A new bill under consideration by the New York City Council could fundamentally alter how apartment buildings are sold in the five boroughs. Titled the Community Opportunity to Purchase Act (COPA), the legislation aims to give nonprofit organizations the first right to buy residential buildings before they hit the open market, a move supporters say will protect and expand affordable housing.
However, the proposal, also known as Intro 902, is facing strong opposition from property owners who warn it could introduce significant delays and financial burdens into real estate transactions, potentially disrupting the market for thousands of small landlords across the city.
Key Takeaways
- The New York City Council is reviewing the Community Opportunity to Purchase Act (COPA), or Intro 902.
- The bill would grant approved nonprofits the first right of refusal to purchase residential buildings with three or more units.
- Supporters, including Council Member Sandy Nurse, argue it will help create permanently affordable housing.
- Opponents, like Small Property Owners of NY, warn the bill could delay sales by 180 days or more, reduce property values, and complicate financing.
Understanding the Proposed Legislation
The Community Opportunity to Purchase Act would establish a new protocol for selling multi-family residential properties. Under the proposed rules, owners of buildings with three or more residential units would be required to notify the Department of Housing Preservation and Development (HPD) of their intent to sell.
Simultaneously, they would have to inform a list of pre-approved “qualified entities,” primarily nonprofit housing organizations. These groups would then have an exclusive window to make an offer on the property. Furthermore, the legislation would empower these nonprofits to match any competing offer that the owner receives from a private buyer, effectively giving them the final say in the sale.
Modeled on Other Cities
This legislative model is not entirely new. Proponents of COPA point to similar laws already in place in other major U.S. cities, such as Washington, D.C., and San Francisco. These programs were also implemented with the stated goal of preserving affordable housing stock against market pressures.
The core mechanism of the bill is the right of first refusal. This legal concept grants a specific party the contractual right to acquire a property before the owner can sell it to anyone else. In this case, the right would be transferred from an individual to a city-wide network of designated nonprofits.
The Argument for Preserving Affordability
Advocates for COPA, including housing activists and the bill's lead sponsor, Council Member Sandy Nurse, frame the legislation as a critical tool in the city's ongoing housing crisis. They argue that it creates a more equitable environment for preserving communities and preventing displacement.
Council Member Nurse, who represents parts of Brooklyn including Bushwick and Brownsville, stated the bill would “level the playing field so we can have a fighting chance to preserve at-risk affordable housing.”
Organizations like the New York Community Land Initiative support the measure, believing it will enable nonprofits to acquire properties and convert them into permanently affordable housing. This would remove them from the speculative private market, where rising values often lead to rent increases and the loss of affordable units.
The central idea is that community-based organizations are better positioned to manage properties with the long-term stability of residents in mind, rather than focusing solely on maximizing profit. By giving these groups a strategic advantage in the purchasing process, the City Council hopes to bolster the city's affordable housing inventory one building at a time.
Concerns from Property Owners
While the goal of affordable housing is widely shared, the proposed method has drawn sharp criticism from the real estate industry, particularly from small property owners. Many argue that COPA, despite its intentions, could have severe unintended consequences for the very people who provide much of the city's existing housing.
A Potential 180-Day Delay
One of the most significant concerns raised is the potential for the sales process to be extended by 180 days or more. This delay would be caused by the notification periods, offer windows, and matching rights granted to nonprofits, creating a lengthy period of uncertainty for sellers.
Ann Korchak, board president of Small Property Owners of NY (SPONY), outlined several potential negative impacts during testimony. She argued that the added steps would not only slow down transactions but also deter potential private buyers.
Potential Market Impacts
Critics of the bill suggest a number of downstream effects that could harm the market:
- Reduced Buyer Competition: Private buyers may be unwilling to invest time and money in due diligence if they know a nonprofit can swoop in at the last minute and match their offer.
- Depressed Sale Prices: With a smaller pool of interested buyers, property values could decrease, impacting the retirement savings and equity of small landlords.
- Complicated Financing: The uncertainty and extended timelines could make it more difficult for both sellers and potential buyers to secure loans from banks.
- Lower Tax Revenue: If nonprofits, which are often tax-exempt, acquire more properties, it could lead to a reduction in property tax revenue for the city.
These owners feel the bill places an unfair burden on them. They contend that while they are private citizens, they are being asked to solve a public housing crisis at their own expense, potentially jeopardizing their financial stability. The debate highlights the fundamental tension between protecting private property rights and advancing public housing goals in one of the world's most expensive real estate markets.
