Anthony Dunbar was relaxing at his home in Hayward on a cold day in January 2014 when the smell of smoke drifted under the door. Dunbar went outside and noticed a fire in the carport below his second floor apartment. A homeless man, who had been sleeping there to stay out of the rain, accidentally set the blaze. The flames were spreading slowly, but by the time the fire department arrived, Dunbar’s home was engulfed in flames. “It was burnt to a crisp,” Dunbar said in an interview. The fire forced him onto the streets. He became homeless for the first time in his life and had to begin hunting for a new place to live. But Dunbar ran into the wall that is the Bay Area’s rental housing crisis. Dunbar, who is blind in one eye and partially disabled, found that market-rate rents across the East Bay were more than double the monthly $879 social security check he relies on for most of his income, putting almost every apartment financially beyond his reach.

Last year, Dunbar started applying for apartments in affordable housing developments, where rent is usually a set percentage of the resident’s income. Last year, while still homeless, Dunbar applied for an open unit at the Main Street Village development in Fremont. He sent all of his paperwork on time, paid the $35 background check fee, and waited with anticipation. On December 8, his answer arrived: a one-page letter from MidPen Housing, the affordable housing company that operates Main Street Village, stating that his application was being rejected because of “adverse consumer credit information.”

Dunbar said in an interview that he was flabbergasted. “I was like, ‘for real?,’ I’m not even eligible for low-income housing?”

Dunbar’s problem is not an uncommon one. Chronically homeless and newly homeless people seeking affordable housing are often denied open units because they have bad credit scores that are compiled and maintained by private companies. According to interviews with homeless advocates, affordable housing landlords often turn people away for having unpaid debts, past-due bills, and court judgments against them. Oftentimes, a homeless person will not even know the details of their credit history until they get a rejection letter from a housing provider. But homeless advocates say that the policy of screening homeless people and excluding some of them based on a poor credit report is doing more harm than good.

“You can naturally expect many of the folks that we serve will have multiple housing barriers including poor credit history,” said Lucy Kasdin, the director of services at Bay Area Community Services. “So for affordable housing developers, who are supposed to serve these populations, to deny these people based on their credit history, which is not an uncommon practice, it is really frustrating.”

Dunbar used to be a delivery truck driver, but when he lost his vision in one eye in 2013, he found it difficult to get another job. Dunbar said he has no criminal history, so when MidPen rejected his application, he was confused. The rejection letter came, however, with another form called a “notice of adverse action” which explained that the decision to deny his application was based on a report that MidPen obtained from a Silicon Valley company called On-Site. On-Site compiles public and private consumer information to produce renter scores. Dunbar’s renter score, according to the letter, was a 1 out of 10, with 0 being the lowest score possible. The notice stated that this very low score was due to “utility bills reported late, past due, or in collections.”

According to Dunbar, and records I reviewed for this report, the bills in question were a PG&E utility bill for $150, and a Comcast cable bill for $130. Dunbar said the unpaid bills were from his old apartment that had been ruined in the fire. He had cancelled the services but didn’t pay the outstanding bills because he was spending more of his money on transportation, food, and other expenses caused by his homeless situation.

“You’re starting over, you have nowhere to go,” said Dunbar. “It’s really difficult to manage everything.”

“Someone stuck homeless on the street because of a couple hundred dollars in debt, or debt from 25 years ago, it’s pretty harsh,” Kasdin said. A few months ago, Kasdin was drafting housing applications for an older homeless man in his mid-sixties who had been chronically homeless for the past fifteen years, and struggling with mental health issues. “Earlier when he was in his twenties, he was living in Arizona, and he went to a trade school,” said Kasdin. “He finished the trade school, but wasn’t able to procure work. At the time, he had taken out about $2,000 in student loan debt, and then over all the years he just didn’t think about it, but recently on an application for affordable housing, he was denied, and it was the student loans from thirty years ago, incurring interest for that time, that’s the cause.”

Kasdin said medical debt, credit card debt, and auto loans are among the many causes of bad credit that prevent many homeless people in Alameda County from qualifying for low-income housing.

Kevin Hopkins has been caught in this limbo for over a year now. Hopkins was recently rejected for a Section 8 apartment in the Mayten Manor development in Hayward, which is managed by Eden Realty, due to information contained in a credit report generated by Experian Information Solutions. Experian is a Costa Mesa-based company that claims to collect financial and other information on 890 million people. The letter from Eden Realty stated that the decision to deny Hopkins’ application was based on the fact that Experian was not able to generate a “risk score” for him because of his “lack of credit history.” The Experian report also noted that Hopkins had two unpaid court judgments against him totaling $15,365.

“When I applied for a housing unit with them I was excited,” said Hopkins in an interview. “To get turned down, that was crushing.”

Hopkins, a youthful-looking 55-year-old man, was born and raised in East Oakland on 48th Avenue. “That was back when housing was affordable,” he said, “but now I’m living pillow to post, anywhere I can rest my head.”

Hopkins maintains a $19-per-month membership at Planet Fitness to stay in shape and use the showers. “I don’t like to be smelly, and I want to take care of myself,” he said. Nevertheless, Hopkins said he has been chronically homeless due mainly to his record of incarceration for thefts and robberies committed when he was younger. His criminal history has made it very difficult for him to get a job, so Hopkins relies on his $889 social security check to pay for food, transportation, and sometimes to get a bed at one of the East Bay’s homeless shelters and hotels. He also sometimes stays with his sister in South Hayward.

“When I got denied housing,” said Hopkins, “I thought it would have been for my prison record, but to have it be for a default judgment, that just doesn’t seem right.”

According to Hopkins’ Experian credit report, and Alameda County Superior Court records, Hopkins was in an auto accident in 2007. The driver of the vehicle he collided with sued him, and in 2009, a judge entered a default judgment against him. But Hopkins said he didn’t even know about the judgment until January of this year when he was turned down for housing by Eden Realty. Eden Realty’s decision was final, according to the letter.

“These companies should give us a second chance,” said Hopkins about affordable housing managers. “How many people applying for subsidized housing have good credit? Part of the reason we’re applying is because we’ve experienced financial problems.”

Two phone calls to Eden Realty’s San Lorenzo offices were not returned.

“I know that we make it a priority to work with applicants to help them through the process and appeal process, including evaluating mitigating circumstances,” wrote Beth Fraker, a representative of MidPen Housing in an email. Fraker wrote that formerly homeless people often need this extra consideration because they are more likely to have bad credit reports.

Reflecting this willingness to work with homeless people with bad credit histories, in Dunbar’s case MidPen Housing considered an appeal that Dunbar made with the help of Rachel Cole-Jansen, a program coordinator and case manager with Operation Dignity, a nonprofit that works with homeless people. The deal Dunbar struck with MidPen Housing requires Dunbar to make payments to a collection agency to eventually pay off his old utility bills. In return, MidPen Housing has placed Dunbar on its waiting list for a unit.

Kasdin said this type of flexibility is needed among more affordable housing providers. “My hope would be that we could move towards looking at all these things together in context — criminal justice history, eviction history, or income, and other things that you can expect to see in the profiles of our homeless folks — so that if you have a credit score below a certain amount, or an old debt, that you’re not automatically denied housing.”

Hopkins said he’s unsure what to do next but that he has to try to clear up the judgment against him, find work, and somehow find a stable housing situation.

Dunbar said he’s waiting now on another unit to open up at Main Street Village. “It’s gonna be beautiful, having a roof over my head,” he said.

Last week, trustees of Oakland’s Police and Fire Retirement System — a closed pension fund with $549 million in assets that pays retirement benefits to former Oakland cops and firefighters — held hearings on a proposal to divest from fossil fuel companies. If the PFRS board ultimately decides to divest, they would join a growing list of pensions, endowments, and foundations — including CalSTRS, Stanford, and the Rockefeller Foundation — that have dumped some or all of their oil, gas, or coal company stocks and bonds in recent years. Proponents of divestment claim that fossil fuel companies are an increasingly risky investment and that divestment is also a productive way to address climate change and other environmental harms. But some members of the PFRS board, and their outside consultant, are resistant to the idea of divestment, fearing it could reduce the pension’s investment returns and possibly force the city to bail it out in future years with tax dollars meant for city services.

Currently, the PFRS pension fund has about $19.5 million invested in the fossil fuel industry, mostly in the form of oil and gas company stocks and bonds. For example, the PFRS pension fund owns Southern California Gas Company (SoCal Gas) bonds that pay 3.2 percent interest. It was a SoCal Gas well in Aliso Canyon, north of Los Angeles, that created the largest natural gas leak in US history when it ruptured last October and spewed 100,000 tons of methane into the atmosphere. The disaster forced the evacuation of 1,800 nearby homes, and experts compared its environmental impact to the Deepwater Horizon oil spill that flooded the Gulf of Mexico with 4.9 million barrels of oil in 2010. The PFRS pension fund also holds stock in Transocean, the global offshore oil drilling company that owned the Deepwater Horizon drilling rig and dozens of other oil and gas companies operating all over the world.

Brett Fleishman, a senior global analyst with 350.org, an environmental organization that supports divestment, said that investments in companies like SoCal Gas and Transocean actually expose pension funds to future losses due to disasters like well blowouts. “A pension trustee’s job is to minimize risk and maximize returns,” said Fleishman. “Fossil fuels today present a very clear risk, so if you don’t swallow the moral argument at all, there’s a strong financial argument for investors to take a look.”

Fleishman said that the stagnating stock prices of oil and gas companies are a symptom of the fact that the oil and gas industry is now over-producing. The industry is also facing a future in which governments are increasingly likely to implement policies that would prevent them from extracting all of the oil and gas in its reserves. These “stranded assets” could crater oil company stock and bond prices, but preventing these oil and gas deposits from being burned is the only way to avert the most catastrophic climate change scenarios.

At last week’s meeting of the PFRS board of trustees, board members grappled with the question of whether divesting from fossil fuels would increase or decrease risk to the fund. It’s a particularly salient question for the PFRS trustees. The pension was never well funded by the city, and in previous years, it’s been questionable whether the fund would actually be able to pay out retirement benefits to its members because its assets had lost so much value.

In response, the City of Oakland was forced to bail the fund out several times by issuing pension obligations bonds. But that left Oakland taxpayers on the hook for tens of millions in bond payments. In some years, the city even had to pay out of its general fund to make contributions to keep the pension system afloat.

“PFRS is a closed system, so the only way to sustain it is to grow the fund’s assets,” said PFRS trustee John Speakman during the board meeting. “The city is obliged to fund [PFRS], so when the fund is short on money, the city must fund it with tax dollars.”

Speakman, who is a retired Oakland firefighter, said his concern about the divestment proposal is that it could end up producing investment returns below PFRS’ goal of 6.75 percent, and that if in future years the city is required to fund the pension system because it didn’t earn enough money, it would end up coming from taxpayers in the form of laid-off police officers and other cuts to services.

Steven Wilkinson, another PFRS board member, disagreed with Speakman. Wilkinson, who runs a wealth management business in Oakland, said that the fossil fuel industry appears to already be in a structural decline and that oil, gas, and coal stocks do not have long-term growth prospects. Wilkinson said that PFRS can make socially responsible investments by divesting from fossil fuels while also earning high returns to pay out benefits.

“Nobody is going to invest in a loss,” said Wilkinson in an interview. “Socially responsible investing is about investing with a conscience and a belief you can do just as well without holding certain things.”

“I think divestment is something that we’re all for,” continued Wilkinson, “but there’s a process. Everything we do, we have to understand the legal ramifications and carry out our fiduciary duty.”

The PFRS board’s pension consultant, David Sancewich of the Pension Consulting Alliance, counseled against divestment. In a report presented to the PFRS trustees last week, he told trustees that the risk of divesting from fossil fuels is that the fund would earn “suboptimal returns.” Instead of divesting, Sancewich said that the key policy for trustees to adopt would be engagement to ask that companies become more environmentally sustainable.

But Janet Cox, an environmental consultant who has worked with several other pension funds on divestment policy, said that engagement has never worked with respect to fossil fuels. “Engagement does make sense for some kinds of companies, except when you’re talking about fossil fuels,” said Cox. “What’s the ask here? Are we asking Chevron to get out of the oil business?”

Cox said that engagement works when an influential investor requests a company to do something it can reasonably do without shutting itself down, but that the existential threat of climate change requires the global economy to transition off of fossil fuels as fast as possible. “Engagement just gives the oil companies longer to do what they’re doing,” said Cox. “They’re not going to change their basic business models until the government tells them they have to.”

In fact, the request for PFRS to divest from fossil fuels stems from a government decision. In 2014, Oakland Councilmember Dan Kalb sponsored a resolution calling climate change a “severe threat to current and future generations.” The resolution divested the city’s funds from investments in companies engaged in the extraction, production, refining, burning and or distribution of fossil fuels.

“Socially responsible investment has been around for about 30 years now,” Olga Bolotina, Kalb’s chief of staff, told the PFRS trustees last week during their meeting. “It has been proven to be effective.”

The PFRS board, however, is legally independent from the city, and the council cannot force the pension system to divest. The PFRS board is expected to hold another hearing on the divestment proposal later this month.