Can Michael Weinstein stop development without compromising his AIDS charity?

Los Angeles /
Dec.December 01, 2016 05:00 PM

TRD Special Report:In the fourth installation of TRD’s series on the Neighborhood Integrity Initiative, we get intimate with Michael Weinstein, the controversial CEO of the AIDS Healthcare Organization, which is funding the ballot measure.

When AIDS Healthcare Foundation CEO Michael Weinstein visited entitlement consultant Steven Afriat’s Burbank office one morning in July 2015, it was the pair’s first face-to-face meeting. Afriat had known of Weinstein, a determined LGBT and AIDS activist who is gap-toothed and square-jawed like Willem Dafoe, for decades. But making his formal acquaintance left a lasting impression.

At the time, Afriat was representing Miami-based Crescent Heights in its  Hollywood Palladium development, which was set to go before City Council.

The developer had proposed a restoration of the historic theater and the construction of two 28-story condo towers on its lot. Weinstein had been a vocal opponent of the project and a regular attendee at community meetings, where he urged the developer to reduce its height. The proposed buildings would block the view from the international headquarters of Weinstein’s AIDS nonprofit, on the 21st floor of the Sunset Media Center on Sunset Boulevard.

After numerous, tense public forums, Weinstein and Afriat agreed to meet to privately to air their grievances. Per Afriat’s recollection, the meeting began pleasantly enough —  until they got down to business.

“He got obsessive when he was making his demands, saying that he was going to sue,” Afriat said of the meeting. “[He] talked about a referendum. When he started to make all those threats, it was hard to work something out. I warned my client: this guy is a little off.”

The NII takes shape

Not long after the meeting, Weinstein and a handful of senior managers at his AIDS Healthcare Foundation signed a draft of a ballot measure that would block most development in Los Angeles, named the Neighborhood Integrity Initiative. It proposed a blanket two-year moratorium on any development projects that required zoning or height exemptions, as Crescent Heights’ project did. A quirk of L.A.’s outdated zoning code means that nearly all new projects require such exemptions.

In the text of the initiative, its authors accused city officials of accepting donations in exchange for spot-zoning exemptions, allowing projects with insufficient environmental impact assessments to go ahead, and neglecting to address traffic concerns or the needs of the homeless.

Less than a year later, in March 2016, the Palladium project gained unanimous approval by the City Council,  and the AHF engaged famed land-use lawyer Robert Silverstein to sue the city for allowing exceptions to the zoning law.

The AHF filed the final version of the Neighborhood Integrity Initiative that same month. Afriat’s associate Aaron Green said he was mystified by the initiative, which would paralyze developers in a city suffering from a housing shortage.

“I remember looking at Steve,” he said,  “Saying, ‘Why would Michael Weinstein want to stop all housing?’”

The Palladium project would add over 700 units to the shortage. Green conceded that the condos were pricey — but was confounded by the fact that the moratorium would put a stop to mixed-income projects as well. The only housing that would be allowed under the initiative is 100 percent affordable housing that does not require a General Plan amendment. The NII could even halt the expansion of the Children’s Hospital, Green said.

To back the initiative, Weinstein and the AHF bankrolled a lobbying group called Coalition To Preserve L.A., hiring Jill Stewart away from her post as managing editor of the L.A. Weekly newspaper to run its campaign. The AHF has provided the group with $1.5 million in campaign donations year-to-date, according filings with the ethics commission. As the initiative began to make headlines, an opposition group formed, called the Coalition to Protect L.A. Neighborhoods & Jobs, with major funding from Crescent Heights and philanthropist Eli Broad.

Initially approved for the November 2016 ballot, NII was pushed back to the less crowded March ballot.

Weinstein has claimed his motives are altruistic: his staff and clients are suffering from overdevelopment. But earlier this year, he told L.A. Weekly he objects to dense development because he prefers the lifestyle in L.A.

“If I wanted to live in Manhattan, I would live there,” he said.

Weinstein’s aggressive anti-development activism has real estate industry insiders wondering what’s really driving his fervor.

“He’s like that ex-boyfriend where you think you’ve seen the worst of them, but then they just continue to surprise you with how low they can go.” Afriat said.

Who is Michael Weinstein?

Brooklyn-born Weinstein spent his teenage years protesting the Vietnam War and dropped out of high school. He first came to California in 1970, where he met fellow activists and friends Chris Brownlie and Sharon Raphael.

“When I met him in the early seventies, he was already a leader who showed great promise,” Raphael told The Real Deal. They met at the Gay Community Services Center in an old Victorian house where they both attended social support groups, and where Weinstein first came out. He was still just a teenager.

When he moved to L.A. in the 1980s, Weinstein held a number of odd jobs. He worked in the print department at the Los Angeles Times, and briefly went into business making chocolate gold medals that could be sold during the 1984 Olympics. He planned on getting a degree in architecture, but he never pursued it.

Instead, Weinstein, who declined to speak with TRD for this article, made activism his career. He cut his teeth in 1986 by successfully fighting a ballot measure that would have quarantined people living with AIDS. He emerged as a leader among gay activists, convincing the city’s board of supervisors to commit $2 million to AIDS hospices. In 1987, along with Raphael and Brownlie, he co-founded the AIDS Hospice Foundation in the Barlow respiratory hospital in Elysian Park on a $1 lease. Raphael describes the group back then as a family, bound by their shared grief over the deaths of friends to the disease — such as Brownlie in 1989, after whom they named their hospice. Raphael worked alongside Weinstein closely — she describes him as unwaveringly committed to fighting for those who have no voice.

“I would know: I’ve known him since he was 18 years old,” Raphael said.

The organization changed its name to AIDS Healthcare Foundation in 1996, when new medications became available for AIDS patients and it shifted focus to more profitable outpatient services. The AHF remains a family affair: the board of directors is a group of close longtime friends of Weinstein like his former partner of many years, Albert Ruiz. But under Weinstein’s leadership, the tax-exempt AHF has grown into the world’s largest AIDS operation, providing HIV healthcare services to over 600,000 HIV patients in 37 countries worldwide with an annual budget over $1.3 billion in 2016.

Its primary business is a national chain of HIV clinics and pharmacies, earning over $800 million in drug sales alone, according to the 2015 financial statements. In addition to clinics, pharmacy outlets, and a roughly $180 million insurance company, the AHF also run a chain of 20 thrift stores called “Out of the Closet,” which provide free testing services. Unlike many nonprofits that rely heavily on the generosity of its patrons, AHF is almost self-supporting through its pharmacy and retail chains. The most recent financial disclosures reveal federal grants accounted for just two percent of the budget at roughly $24 million. A mere one cent of every dollar of the budget came from charitable donations.

Weinstein’s $380,000 salary is not modest for the president of a nonprofit. “He deserves every penny,” Raphael said. “The board basically pushes the money on him.”

Since 2012, the AHF has also been acquiring competitors. It has purchased smaller nonprofit HIV healthcare providers across the country in Ohio, Florida, Texas and New York. The most substantial acquisition, MOMS Pharmacies — a high volume online business where the management was found to be illegally dispensing black market medications — was acquired with a nearly $27 million loan in 2012, and rebranded as AHF Pharmacy. Through these acquisitions, the AHF has increased its real estate holdings by 23 percent in 2015 alone, bringing the value of its total portfolio to around $58 million dollars, according to its most recent financial statements.

Is AHF’s political spending “out of control”?

The AHF’s large budget allows Weinstein to be a prolific citizen legislator. AHF spent more than $22 million on two state measures on November’s ballot, neither of which passed. Proposition 60 was a highly controversial measure that would have forbid pornographers from having sex on camera without condoms. Proposition 61, championed by Bernie Sanders, was a more complicated measure which would have prohibited state agencies from paying more for a drug than the U.S. Department of Veteran Affairs does.  

As Weinstein’s efforts have increasingly drifted afield from the AHF’s mission, his political work has landed the AHF in hot water with adult entertainment industry activist Eric Paul Leue — who, following his 2014 victory in an all-leather male beauty contest, is also known as Mr. L.A. Leather. Leue claims Weinstein’s fight against drug companies is self-serving for his multi-million dollar drug business, and that bullying the porn industry into using condoms conflicts with the First Amendment.

Leue, as head of the Free Speech Coalition — the trade association for the adult entertainment industry — filed a formal complaint against the AHF last month with the Treasury Inspector General for Tax Authority over what the SPC claims is excessive campaign spending in violation of the Internal Revenue Service’s regulations for 501(c)3 nonprofits.

“The money is intended for the uncompensated care of people living with and affected by HIV, money that is sorely needed for people who are dying,” Leue told TRD. His complaint alleges political spending and lawsuits fall squarely outside the charity’s mandate, and constitute a misuse funds intended for HIV-patient care. Should the FSC’s complaint prove successful, the AHF could face penalties, or even lose its nonprofit status.

Leue describes Weinstein as a “pariah” among the community of LGBT activists, using the AHF as a personal piggy bank. “It’s true he did some very important work in the 1980s, but somewhere along the lines through his successes he has lost his focus, and he sits atop his tower, deciding things based on personal whims that unrelated to what the organization was founded to do.”

Weinstein’s old friends stick by him, inured to the accusations he’s endured over the years. “He’s a public health advocate,” Raphael told TRD. “That’s what public health people do: they warn you about diseases and help you avoid them.”

Real Estate and Politics

The Coalition to Preserve L.A. has argued housing and homelessness are public health issues.

“We must take a stand against the unmitigated greed and corruption that will forever change Los Angeles,” Weinstein wrote in a letter to voters in April. “All the privileges are going to the wealthy at the expense of the poor and middle-income people. Affordable housing is torn down to make way for luxury towers.”

He said it would be irresponsible for a social justice organization to stand by. “This is not progress — this is displacement,” he wrote.

The ex-L.A. Weekly editor Stewart, who serves as the coalition’s spokesperson, declined to comment for this article. Elsewhere, she has been the voice of the campaign, megaphoning concerns about the ways money can flow to City Hall when developers need plan amendments approved. The allegations are not unfounded. Just last month, an L.A. Times investigation showed how developer Samuel Leung concealed donations to councilmembers and Mayor Eric Garcetti preceding the approval of a $72 million dollar apartment project in Harbor Gateway.

City leaders also readily admit the zoning process in L.A. is deeply flawed. Following a meeting with neighborhood stakeholders this year, Garcetti penned Weinstein a letter, urging the measure’s withdrawal to “forego a costly and potentially divisive ballot measure campaign.” Garcetti, like most at city hall, wrote he agreed the L.A. zoning system is problematic and warrants changes.

Michael Weinstein will see you in court, often

Though Weinstein recently told the L.A. Times that just two percent of the AHF’s budget is used for advocacy, $24 million per year still affords numerous lawsuits, for which the AHF is well known. The city attorney for San Francisco referred to the AHF as “extremely litigious” in a recent press release, referring to a similar zoning issue lawsuit there.

Arti Bhimani, in-house counsel for AHF, who filed the suit, argued that AHF is intended to be an advocacy group. “An organization whose mission is to advocate on behalf of people living HIV is going to litigate to protect the rights of those whose needs it serves when necessary,” Bhimani told TRD.

Weinstein has said that Hollywood doesn’t need apartments that cost $3,800 a month, but it does need $800 a month apartments. Afriat, on the other hand, believes the lawsuit against Crescent Heights will only delay the inevitable, exacerbating the housing shortage.

“It’s really not about money, it’s about times changing,” Afriat said. “At the time the Palladium was last zoned, there was no subway there. Now, we need housing a stone’s throw away from the metro.”

Weinstein told The Advocate in January, “People who pay $3,800 are not the ones who ride the subway.”

Afriat understands that his client’s project was the catalyst for this initiative, which threatens to freeze the city of L.A. in time.

“Yeah, we’re the eye of the hurricane. But you know the eye of the hurricane is calm,” Afriat said. “The hurricane is Michael Weinstein.”

Cathaleen Chen contributed reporting


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