How affordable housing in National City became a cash machine for San Diego County labor unions

One block from Mile of Cars Way in the heart of National City lies a sprawling, 450-unit apartment complex that advertises to low- and moderate-income residents.

It’s an aging development where some tenants have for years complained about water damage, mold, roaches and poor management — a place some aspire to leave.

But an inewsource investigation found it also advances another purpose far beyond housing in the midst of San Diego County’s ongoing affordability crisis.

For more than a decade, the apartment complex has served as a cash machine to fuel the rising power and influence for a coalition of labor unions, known as the San Diego County Building and Construction Trades Council.

The coalition represents more than a dozen labor unions and thousands of workers throughout the region — from bricklayers to iron workers to plumbers. Top union leaders who manage the coalition also control the apartment complex, known as the National City Park Apartments.

And it’s through the apartment complex, set up as a nonprofit business, that the coalition has generated on average $5.2 million every year in untaxed rent and laundry payments from its tenants. 

Public records show these same union leaders, who manage the coalition and the apartments, also direct political action committees that help channel rent and laundry payments into various political causes.

Since 2016, about 11 cents of every dollar collected from tenants has been used to influence elections for city councils and school boards across the region, finance ballot initiatives that advance labor interests and pay these same union leaders six-figure salaries.

The impacts have been far-reaching, affecting economic and political dynamics across the county.

In the past five years alone, the National City apartment complex has shelled out nearly $1 million on campaigns to lift prohibitions on project labor agreements for city construction projects in both San Diego and Chula Vista. Critics argued both ballot initiatives — which passed — would minimize competition from nonunion members and increase labor costs.

The coalition’s leaders even helped elect one of their own to the Imperial Beach City Council — Matthew Leyba-Gonzalez, who represents District 4, is listed as the coalition’s business representative and political organizer, and works as a project manager for the apartments. Tax records show he collected more than $130,000 in compensation from the apartments in 2022, and while he reported income from the coalition in public financial disclosures, he never reported income from the apartments. He did not respond to requests for comment.

Meanwhile, some tenants living at the apartment complex complain about living conditions.

A single mother with three children filed a lawsuit claiming she was hit with retaliatory fees after repeatedly complaining about water damage and mold, which she claims led to illness. That lawsuit is still pending.

Another tenant, who inewsource agreed not to identify for fear of retaliation, showed reporters the mold that she said has been growing in her bathroom for at least three years. 

This has all played out against the backdrop of a yearslong power struggle between big business and labor unions in the San Diego region — where growing union power coincided with changing demographics, flipping a longtime Republican stronghold to a majority Democratic outpost. 

The rise of big labor in San Diego can be attributed to many different factors, but one little-known reason for its success is the revenue that flows from the National City Park Apartments.  

And the coalition shows no signs of slowing. It recently secured $3.5 million from San Diego County to expand its housing operation — a project known as Union Tower — adding dozens of affordable units. Emails obtained by inewsource show officials in National City helped push the project through the approval process.

To be sure, labor unions aren’t the only special interests pumping money into local politics. In the ballot measure to overturn San Diego’s ban on project labor agreements, for example, dozens of contractors, construction companies and associations poured $1.6 million into a political action committee to fight back against the unions in what would ultimately prove a losing battle. One of the donors was even based out of state.

This arrangement — union leaders working as landlords and funneling money into various political causes — has raised some eyebrows. Two nonprofit tax experts reviewed documents at the request of inewsource and both said while it may pass legal muster, it doesn’t look good.

“It obviously raises an optics problem,” said Lloyd Mayer, a law professor at the University of Notre Dame who specializes in nonprofit tax law. ​​

“If the (nonprofit apartments’) stated mission on their federal tax filings, filed under the penalty of perjury, is to promote affordable housing, why are they directing a significant portion of their funds to these campaign committees that are involved in lobbying on issues that don’t seem to be related to affordable housing?”

One person is calling this arrangement criminal.

Bill Evans, hotel magnate and one of the most influential business owners in San Diego, has been locked in a long-standing legal battle with the coalition over his desire to redevelop and expand The Bahia Resort Hotel — one of three swanky properties he owns in San Diego.

In a lawsuit against the coalition and a union representing hotel workers, Evans Hotels alleges that the unions use bribery and extortion to pressure businesses. The coalition has fought these claims and most have already been rejected by the court.

Evans Hotels and its attorneys have also filed federal complaints with the Department of Labor, raising allegations of criminal activity related to the coalition’s nonprofit housing corporations. Obtained by inewsource, the complaints come with more than 1,600 pages of financial statements, campaign disclosures, labor documents and other public records. Together, they show how millions of dollars have for years flowed from the tax-exempt nonprofit apartment complex to political causes across the region at the direction of union leaders, while fueling their own compensation.

“Unveiling their actions reveals a pattern of preying on the most vulnerable citizens and abusing the democratic institutions that shore up our society,” Evans’ attorneys wrote in one of the federal complaints. 

“The Department of Labor and its law enforcement partners should hold the (Building and Construction Trades Council), the (Park Apartments), and their corrupt officials accountable for their actions. If they are not stopped now, they will continue to hold themselves above the law. Where such criminal violations occur, the wider public are the victims.”

Carol Kim, business manager for the coalition and CEO of the apartments, did not respond to requests for comment.

History of the Park Apartments

The San Diego County Building and Construction Trades Council has been advocating for workers in the region for more than a century. It moved into real estate decades ago during a nationwide affordable housing construction boom, brought on by generous federal housing loans that came with few strings attached.

With the help of one of these federal loans, the coalition built the National City Park Apartments in 1968. The development was never deed-restricted to remain affordable and it appears never received routine health and safety inspections required of other, newer subsidized housing developments.

The coalition decided to take on “the responsibility of owning, operating, and maintaining this community … ensuring that the apartments would remain a vital resource for those in need,” according to its website.

By the early 2000s, records show these apartments became a valuable piece of property. Continued high demand and low supply for affordable housing led to predictable rent increases nationwide, with affordable rents growing nearly at the same rate as market rents, according to industry researchers.

Over a 14-year period, tax records show the apartments have generated more than $72 million in laundry and rent payments. The apartments have generated $5.8 million on average every year since 2016.

In the same timeframe, the coalition’s top leaders — Kim, longtime labor organizer Tom Lemmon and Murtaza Baxamusa, who left the coalition in 2021 to work for San Diego County — have collected compensation packages averaging nearly $180,000 annually.

Take the former CEO and chair, Lemmon, for example. Tax records show he worked 40-hour weeks for the apartment complex in 2018, bringing in a total compensation package of nearly $195,000. Just two years later, his compensation had increased 25%, bringing his total to $243,000.

Meanwhile, tax records show that Lemmon was also working 40-hour weeks for the coalition, bringing in roughly $27,000.

Lemmon retired in 2021, after the coalition’s leadership found he had received as much as $200,000 in “unintended compensation” over the years. A board member for the coalition, Dave Gauthier, said an “inadvertent” wage calculation error in 2017 led to the compensation being higher than intended and that Lemmon’s decision to retire was unrelated, Voice of San Diego reported. Lemmon did not respond to inewsource requests for comment.

According to tax records, Kim took over as the sole CEO and chair of the apartments in 2022, making $172,000 for the year. She also is paid about $30,000 annually as the business manager for the labor coalition. Both entities report her working 40 hours a week.

There were three key events that unlocked the door for hundreds of thousands of dollars of untaxed rental income to flow through San Diego County politics.

The first event happened in 2008 when the coalition paid off its federal loan. The coalition now owns the complex free and clear, and can set rents however it pleases. The complex continues to advertise as low- to moderate-income housing — a decision the coalition says reflects its “steadfast dedication to providing stable, affordable housing in a region where such options are increasingly scarce,” according to its website.

But there’s no restriction, no public agency looking over the apartment complex’s shoulder to require these units remain affordable. And the only time the complex faces a health or safety inspection is when tenants file a complaint with the city.

The second event happened in 2010 when the Supreme Court, in a case known as Citizens United v. Federal Elections Commission, overturned a campaign finance law that barred corporations, unions and nonprofit organizations from independent expenditures in elections.

The controversial ruling expanded free speech rights to many different entities, paving the way for wealthy donors and corporations to influence elections.

And the final event happened in 2013, when the nonprofits managing the apartment complex expanded their articles of organization from merely managing rental housing to promoting “social welfare to benefit the people of San Diego County and the State of California.” 

A nonprofit’s tax-exempt status is based on the purpose stated in its articles, said Miranda Fleischer, a law professor at the University of San Diego specializing in tax law and nonprofits.

“It’s not at all uncommon for organizations to put something vague like that so they can have wiggle room in the types of activities they pursue,” she said.

To further its social welfare mission, union leaders have used revenues from the apartment complex to:

• Give hundreds of thousands of dollars to support Democratic candidates like Todd Gloria and Catherine Blakespear, and unseat Republican incumbents like Kristin Gaspar and Lorie Zapf.
• Bankroll initiatives to pass bond measures, fight a repeal of the state’s gas tax, add a school district property tax and other labor-related interests.
• Donate to nonprofits such as Alliance San Diego, San Diego Parks Foundation and the San Diego Democratic Party.

Legality and ethical stewardship aren’t always the same thing, Fleischer said.

“There are often activities that nonprofits can engage in that don’t necessarily run afoul of the letter of the various tax laws or corporate laws or campaign finance giving laws, but that do run afoul of the spirit of all those laws,” she added. 

“This is one thing that we talk about in my classes — yeah, you could do that, but you have to think about the court of public opinion and how good would this look if it were on the front page of the local newspaper.”

But this situation with the coalition and the apartments also deals with another area of law: labor relations. 

Evans and his attorneys say this activity — union leaders receiving compensation and directing campaign activity with funds generated from the apartment complex — should be investigated as a violation of Section 302 of the Labor Management Relations Act. The law broadly aims to prevent employers from giving union representatives any “thing of value” and those representatives from accepting.

The goal is to prevent corruption in labor-management relations and a violation could carry up to five years in prison. But it comes with exceptions, including when an employer is paying a union representative for services as an employee.

While it was designed to prevent dirty dealing, the statute’s broad language has created confusion about what constitutes impermissible payments, leading to inconsistent rulings and varying interpretations. A handful of labor-relations experts have written scholarly articles calling on Congress to more clearly define acceptable practices.

“Although the courts have identified important safeguards against corrupt payments, their ad hoc and piecemeal approach has created standards that could allow for outright bribes and kickbacks,” wrote Christopher Garofalo in an NYU Law Review article. “Congress is the only actor in our political system that can adequately and effortlessly resolve the problem of employer-paid union representatives.”

In a statement, an official with the Department of Labor said the agency does not confirm or deny the existence of federal investigations.

Life in the Park Apartments

The apartments have developed somewhat of a reputation among the community, marked over the years by complaints of poor living conditions.

In an email obtained by inewsource, a former resident told a city official last year, “I worked my tail off to move out of the National City Park Apartments over 5 years ago. A very well-known low-income complex.”

Unlike some low-income housing developments, health and safety inspections for the apartments are complaint-driven. That means if someone has a problem in their unit and wants to have it inspected, they have to know to reach out to the city’s Neighborhood Services Division and file an official code enforcement complaint.

In general, though, National City residents rarely take that step, one official said.

Records show residents living at the Park Apartments have filed only two complaints with the city in the past decade and both were for mold.

However, a handful of residents over the years have taken their complaints online, writing scathing reviews about “filthy,” roach-infested apartments with old carpet and appliances, and rude management.

“The bathrooms overflowed every four to five months and the roaches were unbearable!” one reviewer wrote in 2019. “Trying to get anything fixed was impossible!”

In 2020, tax records show management paid a Chula Vista-based company, Blueline Builders and Construction, nearly $1 million for exterior renovations. Today, the complex appears to have a fresh coat of paint and improved recreational areas.

inewsource reporters talked to several residents this year. The comments about management were mixed.

One single mother told inewsource she’s lived in the apartments for two years and she’s never had any problems. At one point, the unit directly above her sprang a leak and water started flowing through her ceiling. Maintenance came and fixed the issue right away, she said.

Another resident, Alex Rodriguez, said he enjoys living at the Park Apartments, adding that “the attention from management is really good.” 

But others described having to live with cockroaches and a persistent smell of mold, clumsily smothered by cleaning supplies they use to get rid of both.

In 2023, a single mother with three children filed a lawsuit against the complex that alleges her unit was “infested with water leaks, water damage, mold, asbestos, lead-based paint on walls, dust mites and other related allergens that has caused serious illness and allergies to the family.”

Despite repeated complaints over a period of several months, the suit claims management failed to properly fix the issue. The suit describes one exchange where the property manager said there wasn’t enough mold to be hazardous and instructed maintenance to simply paint over the molded areas.

The tenant and her three children started experiencing health issues, the complaint alleges, including headaches and fatigue. She continued to complain about the living conditions and management retaliated against her, the suit claims. She received a rent increase and a new parking fee — increases that other tenants didn’t experience. 

Court records show those representing the apartment complex have denied all allegations in the complaint.

A lawyer representing the tenant in this case declined to comment. The case is still pending in San Diego County Superior Court.

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Drone video by Charlie Neuman.

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Editor’s note: The late Anne Evans, who founded Evans Hotels with her husband William in 1953, financially donated to inewsource and hosted events for the nonprofit at The Lodge at Torrey Pines. Bill Evans, Anne Evans’ son, has never personally contributed to inewsource.

inewsource supporters are occasionally mentioned in our stories. A full list of contributors can be found here.