As election season ramps up, two propositions on the 2024 California ballot are making voters scratch their heads. Prop 33 would expand rent control in the state, but it’s sponsored by an organization that isn’t widely known as a housing advocate: the LA-based AIDS Healthcare Foundation. The measure, however, has sparked pushback from California’s landlord lobby in the form of Prop 34. The initiative is billed as a health care reform measure, but its real motive appears to be to cut off funding for the AIDS Healthcare Foundation.
What exactly is Prop 33?
This initiative would allow cities to expand their local rent control rules to cover more apartments and homes.
It does that by repealing a 1995 state law called the Costa-Hawkins Rental Act, which currently prevents cities from regulating rents on certain properties, like single-family homes and new housing.
Prop 33 would also let cities pass tougher rent control laws, including limits on how much landlords can raise their rents each time a tenant moves out. That’s not allowed under the current state law.
Supporters of the law include the California Democratic Party, Unite Here Local 11, and the California Nurses Association. The LA County Board of Supervisors voted 3-1 in support of the ballot initiative.
So far, 51% of likely voters say they will vote for Proposition 33, according to recent polling from the Public Policy Institute of California.
Why is the AIDS Healthcare Foundation so interested in rent control?
AIDS Healthcare Foundation CEO Michael Weinstein says housing efforts are an extension of the organization’s overall mission, because access to housing is a major determinant of overall health. In 2017, AHF started purchasing old buildings, including single-room occupancy hotels in Skid Row –– like The King Edward Hotel and The Baltimore Hotel –– and turning them into low-income hotels.
This is the third time the group, which has an annual budget of around $2.5 billion, is putting this issue before LA voters. In total, the AHF has spent more than $150 million backing various ballot measures, including statewide rent control propositions in 2018 and 2020, as well as local and state measures requiring condoms in pornographic films.
So how does the organization have such a large budget? It provides access to medical care for approximately 2 million patients across 17 states and 47 countries. The majority of their revenue comes from a network of 62 pharmacies.
The AHF is also enrolled in a federal program, called 340B that allows providers that serve low-income or at-risk patients to buy drugs at a discount, bill insurance companies at full price, and use that revenue to expand their mission. The 340B law doesn’t specify how exactly that revenue garnered from drug discounts must be spent.
AHF has used some of that money to sponsor ballot measures. But the backers of Proposition 34 argue that this money should be spent on patients, not on politics.
What, then, is Prop 34?
This initiative, billed as the “Protect Patients Now Act,” would require certain health care providers using that discount drug program to use at least 98% of their net drug sale revenue on what’s described as “direct patient care.”
But Prop 34 only applies to 340B providers who meet some very specific conditions. They must have spent more than $100 million on things other than direct patient care in the last decade, and also own and operate apartment buildings that have been collectively cited for at least 500 health and safety violations.
As far as most people can tell, the only organization that meets these criteria is the AIDS Healthcare Foundation.
The proposition is sponsored by the California Apartment Association, a lobbying group for apartment owners and managers.
This proposition has support from 53% of likely voters, according to recent polling from the Public Policy Institute of California.
So is Proposition 34 directly targeting the AIDS Healthcare Foundation?
While backers of Prop 34 claim this would likely apply to a few different providers, it appears to only apply to the AIDS Healthcare Foundation. AHF has dubbed Prop 34 “the revenge measure.”