Oakland is ground zero for gentrification and displacement in the Bay Area; the lack of affordable housing has pushed out communities who have made Oakland their home for generations, most notably communities of color. This displacement is being enabled by banks and other financial institutions, which serve as co-conspirators with serial evictors in this crisis. The financing provided by banks is used by these serial evictors and other borrower landlords to purchase property, increase rents to untenable levels by ignoring tenant protections or using loopholes in local and state policy, and evict tenants. Such financing also harms small businesses, which lack some of the protections afforded to residents.
The California Reinvestment Coalition (CRC) and the Anti-Eviction Mapping Project (AEMP) identified the banks and financial institutions enabling this displacement crisis. The data points to First Republic Bank as the worst actor by far. First Republic has been the most frequent financier of serial evictors, identified by local nonprofits, like Neil Sullivan, Michael Marr, and JDW Enterprises, Inc. These property owners are responsible for filing over 500 petitions with Oakland’s Rent Board to terminate tenancies and remove units from rent control. Several other banks and financial institutions were identified as co-conspirators. A full list can be found on page 9.
Displacement financing by banks runs counter to their obligation to help meet low- and middle income (LMI) community credit needs under the Community Reinvestment Act (CRA). In many cases, bank lenders know when a borrower landlord’s business model is to raise rents and evict tenants. We are concerned that loans are underwritten based expressly on this business model.
CRC, AEMP, and other community groups have developed an Anti-Displacement Code of Conduct for banks and financial institutions. It highlights what banks should do to cease displacement financing while reinvesting in communities to ensure that homeowners, tenants, and small businesses are able to remain and build wealth in neighborhoods throughout California.
This report makes a number of recommendations to banks on how to stop displacement financing and reinvest in communities, as well as recommendations for federal, state, and local governments that will support existing homeowners, tenants, small businesses, and neighborhoods. These governmental-level recommendations include:
• Oakland: Enforce the Rent Adjustment Program, collect better data, and provide greater resident and small business protections.
• California: Repeal Costa-Hawkins, pass a strong state Affirmatively Furthering Fair Housing (AFFH) bill, and influence Opportunity Zone investments for the benefit of communities. 3
• Federal: Strengthen the Community Reinvestment Act so that CRA reviews downgrade banks that finance displacement, and implement the Department of Housing and Urban Development’s AFFH rule.
Thank you to The San Francisco Foundation for their generous support in making this report possible.