The Brief

It was one of the closest and most confusing races among the statewide ballot measures, but the votes are finally in: Californians have accepted new rules restricting how health care providers spend money.

In passing Proposition 34, which squeaked by with just 50.8% of voters saying “yes,” Californians also have potentially knee-capped one of the biggest players in the fight for statewide rent control. The Associated Press called the race on Wednesday, more than two weeks after Election Day. It was the last ballot measure called.

Prop. 34 creates new rules regarding how some California health care providers spend revenue they make selling pharmaceuticals via a particular federal program, requiring them to spend 98% of revenue on direct patient services. What’s not explicitly mentioned in the measure’s text is that it appears only one organization would be affected by the change: The AIDS Healthcare Foundation, which has bankrolled three pro-rent control ballot measures.

“For years, healthcare corporations have misused billions in taxpayer funds meant for patients to fund pet projects, and wasted it on things like luxury condos, CEO bonuses, naming rights on sports stadiums and political campaigns,” the Yes on Prop. 34 campaign said in a statement. “With the passage of Proposition 34, California voters have taken action to close the loophole that allows for this abuse and misuse of public funds.”

The Yes campaign declared victory almost a week before the AP called the race.

But it’s telling that even though the Yes campaign vastly outspend the opposition, the measure just barely passed, said Susie Shannon, campaign manager for No on 34.

“The voters just believe what they’re going to believe,” she said. “You have to do the best with the resources that you have to fight against these things, particularly when they’re funded by corporations that seem to be a bottomless pit in terms of how much money they have.”

The California Apartment Association, which opposes allowing rent control to expand, contributed $44 million to the Yes campaign.

Under the leadership of the controversial Michael Weinstein, the AIDS Healthcare Foundation, which provides health care in California and beyond for patients with HIV and AIDS, has become a big player in state and local housing politics. It also owns affordable housing developments in Los Angeles’ Skid Row, where tenants have complained about habitability and health issues.

Prop. 34 could force the AIDS Healthcare Foundation out of housing advocacy, leaving a noticeable hole in the fight for statewide rent control reform.

The AIDS Healthcare Foundation so far has sponsored three failed ballot measures to allow for the expansion of rent control in California (the third was this year’s Proposition 33, which was rejected by 60% of voters). If the foundation backs out of that fight, it’s unlikely anyone else will take its place, said Sharon Rapport, director of California state policy for the Corporation for Supportive Housing. Sponsoring a rent control ballot initiative is both expensive and politically fraught, as it’s guaranteed to alienate the powerful landlord lobby.

“I don’t know if too many organizations have the will and the funding to be able to put it on the ballot,” Rapport said. Her organization hasn’t taken a position on the proposition.

But Shannon says the tenants rights movement won’t be derailed so easily.

“You have some setbacks, but these movements really do live on,” she said, “and if they think this is in any way going to keep advocates from moving forward with this movement, they have another think coming.”

The AIDS Healthcare Foundation also has thrown its weight (and money) around in other housing-related fights — it campaigned against legislation requiring local governments to approve denser housing and backed a failed two-year moratorium on certain building projects in Los Angeles.

The AIDS Healthcare Foundation wouldn’t answer when asked by CalMatters whether it would stop its housing advocacy work. But if the foundation is found to be spending its pharmaceutical revenue on things like rent control ballot measures in violation of Prop. 34’s guidelines, it could lose its license to operate its medical clinics, which serve 16,000 patients in California.

That’s because the foundation participates in a federal program that gives health care providers a discount on pharmaceuticals in exchange for serving low-income and at-risk patients. The providers can then turn around and sell those drugs at retail rates, raking in a profit. Prop. 34 requires the foundation to spend 98% of the revenue it makes through those drug sales on “direct patient care.”

As far as the Yes on 34 campaign is concerned, that money should go to patients, not to back political gambits in the housing sector.

“That’s obviously not what this program was designed for,” said Nathan Click, spokesperson for Yes on 34.

The other side considers the measure an attempt to silence a nonprofit’s advocacy work, and said it opens the door for this tactic to be used against other groups.

“I think it’s very dangerous to set a precedent where organizations can be targeted like this just for helping communities,” Shannon said. “It would be similar to a tobacco company putting an initiative on the ballot to silence anti-smoking groups.”

Technically, Prop. 34 applies to any health care provider that participates in the federal drug program and also spends at least $100 million on expenses other than direct patient care, owns and operates apartment buildings, and has accumulated at least 500 severe health and safety violations in the last decade.

The AIDS Healthcare Foundation appears to be the only entity that fits all of that criteria.

Because Prop. 34’s scope is so limited, its next stop likely will be the courthouse.

“Because we don’t believe that it’s legal,” Shannon said.

The measure is unconstitutional, The AIDS Healthcare Foundation argues, because it singles out one organization. The foundation already has been to court once over this measure, when it tried without success to get the California Supreme Court to boot it off the ballot. If voters approve the measure, the foundation has promised to challenge it again.

The other side insists the proposition could apply more broadly.

“We just have to wait and see what the Attorney General says,” Click said. “There are a number of entities that could be covered.”

After months of debate and false starts, the Los Angeles City Council voted Wednesday in favor of developing a potential November ballot measure that would ask voters to rein in the city’s controversial “mansion tax.”

Ahead of the 9-5 vote to proceed with proposed tax breaks for new apartment buildings, Council President Marqueece Harris-Dawson said he has seen affordable housing construction decline in his district after the policy — called Measure ULA — took effect in 2023.

“I can tell you with certainty ULA has not helped,” Harris-Dawson said. “Housing starts are as low in my district as they’ve been the entire time I’ve been in office.”

Harris-Dawson said neighboring cities, such as Inglewood and Gardena, where new apartment buildings are not subject to L.A.’s tax, have not seen similar declines.

While a majority of the council voted to proceed with a possible ballot measure, Councilmembers Ysabel Jurado, Imelda Padilla, Monica Rodriguez, Eunisses Hernandez and Hugo Soto-Martinez voted against the proposal.

Reform advocates cheered the vote, but said more work is needed. Miguel Santana, president of the California Community Foundation, has pushed for changes with the “Mend It, Don’t End It” coalition, a group of affordable housing developers, labor organizations and business leaders.

“Today the City Council took another important step towards reforming Measure ULA in a way that will allow us to start building housing again while saving a critical funding source that we desperately need," Santana said in a written statement.

‘Mansion tax’ nuts and bolts

Measure ULA taxes the sale of real estate worth $5.3 million or more. That includes large, luxury single-family homes, which is why the measure is often called the city’s “mansion tax.”

However, the tax also applies to apartment buildings and other commercial real estate. Economists have said that’s causing a slow-down in new multi-family construction at a time when L.A. needs more housing supply to keep up with demand and prevent rents from spiking.

During Wednesday’s meeting, Councilmembers Tim McOsker and Katy Yaroslavsky put forward a motion asking the City Attorney to draft a ballot measure that would ask voters to cancel the tax on sales of multifamily and residential mixed-use buildings within the first 10 years of their construction.

That reform proposal is somewhat similar to earlier failed attempts at changing the tax, including from Councilmember (and now mayoral candidate) Nithya Raman and a separate effort from state legislators.

What happens next? 

The council’s proposed measure is still far from officially qualifying for the November ballot. Sending final language to the ballot will require another council vote, and the council could potentially decide later this summer to pull the measure.

If it does appear on the ballot, a majority of L.A. voters would need to approve the changes before new apartment buildings would be exempt. Close to 58% of the city’s voters supported Measure ULA when it first came up for a vote in November 2022.

In a separate vote Wednesday, the council moved forward with another potential ballot measure that would ask voters to exempt Pacific Palisades homeowners from the tax if they sell their properties after the January 2025 Palisades Fire.

To complicate matters further, voters are likely to encounter yet another measure on the November ballot related to the city’s “mansion tax.”

The Howard Jarvis Taxpayers Association has qualified a measure that would repeal L.A.’s tax, and similar taxes across the state, while simultaneously raising the voter-approval threshold for new taxes.

How we got here

Though reforms are tentative at this point, the council’s decision to pursue a ballot measure is an about-face from a committee’s earlier decision to keep changes off the November ballot.

Jurado, the chair of that committee, repeated her argument that it’s too soon to conclude the tax has caused apartment developers to retreat from L.A.

“When we focus just on housing production alone, we’re missing the mark about what this measure was actually intended to do, which is to keep Angelenos housed,” Jurado said during Wednesday’s meeting.

What has tax revenue funded so far? 

Measure ULA has raised $1.2 billion over the last three years, far less than the $1.1 billion in annual funding supporters said the tax could raise. That funding has gone toward affordable housing construction and tenant aid programs, such as rent relief and eviction defense.

However, the city has encountered trouble spending the money on its intended purposes.

City Attorney Hydee Feldstein Soto has refused to sign contracts approved by the city council and the mayor in April for $177 million in tenant aid. And the measure’s strict rules on how tax revenue can be spent to support affordable housing projects have required city leaders to pursue changes to funding restrictions.

Tax supporters expressed disappointment with the council vote. Joe Donlin, executive director of the United to House L.A. Coalition, said a local ballot measure aimed at carving out certain types of real estate could help fuel the argument for full repeal being made by tax opponents.

"Such a move plays into the hands of the Howard Jarvis Taxpayer Association and its allies in the real estate lobby," Donlin said in an written statement.

He went on to say tax breaks would lead to less revenue meant to keep city residents housed.

"If this ballot measure were to pass, it could mean tens of millions of dollars per year cut from programs that build affordable housing and combat homelessness," Donlin said.

A fire at a Boyle Heights commercial building sent up a massive plume of black smoke on Wednesday and prompted a shelter-in-place order due to hazardous materials, including ammonia.

Fire broke out around 2:35 p.m. at a 1,000-foot by 500-foot cold storage facility at 1400 S. Los Palos St. with solar panels on the roof, according to the Los Angeles Fire Department. The fire reached an ammonia line, officials said, prompting firefighters to pull back as it started off-gassing and order people nearby to shelter in place.

The ammonia is not toxic to individuals unless they have respiratory issues or come into direct contact with it, LAFD Chief Jaime Moore said. Adjacent structures were evacuated to keep people from breathing in the ammonia that was in the air, and firefighters pivoted to using water drops from helicopters to take on the flames as they spread across the building’s rooftop solar panels “almost like a brush fire would,” he said.

“Get inside IMMEDIATELY and close all windows and doors. Turn off air conditioning/heating. Bring all people and pets to an inside room until you receive more instructions,” an LAFD alert said.

The shelter-in-place order was in effect for the area south of Interstate 5, east of Soto Street, north of Washington Boulevard and west of Indiana Street. As of 5:30 p.m. Wednesday, LAFD Capt. Anthony Tubbs said officials did not know when it would be lifted.

East Yard Communities for Environmental Justice urged people outside the shelter-in-place boundaries to also take precautions.

“The 5 freeway is not an air filter. The smoke is spreading and everyone in adjacent neighborhoods should reduce the risk of smoke exposure ASAP,” the organization wrote in an Instagram post.

By 4 p.m., authorities added a smoke advisory covering East LA, Commerce and parts of downtown. Heavy, black smoke was visible across the region.

The water drops via helicopter were helping to get the fire under control by Wednesday evening. Authorities planned to use an LAFD robot to get inside and assess the building, Moore said.

“This is a very unique situation because of the size of the building,” he added.

The business at 1400 Los Palos is called Lineage, a logistics company that offers cold storage services, according to the company’s website.

According to LAFD firefighter Jennifer Middleton, over 120 firefighters were on scene battling the blaze. Air quality was being monitored in the area, Middleton said.

“Any sort of structure fire with [solar] panels burning, there’s going to be some sort of hazardous materials in the air,” Middleton said.

No injuries have been reported, she added, but she also urged people to stay inside if smoke was reaching their area.

“Close your windows, stay indoors, turn off your air conditioning, and just shelter in place. We don’t want anyone breathing that smoke. And don’t go outside to watch the fire,” Middleton said. “If need be, you can leave the area to more clear air.”

Local organizations including Neighborhood Music, Centro CSO and Plaza de la Raza announced on social media they were either canceling classes and meetings or moving them online.

In a statement, District 14 Councilmember Ysabel Jurado said her office was monitoring the situation.

“Right now, the most important thing is to follow the shelter-in-place order that has been issued because of the smoke,” Jurado said. “Residents should stay indoors, keep windows and doors closed, avoid unnecessary travel in the area, and follow instructions from first responders.”

Mayor Karen Bass also urged people to stay inside.

“I urge everyone in the impacted area to get indoors immediately, close windows and doors, turn off air conditioning, and avoid unnecessary travel to the area,” she said. “I want to thank the brave LAFD and public safety personnel who responded quickly and remain on scene.”

Officials in the neighboring city of Maywood also urged people to stay away from the area.

Air quality regulators say an oil recycling facility in Compton violated pollution rules and improperly maintained some of its equipment.

The South Coast Air Quality Management District issued four notices of violation to World Oil Recycling in Compton, and one notice of violation to a contractor operating leaky equipment on its property.

The Compton facility “receives used oils, glycol and wastewater and re-refines these materials into engine oil and glycol products for reuse,” according to the air district. The largest oil recycler in the state, it’s located in some of the most pollution-burdened and low-income neighborhoods in California, as well, where asthma rates are higher than 95% of census tracts, according to state data.

The violations came after the air district started receiving odor complaints from residents at the start of this year. The agency received more than 70 complaints of strong odors of gas, including from the nearby Jefferson Elementary School, the agency said in a news release.

Officials then carried out more than a dozen on-site inspections, including using an infrared camera to identify gas leaks. They found hydrocarbons leaking from a wastewater storage tank, as well as a centrifuge pump. A small fire at the facility in late May also led to nuisance notices from the agency.

The company told LAist it is working to remove the leaky storage tank that may have caused the odors.

“World Oil Recycling provides an essential environmental service by recycling used oil and other materials, helping to keep them out of landfills and waterways,” a spokesperson for the company said in a statement. “We are committed to meeting or exceeding the highest standards at our facility in Compton, where we have operated safely for more than 40 years and serve as a major local employer.”

If World Oil Recycling doesn’t comply, it could face fines or litigation.

The company has faced such issues in the past. In 2019, the Environmental Protection Agency reached a settlement with World Oil’s Compton and Vernon facilities for violating hazardous waste regulations. The agreement required the companies to pay a $39,092 penalty and spend $167,967 on air filtration systems in nearby schools to reduce indoor air pollution.

The facility has received dozens of violation notices from the air district over the years, as well, mostly for minor maintenance issues.

In a statement to LAist, Compton Mayor Emma Sharif said the city “is working with the appropriate regulatory agencies as they continue their investigation.”

California will not consider the city of Los Angeles’ request for a time extension on three mobility projects in underinvested communities that are largely funded by more than $100 million from the state.

The exclusion of the request from the California Transportation Commission's June agenda spells an uncertain fate for the projects in Boyle Heights, Skid Row and Wilmington, which involve repairing sidewalks, adding bike lanes and installing traffic-calming measures to make streets friendlier to non-vehicular modes of transportation.

In April, the city formally requested a six-year extension on state-mandated deadlines to complete pre-construction work on the projects, saying recent staffing and funding constraints in the public works and transportation departments have hampered progress.

Justin Behrens, the spokesperson for the commission, said that while the state grant program offers time extensions in certain cases, “The requested time exceeded what is allowable under the guidelines,” and extensions were ultimately not recommended to be considered by the commission.

The state funds for pre-construction work, including environmental review and design, are set to lapse at the end of June.

L.A. officials said in a March report that without the time extension, “The city will be unable to meet these deadlines and lose the opportunity to provide these critical improvements for the city.”

The Bureau of Street Services, which is the lead agency on the three projects, did not respond to requests for comment.

'A deeply disappointing moment'

A statement from the office of L.A. City Councilmember Ysabel Jurado said the situation is “disappointing” and that the councilmember is taking time to “fully understand” what the California Transportation Commission’s decision means for the projects in her district.

“What we can say clearly is this: We are not giving up,” the statement read. “Boyle Heights and Skid Row have waited far too long for safer, more accessible streets, and the residents who organized for these improvements deserve more than a setback and a closed door.”

Jurado advocated for additional staffing resources across the bureaus of Street Services, Street Lighting and Engineering, as well as the Department of Transportation, to deliver the projects.

For Jens Midthun, the president of the DTLA Neighborhood Council, any investment in improving the walkability of downtown L.A. is a worthy one.

“People in downtown L.A. are here because they want to be,” Midthun said about the neighborhood’s transition from a business hub to a residential destination. “People want to be part of a vibrant city center.”

L.A. City Councilmember Tim McOsker's office said in a statement that infrastructure improvements in Wilmington “remain a priority.”

“We will continue exploring funding opportunities and other available options to advance as much of the project as possible,” McOsker's office said.

The grant program

Since its launch in 2013, the state’s Active Transportation Program has funded capital projects that promote walking, cycling or other non-motorized ways to get around. Behrens said the program is competitive and over-subscribed, meaning the applications for funds “far exceeds the available resources.”

Over the course of the grant program, L.A. has secured $500 million to fund 46 transportation projects across the city, according to a June report from Laura Rubio-Cornejo, the general manager of the city’s Department of Transportation.

Twenty of those projects have been constructed and staff is actively working on designing, implementing or closing out another 22.

Jurisdictions that win the funds have to adhere to strict timelines to retain the money, which is allocated based on different phases of a capital project. Failing to meet the program’s deadlines can jeopardize a city or county’s likelihood of clinching future grants.

The program’s deadlines require the city to allocate funds for construction for the three projects in question by the end of June 2027. In its request for a time extension, the city said it would need an additional six years to get to that point.

Absent a time extension, it’s unclear what the path forward is for the three projects.

The city in June submitted its application for the next round of Active Transportation Program grants, though its ambitions were tempered by “staff resource limitations and the city’s existing grant commitments.”

The projects it submitted for consideration to the state include extending the LARiverWay bike path and enhancing mobility along Huntington Drive.