Capitol Alert

'He's making a fortune off the taxpayer': Candidate bashes GOP rival in governor's race

Get to know Republican gubernatorial candidate John Cox

The attorney, accountant and businessman from Chicago, a "Jack Kemp-style" Republican, has set his sights on California's governorship.
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The attorney, accountant and businessman from Chicago, a "Jack Kemp-style" Republican, has set his sights on California's governorship.

Republican gubernatorial candidate Travis Allen is going after his Republican rival John Cox for his business dealings as owner of a residential property management company in the Midwest.

Allen is criticizing Cox in public debates and interviews as a "hypocrite" for collecting taxpayer dollars as a real estate owner and investor while seeking to brand himself in the campaign as a successful businessman who believes in minimal regulation, low taxes and small government.

"It's a matter of honesty — he's making a fortune off the taxpayer," Allen said in an interview. "John Cox is getting government loans for his properties and then raising the rents on his tenants … He has allowed himself to have this lavish lifestyle with taxpayers' hard-earned money."

Cox is the sole shareholder and president of Equity Property Management LLC, which owns and manages 22 apartment buildings mostly in Indiana, with a few others outside Chicago and Milwaukee, Wis., according to its online listing of apartments. At least three of the properties, with hundreds of one- and two-bedroom units for rent, have approved Section 8 units – government-subsidized rentals for low-income tenants, according to quarterly financial statements.

Federally funded rental subsidies for private property owners are seen by policymakers as critical for low-income renters to afford housing. Cox declined to discuss the political attacks with The Sacramento Bee, but at a debate in Los Angeles last month, he responded to Allen, saying he is "proud" of renting to low-income tenants in Indiana, under the federal government's housing subsidy program.

Quarterly financial reports over the past few years show Equity Property Management refinanced mortgage loans backed by the federal Department of Housing and Urban Development, renovated apartments and raised rents on tenants.

"Apartments continue to be upgraded at Main Street upon turnover…This free upgrade will enable EPM to increase rents and add over $100,000 in value to the property," a 2016 financial report issued by the company stated about a 100-unit building outside Chicago, advertised as "virtually 30 minutes from the Chicago Loop."

Equity Property Management's portfolio includes 2,615 units, with about 200 of those rented under the Section 8 program, according to Kevin Donohoe, executive vice president for the company, which "reflects the company's collective commitment to affordable housing in America."

Donohoe added that "the company is committed to providing safe, clean and energy efficient housing at an affordable rent."

Allen is also pushing unsubstantiated allegations that several of Cox's properties have a history of substandard housing conditions. In public appearances, he is discussing non-official apartment reviews of Cox's properties posted online, dating back years, from alleged tenants complaining about bedbugs, cockroaches, rodents, holes in walls, faulty wiring and other issues.

"He actually is building homes with … government money and raising rents on his tenants," Allen said at the debate last month. "John Cox's units have complaints of rodents and cockroaches and holes in the walls."

Cox, who has boasted about owning three homes in California, defended his rental properties.

"I'm not going to dignify the politician with an answer," he said of the substandard housing complaints. "Anybody who wants to see my properties — every single one of my properties is fantastic. This is what a typical politician does — a typical politician lies and distracts people from the truth."

Cox has said subsidies are not the answer for California's housing problems, but brushed off attacks for participating in the Section 8 program.

"I'm talking about getting the free market into housing. I'm talking about building more homes and getting affordable housing, which I'm proud to do in Indiana," Cox said. "We need to have that because people are just not able to make it in this state. They're not able to live when they're working two and three jobs to afford a life."

Allen, who is trailing Cox in recent polls, said he's going to continue raising the allegations leading up to the June primary.

"Not just Republicans, but all Californians have a real problem with wealthy businessmen using public money to raise rents on substandard housing," Allen said. "It's morally reprehensible."

Lt. Gov. Gavin Newsom, in a recent public opinion survey by the Public Policy Institute of California, has a commanding advantage in the race with 28 percent, but Cox had moved into the coveted second spot at 14 percent. Allen was in fourth with 10 percent, behind Democrat Antonio Villaraigosa. Only the top two candidates advance to the November runoff.

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