Thursday, September 17, 2009

Huffington Post covers Predatory Equity

Huffington Post ran an excellent piece today by David Jones of the Community Service Society (CSS) of New York about "predatory equity," an issue that has profoundly affected many tenants in East Palo Alto, San Francisco, and other cities in California.

Last February, Tenants Together participated in a Congressional forum in Washington D.C. hosted by our cross-country allies CSS, on the topics of predatory equity and tenants in foreclosure.

Predatory equity is a term coined by housing advocates to describe a particularly nasty form of real estate investment that relies on the displacement of tenants from rent regulated housing to turn profits. In these schemes investors pay more for rental properties than rental income can justify with the explicit intention of evicting existing tenants and raising rents.

Two major predatory equity schemes in New York City and East Palo Alto have been all over the news lately as they have both begun to collapse, proving that not only are these schemes unethical, but they're also very risky investments. In both these instances, the tenants played a very significant role in the downfall of the schemes as they organized and fought back, refusing to let greedy investment firms destroy their communities.

Unfortunately, CalPERS, the pension fund for California Public Employees, has been heavily involved in both the East Palo Alto and NYC schemes to the tune of several-hundred million dollars. Tenants Together has called on CalPERS to adopt predatory-free real estate investment policies that will prevent any future involvement in these schemes.

In his Huff Post piece Jones explained that for a long time to come, these collapsing investments will have major detrimental effects on tenants, taxpayers, and the general public. To this list we would add the California public employees whose retirement funds have been hit hard by CalPERS' imprudent investments in these predatory schemes.

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