The AIDS Healthcare Foundation vs. sensible housing policy

A long-running war over rent control laws in California is heating up again this year as the California Apartment Association seeks to turn the tables on its longtime nemesis, Michael Weinstein of the AIDS Healthcare Foundation.

It may seem odd that a group representing landlords would have an issue with an organization that operates clinics and pharmacies serving low-income patients. But apartment owners may wonder why the AIDS Healthcare Foundation has an issue with them.

Weinstein and AHF have spent tens of millions of dollars over multiple election cycles attempting to persuade voters to repeal a 1995 state law that limits local rent control laws. The Costa-Hawkins Rental Housing Act prohibits rent control on single-family homes or condos, and it protects what is known as “vacancy decontrol,” the ability of property owners to reset the rent to market rate after a tenant moves out of a rent-controlled unit.

Without the Costa-Hawkins Act, local governments throughout the state would be able to enact new rent control laws without regard to whether property owners receive fair and reasonable returns on their investment. While this may sound appealing to some in a time of high housing costs, the long-term effect of rent control is to reduce the number of available rental units. The impact is felt in the absence of new housing, as investors judge apartment projects in California to be likely money-losers, and in the loss of existing housing, as current owners choose to sell and get out of the rental housing business.

Apartment owners funded costly campaigns to successfully defeat Weinstein’s previous efforts to repeal Costa-Hawkins, Proposition 10 in 2018 and Proposition 21 in 2020. Voters rejected both by a margin of roughly 60%-40%. Undeterred, Weinstein is trying again and has collected the signatures needed to qualify the “Justice for Renters Act” for the November 2024 ballot.

But the California Apartment Association is collecting signatures for an initiative that targets Weinstein’s organization. The “Protect Patients Now Act” would revoke the nonprofit status of organizations participating in a federal drug discount program if they have spent more than $100 million on issues other than direct patient care. That description precisely matches the AIDS Healthcare Foundation, which has spent over $100 million on political advocacy, including hiring former California Senate Pro Tem Kevin de León, who now serves on the Los Angeles City Council, as a paid political consultant.

AHF makes money by using the federal drug discount program known as 340B, which allows it to buy prescription drugs at a deep discount and bill government health insurance programs for the regular price. Weinstein’s organization has said its use of the funds for political activity is allowed by law.

Even so, it’s troubling that the AIDS Healthcare Foundation uses revenue derived from a taxpayer-funded drug discount program for its repeated efforts to harass and financially drain everyone in the business of rental housing. Many are small business owners. Millions of rental units in California are in buildings with fewer than 20 units.

What Michael Weinstein does with his personal fortune is entirely his own business, but in this case he is attacking other people’s businesses with the excess profits from a healthcare program intended to benefit low-income patients, made possible by U.S. taxpayers.