As state and local economies attempt to reopen, and eviction moratoriums expire, millions of Americans once again face losing their homes. While these moratoriums have temporarily protected renters who may be unemployed and unable to pay rent due to the COVID-19 pandemic, elected officials are waking up to the reality that additional, far-reaching legislation is necessary to prevent widespread eviction, homelessness, and another foreclosure crisis.
Along with legislation that cancels rent and forgives debts, we need policies that remove land from the speculative market and preserve existing affordable housing. With real estate moratoriums lifted, landlords could seek to evict tenants who are unable to pay back rent, and property owners could sell distressed properties to the highest bidder. Waves of mass evictions would be spurred by the conversion of rentals to luxury condos. Large investment firms like Blackstone Group are already poised to buy and flip distressed properties around the country, which would eliminate affordable housing options for middle- to low-income renters.
Laws that would enable tenants to purchase a property before it’s put on the market have the potential to further protect renters. Versions of a law known as the Tenant Opportunity to Purchase Act (TOPA) are currently being proposed in reconvened legislative sessions in New York and California; and in the cities of Oakland and Berkeley, California. Massachusetts is considering state enabling legislation (H.1260/ S.786), which would give all Massachusetts cities the ability to opt in to TOPA. Boston and Somerville, Massachusetts, are trying to get versions of TOPA passed through local home-rule petitions. A version of TOPA was also introduced on the federal level by Rep. Ilhan Omar, in her Emergency Rent and Mortgage Cancellation Act, which would give affordable housing developers the first right of purchase when a multi-family unit goes up for sale. Although it is unlikely that Omar’s bill will pass, the inclusion of this right in her federal bill represents widespread awareness that TOPA has the potential to help prevent another mass foreclosure crisis.
TOPA bills promote the transfer of property ownership into the hands of tenants and affordable housing developers by enabling tenants to exercise a first right of purchase. The process is outlined in various TOPA bills: landlords are required to give notice to tenants, and then allow a specified amount of time for tenants to express interest, make an offer, and secure funding.
[VIDEO: Tenants Facing Eviction Over Covid-19 Look to a 1970s Solution]
The first TOPA bill was enacted in Washington, D.C., in 1980 to give tenants at risk of eviction a pathway to ownership and control over their homes. A 2013 report from the D.C. Fiscal Policy Institute found that TOPA helped preserve nearly 1,400 units of affordable housing in the District between 2003 and 2013, at just a fraction of a cost of building new affordable units. TOPA and Washington, D.C.’s Housing Production Trust Fund have led to the creation of 4,400 limited-equity co-op units across 99 buildings. D.C. TOPA was successful in part because a funding source, the Housing Production Trust Fund, was created about 10 years after the law’s enactment. Advocates of current TOPA proposals are similarly calling for expanded funding streams to make the first right of purchase attainable for low-income tenants.
In recent years, cities and states around the country have worked on versions of the TOPA bill that build on the D.C. law. Advocates see TOPA as an answer to keep Wall Street out of their neighborhoods, and protect communities’ affordable housing stock, especially now, in light of pandemic-related housing insecurity.
TOPA in the Works
TOPA bills that have been, or will soon be introduced, bear marked similarities with one another, but also reflect policymakers’ diverging priorities. For instance, the East Bay Community Law Center, a drafter of the Berkeley bill that also provided legal research for the Oakland and New York proposals, studied what has worked with D.C.’s law, and what could be improved.
D.C.’s TOPA law does not have a permanent affordability requirement, meaning that tenants who collectively purchase a property through TOPA using private funds could resell that property at market-rate prices without resale caps. However, if tenants utilize public subsidies or subsidized loans offered by the Department of Housing and Community Development to purchase the property, affordability restrictions (resale caps or rent limits) are triggered. Although D.C. policymakers may have intended to allow for tenants to build equity, this aspect of their TOPA bill does not accomplish other policymakers’ goals of reusing public subsidies to preserve the units of affordable housing in perpetuity.
In light of this, the East Bay Community Law Center decided to mandate permanent affordability to any property that is acquired through TOPA, which would be accomplished through deed restriction. Their system would still allow for very modest equity-building while still preserving affordability longterm.
New York State Sen. Zellnor Myrie will soon introduce a proposal for a statewide TOPA bill. Advocates of the New York bill hope that many of the properties acquired by tenants through this program will be converted into limited-equity co-ops or affordable rentals with tenant oversight. “We are looking to TOPA as one necessary tool to stabilize neighborhoods, preserve affordable housing permanently and create shared equity through tenants taking collective control of their buildings,” says Akilah Browne of New Economy Project, one of the groups helping to shape the bill.
All of the new proposals will allow tenants to assign their right to purchase to a third party who could help with financing and oversight in the acquisition and renovation process. Third-party entities may be able to help tenants acquire funding for the purchase of their property, having familiarity with available tax exemptions and credits, and with existing relationships with local banks and credit unions to leverage in securing mortgage loans.
In Berkeley, Oakland, and other jurisdictions, the third-party organizations must be vetted by the city, which will maintain a list of qualified affordable housing organizations. In order to qualify, organizations must show commitment to permanent affordability and democratic residential control. The D.C. TOPA bill leaves it up to tenants whether they assign their rights to a for-profit or nonprofit developer, and even gives the option to sell their rights to the highest bidder, which has been criticized as a practice that runs counter to the intent of the bill. Berkeley TOPA drafters learned from the D.C. bill, and chose to exclude tenants’ option to sell their rights.
Some questions up for debate among TOPA policymakers are how to ensure that a landlord accepts a good-faith offer made by tenants or affordable housing developers, and is not purposely refusing their offer in order to accept a higher bid.
Another major point where the various bills differ is whether TOPA rights are triggered for all rentals put up on the market by a landlord, or just multi-family units. D.C.’s TOPA law previously applied to single-family accommodations (SFAs), but in 2019 the law was amended to exclude certain SFAs. Berkeley’s proposed bill will apply to all rental properties in the city, including SFAs, with a number of exceptions and safeguards against the undesireable consequences of including SFAs in D.C. Oakland’s proposed bill, authored by Council Member Nikki Fortunato Bas and supported by the Oakland Opportunity Coalition, offers an exemption to transfers within families upon the death of a family member, as would Berkeley.
The timeframe given to tenants to exercise their right to purchase also varies by jurisdiction, and depends on the type of property (i.e., single-family home, duplex, multi-unit building). Each bill specifies deadlines for tenants to submit a statement of interest, make an offer, and then to secure financing and close on the property. In general, the time allotted increases for properties with five or more units, since mortgages for collectively owned properties are typically difficult to obtain, and tenants of multi-family units of five or more must organize into a tenant association to execute their right if one is not already in place.
Berkeley’s bill is opposed by a coalition called STOP TOPA (Taking Our Property Away), which claims the bill is an attack on private property. STOP TOPA represents real estate lobbyists and landlord lobbying groups. One of the main organizers for the Berkeley STOP TOPA contingent is from Bridge Association of Realtors.
In response to the opposition group circulating incendiary information about the proposal, supporters created their own campaign, Yes2TOPA. This group’s website includes justifications for the bill, including a statistic gathered from an Urban Displacement Project study that in all of Berkeley’s low-income tracts, households are either at risk of displacement, undergoing displacement, or experiencing advanced gentrification.
Outlook for the Future
Mayor Jesse Arreguín of Berkeley strongly supports the TOPA bill, which was proposed only weeks before California executed its shelter-in-place order. The COVID-19 crisis diverted the city’s attention to emergency responses, but now that the initial shock of the pandemic is subsiding, coalitions are beginning to revive momentum with community partners and electeds. “We’re hopeful about the outlook,” says Hewot Shankute of the East Bay Community Law Center.
David Tisel, project manager at Somerville Community Corporation (SCC) in Massachusetts, is likewise optimistic about the passage of TOPA bills in Boston and Somerville. Tisel has been instrumental in petitioning the Massachusetts state legislature to grant a home-rule petition to allow Somerville to pass TOPA. Boston housing advocates have done the same. Both jurisdictions are pursuing state-enabling legislation, which would allow any city or town in Massachusetts to pass a version of the bill. “I think TOPA has an even greater chance of passing in this environment of pandemic-related housing insecurity,” Tisel states. “We don’t want another housing crisis like what happened in 2008, and we need measures like TOPA to prevent that from happening.”
Each jurisdiction’s iteration of TOPA has differing prospects for passage, and falls along varying timelines. According to a spokesperson from Housing Justice for All, a leader in the New York State push for TOPA, it’s not yet clear whether NY TOPA will be introduced in the special summer session of 2020 or at the start of the new session in January 2021.
The Berkeley bill went to the The Land Use, Housing & Economic Development Committee in early March, but hasn’t been visited publicly again since COVID.
The Somerville city council unanimously passed a local Home Rule Petition with the mayor’s approval in December 2019. The Home Rule Petition was assigned to the House’s Joint Committee on Housing where it received a favorable report in late May, but there are still many more hurdles to go through before passage of a statewide Massachusetts or local TOPA bills.
If we want to solve the homeless crisis, we have to give people affordable housing (that they control) before homelessness. TOPA contributes to this goal.
Some features of the Massachusetts bills:
They include a right of first offer by the tenants, but the actual “teeth” is the right of first refusal, i.e. tenants or their designee have right to match a bona fide third party offer..
The importance of the right of first offer ( which the landlord is not obliged to accept) is that it gives tenants adn tenant advocates notice that the property is in play and on the market.
The timeframes for teens to exercise their rights are tight…. perhaps too tight. The original bill provided a 30 day window for 51 percent of the tenants to exercise their rights through a tenant association. The Mass. House verson cut that to 15 days. Mass Senators amended the Senate version to restore the 30 day limit… but in the chaos of a rush to adjourn the Senate amendment was defeated.
As of late July the fate of the bills is uncertain .
There are pros and con’s to both ownership and tenant relationships with housing. While ownership is often tied to wealth generation, the responsibility for ownership cannot be underestimated. Programs are needed to support people’s and neighborhoods’ abilities to manage those responsibilities for taxes, repairs, and other costs on a long-term basis to best protect the occupants, owners, and stability of the neighborhood from foreclosure, tax sale, and gentrification.
The City of Minneapolis is also reviewing options for an Opportunity to Purchase policy through an assessment by LISC Twin Cities and the Center for Nonprofit Housing and Economic Development (CNHED) in the District of Columbia. The study will be presented to the City Council in September 2020. Renters and tenant advocate organizations have successfully advanced this work forward. Framing housing as a right has changed the dialogue.
What about historically discriminated black and brown property owners?
To many of us, this is just another way to take property away from poor people. And we’re not lobbiest…small mom and pop property owners (people that own a multi-family unit for themselves and their families) don’t need another gentrifying law that doesn’t help them or there families and creates even more legal burdens to people who have already had to navigate a poorly designed for fairness and equity process to not just purchase a home but one to keep the properties within their families.
There are MANY of these individuals that live in cities like Boston, New York and the SF Bay Area (Oakland and Berkeley). Many of these people held on to their properties for dear life, due to the ONSLAUGHT of discriminatory practices by not only the real estate industry but also the banking industry and other access to capital entities. Laws like this fuel gentrification because it gives the ability to people who CAN afford to purchase a property, the benefits over those that do not.
For anything like this to even be under consideration, a carve-out for those who have been victims of any marginalized groups MUST be protected.
There is no surprise that those who have multi-unit properties are ethnic minorities with large families (particularly Asian and Hispanic/Latino).
Since housing endures “no” discrimination, yet most foreclosures that occur in Alameda County impact poor minority property owners (you can do the research on that but it’s verified), carve-outs for ethnic minorities are slim to none.
You can’t give preferential treatment to minorities to preserve their opportunity to remain in their communities, yet you claim this ‘helps’ keep people in housing…It might, but it certainly ‘supercharges’ the ability to gentrify if you don’t protect those who fought so hard to obtain their properites.
When the 2020 Census (data isn’t out until 2022) are outward migrating from communities that have historically been redlined or segregated (Read Richard Rothstein’s The Color of Law), policies that don’t review the racial ethnicity or anything else that has been historically disenfranchise.
For those people who have managed and endured, even through discrimination and business practices that targeted them more than others (including the 2009 Housing Crisis, that in particular targeted black and brown people in the SF Bay Area….and I know because I’m one of them), these ‘laws’ designed to ‘help’ people really need to be examined closely and almost to the point of microscopically, because it all boils down to one thing…WHO CAN AFFORD TO PURCHASE PROPERTY? then it boils down the next rung..WHO HAS A JOB AND QUALIFIES FOR LOANS….there are lots of loopholes.
These cities first need to focus on the glut purchases of out-of-town speculators who purchased up the properties during the mass foreclosures, and who allowed them to do it.
The corruption in this area is such that minorities can be in a lose-lose situation. And this is something that as a minority, we will be watching very closely.
I am familiar with TOPA in Washington D.C. While the acronym is compelling as an organizing tool, it has been frought with problems since inception and has never fulfilled its promise. Who came up with TOPA? Who was its original author? TOPA appears to come from a very eurocentrc perspective as implementation doesn’t consider the owner’s rights to pass property to nontraditional households, extended family, or others in the owner’s circle. It gives preference to whatever tenants happen to live in an apartment that comes up for sale. The tenants would need to be sophisticated enough to buy via TOPA. I’m afraid those buyers will not be minority or working class folks. TOPA is a false promise to tenants.