Fix Council bill on nonprofit housing

The Community Purchasing Opportunity Act (COPA) currently under consideration by the City Council is a seemingly solution in search of a problem and would pose an unnecessary obstacle for the new city administration as it begins to pursue its own affordability agenda.

COPA would give nonprofits first right to bid on apartment buildings when owners put them up for sale. However, the reality is that nonprofit ownership, while commendable, does not produce affordable housing alone. Rather, affordable housing is generated through a combination of regulatory agreements, rent restrictions, income brackets, compliance rules, and oversight, all of which apply to nonprofits.

By misdiagnosing the problem, COPA is proposing a mechanism that would introduce delays, deter investment, and slow production at exactly the time the city needs more housing built faster. At the heart of this misunderstanding is the idea that COPA is narrowly tailored to distressed buildings at risk of displacing their tenants. The fact is that the legislation is too broad and could affect a range of housing from distressed housing to stabilized mixed-income developments to Class A luxury rentals.

COPA’s definition of “covered properties” uses criteria common to the entire housing stock. For example, a single open hazardous or immediately dangerous violation per unit, or municipal arrears of $1,500 per unit, are enough to trigger COPA. These conditions are often temporary and appear in private buildings, new rentals or properties undergoing routine repairs. This means that owners of fully compliant buildings will have to wade through COPA for months before listing or marketing their properties.

COPA’s extended mandates and processes would also apply to a lender selling a property it acquired by superseding deed, to properties acquired by lenders due to foreclosure, and to lender-approved short sales by a distressed homeowner. Unfortunately, the extended timelines and uncertainty inherent in the COPA process make these assets less liquid and negatively impact their value, which is a problem for lenders whose mortgages are secured by these assets.

Overall, COPA as proposed will reduce the pool of buyers and lenders and make it more difficult to recapitalize aging buildings or refinance maturing debt. In a worsening supply crisis, the parameters of this bill will limit development, further limit supply, and exacerbate the housing crisis.

The bill would require the city Department of Housing Preservation and Development to create a new division that would track, enforce and manage the process. Among other functions, this division would certify and recertify qualified buyers, track each notice of intent to sell or market a property, collect and audit expense reports, manage a citywide publishing and reporting platform, adjudicate disputes, enforce sanctions, and coordinate interagency data sharing.

COPA should be adjusted to make it more efficient and effective.

The Council should start with an overly broad definition by targeting only properties already enrolled in one of the city’s distressed building programs, buildings subject to an HPD vacate order, and those whose accessibility agreements are expiring. This would reach the most impactful purchasing opportunities where it is essential to both preserve affordability and protect renters. Focusing on properties already in the city’s network would help speed up administration of the program.

Additionally, to ensure that buyers have the capacity and capacity to purchase, renovate, and manage property, the bill should consider defining a group of pre-qualified community preservation buyers through the Qualified Buyers List and require that an eligible COPA partnership include a nonprofit organization and developer from that list.

Finally, establishing clear deadlines for community buyers to declare their intent and then make an offer, limiting negotiations for a given sale to the first qualified COPA buyer to make an offer, and shortening the opt-in period time to five days would help ensure that the preservation of these properties occurs as quickly as possible and is not an open-ended process.

The Council has an opportunity to make meaningful changes to focus on truly distressed properties and better leverage our city’s resources to meet the housing needs of our most vulnerable communities and tenants — an opportunity we cannot afford to miss.

Cestero is president and CEO of The Community Preservation Corp. Goodrich is president of Monadnock Development.