By David Brand
The New York City Council is once again considering a bill to curb speculation by giving nonprofits and community land trusts first dibs on residential properties that come up for sale.
Councilmember Carlina Rivera on Thursday reintroduced the Community Opportunity to Purchase Act (COPA) as part of a legislative package intended to preserve and develop affordable housing. Under the bill, which Rivera first introduced in 2020, city-approved nonprofit developers and community land trusts (CLTs) would have four months to make an offer on multi-family properties with at least three units before they hit the market. During that period, owners could not accept another offer.
The legislation has the backing of organizations that preserve affordable housing, but has encountered criticism from the real estate industry and skepticism from city housing officials.
Rivera said the measure would “level the playing field” and give CLTs a shot at buying homes before real estate speculators snatch them up and flip them.
“COPA can make a difference to ensure people can stay in their homes and in their communities,” Rivera told City Limits. “It would give CLTs and other organizations critical time and flexibility to put together the financing they need to make a fair market offer.”
Under the CLT model, a nonprofit organization purchases a property and retains the land while leasing apartments at permanently affordable rates. People can also purchase and maintain ownership of homes on CLT land, but they are barred from reselling at exorbitant prices, thereby cutting out the speculation that has diminished affordable housing options in neighborhoods like East New York.
There are around 400 CLT units citywide, mostly managed by the Cooper Square CLT in the Lower East Side as well as El Barrio CLT in East Harlem and the Interboro CLT, which has property in The Bronx and Queens. About 1,000 CLT units were in “predevelopment” stages last year, a top official at the city’s Department of Housing Preservation and Development (HPD) testified at a Council hearing last year.
Rivera’s bill would allow only “qualifying” organizations to have the first crack at buying properties. The eligible organizations would include nonprofits that appear on the city’s Qualified Preservation Buyers List—a roster that includes several for-profit developers—or that operate as a CLT.
In most cases, sellers would have to give the city’s Department of Housing Preservation and Development 180-day notice that they plan to put the property on the market, unless an owner dies or is facing financial hardship, the bill states. Nonprofits and CLTs would have two months to notify the seller and the city if they plan to make an offer, and then two more months to put the money together to actually buy the property. If the four-month timeline passes without an offer from a CLT or nonprofit developer, the owner is not bound by any restrictions and can sell the building to any buyer.
San Francisco enacted a similar policy, also known as COPA, in 2019, though that law opens shorter purchasing windows for non-profit groups. San Jose, the 10th largest city in the U.S., is also considering its own COPA policy. Washington D.C. has a law known as the Tenant Opportunity to Purchase Act (TOPA), which gives renters, as well as nonprofit groups, the first crack at buying a building or unit. The D.C. program has benefited from a dedicated funding stream for tenant or nonprofit purchases. New York state lawmakers are considering a similar measure.
Will Spisak, a senior program associate with the New Economy Project, said COPA would give CLTs breathing room to secure financing for a purchase and a head start against private equity firms. But actually getting the money to make the purchase will remain a barrier without more intervention from the city, the state and private affordable housing investment firms, he added.
“We know that, even if given that first opportunity, putting together a financing package is still going to be a challenge,” Spisak said. “We’re fighting to make sure there are funding streams coming from the city and state and partners, like community development funds, so that there is financing when these opportunities do come up.”
New Economy Project, CLT groups and several policymakers are also advocating for $3 million in the city budget for an initiative that funds organizing and technical assistance for CLTs. The groups rallied outside City Hall ahead of a Council meeting Thursday.
“From creating homeownership opportunities to establishing public open space, there are few investments in the future of New York City more important than growing our network of CLTs,” said Queens Borough President Donovan Richards, who has backed the growth of CLTs in Edgemere, located in his former Council district.
City housing officials say they are still reviewing the revised legislation but welcome opportunities for community groups to purchase properties and fend off displacement.
“HPD shares Councilmember Rivera’s goal of doing more to support mission-driven organizations in shoring up the affordability of our communities,” said HPD spokesperson William Fowler. “Although we are currently reviewing the new introduction of this bill, we look forward to working with the Council on finding cost-effective tools to create and preserve quality affordable housing.”
Last year, HPD was supportive of CLTs gaining more of a foothold in New York City, but stopped short of backing Rivera’s earlier legislation.
At a January 2021 Council hearing, HPD Associate Commissioner Kim Darga said she was “excited” about the potential for growing CLTs, but called them a “largely untested model in New York City.” Most of New York City’s CLTs are still in their early stages and do not yet own property.
“I think before we can talk about [how a] CLT is stepping in and acquiring a lot of property, that we need a ramp,” Darga said. “We need some more time to help these organizations actually grow capacity.” Rivera responded that her bill would help organizations develop that capacity and pointed to Cooper Square as a “proven, successful result.”
Even if a nonprofit group does not ultimately step in to buy a property, supporters of the bill say the six-month notice will cool down speculation by prohibiting quick flips. But the waiting period is precisely the problem to real estate and landlord groups who have criticized the first-dibs proposal.
Jay Martin, head of the Community Housing Improvement Program, which represents owners of rent-stabilized properties, said the measure would end up delaying sales even though nonprofit groups are unlikely to make a purchase in most cases. He also questioned how the organizations would come up with the money.
“If you’re going to make [owners] wait to sell to people and then they’re not going to secure financing for the property, you’re only going to slow the process down,” Martin said. “How are these groups suddenly going to be able to own and operate the property in a city that’s prohibitively expensive?”
Ryan Monell, the Real Estate Board of New York’s vice president of city legislative affairs, also criticized the lengthier timeline for property owners looking to sell. Monell recommended the city create incentives for property owners to voluntarily negotiate with non-profits and CLTs.
“While well-intended to increase affordable homeownership opportunities in New York, this legislation does not guarantee that outcome, would significantly extend the timeline to complete transactions and stands on dubious legal footing by limiting the pool of potential buyers for private property transactions,” he said.