According to numbers crunched by the Fair Rent Coalition and based on 2007 census data, the vacancy rate reached 24 percent in 2008. Before Page Mill started buying up property, vacancy rates were as low as 2 percent. Further, there were 182 evictions between 2007 and 2009 according to the San Mateo County Sheriff's Office.

RAW DEAL IN MANHATTAN

The Tishman Speyer deal has gotten a lot of press on the East Coast — much of it highly critical. The two massive housing complexes were built for middle-income renters and were one of the few moderate-income communities remaining in Manhattan.

David Jones, president of the Community Service Society of New York, wrote in a Sept. 17 Huffington Post piece that it was the intention of Tishman Speyer to shove aside moderate income to make room for more affluent renters who can afford the higher rents. He called it a "classic example of 'predator equity.'"

Dina Levy, who works with the New York advocacy group Urban Homesteading, agrees with that assessment. She told us in a phone interview that it was obvious what plans the real estate firms had in mind for the properties.

She said that CalPERS, as a public agency, should have been more careful about getting involved in this sort of investment. She told us that other bankers she talked to thought the deal was toxic and stayed away. "Why would CalPERS put money into a deal that's predicated on displacing families?" Levy asked.

The Wall Street Journal reported Oct. 23 that CalPERS is extensively reviewing its relationship with Apollo Global Management, which handled a majority of its real estate equity. The fund also issued a new policy on its dealings with placement agents.

But so far, there has been no public investigation of the East Palo Alto and New York investments. Tenancy advocacy groups and East Palo Alto have asked CalPERS to take an active role in the management of Page Mill's property.

"It doesn't appear that the human impact of their investments were considered at all as part of this," Tenants Together executive director Dean Preston told us.

Preston's group is trying to get CalPERS to adopt predator-free investment guidelines — a policy that already has been instituted by New York's pension fund.

CALPERS DUCKS

In a February letter to Tenants Together, CalPERS called itself a "limited partner in the partnership" and expressed concern over the situation in East Palo Alto, stating that it is reviewing the allegations.

But tenant advocates say the giant fund has been missing in action. "There hasn't been anything that they've told us they've been doing or that we've seen them do," Preston said.

That hands-off approach appears to violate CalPERS' stated policies. Two months before allocating funds to Page Mill, CalPERS coauthored and signed the United Nations Principles for Responsible Investment (UNPRI). No. 2 of the six principals states: "We will be active owners and incorporate ESG [environmental, social, and corporate governance] issues into our ownership policies and practices."

CalPERS has been eyeing real estate windfalls since 2002. According to memos and letters given to us by the Fair Rent Coalition, agency staffers that year were discussing an "opportunistic real estate fund." The result of those discussions: discretionary authority given to the senior investment officer for investments up to $100 million, with anything beyond that requiring approval from the chief investment officer.

Paradoxically, the compensation package that rates the senior investment officer's performance has no provision for the social responsibilities. This coming year's compensation package now includes a "Best Practices" measure on ethics and risk management.