By Kathryn Brenzel
Starting next year, certain nonprofits and joint ventures can get a head start when bidding on distressed multifamily buildings in New York City.
The City Council on Thursday approved the contentious Community Opportunity to Purchase Act, a bill that gives city-approved buyers the first opportunity to buy troubled multifamily properties. The measure passed by a vote of 38-9, with two abstentions.
Under the bill, a select group of approved nonprofits, including community land trusts, will have an exclusive window to make offers on certain residential buildings, a change supporters have described as leveling the playing field for these parties. The measure could also create a path for nonprofits to work with tenants to eventually convert the buildings into limited equity co-ops or otherwise turn them over to tenant ownership.
“Buying and preserving some of the housing we already have is the most immediate way to stop displacement,” Brooklyn Councilwoman Sandy Nurse, the bill’s sponsor, said at a press conference ahead of Thursday’s vote.
Mayor Zohran Mamdani has long supported the measure, describing it during his mayoral campaign as a way to “expand the supply of community-controlled housing and break the cycle of slumlord and investor-backed speculation.” The measure joins the administration’s efforts to transfer ownership of distressed properties to what the administration has described as “high road” landlords.
Thursday’s vote was years in the making and shaped in part by concerns raised by the real estate industry.
The measure hit several nerves for property owners. They saw it as a wrongful intrusion into private contracts that would scare away investors. Some also viewed it as the latest example of elected officials revering nonprofit landlords while vilifying for-profit ones.
A version of COPA was first introduced in 2020 and would have applied to every multifamily building in the city. New versions of the bill introduced over the years shrunk the universe of properties it would apply to and shortened the exclusivity period for city-approved buyers.
The City Council approved a version of COPA focused on distressed multifamily properties just last year, but then-Mayor Eric Adams vetoed the measure on his last day in office. The new Council, led by Speaker Julie Menin, didn’t have enough votes to override the veto.
In May, Nurse introduced another amended version of the bill that further limited what buildings would qualify and shrunk the timeline from 160 days to 145 days.
The latest version of the bill gives nonprofits certified by the city’s Department of Housing Preservation and Development, as well as joint ventures where those nonprofits have a controlling stake, the first chance to buy certain multifamily buildings.
These potential buyers have 20 days to express interest in a property, after which they will have 70 days to submit an offer. They can also request a five-day extension.
After that exclusivity period, the owner has 10 days to accept, reject or counter the offer. If accepted or countered, both parties then have 30 days to sign a sales contract. If an owner receives a competing bid, the nonprofit or joint venture has 15 days to exercise their right of first refusal and match the offer.
Multifamily properties qualify for COPA if they have four or more units and are considered distressed or if they have 100 or fewer units and are subject to affordability agreements managed by HPD. The bill’s definition of “distressed” includes properties that have been subject to the city’s alternative enforcement program for at least a year, properties that have an annual daily average of violations equal to or greater than three, and properties that would otherwise be subject to the city’s defunct third-party transfer program, in which properties with extensive unpaid city bills were transferred to new owners.
HPD has estimated that 2,100 buildings could qualify for COPA, down from the 10,000 that would have been impacted under earlier versions, according to Menin, who voted in favor of the latest version.
The bill does not explicitly include any affordability requirements, but the Council’s belief is that HPD will certify “mission driven” nonprofits committed to affordable housing.
Menin noted the version of the bill approved Thursday addressed a number of legal concerns raised by the city’s Law Department over the iteration the Council had approved last year. Menin commended Nurse on Thursday for working closely with stakeholders and concerned Council members to come up with a “more targeted universe” of buildings.
“The bill has been through the fire,” Nurse said, noting that it has been introduced four times, heard three times and was the focus of a sustained and intense lobbying effort against it by the real estate industry. She later added that she felt that lobbying was done in “bad faith.”
The measure “is the strongest, most strategic and the most operationally sound version of COPA yet,” she said. It goes into effect one year after becoming law.
The latest version included some changes sought by real estate trade groups, including the removal of language that allowed HPD to add different categories of buildings to COPA as the agency saw fit. The bill also includes a two-year statute of limitations for lawsuits alleging a violation of COPA rules.
The Real Estate Board of New York and the New York Apartment Association have acknowledged that the many amendments to the bill have made COPA more palatable.
But Kenny Burgos, CEO of NYAA, said the bill still doesn’t address the reasons many buildings are distressed in the first place, noting that nonprofit owners face the same cost challenges as for-profit ones.
“Lawmakers must focus on the underlying financial challenges jeopardizing housing to preserve existing homes, prevent future losses, and end the trend of tens of thousands of vacant rent-stabilized units year over year,” Burgos said in a statement.
Not all landlord groups have been assuaged by changes to COPA, either. Ann Korchak, board president of the Small Property Owners of New York, said any version of the legislation is “a disaster for affordable housing, renters and owners.”
She said in a statement that the bill will “alienate and discourage conventional purchasers who have the financial wherewithal to immediately purchase and rehabilitate a failing property.”