to AB 1482, SB 329, a bill that bars landlords from discriminating against would-be tenants who pay the rent with Section 8 rent subsidy vouchers, was also approved. SB 529, a bill by Senator Maria Elena Durazo (D-Los Angeles) that would prohibit discrimination against those who join tenant unions, failed to win enough votes in the Senate to move to an Assembly vote.

Glazer voted in favor of AB 1482, but sat out votes on SB 329 and SB 529. He also voted yes on Chiu’s bill to extend the time for tenants to respond to evictions. Salas voted no, while Cooper didn’t vote, even after the CAR compromise. Twenty-one other moderate Democrats — some of whom received significant support from the real estate industry — also either opposed or didn’t vote on at least one of the bills. One of those, Senator Melissa Hurtado, had felt the sting of more than $300,000 in CAR cash spent to oppose her in her 2018 election bid. After she beat Republican Andy Vidak, she garnered some of the organization’s support and cast no votes on AB 1482 and SB 529.
 

“Any politician who says they can disconnect themselves from the large sums of money is lying.”

— Sean McMorris, California Common Cause

 
Ramos, a former San Bernardino County Supervisor and former chair of the San Manuel Band of Mission Indians, came in second in the primary behind Republican Henry Nickel, then won with nearly 60 percent of the general election vote after an infusion of more than half a million dollars between June and November. Similarly, Salas came in slightly ahead of a Republican challenger, Justin Mendes, in the primary, then crushed him 56 to 43 percent in the November election with nearly $500,000 of industry cash for his general election bid. Both races were among the priciest legislative contests of 2018, with Ramos spending $2.8 million and Salas, $2.2 million. Most of Cooper’s and Glazer’s funding came in late 2019 and early 2020 for the March 2020 primary. Both finished first, comfortably ahead of their Republican opponents.

Assembly members Salas, Ramos and Cooper didn’t answer interview requests. Glazer’s chief of staff, Daniel Weintraub, wrote in an email that Glazer backed AB 1482 because it was balanced “without risking the consequence of any rent control measure: a loss of rental units that would make it harder for tenants to find affordable housing.” Similarly, Glazer felt that SB 329 and 529’s requirements might be counterproductive and exacerbate the housing shortage. Weintraub stressed Glazer’s support for tenants, pointing to his sponsorship of bills to increase the renter’s tax credit two years running.

Like Rubio, whose election-year haul likely made the difference in her 2018 win over former three-term Assemblyman Mike Eng, not all recipients of real estate cash vote in lockstep with the industry.
 

The balance of power remains heavily tipped in favor of landlords through Costa-Hawkins, along with the 1986 Ellis Act.

 
Still, the big-dollar donations are impossible to ignore, argued Sean McMorris, a policy and organizing consultant with California Common Cause. “Those campaign contributions are going to create goodwill between [industry donors] and politicians — whether they be direct or through independent expenditure committees that benefit a particular candidate. The message is received. Any politician who says they can disconnect themselves from the large sums of money is lying.”

The ocean of cash has left tenant groups hopelessly outgunned in Sacramento, even though a resurgent tenant movement has flexed its muscle in recent years. Renters’ rights groups have blanketed the capitol with grassroots lobbyists. A group from the Alliance of Californians for Community Empowerment (ACCE) even staged an all-night sit-in at the governor’s office last year to push for AB 1482, and two other bills that were defeated. Tenant power is still puny compared to that of their landlords, but ACCE’s Amy Schur said it is growing: Unions are increasingly lending their voices — and their political clout — to renters’ rights bills in Sacramento. Moreover, thousands of new tenants, many desperate for COVID-19 relief, have joined online petition drives, adding a large pool of potential activists.

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Although it’s long been a power player in Sacramento, the real estate industry established its dominance over the tenant movement in 1995 after a dogged 12-year effort to pass the Costa-Hawkins Rental Housing Act. The bill — authored each year by Jim Costa, now a U.S. congressman, who first carried it in the Assembly and later as a senator from Fresno — allows landlords to raise rents to market rate after a tenant vacates a rent-controlled unit, and exempts single-family homes and newer buildings from rent control. The balance of power remains heavily tipped in favor of landlords through Costa-Hawkins, along with the 1986 Ellis Act, which allows landlords to evict tenants if the owners or their family members wish to occupy a property or to convert to it condos or tenants-in-common ownership arrangements. Tenants say Ellis is often used to circumvent rent control laws.
 

The real estate industry rewards friends and would-be friends alike through standard campaign contributions, independent expenditure committees through “behested payments” that go to nonprofits in the names of elected officials.

 
Rent control is still at the center of the landlord-tenant fight; tenant groups argue that without stronger protections, cities are slowly losing affordable housing while property owners are incentivized to evict moderate- and low-income renters, especially in hot real estate markets. Property owners counter that stronger protections would mean an even smaller and costlier supply of housing and that rent control merely distracts from resolving the issue of how to create more housing.

The industry sought passage of Costa-Hawkins to quell a wave of tenant activism in the 1970s and early 1980s that gave rise to rent control laws that covered apartments in 14 cities, and dozens more that regulated mobile home rents. San Francisco was the first large city to pass a vacancy control provision — allowing it to cap rents landlords could charge new tenants; voters eventually invalidated the San Francisco law in a referendum, but the action alarmed the industry and spurred it to fight back, said Steve Carlson, a longtime lobbyist for the Apartment Association of Greater Los Angeles.

When asked why Jim Costa — a state lawmaker from Fresno, where rent control wasn’t an issue — would take on the role of industry champion, Carlson told Capital & Main, “We felt we should have a Democrat,” noting that the party held a majority in the legislature. Costa was “friendly” with powerful House speaker Willie Brown and was a “well-respected hard worker.”

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Occidental College professor of urban and environmental policy Peter Dreier wrote in a 1997 paper that the industry had spent $50 million in the previous 12 years to beat back local rent control initiatives and back political campaigns. He wrote that an industry lobbyist said, “It is a small investment when you consider a billion dollars or more in apartment values are at stake.”

The industry never forgot Costa’s effort. He was elected to the U.S. Congress in 2004 with real estate firms and the National Association of Realtors among his top contributors. They’ve remained loyal to Costa ever since, stepping in with tens of thousands of dollars when he’s faced tough election opponents.

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In Sacramento, the industry rewards friends and would-be friends alike through a variety of means; standard campaign contributions are just the start. Hundreds of thousands of dollars come from independent expenditure committees (IEs) with names like Keep California Golden and Keeping Californians Working, which represent real estate and other interest groups, and aren’t bound by state campaign contribution limits. Because of the U.S. Supreme Court’s 2010 Citizens United decision, IE committees can siphon unlimited amounts of cash into candidate coffers as long as they don’t coordinate their activities with the candidates. The CAA and CAR together poured more than $2.5 million into at least six such committees between 2017 and February 2020, the last date for which disclosures are available.

The money behind CAA and CAR largely comes from big companies like Houston-based Camden Property Trust, with revenues of $1 billion last year, or Essex Property Trust, based in San Mateo, with $1.4 billion in revenue. However, the groups also collect small contributions and enjoy significant grassroots reach; local realtors and landlords are often politically active and regularly voice concerns to legislators.

The major parties also reap the benefits of industry generosity; the Democratic Party took in more than $2.4 million in CAA and CAR donations, while the Republicans received $1,590,000 between 2017 and February 2020. Even elected officials’ favorite charities are a way to make real estate industry influence felt through so-called behested payments, which go to nonprofits in the names of elected officials. In some cases, those nonprofits are organized by the lawmakers themselves, like the California Legislative Black Caucus, or Women in California Leadership, a nonprofit with Senator Connie Leyva (D-Chino) at the helm.

These organizations receive major funding from groups like the CAA and CAR that lobby the legislature. For instance, since 2017, of the CAA’s $365,695 in behested payments to lawmakers, only $39,000 went to charities or causes not controlled by legislators. The CAR made $145,000 in behested payments, $85,000 of which went to charities that were not operated by legislators.

This November, for the second time in as many years, the AIDS Healthcare Foundation has placed a Costa-Hawkins reform measure, Proposition 21, on the ballot. A similar measure was outspent three to one and failed badly in 2018; Prop. 21 will likely attract equally aggressive opposition. But ACCE’s Amy Schur sounded a note of optimism on behalf of tenant activists. Because of the sheer numbers of people concerned about homelessness, COVID-19 rent relief and the increasing support of labor unions for tenant protections, she said one day “it seems possible that the interests of the 17 million Californians who rent could win out.”

Copyright 2020 Capital & Main