A controversial bill that would give nonprofits first dibs to buy multifamily properties will now be less sweeping, but changes to the measure have not won over its fiercest critics.
An amended version of the Community Opportunity to Purchase Act, or COPA, would apply to multifamily buildings with four or more units that are also considered distressed or that have affordability requirements that recently expired or will soon end. The previous iteration simply applied to properties with three or more units.
The new version of the bill shrinks the pool of buildings subject to COPA and also decreases the exclusivity window granted to “qualified entities.” It also changes the structure of how buildings that don’t comply are fined.
When such buildings go up for sale, “qualified entities” approved by the city would be given the first opportunity to buy the properties. The new bill expands the definition of “qualified entities” to include for-profit companies that form a joint venture with nonprofits. That means those joint ventures, alongside nonprofits, will also have the right of first refusal under COPA.
The measure additionally excludes owner-occupied buildings with five or fewer units, while also making vacant lots zoned for residential use eligible for COPA sales.
The changes address a number of critiques of the previous bill, and even follow a suggestion made by the Adams administration to limit the buildings eligible to those in significant and financial distress.
Based on HPD’s response on Tuesday, the agency hasn’t yet been won over. A spokesperson provided the same statement given to The Real Deal last week in response to the previous bill, saying that the agency is “committed to providing input and feedback to ensure that all potential effects are fully evaluated and considered.” The spokesperson said the agency is “deeply grateful” to Council member Sandy Nurse, the bill’s sponsor, for her “continued engagement.”
“I’m proud that, by working closely with diverse stakeholders, we’ve refined the bill while keeping its central purpose intact: preserving and expanding permanently affordable homes for New Yorkers,” Nurse said.
Will Spisak, senior policy strategist for the nonprofit New Economy Project, which advocated for COPA, said the bill now targets buildings that could most benefit from working with nonprofits that specialize in preservation work. He said COPA could also help buildings that would otherwise be shuffled between speculative buyers on their way to the city’s lien sale.
But not all stakeholders are on board.
Ann Korchak, board president of the Small Property Owners of New York, doesn’t think the bill is workable even with the changes.
“Clearly it still has in the crosshairs, small building operators,” she said. “Buildings end up on this distressed list because of state and city policies and housing courts.”
Property owners and brokers sounded the alarm on the bill last month, saying it would devastate the city’s multifamily market. Broker Bob Knakal, at the time, said the City Council had “dropped a bomb on the multifamily market.”
Matt Cosentino, who leads multifamily sales at Brooklyn-based brokerage TerraCRG, acknowledged that the timeframes included in the new bill are preferable to the previous proposals, but said the new parameters around how a building qualifies will create confusion for owners.
The measure lays out various ways a building is considered distressed, including if it is part of the city’s alternative enforcement program, has significant tax liens, is subject to the city’s emergency repairs program or has unpaid municipal charges totaling $1,500 or more per unit. The bill also leaves the door open for the Department of Housing Preservation and Development to add its own qualifying criteria.
Properties that had an affordability requirement expire in the past two years, or that have one expiring in the next two, would also be subject to COPA.
The bill additionally lays out a new timeline for these deals. For COPA buildings, an owner must give HPD at least five days, instead of 180, before moving to sell their building.
Qualified nonprofits and community land trusts will then have 45 days, rather than 60, to submit a letter of intent to make an offer on the property. They then have 90 days (starting after the 45-day limit runs out) to bid on the building.
Under the old version, the time limits ran concurrently, totaling 180 days. The new bill has windows that run consecutively, pausing these transactions for 135 days.
Owners who fail to abide by COPA and sell their building to someone who is not a “qualified entity,” will be on the hook for a fine equal to at least 3 percent of the purchase price.
Even some proponents of the bill aren’t happy with this latest version.
Kenny Burgos, CEO of New York Apartment Association, said focusing on distressed properties will lead to fewer deals and make it harder for tenants looking to purchase buildings (by working with a nonprofit) due to the extent of repairs and debt on these properties. If the bill passes in its current form, he believes it will simply delay transactions.
“I just think the bill is losing its original intent in giving tenants the opportunity to purchase,” he said.
Other cities (including Washington, D.C., San Francisco and Chicago) have adopted similar policies, providing the right of first offer and/or refusal to nonprofits or a building’s tenants. In New York, the state legislature is also considering a Tenant Opportunity to Purchase Act, or TOPA, which would give tenants first dibs on buying their building.
A version of COPA was introduced in the City Council in 2020 and has been the subject of multiple hearings, most recently in June. At that time, the NYAA pointed to San Francisco’s COPA policy, which gives nonprofits 30 days to exercise their right of first refusal, as a potentially more reasonable timeframe.
Time is running out for yet another version of the bill to emerge. The last City Council meeting of the year is slated for Dec. 18.
The success of San Francisco’s version and other COPA policies relies on a consistent stream of funding being available for nonprofits. Spisak noted that New York City’s bill would go into effect one year after becoming law, giving time for the program to be factored into next year’s budget.
The Adams administration also recently relaunched the Neighborhood Pillars program, which could help buyers under COPA finance building rehabs.
Some have reservations about whether HPD could handle the administrative burden of ensuring buildings comply with COPA.
Erica Buckley, a partner at Nixon Peabody, thinks before a sweeping bill like COPA is enacted, HPD should launch a voluntary pilot program to test it out. She noted that Mayor-elect Zohran Mamdani, who called for COPA’s passage, could create a program that allows the agency to figure out the staffing levels required and includes a term sheet that would help line up public financing for these deals.
She said the program could also incorporate more direct efforts to encourage homeownership among tenants.
Testing out this model before approving COPA citywide could also give the city, nonprofits and owners time to better understand the complexity of such deals. Buckley has worked on a few deals where a nonprofit is buying a building, with the intent of eventually turning ownership over to tenants.
“They are incredibly expensive, and they take a lot more time than you think,” she said.
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