The legislation would require CalPERS and CalSTRS to disclose and divest from any investments in companies engaged in predatory business practices that rely, or result in, the displacement of residents in affordable housing in order to generate profits for investors.
Public pension funds have been a primary source of equity for what affordable housing advocates have termed “predatory equity”, a form of real estate speculation predicated on the displacement of low and middle-income renters from affordable housing.
Tenants Together, California’s statewide organization for renters’ rights, has been urging CalPERS for over a year to voluntarily adopt “predator free” investment criteria, pointing to the large scale displacement of tenants in East Palo Alto and New York City fueled by CalPERS money.
Over $600 million of public funds were invested in the Page Mill and Stuyvesant Town developments which have resulted in the harassment and displacement of tenants in rent-controlled units. To date, the pension fund board has not taken action to screen out real estate investments that are premised on evicting tenants.
There is no excuse for public funds being used for predatory equity schemes. They are not only unethical but are unsound investments that pose serious financial risks. The retirement funds of working people should not be used to evict working people and it is long overdue that the state ensures that public employee pension funds are not invested in predatory schemes that displace renters.
Previous divestment acts (Sudan and Iran) passed by the legislature have brought attention to the Legislature’s responsibility to prohibit CalPERS and CalSTRS from public employee pension fund investments that do not serve the public‘s interest.
It is now time for CalPERS and CalSTRS to claim moral and social responsibility for their investments and continue to abide by their fiduciary responsibility by acting in the public’s best interest to end public pension fund investments in predatory equity schemes that displace renters.
It is unconscionable that hundreds of millions of dollars in public funds have been used in efforts to evict tenants from New York to California. Actions speak louder than words and CalPERS needs to make its claim of socially responsible investing a reality.
At its heart, this bill introduces greater transparency and accountability into California’s pension fund investment decisions, something that will benefit communities across the country.
Tom Ammiano is a California State Assemblyman representing the 13th District in the City of San Francisco.