Non-Profit have first dibs

Last Updated: January 16, 2020By

A vetted pool of qualified non-profits will be the first buyers to come to the trough when buildings with three or more units in San Francisco are about to go up for sale, courtesy of COPA.

Before you start singing the hymns of Barry Manilow’s Copacabana, we are referencing the City’s newly minted Community Opportunity to Purchase Act, one of the many incremental steps taken by the City aimed at solving the affordable housing dearth.

Organizations who have demonstrated experience in managing properties and a dedication to preserving affordable housing will now get first crack at scooping up multifamily properties once the owner signals their intention to sell. The short list of qualified nonprofits, published on the Mayor’s Office of Housing and Community Development’s website, amounts to an oligarchy.

These coronated groups will not only have first dibbs on buildings with three or more units before these impending listings are readily available to buyers on the open market, but the non-profit also has the right to match an offer from a private buyer, or make a sweeter offer. In legalese, this is called the “first right of refusal.”

The hard-won ordinance was championed by Supervisor Sandra Fewer, who concedes that while COPA is not a panacea, it “will provide affordable non-profits with a critical tool to stop the bleeding.”

You’ll get some argument from Charley Goss, the Government Affairs Manager for the San Francisco Apartment Association. Goss was quoted in a spirited public hearing that, “The City should be spending money to build new affordable housing units, not shuffle ownership of existing ones.”

The ordinance is not endeared to Noni Richen, either. As the head of the Small Property Owners of San Francisco, she says the new regulations will only serve to add more red tape and aggravation to mom and pop landlords, adding there is a low probability that non-profit groups will express an interest in purchasing small buildings. Many agree the new rules are extra baggage for owners already swimming upstream in a complicated regulatory regime.

Trade groups like SFAA have made ominous statements about exploring legal options, but there has been no legal challenges to date. COPA has been loosely modeled after a similar law in Washington, D.C, however, that has been the object of many legal dustups and so there is no reason to believe that San Francisco’s ordinance will not be tested in the courts.

Attorney Daniel Bornstein says that while non-profits will likely overlook the vast number of small properties – duplexes, triplexes, and the like – owners must still notify the organization of the intent to sell or risk costly litigation that may ensue if the non-profit feels slighted by not being invited to the table. His best advice for sellers of multi-unit properties? Tether yourself to an attorney or real estate broker that is versed in the nuances of this nascent law to ensure you are in compliance.


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