FRC: Predatory Real Estate Fund Undermines Wells Fargo’s and CalPERS’ Claims of Corporate Responsibility

Business Wire, June 18, 2009

EAST PALO ALTO, Calif. -- Public outrage over widespread corporate irresponsibility continues to grow, and with good reason. Consider the current affordable housing crisis in East Palo Alto, a low-income municipality in the heart of Silicon Valley that finds itself in the crosshairs of a predatory real estate fund. Fueled by a risky $242 million loan from Wells Fargo/Wachovia and $100 million in equity from the California Public Employees’ Retirement System, the fund, Page Mill Properties II, is seeking “opportunistic” profits through aggressive attempts to deregulate its 1800 rent stabilized units. It now owns 50% of the rental housing stock in this predominantly Latino and African American community. On June 15, a delegation of tenants from the EPA Fair Rent Coalition presented an open letter to the CalPERS Investment Committee renewing its demand for the release of documents outlining Page Mill Properties’ East Palo Alto development plan.

According to Matthew Fremont, president of the EPA Fair Rent Coalition, “over 1500 residents have been displaced due to evictions and steep rent increases in the past 18 months; 5000 more are at risk, and this in the midst of the worst housing crisis the country has seen in decades.”

John Stumpf, Wells’ CEO, declined to comment on the East Palo Alto crisis, but Wells Fargo’s corporate website states it is, “committed to the development of affordable housing.” And its 2007 Corporate Citizenship Report notes that, “Wells Fargo has a proud history of supporting communities,” and that Wells will, “continue to be responsible and active members of our communities because it is part of our Vision & Values.”

Wells Fargo is not alone in its hypocrisy. In April 2006, months before investing in Page Mill Properties II, CalPERS, became a signatory to the United Nations’ Principles for Responsible Investment. As a signatory, CalPERS committed to socially responsible investment practices.

Anne Stausboll, CalPERS’ CEO, said, “CalPERS has been a leader in designing and implementing programs, consistent with its fiduciary duty, which also reflect responsible investment practices.”

“I see a large gap between stated goals and practice,” said Christopher Lund, FRC’s director of communications. “Given that CalPERS is a state agency investing money on behalf of public employees and that Wells Fargo has received over $25 billion in taxpayer aid through the TARP, shouldn’t the public good factor into the equation? CalPERS should publicly disclose its role in these types of investments nationally.”

The East Palo Alto City Council and SEIU L521 recently passed resolutions condemning Page Mill’s business practices and protesting CalPERS’ involvement in the fund. “Page Mill’s financial supporters must address their role in this crisis,” added Mayor Ruben Abrica.

Thus far, CalPERS and Wells Fargo have taken no public action.

Please visit www.epa-tenants.org for more information on Page Mill Properties’ predatory equity scheme.