Every month, tenants in more than 14,000 California rental properties fork over huge portions of their paychecks to Blackstone, a Wall Street asset-management company that’s notoriously reluctant to perform maintenance duties. This year, Blackstone has been throwing millions of dollars of that money into the fight against Proposition 10, a ballot measure that would pave the way for rent control across the state.
Or to put it another way: a massive corporation is using working people as ATMs, and then leveraging the money it extracts from them to purchase political influence, thus protecting its ability to continue wringing renters dry — all while rents skyrocket, the eviction and homelessness crises worsen, and the average working-class Californian’s standard of living plummets.
The corporation’s behavior is no surprise; giant companies have been known to interfere in American politics from time to time. But it’s worth remarking on in this instance, because the stakes are so high and the outcome is so uncertain. 41 percent of Californians support the rent control ballot measure, 38 percent oppose it, and 21 percent remain undecided. The next few days will feature a dramatic showdown between tenants and billionaires. There’s no telling who will emerge victorious.
Blackstone is not alone in its opposition to Prop 10. The initiative to defeat the ballot measure is being funded to the tune of $77.5 million, mostly by large landlords, for-profit speculative developers, and real estate investment trusts. Prop 10 would repeal California’s Costa-Hawkins law, a draconian anti-tenant piece of legislation, and allow cities to implement comprehensive rent control policies. That, of course, would undermine capitalists whose entire business model hinges on making buildings and land more expensive and more profitable.
Still, Blackstone is the anti-Prop 10 campaign’s largest single contributor. So how did the Wall Street private-equity firm break into the rental business to begin with? The answer has to do with another Wall Street phenomenon — the 2008 housing crisis.
As a wave of foreclosures swept across California, Blackstone and other big landlords gobbled up owner-occupied properties at an alarming rate, transforming them into lucrative rental properties. Since Costa-Hawkins prohibits municipalities from extending rent control protections to new tenants in newer units, every time a tenant moves out they’ve been able to jack up the rent in preparation for the new tenant — at least on units built after 1995. This has contributed to soaring rents, especially in working-class areas, as the constant tenant turnover creates perpetual fresh opportunities for price gouging. Cue rapid gentrification and large-scale displacement.
Blackstone is flush with cash. Among its many other sources of profit, it not only rakes in an ever-growing amount in rent from tenants of its properties, but the Trump administration ensured that it received a $1 billion subsidy via Fannie Mae in 2017. And since it’s a sprawling asset-management company, Blackstone also has access to funds unrelated to its housing investments, including the pensions of California public employees. As the Guardian reported, Blackstone has been funding its anti-Prop 10 lobbying by tapping profits on “pools of capital from investors, which include dozens of state and local pension systems, and public university endowments.” This effectively means that “the opposition to the rent control initiative is being bankrolled by everyone from San Francisco municipal workers to university employees to public school teachers — all of whose retirement savings are in the Blackstone funds.”
So let’s get this straight. A multibillion-dollar Wall Street private-equity corporation took advantage of the foreclosure crisis to become the largest single-family home landlord in California, contributing to rising rents all across the state, and is now using not only working people’s hard-earned rent money but also taxpayer subsidies and public employees’ pensions to fund a massive campaign against a ballot measure that would give cities the right to control the spiral of rents in the state. Is that correct?
“Yes,” says Will Shattuc, who’s helping to lead a campaign for Prop 10 with the East Bay chapter of Democratic Socialists of America. “What it always comes back to is that giant corporations do not have our interests in mind, ever. It’s never been about providing quality homes, stability for renters, even any sort of effective service. They’re just squeezing people in whatever way they can.”
The only question is whether working-class Californians will let them get away with it. Shattuc doesn’t believe it’s a foregone conclusion. “Across the state and the country, the renters’ movement has been picking up steam,” Shattuc says. “Corporate lobbyists and the politicians they’ve bought have been able to tamp it down for years. But the problems are visible across all strata of our society now, and the work of activists and community organizations has actually made an incredible infrastructure to fight back.”
The campaign against Prop 10 has used its massive funds from corporations like Blackstone to purchase misleading ads which they’re airing nonstop on local television, claiming that Prop 10 will actually exacerbate the housing affordability crisis. Meanwhile landlords have even been harassing and intimidating tenants across the state, implementing rent hikes and serving eviction notices while citing the looming Prop 10 vote as their rationale — essentially a strong-arm propaganda campaign.
But a strong coalition of ordinary renters, tenants’ unions, labor unions, and groups like the Alliance of Californians for Community Empowerment and DSA are organizing as hard as they can for a Prop 10 victory.
“When I talk to people at their doors, I just have to say, ‘The rent is too damn high,’ and everyone knows it,” says Shattuc. “I hear horror stories every day. But people are organized now around housing and rents in a way they haven’t been before. Putting $77.5 million into this fight only shows how afraid the corporate landlords are.”