The New York City Council is currently evaluating new legislation aimed at increasing nonprofit access to residential and commercial real estate. The proposed bill, known as the Community Opportunity to Purchase Act (COPA) or Intro 902, could significantly alter real estate transactions by requiring property owners of buildings with three or more residential units to notify the Department of Housing Preservation and Development (HPD) and a list of designated “qualified entities” before listing their properties for sale. This would grant nonprofits a first right of refusal, allowing them to submit initial offers and match any competing bids.
While the legislation is designed to expand the supply of permanently affordable housing, concerns have emerged regarding its potential impact on the real estate market. Industry sources indicate that if enacted, the bill could lead to increased costs and substantial delays in property sales. According to testimony from Ann Korchak, board president of the Small Property Owners of New York (SPONY), the bill could extend the closing process by as much as 180 days, thereby complicating borrowing and limiting an owner’s ability to sell their property promptly.
Potential Consequences for Property Owners
Korchak highlighted that approximately 90,000 buildings in the city could be affected, which includes about 25,000 rental properties sold annually. The extended closing process may not only delay transactions but could also lead to lower sale prices and decreased tax revenue for the city if nonprofits acquire properties.
She emphasized the adverse effects on all parties involved in property transactions, from attorneys to insurance companies. “A six-month waiting period could freeze thousands of transactions,” Korchak stated. “If the deal falls apart, we’re back to square one, going to the open market.” This could prove particularly challenging for distressed property owners who must continue meeting financial obligations.
Valentina Gojcaj, a SPONY board member and owner of a rent-stabilized building in the Bronx, described the proposed waiting period as a “complete bottleneck,” warning that it would create significant bureaucratic delays. The Hudson Gateway Association of Realtors also expressed concern, stating that the bill would slow the housing market and negatively affect homeowners in New York City.
Support and Opposition to the Legislation
Despite the pushback from the real estate sector, supporters of the legislation argue that community-based nonprofit purchases have proven effective in other cities, such as Washington, D.C., and San Francisco. They contend that the bill could help address the ongoing housing affordability crisis in New York City.
Council Member Sandy Nurse, who sponsors the bill and represents areas including Bushwick and Brownsville, asserted that the legislation would “level the playing field” for nonprofits and help preserve at-risk affordable housing. Nonprofit advocates, including representatives from the New York Community Land Initiative, believe that this initiative could facilitate the acquisition of neglected properties and enhance the availability of affordable housing.
Brianna Soleyn, a board member of the East New York Community Land Trust, noted that successful community purchases have the potential to improve the lives of New Yorkers. “Through COPA, the city can support acquisitions like these,” Soleyn explained.
Nevertheless, concerns persist about the implications for property owners and the broader market. Legal experts from Holland & Knight warned that the regulation could deter potential buyers and complicate the already intricate real estate landscape in New York City.
Francis Korzekwinski, Senior Executive Vice President at Flushing Bank, pointed out that the bill could lead to decreased interest from banks as lenders may reassess their strategies in light of the new compliance requirements.
As the City Council continues to deliberate on the legislation, the balance between expanding affordable housing options and maintaining a functional real estate market remains a critical point of contention.
