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Ethan Penner Would Build New Town For Homeless Populations, 'Delete' CEQA As California Governor

Commercial finance pioneer and real estate investor Ethan Penner declared his intentions for the California governor’s mansion late last month, seeking to replace the term-limited Gavin Newsom.

Running as an independent, Penner would be the first non-Democrat to hold the state’s highest office since Arnold Schwarzenegger, who departed in 2011. Penner's list of priorities would signal a departure from 15 years of left-leaning policymaking, including eliminating the California Environmental Quality Act and building communities in rural areas where the state’s growing population of homeless people would live.

Both CEQA and homelessness are frequent issues discussed among commercial real estate professionals in the state, which is struggling to bring back urban corridors in major cities and address a yearslong housing affordability crisis.

Penner, best known for creating the commercial mortgage-backed securities market while working at Nomura on Wall Street in the 1990s, has since entered the world of commercial property investing. 

In 2024, he helped launch Reven Office REIT, with the aim of raising $1B to offer loans to office owners and take advantage of distress. Penner is also chairman of Hill Street Realty, a multifamily owner with offices in Los Angeles and Denver. 

Penner has now decided to pivot away from the intersection of finance and commercial real estate to campaign for governor, seeing parallels between his entry into the world of structured finance and his entry into the political field. 

Bisnow sat down with Penner to discuss what he would do if elected California’s next governor in November 2026.

This interview has been edited for length and clarity. The bulk of the interview was conducted June 5 with a follow-up on Monday, primarily to discuss unrest in Los Angeles linked to immigration protests.

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Independent gubernatorial candidate Ethan Penner

Bisnow: Your résumé is entrenched in commercial real estate and finance. What does that experience bring to the governor's mansion? How do you think that expertise could impact commercial real estate in the state?

Ethan Penner: Well, I think my journey into commercial real estate is almost eerily parallel to the journey that I'm experiencing into the world of politics. 

When I got to commercial real estate, it was through that lens of being a structured finance person, not a real estate person, but seeing that the real estate industry — very much like the political industry today — was in shambles. 

The real estate finance industry in the early 1990s was not capable of meeting the needs of the real estate community, much like the political industry has proven to be completely incapable of meeting the needs of its clients, the citizens of California, in this particular case. 

When I started in commercial real estate, I had never originated a commercial real estate loan in my life, but I had a finance background. I understood what questions to ask. I'm a person who prods and asks questions. I think I'm good at seeing what's working and what's not working, being inquisitive. Being humble enough to solicit help from people who have domain expertise where that's required, but also being confident enough to also see where domain expertise could be a hindrance.

I mean, the commercial real estate finance industry in the '90s and the commercial real estate industry collapsed in a heap. All the domain expertise in the world didn't prevent that collapse, right? 

There's a time for an insider, and then there's a time where being an insider is absolutely the wrong thing and we need an outsider. I was an outsider in 1991 to the commercial real estate industry, in an industry that was very insular. So I understand better than probably most anyone what it takes to enter a field that's completely broken, that's not meeting the needs of its constituency, and building the response and meeting the needs in a very profound way.

Bisnow: When you talk about failures on the political front, I think that one of the areas where Californians have been the most vocal about those failures has been access to housing average people can afford. I'm curious to hear what steps you would take as a governor to build more housing in ranges that line up with what Californians are actually making.

Penner: This is where my background in understanding financial markets and my expertise in finance comes in. 

Oddly enough, I don't think that the answers lie in real estate. I think they lie in human behavior and understanding interconnectivity of all things. Let me explain to you with an anecdote. My campaign team had a policy meeting about a week ago. My 22-year-old daughter observed, correctly, that none of the people on my campaign team are in her generation. She offered to bring three or four people about her age so that they can hear what we’re talking about and we could get input from them, and it'd be a win-win. 

Those five people were mostly left-leaning, liberal, progressive-leaning members of the LGBTQ community. It was a left-leaning group, for the most part. They came in with the same concerns you just articulated. “The No. 1 issue for us is rent and affordable living.” “We can't afford rent, let alone dream of buying a house.”

They know something's wrong, but they didn't make the connection as to why things are wrong. And now they look in the mirror and they realize they're to blame, to a large extent, for their own problems. 

Continually over the last few decades, left, liberal, progressive agendas have been put on the ballot box, either in the form of candidates or in the form of initiatives to vote for. And each time that what seems like a pro-environment initiative or pro-environment candidate gets to the ballot box, these people instinctively vote for them. They instinctively say, “Yes, we want a better environment.” I mean, that's a natural thing to want, by the way. Who doesn't want a better environment?

We vote for the environment because we want a better quality of life, but we’re voting now for environmental initiatives that actually undermine our quality of life.

I've read reports that it costs about $100K per unit more to build in the state of California, for example, than it does to build in the state of Texas. So obviously, even for those who build, the cost of rent is going to be commensurately higher to account for that higher construction cost. That doesn't even account for the fact that to build can take years and years of planning approval process and environmental compliance processes and commission after commission.

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A skyline view looking at Downtown Los Angeles

Bisnow: It sounds like you’re talking about CEQA.

Penner: I want to hit the delete button on many things. It’s funny to say that, but I’m not kidding. I want to hit the delete button on CEQA. I want to hit the delete button on the Coastal Commission. Delete. They have to literally go away. 

Bisnow: Regarding CEQA, there are two bills that are in the legislature right now that would make some pretty big changes — but they wouldn't go so far as the full delete button. 

Penner: I don't trust, and I think California should not trust, the people in charge of these things to police themselves. They've proven incapable of doing so. 

Bisnow: I'm going to turn away from the environment to downtowns. I know that Los Angeles and San Francisco, maybe more prominently than other places, have struggled since the pandemic to build up the momentum that was there right before the lockdowns. What steps would you take to boost activity in urban areas, to reinvigorate them throughout the state, and what role do you think real estate plays in that reinvigoration?

Penner: In my last real estate endeavor, I ran a fund, and I think, as you correctly pointed out, Downtown LA pre-Covid was probably its most valuable. That's when real estate values were hottest. It's the only time in my life where real estate in Downtown LA became the primary place for young, smart, educated people to want to live, to want to work, to want to enjoy culture. Downtown LA was blooming like it had never been before.

Now, buildings that were worth hundreds of millions of dollars, you cannot give them away because there's no guarantee of any revenue at all, and there is a guarantee of continued expense in the form of insurance, taxes and maintenance.

I think that a lot of people that are in politics, folks that deal with homelessness and crime, have incorrectly dealt with these two issues but have come at it from a kind-hearted place. I don't condemn their intent. I condemn their competence and I condemn them for having the wrong answers and then staying ideologically stuck. We've seen the results of this now for five and six years, and it's people who can't learn a new lesson.

Bisnow: What would you do differently? 

Penner: There's an obvious solution to the homeless problem, and the reason it's obvious is because it's been tried and it's worked. The kindest answer is to take an area of California that is less populated, that is therefore very inexpensive real estate, and construct a community that provides [their] own housing and then requisite services to actually give these people a better quality of life, rather than have them languish in the streets, which is the cruelest thing you could possibly do. 

We in California have spent, I am told, in the last five years something near $25B on homelessness. With that $25B, or far less than that, I would have built a homeless community in one of the many underpopulated areas of the state of California, and in that community, I would have segregated the people that are homeless by their particular challenge: mental health, addiction, financial stress.

I would not commingle those people. I would have them each in their separate village, if you will, and each would have an appropriate level of services to help them with their particular challenge. And those who can be guided back to society, I would build an on-ramp for them to be guided back to society. These are not hard things to do. In Austin, a private citizen has done it quite successfully. 

(EDITOR’S NOTE: During a follow-up conversation June 9, Penner clarified that homeless people would not be required to move to a separate town but that he would make it illegal to sleep on the street.)

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California Gov. Gavin Newsom in 2020

Bisnow: I've heard you talk in interviews about the response to the fires that we had here in the Los Angeles area earlier this year. A big part of the recovery will be working with the federal government, especially to get funds for rebuilding. President Trump has threatened to cut Federal Emergency Management Agency funding, or eliminate the agency altogether, and has a history of withholding aid based on political grounds. I’m curious how you envision yourself as a governor working with the Trump administration on recovery and other issues where federal involvement is a reality and necessity of the job.

Penner: The answer to that is rooted in my running as an independent and not as a Republican or Democrat. I feel like our society has become so fragmented, and everyone feels it. We've lost friendships or had frayed friendships. We've even lost or frayed relationships within our own families. The division has become so profound.

We've gotten to the ultimate win-lose society, which is really a lose-lose society, because even the winners have to deal with the kind of obstruction which we see today. Trump won, and the other party is literally continually obstructing Trump's agenda. All they're doing is like trying to break down and stop the Trump agenda, so everyone's losing.

As an independent candidate, and as a representative of the state of California, I'm going to be able to work very easily with whomever the administration is. I think I'll be in the right intellectual place and in a nonthreatening place where agreeing with me for either a Democrat or Republican administration won't seem like they're selling out their core. And I think that puts the state immediately in a much more favorable position.

Bisnow: This weekend's deployment of the National Guard and Monday's arrival of U.S. Marines in Los Angeles set up a conflict between Newsom and Trump and marks an uncommon use of federal force in a major U.S. city. What are your thoughts on this weekend's events, and how would you respond as governor in a similar instance? How would you work with the administration more broadly on immigration issues such as deportations, which impact the construction industry throughout the state?

Penner: I think that when the current president won his election, he specifically said exactly what he planned to do: He was going to use ICE to remove the folks who had immigrated here illegally or across the border illegally during the Biden administration, and particularly those who had committed a crime.

But you didn't have to be a genius to know that extracting those people was not going to be easy without dislocation, without affecting the lives of other people who might have come here before the Biden administration, who might have been settled here for years and even decades and still had not found themselves into legal status.

If I were governor of the state of California, I would have made it a point to be in Washington the first week after the election, or before he took office, and I would have been talking to the president and his people about avoiding exactly what we see happening this week. 

If I was the governor, five months ago, instead of being complacent, I would have been talking to the president, saying we need to protect those people who have been here longer, those people who have made their lives here and contributed, many of whom have been paying taxes, many of whom have kids that are even in the military, defending our country. We need to make sure that these people have a path to citizenship and have status, legal status, to stay in this country. 

That didn't happen. It shows a lack of care and a lack of preparation and an inability to think one step ahead. We have now a hornet's nest, a terrible situation in LA, but it's a result of not thinking ahead. 

It's very tempting to lay all the blame on the federal government, because they're handling it, seemingly in a very rough way. The targeting more broadly of the Latin American or Hispanic communities, the rounding up of citizens by race, that's not pretty. That should never happen in this country.