Tangled Web: Gavin Newsom, Ace Smith, California Apartment Association, and the Billionaires Who Love Them
By: Housing Is A Human Right
Tags: News, Billionaires, Politics, Housing, California

Gov. Newsom, left, and Ace Smith

Billionaires Stephen Schwarzman and Sam Zell must love Gov. Gavin Newsom, political consultant Ace Smith, and the California Apartment Association right now. After all, Newsom, Smith, and the CAA were key players in killing two rent control ballot measures in California that Schwarzman, Zell, and other real estate heavyweights spent a staggering $163.5 million in campaign cash to stop.

Ace Smith, in particular, profited from doing Big Real Estate’s dirty work. Smith’s consulting firm raked in $105,000 for stopping Prop 10 in 2018 and $140,000 for defeating Prop 21 in 2020. Smith (pictured above) usually represents Democratic candidates, but with both measures he chose to work for real estate executives who are major contributors to Donald Trump — and have awful reputations among housing justice activists.

In the meantime, millions of other renters are still struggling to pay unfair, sky-high rents — and, as a result, face an eviction tsunami as the economic fallout of the COVID-19 pandemic slams the middle and working class.

Billionaires Stephen Schwarzman, CEO of Blackstone Group, and Sam Zell, co-founder of Equity Residential, are two of the real estate hotshots that Newsom and Smith decided to stand with. Schwarzman and Zell are among the richest people on the planet. Schwarzman, who’s been deemed a “Modern-Day Robber Baron,” is worth $20.4 billion. Zell, whose predatory business practices earned him the nickname the “Grave Dancer,” is worth $5 billion.

Their companies shelled out tens of millions to oppose Prop 10 in 2018 and Prop 21 in 2020. Both measures, which were spearheaded by AIDS Healthcare Foundation and Housing Is A Human Right, would have allowed localities to expand rent control policies in response to the devastating, and worsening, housing affordability and homelessness crises.

Schwarzman, Zell, and other corporate landlords — including Essex Property Trust CEO Mike Schall, billionaire landlord Geoffrey Palmer, Western National Group CEO Michael Hayde, and Prometheus Real Estate Group CEO and billionaire Jackie Safier, all of whom contributed vast sums to stop Prop 10 and Prop 21 — weren’t worried about seniors forced to sleep in their cars, working-class families not having the money to pay rent and medical bills, and growing numbers of college students trying to earn a degree while struggling with homelessness.

Schwarzman and his deep-pocketed cronies just wanted to maintain a rigged and broken housing market that made them shockingly rich. In the 2010s, according to Zillow, U.S. renters paid a staggering $4.5 trillion to landlords.

“On Dec. 1,” Zillow reported last year, “the nation’s renters didn’t just make their last rent payment of the year — their landlords also collected their last rent payment of what was a very lucrative decade. All-in-all, U.S. renters paid roughly $4.5 trillion in rent during the 2010s, capped off with $512 billion in 2019 alone.”

California landlords were especially making big bucks.

Zillow found that in 2019, Los Angeles renters paid an incredible $39.2 billion to landlords. San Francisco renters shelled out $16.4 billion. San Diego renters forked over $10.3 billion. Riverside renters wrote checks totaling $7.4 billion. San Jose renters paid $6.5 billion. And Sacramento renters delivered $4.8 billion to landlords. Massive amounts paid by renters.

Californians needed relief — and quick.

A statewide coalition of civic leaders, social justice groups, unions, and housing justice organizations — including U.S. Senator Bernie Sanders, the California Democratic Party, and Congresswoman Maxine Waters — backed Prop 10 and Prop 21.

Yet Gov. Gavin Newsom and Ace Smith, a longtime political consultant for Democratic politicians (including Newsom), turned their backs on them. They joined forces with the billionaires and the California Apartment Association, the landlord lobbying powerhouse known for using strong-arm tactics and campaign cash to oppose renter protections in nearly every corner of the state.

It didn’t matter that California’s housing justice movement rallied behind Prop 10 and Prop 21 or that top experts at USC, UCLA, and UC Berkeley found that sensible rent control policies were key for stabilizing California’s housing affordability crisis.

In the University of Southern California’s Rent Matters report, esteemed professor and co-author Manuel Pastor wrote: “The housing crisis requires a range of strategies, [and] moderate rent regulation is a useful tool to be nested in broader strategy. It has fewer damaging effects than are often imagined, it can address economic pain, and it can promote housing stability. And housing stability matters because it is associated with physical, social, and psychological well-being; higher educational achievement by the young; and benefits for people of color.”

Regardless, in 2018, Gavin Newsom, then a gubernatorial candidate, publicly opposed Prop 10. Then in 2020, he actively campaigned against Prop 21, starring in a misleading Prop 21 TV ad and featured on the No on Prop 21 website.

Ace Smith was also an active participant: he was a paid consultant for both the No on Prop 10 and No on Prop 21 campaigns.

Smith’s firm, SCN Strategies, raked in a total of $105,000 from No on Prop 10: Californians for Responsible Housing sponsored by the California Apartment Association, according to state filings.

Blackstone Group, Equity Residential, Essex Property Trust, AvalonBay Communities, Prometheus Real Estate Group, and other corporate landlords contributed millions to the CAA-sponsored committee. (Billionaire Geoffrey Palmer and multi-millionaire Michael Hayde forked over millions to another No on Prop 10 committee.)

In 2020, Smith’s firm, now called SCRB Strategies, received another big payday to stop the expansion of rent control: $140,000 from No on Prop 21: Californians for Responsible Housing sponsored by the California Apartment Association.

Equity Residential, Essex Property Trust, AvalonBay Communities, Prometheus Real Estate Group, and other corporate landlords again delivered millions to the CAA-sponsored committee. (Blackstone Group, Michael Hayde, and Geoffrey Palmer used a shell committee to funnel millions to a different No on Prop 21 committee.)

All in all, Schwarzman, Zell, Palmer, and their high-powered gang seemingly make for strange bedfellows for Democrats Gavin Newsom and Ace Smith, particularly since Schwarzman, Palmer, and Hayde have been major contributors to Donald Trump.

According to Federal Election Commission filings, Schwarzman, Palmer, and Hayde shelled out millions either directly to Trump’s presidential campaigns or to political committees linked to Trump, such as America First Action, Inc., Rebuilding America Now, and the Republican National Committee. Since 2016, Palmer delivered $14.8 million to Trump and associated political committees. Schwarzman forked over $4.4 million since 2017. Hayde contributed $209,500 since 2016.

Rather than fight for middle- and working-class Californians, Newsom and Smith decided to join these billionaires and the California Apartment Association to stop Props 10 and 21.

Housing justice activists are still peeved at Gov. Gavin Newsom, and who knows what will happen when he runs for re-election in 2022. One thing is certain: the governor can’t dodge the fact that he helped the billionaires kill two ballot measures that would have brought urgent relief to California’s 17 million renters.

Patrick Range McDonald, the author of this article, is the award-winning advocacy journalist for Housing Is A Human Right.