California’s Proposition 34, on the ballot in November, is about a number of things. It’s a clash that involves a couple of high-profile, heavily funded interest groups that have a long history and a bitter backstory, and it features a quixotic but pugnacious battler who has accumulated both foes and lawsuits through the decades.
What it isn’t about is health care. Which is odd, because Prop. 34, as written, looks and sounds like nothing so much as a health care issue.
In reality, the measure was written for a specific purpose: To quell the political activity of a single organization, the AIDS Healthcare Foundation (AHF), which for years — including this one — has been pushing California rent-control ballot measures that landlord groups and corporate apartment owners have spent vast amounts of money to defeat.
“I’m getting between them and billions of dollars,” said Michael Weinstein, president of the Los Angeles-based AIDS Healthcare Foundation, speaking of his opponents.
“It’s not about him,” replied Nathan Click, the longtime political operative and spokesman for the Yes on 34 coalition, whose campaign has already spent nearly $44.6 million on the initiative, almost all of it funded by the California Apartment Association.
Wait: An apartment association driving a health care proposition?
An AIDS foundation trying to force through rent control?
Welcome to the initiative process in the Golden State, where words don’t always mean what you think.
On its face, Prop. 34 would do something simple: require that certain health care providers spend 98% of what they make through a federal drug program directly on patient care. It would modify national legislation that allows those who serve low-income and at-risk patients to use the federal program to get a discount on pharmaceuticals, then sell them at a profit in order to help underwrite those services.
Asking providers to spend most of the money on patient care sounds reasonable, which is perhaps one reason why the measure holds a 10-point lead among likely voters in the most recent poll taken. But that’s not why the initiative was drafted.
“We’ve been in both the housing and health care business from the beginning.”~ Michael Weinstein, president, AIDS Healthcare Foundation
The proposition lists several criteria to define which groups would have to hit this 98% spending level: Those that spend at least $100 million on expenses other than direct care, own and operate apartment buildings, and have received at least 500 severe health and safety violations over the past decade.
According to those who’ve studied it, that description fits exactly one organization in California — the AIDS Healthcare Foundation. Founded in 1987, AHF has become a large-scale national and international operation that generates nearly $2.5 billion in annual revenue, most of it through its national network of pharmacies. Weinstein has used loads of that money on political issues including housing development and drug prices — and, most notably, three state initiatives to expand rent control policies. (Prop. 33 is this year’s version.)
The AIDS Healthcare Foundation has also purchased older, distressed buildings in multiple cities, including nearly a dozen in Los Angeles, and turned them into subsistence-income housing. Weinstein called the buildings “low-hanging fruit” in the ongoing struggle to get unhoused people off the streets, but the foundation’s history of ownership includes hundreds of housing violations and legal actions against it.
Though the ballot initiative is primarily aimed at reducing Weinstein’s ability to finance expensive ballot initiatives and other political projects, critics say the 98% patient care spending requirement could also impact the AIDS Healthcare Foundation’s ability to continue buying buildings it uses for housing.
“One of the trends that we see with these entities is that they use this money as a slush fund, and real estate is one of the top ways that they’ve found to park it. That’s not what Congress intended when it passed the [drug program] law,” Click said. “It’s not just AHF that has abused the lack of accountability and transparency in that program.”
Weinstein scoffs at such criticism. In discussing a recent tenant lawsuit over living conditions at the Madison Hotel on L.A.’s Skid Row (it was settled before trial), Weinstein noted that the AHF bought the building for $8 million and has spent $7 million more trying to improve its habitability — as opposed to plunging full-scale into new construction, which Weinstein said can take years “just to get a shovel in the ground” in Los Angeles.
“We’ve been in both the housing and health care business from the beginning,” Weinstein said. “Our urgent desire is to get people off the streets. We’re talking about the very first rung on the ladder: $400 a month for a room in a building that has 200 people living in it in close quarters, sharing bathrooms. If you make perfect the enemy of the good, you’re not going to get anywhere.”
As for Prop. 34, he said, “I wouldn’t put anything past these people. The corporate landlords don’t care what the impact is. They don’t care about what happens to people here — or to society, for that matter — so I’m not surprised by their tactics, no.”
Of the $44.6 million raised in support of Prop. 34 so far, $44.1 million of it came from the California Apartment Association.
Click denied that Weinstein is the target of Prop. 34, saying the lack of transparency around the federal drug program leaves it unclear which organizations might be affected, including the AIDS Healthcare Foundation.
“No one knows how much of their money they spend on patient care,” said Click, a former communications director for and current adviser to Gov. Gavin Newsom. Click added that there are “a number of groups” backing the ballot initiative, not just the powerful California Apartment Association.
Still, of the $44.6 million raised in support of the measure so far, $44.1 million of it came from the California Apartment Association, according to state data compiled by Cal Matters. The AHF has spent $5.6 million opposing it.
It’s a long-running grudge. Weinstein has repeatedly taken aim at landlords, even though his foundation is one, albeit a landlord with little interest in raising rents. He wants to repeal the Costa-Hawkins Rental Housing Act of 1995, which he said is “more responsible than anything else for the housing crisis in California” since it exempts housing built after 1995 from any local rent control, likely reducing the pool of affordable housing.
A 2019 law limits annual rent increases to 5%, but it allows for a yearly inflation increase of up to another 5%. The AIDS Healthcare Foundation opposed it, Weinstein said, because “people cannot afford 10% increases.” He also thinks that, over time, what was intended as a cap will instead become a standard annual hike that squeezes renters to the breaking point.
This year’s Prop. 33 would take down Costa-Hawkins entirely. Like Prop. 34, it leads among likely voters in the most recent polling. The AHF has poured nearly $42 million into the rent-control initiative; its opponents have spent $106 million against it, led by the California Apartment Association’s $72.2 million in funding.
Weinstein is no stranger to sharp elbows. From his AIDS activism forward, he has taken on industry giants in several fields and often been the subject of withering criticism for his views and tactics. He remains unapologetic, especially on the subject of housing.
“The same outrage I felt about how AIDS patients were treated in the ’80s, I feel about homelessness now,” Weinstein said. “We can’t have these robber barons milking us dry — but we’ll not fix that without slaughtering some sacred cows, and at the top of that list is the California Apartment Association.”
Weinstein added that he has no plans to quit pressing the issue. It seems clear that his opponents believe him.
