In summary
Prop. 34 is about healthcare spending. But it also would likely quash the controversial AIDS Healthcare Foundation’s fight for rent control.
Voters today decide on one of the more confusing statewide measures on the ballot: Proposition 34, which has to do with health care spending, but also could have implications for rent control and other housing issues.
Prop. 34 would create new rules regarding how some California health care providers spend revenue they make selling pharmaceuticals via a particular federal program. What’s not explicitly mentioned in the measure’s text is that it appears only one organization would be affected by the change: The AIDS Healthcare Foundation.
The foundation, which provides health care in California and beyond for patients with HIV and AIDS, is led by the controversial Michael Weinstein. Under his watch, the foundation has become a big player in state and local housing politics. It also owns affordable housing developments in Los Angeles’ Skid Row, where tenants have complained about habitability and health issues.
If Prop. 34 passes, it could force the AIDS Healthcare Foundation out of housing advocacy. That likely would leave a noticeable hole in at least one arena: the fight for statewide rent control reform.
The AIDS Healthcare Foundation so far has sponsored three ballot measures to allow for the expansion of rent control in California (the first two failed, and the third is this year’s Proposition 33). If the foundation backed out of that fight, it’s unlikely anyone else would take its place, said Sharon Rapport, director of California state policy for the Corporation for Supportive Housing. Sponsoring a rent control ballot initiative is both expensive and politically fraught, as it’s guaranteed to alienate the powerful landlord lobby.
“I don’t know if too many organizations have the will and the funding to be able to put it on the ballot,” Rapport said. Her organization hasn’t taken a position on the proposition.
That means if Prop. 34 passes and Prop. 33 fails there’s little chance of statewide rent control reform happening in the near future, Rapport said. The state Legislature could reform rent control without a ballot measure, but it’s a political hot potato that many legislators are unwilling to touch, she said.
The AIDS Healthcare Foundation also has thrown its weight (and money) around in other housing-related fights — it campaigned against legislation requiring local governments to approve denser housing and backed a failed two-year moratorium on certain building projects in Los Angeles.
The AIDS Healthcare Foundation wouldn’t answer when asked by CalMatters whether it would stop its housing advocacy work if Prop. 34 passes. But if the foundation is found to be spending its pharmaceutical revenue on things like rent control ballot measures in violation of Prop. 34’s guidelines, it could lose its license to operate its medical clinics, which serve 16,000 patients in California.
That’s because the foundation participates in a federal program that gives health care providers a discount on pharmaceuticals in exchange for serving low-income and at-risk patients. The providers can then turn around and sell those drugs at retail rates, raking in a profit. Prop. 34 would require the foundation to spend 98% of the revenue it makes through those drug sales on “direct patient care.”
As far as the Yes on 34 campaign is concerned, that money should go to patients, not to back political gambits in the housing sector.
“That’s obviously not what this program was designed for,” said Nathan Click, spokesperson for Yes on 34.
The other side considers the measure an attempt to silence a nonprofit’s advocacy work.
“I think it’s very dangerous to set a precedent where organizations can be targeted like this just for helping communities,” said Susie Shannon, campaign manager for No on 34. “It would be similar to a tobacco company putting an initiative on the ballot to silence anti-smoking groups.”
Backers of Prop. 34 include the California Apartment Association, which also opposes rent control measure Prop. 33.
“I don’t know if too many organizations have the will and the funding to be able to put it on the ballot.”
Sharon Rapport, director of California state policy, Corporation for Supportive Housing
Technically, Prop. 34 applies to any health care provider that participates in the federal drug program and also spends at least $100 million on expenses other than direct patient care, owns and operates apartment buildings, and has accumulated at least 500 severe health and safety violations in the last decade.
The AIDS Healthcare Foundation appears to be the only entity that fits all of that criteria.
Because Prop. 34’s scope is so limited, if the measure passes, its next stop will be the courthouse.
“Because we don’t believe that it’s legal,” Shannon said.
The measure is unconstitutional, The AIDS Healthcare Foundation argues, because it singles out one organization. The foundation already has been to court once over this measure, when it tried without success to get the California Supreme Court to boot it off the ballot. If voters approve the measure, the foundation has promised to challenge it again.
The other side insists the proposition could apply more broadly.
“We just have to wait and see what the Attorney General says,” Click said. “There are a number of entities that could be covered.”
