Why Tenants Should Be Given the Opportunity to Purchase Their Buildings

Unlike so many owners who are quickly selling their properties to the highest bidder amidst rising real estate values, an East Oakland landlord was intent on giving the existing tenants a fair shot to purchase the property.

A building in East Oakland with colorful murals painted on the wall. A graffitied fence is to the right of the building.
23rd Avenue, a mixed-use space located at 23rd Ave. and International Boulevard in East Oakland, California, includes eight units of residential space and four units of commercial space for grassroots community organizations. Photo courtesy of Zach Murray
Two people sit at a desk.
From left, Devi Peacock and euri oura, co-organizers of the #Liberate23rdAve campaign. Photo courtesy of Zach Murray

In late January, a standing-room only crowd gathered to celebrate a milestone that once seemed impossible. Exactly one year and five days prior to this celebration, residents and tenants of the 23rd Avenue Community Building (23rd Avenue)—a long-standing affordable, people of color led social justice center—received notice that their landlord had planned to sell the property. The mixed-use space, located at 23rd Avenue and International Boulevard in East Oakland, California, includes eight units of residential space and four units of commercial space for grassroots community organizations—some that have been in the building for decades.

“When we heard our landlord was selling, it felt like life or death. We’ve been in the neighborhood for 20 years; we have a responsibility to the community. And we can’t afford anywhere else,” said Eugene Kang, who works at The Bikery, a community bike shop located in the building.

Just one month prior to the landlord’s notice, the Oakland artist and activist community was shaken to its core when 36 people died following a fire at the Ghost Ship, an artist collective housed in a converted warehouse. Following the fire, the deadliest in Oakland’s history, city officials around the country began aggressive fire and code enforcement of underground artist warehouse communities. Increased enforcement added even more pressure to already vulnerable communities. For far too many Oakland residents, eviction often means losing the right to return to the city. “We could never compete with the likes of big tech. We don’t have that kind of cash. It’s hard enough to rent in this town,” says eri oura, who lives in the building and works at The Bikery.

In Oakland, the median home value is nearly $700,000, while median rents are reaching $3,000 a month, well beyond the reach of artists, activists, and many residents of color. The growth of the tech industry in the region and its high-earning, cash-rich workforce has led real estate investors to Oakland. Speculation is on the rise as Oakland’s once affordable market is now one of the nation’s top five most expensive, making it extremely difficult for displaced low- and moderate-income households to compete in the market as renters or as owners.

A Fair Shot at Ownership

In a previous Shelterforce article, Steve King of the Oakland Community Land Trust introduced us to “HAUTMSS” (hot mess)—Housing Affordable Until the Market Speculation Starts—to more accurately depict the supposed natural occurrence of affordable housing, as well as the systemic failure to protect tenants and deliver alternatives to market-driven displacement. Sales listings that offer speculators the chance to “reposition” occupied multifamily units at higher rents is a common example of HAUTMSS conditions that frequently occur in the Oakland market.

However, unlike so many owners who are quickly selling their properties to the highest bidder amidst rising real estate values—resulting in thousands of Oakland tenants facing skyrocketing rents or eviction—23rd Avenue landlord Ming Cheung was intent on giving the existing tenants a fair shot to purchase the property.

Cheung agreed to offer the tenants a right of first refusal, granting them 90 days to develop a plan to purchase the building before the property was placed on the open market. “[Cheung] was an ally, she wanted to pay it forward and make sure [the property] went into community hands within a timeframe. We made an offer . . . and she accepted and also granted extensions gracefully,” says oura.

In so doing, Cheung, who is also the mother of a former tenant in the building, has provided Oakland with an instructive template for resident-led, anti-displacement focused preservation. The landlord’s decision to extend an opportunity for tenants to purchase the property presented the community with a critical window of opportunity to step up to preserve 23rd Avenue. All the residents needed to do was raise $75,000 for the down payment.

A local farm founded as a community garden in East Oakland, California.
Oakland Sustaining Ourselves Locally, located in a lot behind 23rd Avenue, is a local farm founded as a community garden. Photo courtesy of Zach Murray

Residents and community groups housed at 23rd Avenue—Cycles; Oakland Sustaining Ourselves Locally, a local farm founded as a community garden on the property; Peacock Rebellion, an arts and social justice group for queer and trans people of color; Liberating Ourselves Locally, a queer and trans people of color maker space; Shaolin Life / Deep Root Center for Spiritual Studies; and others—reached out to local groups like the neighboring Eastside Arts Alliance, People of Color Sustainable Housing Network, and the Sustainable Economies Law Center. “We rolled up our sleeves and said, ‘We’re staying. What do we need to do to stay? And we went all in,” says oura.

One of the organizers’ first actions was to connect with government officials. However, limited city funding for affordable housing initially led to a lukewarm response from officials. The City of Oakland’s ability to meet the affordable housing needs of its residents is hindered by declining federal resources, and extremely limited state funding. Area voters recently approved two bond measures, which will certainly help, but those measures hardly meets the city’s immediate and vast need for rapid funds to preserve thousands of vulnerable units. Residents of 23rd Avenue also grew skeptical of government involvement and what oura viewed as the use of the Ghostship fire “to power disaster capitalism and sweep up similar properties.”

The residents decided to take matters into their own hands and envisioned the type of future they wanted for the space. Launching the #Liberate23rdAve campaign helped the group “name our needs . . . it would be good to know down the road that people in the building would be taken care of through the benefits of ownership and equity that helps build intergenerational wealth,” says oura, who co-organized the effort. The #Liberate23rdAve campaign involved outreach to gain local media coverage, several fundraising events, and the development of a video that was the centerpiece of an online crowdfunding effort to raise money for the down payment. Ultimately the campaign raised $90,000 from 600 donors in eight weeks. The campaign’s success can be attributed to a combination of factors, including growing local frustration with displacement (especially after the Ghost Ship fire) as well as the abundant connections and networks 23rd Avenue organizations and residents had developed in the community.

Residents and tenants of 23rd Avenue chose to partner with the Oakland Community Land Trust (OakCLT) because of its model of resident ownership and commitment to purchase and steward land for the permanent benefit of low-income people. OakCLT helped residents to close the financing gap through a $288,250 equity contribution as well as a $300,000 loan for site acquisition from the City of Oakland. The $1.5 million purchase was finalized and 23rd Avenue became a land trust property after OakCLT secured a $866,000 loan from the Northern California Community Loan Fund. The effort at 23rd Avenue was not only a perfect fit for the OakCLT’s model of resident led self-management and cooperative ownership, but it fit into the organization’s goal of acquiring small buildings (5 to 25 units) vulnerable to speculation by preserving affordability in an often neglected yet presently affordable portion of housing stock in Oakland. Not only does 23rd Avenue preserve several units of affordable housing, but it also preserves much needed community space, as nonprofit and social justice organizations also contend with an affordability crisis in the Bay Area.

Though the work of securing financing for the purchase is complete, the organizers believe that the true work has only begun. “Paying back the loan is not the endpoint. The campaign is . . . maybe 30-years long. Way after the folks here now are gone this will still be happening. Learning cooperative management is a process,” says Devi Peacock, founder and director of Peacock Rebellion, the queer, trans, people of color arts and culture collective located at 23rd Avenue. “There is much to be hashed out. We have a community land trust roadmap that will help us scope out a resident management and ownership plan, but as of now the plan for implementation is something we’re still shaping.” Residents are currently working with OakCLT to determine self-governance and to develop a method for resident ownership that could include a limited-equity cooperative or another form of cooperative ownership or management.

One promising sign: early resident meetings to determine a self-governance structure have achieved nearly full participation from existing residents so far. According to Peacock, “we have 100 percent resident participation today, but what about in 3 years, or 10 years. The collective leadership model can be a tough sell, especially when you consider our challenges, such as an expensive seismic retrofit of the building that we’ll need to do by the end of the year.”

And the persistent challenges of gentrification add daily pressure to the surrounding neighborhood. In response to rising homelessness, the city government has embraced and sanctioned an encampment known as “The Village” down the block from the 23rd Avenue building. “Encampments have been around, but not like this. It’s coming closer to the doorstep. Our block is more full now because the homeless have cars and drive to work. It’s not unsafe, but it’s desperation. The city has too few solutions to rising homelessness so now it must embrace traditional grassroots responses. One meal to share is kind, but that’s no long-term solution. We need infrastructure to support working class people,” says oura.

The residents and organizers of 23rd Avenue are implementing a people-centered model that can help remedy displacement that all too often results in homelessness. “We’re building something beyond us,” says Peacock, “this is a blessing, but has lots of challenges. We’re located smack dab in the middle of industrial Oakland, directly along a path slated for rapid gentrification and displacement of our communities. But we’re developing an oasis to protect our cultural traditions and the land, a living, breathing think-tank and space for making big things happen.”

In Oakland, 23rd Avenue is evidence that a policy like Washington, D.C.’s Tenant Opportunity to Purchase program could help provide residents with options for preserving affordability and community stability. Extending tenants the opportunity to purchase in a speculative market ensures a more even playing field for those competing against cash-rich institutional investors. As communities across the Bay Area contend with an unprecedented crisis of affordability, local leaders and funders empowering organized residents and supporting community-driven efforts to preserve affordable housing could yield greater results for addressing our displacement and inequality crisis.

3 COMMENTS

  1. Please expand on why Prop 827 would have “risked widespread gentrification and displacement in the process” of expanding the housing supply. The bill was amended to include local inclusionary housing requirements. In San Francisco, most projects now are 30% affordable or more. Not that the percentage is important– 30% of nothing is nothing. The amount of new housing built under 827 would have yielded more affordable housing than any public funds could produce.

    The bill had flaws but gentrification and displacement were not among them. Quite the opposite.

    https://medium.com/@Scott_Wiener/sb-827-amendments-strengthening-demolition-displacement-protections-4ced4c942ac9

    • I don’t address SB 827 in this article but I do have an opinion. You cite inclusionary housing requirements as the solution to displacement and gentrification alone, but in reality inclusionary housing programs typically and most effectively serve households (60% to 120% AMI) who don’t face the bulk of housing instability. The bulk of displacement pressure and lack of adequate new construction is in fact most impacting people making less than 50% AMI and especially those under 30% AMI. If you were to look at the transit zones SB 827 would have created in Oakland and LA the reality is AMIs in many of those transit zones is well under 50% AMI meaning inclusionary would have little benefit to present poor residents who mostly don’t income qualify. Also have you seen the track record of private market inclusionary units at serving Black and Latino residents in SF, the data is abysmal and brings up potential fair housing concerns. So yes gentrification and displacement threat persist even if only slightly higher income/middle-class/workforce populations are the 30% and stand to benefit. Homelessness is a major issue in these same transit zones. The bill did nothing to address homelessness. Additionally, I find it hard to believe places like Marin or Orange County would support new regional transit expansion if that comes with this major automatic zoning mandate.

      source: https://inclusionaryhousing.org/designing-a-policy/onsite-development/income-targeting/

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