Sunday, June 1, 2008

Bay Area real estate figure bolsters fight to end rent control

SACRAMENTO — A Bay Area real estate investment broker and apartment management firm co-owner has donated nearly $1 million to bolster an initiative banning rent control just days before Californians vote Tuesday.

An analysis of campaign finance activity shows Thomas Coates has become the single largest individual contributor to Proposition 98, a property rights measure that has been largely funded by landlords and mobile home park owners.

Several grass-roots groups in the Bay Area are fighting Prop. 98 in an effort to preserve rent control in cities such as Berkeley, Oakland, San Francisco and San Jose, and in mobile home parks scattered across the region.

Analysts said three last-minute donations from Coates totaling $950,000 must be viewed in the context of a long-running clash in cities and towns across the country over government's ability to control rental prices. Pro-98 forces may be trying to sway large percentages of undecided voters or just narrow the margin of defeat, they said.

In an interview, Coates said he made a "sizable contribution" out of personal funds because "you have to invest in the things you believe in." Asked why he made the donations at a time when polls indicate the proposition is headed for defeat, he said, "It's been my experience that money that is spent early is less effective than money that is spent late." Coates said he "passionately" believes in doing away with government-imposed rent control, Advertisementsaying it has failed in the long run to provide affordable housing for those who most need it.

"Advocates of rent control don't understand the issue," he said.

Coates said passage of Prop. 98 would "have no positive effect on my business whatsoever."

Coates is chairman of San Francisco-based Arroyo and Coates Inc., which brokers investment in retail properties and apartments, and arranges several types of loans. He has made contributions of $200,000, $300,000 and $450,000 within the past week.

Coates also is the co-owner of Jackson Square Properties, which manages apartments across the nation. Additionally, in affiliation with Jackson, he made eight donations, each in the thousands of dollars.

Dean Preston of Bay Area-based Tenants Together, one of the public interest groups that formed the anti-98 coalition, said "Coates is the poster child for what we've been saying all along — 98 is nothing more than a moneymaking scheme by California's wealthiest landlords."

"We're confident that California voters are going to ensure he doesn't get a return on this mean-spirited investment," Preston said.

Prop. 98 would not only phase out rent control but also limit government seizure of private property through eminent domain. A U.S. Supreme Court ruling in 2005 broadened governments' eminent domain powers.

Late contribution reports, which must be filed with the Secretary of State's Office, show the anti-98 coalition has been dumping five- and six-digit contributions into the fight.

But the largest in recent days, $345,000, came from Californians for Neighborhood Protection, the primary anti-98 coalition of conservationists and labor.

Opponents of Prop. 98 have put on the ballot a countermeasure, Proposition 99, which focuses much more narrowly on eminent domain.

During the past two weeks polls have shown Prop. 98 to be in trouble.

In the Field Poll, 33 percent of voters said they favor the initiative and 43 percent opposed it.

In an earlier Public Policy Institute of California poll, 30 percent of voters backed the measure, and 48 percent said they would vote "no."

"Supporters may believe that they still have a chance of winning," said Jack Pitney, a political science professor at Claremont McKenna College. "There are precedents for dramatic turnarounds in initiative campaigns. That's the good news for backers of Proposition 98.

"The bad news is that it is much harder to win 'yes' votes than 'no' votes. The worse news is that Californians have already cast a large fraction of the vote by mail."

"Even if it is a lost cause, supporters may reason that a narrow defeat is better than a huge defeat," Pitney said. "If they can beat the point spread, they can give a morale boost to anti-rent-control measures at the local level."

In addition, U.S. corporate interests, no matter how the vote turns out, will continue to step up pressure on trend-setting California and other states to do away with rent control.

David McCuan, a political science professor at Sonoma State University, said that "strategic giving," such as by Coates, could be viewed as "throwing good money after bad."

"But ballot measure politics are, part and parcel, really a longer term strategy with their own political dynamic — you are giving to 'sow the field' for later and to seed the movement in other states," he said.

Tim Hodson of the Center for California Studies in Sacramento said that "rent control is a never-ending war and Proposition 98 is simply the latest skirmish.

"Both sides understand the importance of California nationally."

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