In a growing number of cities across the United States, housing advocates are getting laws passed that give tenants the ability to purchase—either directly or through a nonprofit—their own apartments. Increasingly, these policies are emerging as a powerful anti-displacement strategy. But these policies are hard won, and not always easy to implement. Even in cities where tenants have established this ability in law, they often have to stave off efforts to dial back these legislative gains.
On June 20, Shelterforce and NPQ co-sponsored and co-moderated “How Policy Can Help Tenants Purchase Their Homes,” with a panel of four experts who have been reporting on, fighting for, and using these policies.
The moderators were NPQ economic justice senior editor Steve Dubb and Shelterforce editor in chief Miriam Axel-Lute. The panelists were:
- Roshan Abraham, a journalist who has written widely on housing issues both for Next City and Shelterforce. He is based in Queens, New York City.
- José García, associate director of preservation at the Mission Economic Development Agency (MEDA) in San Francisco.
- Tram Hoang, a senior associate at PolicyLink, where she focuses on housing policy work. She led a successful rent stabilization campaign in St. Paul, Minnesota, in 2021.
- Elin Zurbrigg, co-executive director of Mi Casa, an affordable housing development nonprofit focused on facilitating tenant opportunity to purchase, based in Washington, D.C.
Editor’s note: This transcript has been lightly edited.
Miriam Axel-Lute: We’re here today to discuss a type of policy that’s generally known as opportunity to purchase laws. These policies put tenants or in some cases, vetted nonprofits acting on their behalf, first in line to buy a building when it goes up for sale. You’ll hear the terms TOPA and COPA, which are the acronyms. They stand for the Tenant Opportunity to Purchase Act and the Community Opportunity to Purchase Act, and that’s how these policies are frequently referred to.
Tenants exercising this right might form a co-op, they might partner with a nonprofit to manage their building and keep it affordable. In some cases, if they don’t want to buy, they might negotiate other benefits. Opportunity to purchase can be a really powerful tool to prevent displacement and increase community control, and level the playing field between tenants and powerful real estate players. It can also be a potential step toward racial equity, as a recent report from LISC [Local Initiatives Support Corporation] pointed out. But it’s also a complicated process that’s only been enacted in a handful of places, and so learning from those places is really key in order to do it well in more locations.
Our panelists today are going to give us some perspective on the promise, division, the wins, and the challenges of helping tenants buy their buildings.
Tram Hoang: I am a senior associate on the housing team at PolicyLink, a national research and advocacy organization that’s focused on advancing racial and economic equity for the 100 million who live in poverty. Within that, our housing team focuses on a variety of housing issues, ranging from fair housing to tenant protections, and social housing to reparative approaches to achieving housing and land justice.
I’m especially excited to talk about TOPA and COPA policies for a few reasons that you’ll hear about. I believe they’re central to our team’s work to shift control of land and housing away from speculative and extractive systems. One of the ways I do that is through co-hosting a national TOPA/COPA network with my partners at the New Economy Project. This is a space that’s dedicated to organizers, housing advocates, and community members who are participating in active TOPA and COPA campaigns.
I’ve also created some resources about TOPA and COPA policies that are available on the PolicyLink website, [including a] map of all of the TOPA/COPA campaigns taking place across the country, as well as policies that have been passed. I think this is a helpful tool because we often think of TOPA/COPA as a [San Francisco/D.C.] thing, but really, the momentum is building, we’re seeing campaigns across the country. I’m sure there are campaigns I have yet to learn about because the energy continues to grow.
The only repeal is one in Baltimore, where it was repealed to be replaced with a stronger ordinance, which has already happened. That is a good sign.
Our tools around TOPA/COPA [are] a good way to generally learn about what it takes to pass a policy, what it takes to implement it well, and the ongoing work that’s needed to maintain TOPA/COPA as a sustainable housing tool.
Roshan Abraham: I am a freelance journalist. I predominantly write about housing policy for Next City. We co-publish articles with Shelterforce, and I’ve freelanced all over the place on top of that.
I’ve written a lot about innovative, tenant-centered policies that preserve affordability, that work for preserving affordability of which TOPA is one of the primary ones. It’s something that is getting more and more attention among tenant activists, just as a way to gain additional leverage in terms of their relationships to their landlords, and for the ability to obviously, potentially purchase their homes, their apartments, but I think as we’ll talk about later, that outcome, while ideal, is often rare.
TOPA’s not just something as a principle that exists in the housing world. I don’t know how many states or cities have worker ownership analogues of TOPA, but I know that there are opportunities to purchase companies, to turn them into worker-owned co-ops. I’m hearing a lot more about that as well, and I know people who are trying to push that forward as well, and are also looking to TOPA and trying to find good examples of how these types of policies can work in different sectors of the economy.
Elin Zurbrigg: I’m co-executive director of Mi Casa Inc. I’ve been involved in nonprofit affordable housing and community development for more than 25 years. I’m originally from Chicago, but I prefer the Mid-Atlantic winters, and I’m now hailing from Washington, D.C.
I want to talk for a minute about D.C. TOPA and then talk about Mi Casa’s work because … TOPA is integral to the affordable housing work that we do. The D.C. TOPA law is one of the oldest in the country. It was formulated in 1980. It came out of the Civil Rights Movement and the home rule movement of D.C., very much connected to resident power, racial equity, economic equity. It was focused mainly on the conversion of the use, and sale, and transfer of rental housing to tenant ownership and tenants accessing the first right of refusal and the right to purchase their buildings and preserve them as affordable housing in many shapes and forms.
Mi Casa as an organization is driven by a vision of housing equity and a vision of housing as a human right, where everyone has access to quality, affordable housing, and diverse, vibrant communities. We do this through facilitating, advocating, and providing affordable housing for low-income communities. Our focus has been promoting equitable, thriving, and diverse neighborhoods in the greater D.C. area with an emphasis on non-displacement.
We started in the ’90s, more than 30 years ago, when D.C. was a really different city, taking the boards off of vacant houses and neighborhoods that had seen decades of disinvestment. As we’ve grown over time, with more and more focus on multifamily development from single-family development, the city has also changed. Like many cities in America, it’s become very unaffordable, one of the most rapidly gentrifying cities with great disparities in incomes and a severe shortage of affordable housing.
How we pivoted was we provided more work with technical assistance and training to low-income tenant groups to exercise their first right to purchase under D.C.’s TOPA Act. … A lot of limited equity co-ops have been developed, more than 4,000 units, since TOPA’s inception. Mi Casa, in one way, shape, or form has been involved in developing about a third of them.
We really have had an imprint throughout the city in facilitating tenant ownership through TOPA. We also have evolved to do more affordable rental housing that way because tenants can also assign their rights to purchase to a developer. What’s key for us there is the essential agreement with the residents that promises them better living conditions, affordable housing long-term, and the ability to remain in their neighborhoods and benefit from the resurgence and the redevelopment of their neighborhoods.
The majority of the households we serve are low-income renters in D.C., are majority BIPOC, and below 30 percent and 50 percent of the area median income. We have bilingual staff. We work with a lot of recent immigrants and long-term Black Washingtonians to ensure that they can remain in their neighborhoods as their neighborhoods change.
José Garcia: I’m the associate director of preservation here at Mission Economic Development Agency, also known as MEDA, in San Francisco, California. At MEDA, we envision generations of Latinos, choosing where to go home, thriving economically, succeeding in learning opportunities, and leading policy and social change to a more equitable society.
MEDA has actually been providing services to the community since 1973, but we established our community real estate team in 2014 in response [to the] displacements of our families. In the early 2000s, we lost approximately 25 percent of our Latino population in the Mission District. Since 2014, we’ve been able to produce or preserve—which is new construction acquisitions, rehabs—approximately 1,300 units and another 900 in the pipeline. For preservation numbers, we’ve been able to acquire 36 buildings, totaling to approximately 300 units. Thanks to the COPA legislation passed here in San Francisco in 2019, out of those 36, 14 buildings were COPA buildings.
Axel-Lute: How do these local policies work to help tenants buy apartment buildings from landlords and collectively own their property, or with COPA involving the nonprofits in that process? How does having this right of first refusal really increase tenant power?
Zurbrigg: First and foremost, it gives tenants negotiating power. It gives them a seat at the table. The private sector is not going to give them that seat without the law. Through that ability to sit at the table, they’re able to negotiate better outcomes for themselves. That might mean preserving their affordable housing. It might be improving quality of the housing. It sometimes could mean a cash payout that enables them to move to another place. Those are pretty infrequent in D.C., but what we found—and there is a great study that the Coalition for Nonprofit Housing & Economic Development in D.C. put out on TOPA outcomes—is that in more than half of the cases, the residents who exercise their rights to purchase were able to negotiate better outcomes for themselves, whether it was affordability or improved conditions for their buildings.
Some residents do actually purchase their buildings, and so that is a conduit to get residents and renters to become owners of their buildings, forming cooperatives or condominiums. More commonly, in D.C. at least, residents will negotiate better terms with a buyer. Through having that seat at the table, they’re able to have the voice and legal support to really put in writing what those improvements are going to be, assuring that they will be able to stay in their homes and to have affordable housing.
Garcia: Yes, so much of that here in San Francisco. We were losing a lot of folks being displaced or evicted because all these [buildings] were being sold off the market, or sellers weren’t willing to sell to us because of our financing timelines. We’ve been struggling doing anything less than 120 days. Just to put it in numbers again, here in San Francisco, in just this year, and we’re halfway through it, we’ve received 271 COPA notices in San Francisco. If it wasn’t for this policy, we would have lost a lot more of these opportunities to keep people housed.
Hoang: Negotiation power for tenants is huge, and I also think an element of TOPA/COPA is time. The main thing that these policies do, whether TOPA/COPA or advanced notice of sale, they give tenants time. Time is crucial in the real estate market, [which] moves quickly and heavily favors access to capital, which generally favors multifamily buyers over current tenants. I think the time also gives tenants the power to negotiate and actually influence what happens to the home, for which they’ve been paying the mortgage and making the landlord’s financial gain possible. It means they have the agency and choice to decide what happens to them. It can mean buying the property with their neighbors, like most have said.
It can also mean, which is equally important, negotiating the terms of sale because not everyone will want to or must have a goal of ownership, but we should all have agency and choice, whether they are able to maintain affordability in their building, get long overdue repairs, extend move-out dates to allow for a smoother transition. All those things are needs that tenants have deemed necessary for them to maintain housing stability, whether that’s in the current building or elsewhere. Those are really important things that people can win when TOPA/COPA policies exist.
Dubb: How do laws like the Tenant Opportunity to Purchase Act or Community Opportunity to Purchase Act work in practice? What are the tripwires in terms of implementation, and maybe some strategies to address those?
Garcia: Here at MEDA, we’re a place-based organization, so we focus specifically in the Mission District. That’s how we initially filter all these COPA notices coming through. We do expand outside of the Mission District, if a district supervisor, or tenant organization, or tenants themselves, come to MEDA and say, “Hey, we want to stay here, and we want you to purchase our property.”
I’ll get into the financing later, the small sites program financing, but how it typically works for us: We get the notice, we have five days to express interest. The initial notice just gives you the address, the unit count, and the rents. That’s all you get at the beginning. Sometimes you get the asking price, but sometimes, they just give you the basic minimum. In those five days, you have to submit interest. If you submit interest, that buys you another 25 days to submit an offer … which is not enough. Unless you’ve been doing this for a while, it’s not enough because you need to get your financing straight, you need to make sure that the tenants are on board and you get all their incomes, their leases. You need all of this as soon as possible.
In the 25 days, you have to submit an offer. If you don’t meet that timeline, do you lose the opportunity to purchase that property? No, but if you do submit an offer before that 25th day, you get the right of first refusal. What does that mean in context? Imagine the building’s up for $2 million and your offer is $1.5 million, close in 120 days. They say, “No, we want something different.” They can go to the private market. They can figure out whatever deal they want to figure out, but they have to come back to us and say, “Hey, I have an offer for $2 million, close in 120 days.” If we could meet those terms, we have the opportunity to purchase and proceed with that purchase of that building. That’s typically how the process works.
Dubb: Do you get special notice or is it public notice?
Garcia: Here in San Francisco, actually, you have to register with the city of San Francisco as a qualified nonprofit. Initially in 2019, there were five qualified nonprofits. To date, last time I checked, there were 26 qualified nonprofits. Not all of them are active because they’re just getting into affordable housing and housing development, but you have to register with the city. You get approved for three years, and then they have to mail that notice to everyone on that list. That is usually the process they have to take.
Abraham: We should clarify for everyone, when we say negotiating power, specifically what we’re referring to is the fact that not only do tenants and/or nonprofit organizations get the right to purchase, they can then sell that right to purchase to third parties, which often could be the incoming landlord, which could be a private market landlord, or it could be a nonprofit landlord, or it could be a nonprofit that’s helping you to facilitate some kind of community ownership.
The difference between TOPA and COPA, for anyone in the audience who isn’t sure … is basically that community opportunity to purchase usually gives that opportunity to purchase to qualified nonprofits or community organizations. Whereas TOPA requires there to be a tenant organization created within the building that is going up for sale, and there has to be some kind of consensus among those tenants.
A city or state, in theory, could have both of those. I think in New York, there’s an attempt to get a citywide TOPA and then a statewide COPA law. I’m sure there are ways in which those two policies would interact that I can’t speak to right now. I think that in some way, they could probably complement each other, especially since if you’re a tenant and your tenant association has the opportunity to purchase, you can sell that to a nonprofit essentially, and they can buy the building and help to facilitate community ownership, which is one path that people have gone to.
Zurbrigg: In D.C., since the TOPA law has been in existence for so long, it’s part of the fabric of development. That is actually why it’s so integral to our work because we can utilize it. We see it as a really viable tool for creating and preserving affordable housing. For market rate developers, they’re also very aware of TOPA. I’m not saying everyone loves TOPA. José, I think your timeline in San Francisco is far, far shorter than the TOPA timeline in D.C., which is still a difficult timeline to meet sometimes because you are working with resident groups and convening people after hours who are volunteering their time, while they’re trying to feed their children at the same time or coming home from work.
One of the key pieces in D.C. is we have a strong infrastructure of nonprofit housing counselors that do get notices, and they go out to buildings and do a lot of the footwork … to reach out to residents and ensure that residents know what their rights are. Even though TOPA is widely known by developers, a lot of residents don’t actually know that they have the right to purchase, so there is a knowledge curve that needs to be built very quickly. Then tenants have 45 days to register their intent to purchase and another 120 days to submit an offer, which is extendable based on financing.
I would say that in D.C., we’ve also closed some of the transfer loopholes. There have been some ways that developers have gone around TOPA and some of those loopholes have been closed. The biggest one now that’s on our hit list is advocating for a cooling-off period during that first 45 days. Because even though tenant associations do have 45 days to register their intent to purchase, there are still some— let’s say, not our favorite—developers who go out into the buildings at night over the weekends and talk to the tenants and offer usually some money or compensation to sign away their rights within that period of time.
We think it’s essential that residents have that period of time to be able to speak, or at least that it’s required that they meet with housing counselors at least once to understand what their rights are and have the full range of choices put before them before they lose them.
Axel-Lute: One of the key questions in all of this is, how do tenants move from having this abstract right to purchase to actually the ability to purchase? This gets into the money side of it. Because a group of usually low-income tenants don’t just have the ability to purchase a building sitting ready to go. How do we make this go from abstract to practical?
Garcia: That is the million-dollar question that we always get asked: “How can you acquire these properties, especially if you’re buying some properties from the 1900s with a lot of deferred maintenance, because we’re under rent control here in San Francisco?” Thankfully, before COPA was passed, the city of San Francisco passed this program called Small Sites Program. That is the only way that we’ve been able to achieve the purchase and keep folks housed in our 36 buildings.
How that works [is] the Small Sites Program actually provides a soft loan. It’s a residual receipt loan. It ranges anywhere from $350,000 per unit to $500,000 per unit max, if you’re adding an additional dwelling unit. If you’re converting another two garage spaces into a unit, they can give you that subsidy up to $500,000. That is the only way that we can do it.
How it’s typically done here in San Francisco under Small Sites Program: You have all your rents, you have all your operating expenses, so you size your hard debt, your first mortgage, as much as you can afford. Let’s say you can only afford $5 million and the total development cost for that property is $10 million. Typically, if you fall under the guidelines, depending on the unit mix, so for example, studios is $350,000 or $375,000, then it continues to grow. If you fit in that [Small Sites Program] margin, then that covers your gap.
OK, when do you have to pay that? It’s just a residual receipts loan, so the city allows you to [pay] your first mortgage, whatever your debt is, and at the end, once you’re done paying your first mortgage and all your operating expenses, if you have any cash flow from that, before you even pay that soft loan, they make sure that your reserves are done because this program actually not only gives you money to do all the rehab at acquisition, but also makes sure that all the capital improvements are incorporated in your replacement reserves for the next 20 years.
They want to make sure that your replacement reserves are properly funded. Then, if you have any more money after that, then you pay one-third of that back to the city of San Francisco. That’s under the Small Sites Program, [which] was established in 2013, 2014, because we were losing so many opportunities to keep our families in place. 2019, that’s when COPA legislation passed, and it’s been a roller coaster since then.
Zurbrigg: We have this amazing infrastructure of nonprofit on-the-ground housing counselors. We also have some—too few—excellent attorneys who work with and protect tenant rights. Getting those folks involved very early in the process enables residents to make sound decisions with all the information about what is available to them in terms of options, whether it is assigning their rights and negotiating terms with a third-party developer, whether it is direct purchase, or some other outcome.
Generally, it’s the housing counselors and the attorneys that will then bring in groups like Mi Casa, the development consultants that can analyze the feasibility of a direct purchase or forming a co-op and analyze the resident incomes, what’s needed to preserve affordability at affordable rent levels for the residents, and then what subsidy sources or financing sources are needed, and basically creating a development plan. If it looks like a feasible plan, the residents can then move forward with direct purchase. If the plan doesn’t look as feasible, they might opt to assign their rights to a third-party developer and negotiate that way. Then again, that falls back on the technical assistance of housing counselors and attorneys.
D.C. used to have basically a one-stop shop for tenant opportunity to purchase financing. It was housed in our Department of Housing and Community Development. It was called the First Right to Purchase program. It’s still on the books, but it has not been utilized for many years. There’s some pros and cons about a program like that. What it did was enable a gateway to tenants who are interested in direct purchase, to access permanent acquisition financing at very low cost. A cash flow loan payable only on what you have available out of cash flow at the end of the year, with very favorable terms and a long-term affordability covenant. It used to be 10 or 20 years, and now, it’s 40 or 50 years, along with the public financing.
That support would also make available, in the previous model, renovation financing that would allow residents who purchase their buildings to fully renovate them, and stabilize the conditions of the property, and improve them, and have a long-term viable asset they could preserve over many years as affordable housing.
The model has changed in recent years. The D.C. Department of Housing and Community Development has outsourced the acquisition fund to a bridge loan fund, which is a preservation loan fund. That is available for tenant opportunity to purchase projects, whether it’s a developer purchasing or the residents purchasing and forming a limited equity co-op, the most common model here in D.C. There are challenges with it, in that projects will have to carry the interest for a period of some years.
Built into the loans are usually some costs for critical repairs to stabilize the building conditions, and then also provide predevelopment funding that will allow them to hire architects in their development team and then apply for takeout and permanent financing. Gap financing is always needed. Public financing is always needed in affordable housing projects. Particularly now, as housing development gets more and more expensive, and resident incomes are stagnant or not increasing at such a rapid rate. What people can afford to pay and the total development costs, it’s really staggering how big the gap is growing and how much subsidy is needed. Sometimes 80 percent or 90 percent of subsidy is needed to ensure affordability in tenant purchase projects.
When the projects that have bridge loans have to compete with other developers in a competitive bid process, they often don’t score well. The challenge that we see with tenant opportunity to purchase is to bring back this path, if you will, for direct tenant purchase or a viable means of getting these projects to permanent acquisition financing. That will assure residents that if they go that path, that they will actually have the funding sources that they need to be able to purchase and stabilize their buildings.
Garcia: [With] the Small Sites Program, the issue we ran into that is that city of San Francisco also only had so much capacity, and we were seeing all these properties coming on the market and losing these properties. Together with the Mayor’s Office of Housing and Community Development here at San Francisco, and a CDFI [community development financial institution] known as San Francisco Housing Accelerator Fund, what it allowed us to do is acquire faster. With San Francisco Housing Accelerator Fund, you would be able to close on the property in 60 to 90 days compared to the 120. It also provides you over 100 percent loan to value because you’re acquiring the property, you’re getting a construction loan with San Francisco Housing Accelerator Fund, so they give you– I’ve worked on a deal with San Francisco Housing Accelerator Fund at 160 loan to value. I haven’t found it anywhere else, so that San Francisco Housing Accelerator Fund has been key.
How they work is they work alongside with the city, [which] provides them a commitment letter saying, “Hey, once you acquire it, stabilize this property, rehab it, stabilize it, we’ll come in with permanent financing.” That process allows us to preserve a lot more housing faster and more efficiently.
Dubb: What are the sources of resistance to these policies? I know there are efforts to whittle away them by having exemptions in the law, all sorts of different tactics. It was mentioned about going door to door to get tenants to sign away rights. There’s obviously areas of resistance. How do housing advocates and tenants respond to these to protect those rights?
Hoang: This is a big topic that we discuss in our national network because we have campaigns across the country that are trying to advance these policies. The main source of resistance to TOPA and COPA policies, but really, any tenant protection policy, is the real estate lobby and their ideologies. With that, I really recommend reading a report that just came out from Americans for Financial Reform. It’s called Who is Behind the Curtain?
It breaks down the really powerful relationships across the real estate industry that reveal the chokehold that the lobby has in our housing policy efforts. I’ll say, the two main issues that the real estate lobby have with TOPA/COPA policies are generally who the buyer is and time. Those are the two things that TOPA and COPA try to impact and intervene in.
One thing I want to make clear is that TOPA and COPA do not impact the purchase price. There’s nothing in TOPA/COPA that says, “Oh, real estate owners have to sell the property at a lower price.” That’s a very common myth that we want to correct. The price of the building is not changed at all. The two elements that are changed are the buyer and time. If we consider time, sure, of course, the real estate lobby wants things to move as quickly as possible because time is what makes our policy interventions possible, and they want to speed up the process to ensure that their advantage of fast-moving capital is protected.
Now, changing buyers, where we have to dig a little bit deeper, because in any real estate transaction, expanding the pool of potential buyers is actually desired. More buyers, more competition, higher prices. That’s exactly what TOPA does, it actually expands the pool of buyers to tenants and COPA to preservation buyers. For some reason—I think we all have suspicions about why—the real estate lobby wants to prevent tenants from being potential buyers. This requires us to question very deeply held beliefs and assumptions about property ownership. Why is it that we think different people are worthy of housing stability or capable of controlling their housing futures? Why is the real estate industry so appalled with the idea of tenants who have been paying the mortgage, owning their homes?
We have to think about how housing and land exclusion are very racialized in nature, are sewn into the fabric of our institutions, of our policies, of our value systems.
In this fight, we are trying to allow renters who are disproportionately Black, indigenous, and people of color to collectively own property. We’re not just up against a billion-dollar lobby, we’re also working to shift paradigms of race and property ownership.
To the question of how people are responding, I think that tenants are very powerfully questioning those racist beliefs through a lot of narrative work and talking about the benefits of tenant ownership by not just talking about the benefits to tenants, but also sharing stories of the impact of collective ownership on entire communities. Because we know that everyone thrives when people stay stably housed in communities of their choice, and systems of collective care and land stewardship have been with us in our roots, with our ancestry, have been created and used for generations. We know how to take care of one another and interact with land in a way that isn’t just wealth extraction.
TOPA is an extension of that care. That’s the story that I think tenants and advocates are doing a really powerful job of telling.
Abraham: I agree with all that. I think that was a great assessment. I also think there is this broader, almost like disaster capitalism intervention that seems to happen. It happened during the pandemic. It happened after the 2008 crisis where any time there’s some downward trend in real estate prices, or there’s a lack of development, or there isn’t enough housing being produced, that’s used as an excuse to crack down on policies that really have nothing to do with any of those things. I think specifically in D.C., there have been successful attempts to whittle down TOPA in the past few years. There was an exemption for single-family homes I believe in 2018 or 2019.
No one I spoke to who had studied TOPA for years could figure out what the basis for that was. There wasn’t any data showing that TOPA had reduced the production of single-family homes, but there was an exemption anyway for single-family homes. There was also, after 2020, I think it was maybe last year, there was another exemption, specific for new development in the downtown area of D.C.
The exemption I think hasn’t necessarily played out yet because it’s for new development, but again, there wasn’t really any evidence that in downtown D.C. TOPA had been restricting any kind of development. Obviously, all across the country during the pandemic, downtown areas faced a lot of leases being canceled and companies not putting their employees there. There was just panic from a lot of elected officials. Very often, elected officials are quick to adopt the narrative of real estate developers and other business folks who want to sell them a quick fix without any kind of data to support that.
I think those are the big forces, and I think that anyone who implements any kind of TOPA will probably face continued attempts to whittle away at it. I think that grabbing the narrative first and addressing it directly is probably the best approach, because very often, the legislators are not really reading the studies or reports or anything at all in some cases.
Dubb: Elin, you’re in D.C. so you have a perspective on this, I’m sure.
Zurbrigg: I think what Roshan is saying is right. We work across multisector coalitions with the Coalition for Nonprofit Housing and Economic Development and Housing Association of Nonprofit Developers and other working groups and coalitions. There is a general sense that the economy is particularly challenging. There’s a sense among nonprofit housing developers, as well as for-profit housing developers, that this cycle of intense income disparity is creating even more intense pressure on low-income households and affecting their ability to pay. At the same time, development costs are dramatically increasing.
You have budgets and funding with more limitations because loss of revenue … loss of office leases, and disinvestment, mainly aftereffects of the pandemic. One of the other effects of the pandemic is that TOPA basically froze during the pandemic … because it wasn’t safe for residents to convene public meetings, [or for] housing counselors to go out to buildings.
The effect it had was to dramatically stall maybe for two, three years some multi-family developments. I think there are developers that are still reeling from that process. But it really was a temporary process. I think it is important to look holistically at what are the true issues? What are the things that are actually standing in the way? Oftentimes, it’s not TOPA; oftentimes, it’s other factors.
Having that very open dialogue about how we can create policy solutions and funding solutions that aren’t just like, “We need to throw more subsidy at it. We need to increase the amount of subsidy.”
We need to get smart. We need to use different sources, we need to increase density. We need to think of other ways that we can spur affordable housing development without taking away this fundamental right, which has been so instrumental in preserving and producing affordable housing for very-low-income residents.
Axel-Lute: We’ve talked about the value to tenant power of these policies but let’s home in specifically on how they promote ongoing housing affordability.
Garcia: For COPA on the rental side, once you access any of these funds from the city of San Francisco, the property is de-restricted for the next 75 years. What does that mean for the tenants? … The program wants folks to be from 20 percent to 30 percent rent burdened; at acquisition, you want to make sure that they’re somewhere around that range. Then once that rent is set, the max increase is anywhere from 2 percent to 3.5 percent depending on the operating expenses but that is the max increase going forward.
That is a little bit over the average rent board increase here in San Francisco. That’s typically something that tenants are afraid when they see that 3.5 versus a 2.5 yearly increase. The program does offer to make sure that the tenants don’t ever have to pay any capital needs pass-throughs. We budget—as the nonprofit responsible to maintain their home—for the next 20 years of that loan. Any upkeeping, any structural, anything that happens in their building, they never get a pass-through and it’s covered through our loan with the city of San Francisco.
Zurbrigg: With tenant opportunity to purchase and the accompanied public financing that will keep buildings affordable, D.C. also utilizes deed restrictions. It’s been a 40- or 50-year affordability covenant. There are some folks that are promoting a longer term for that. The one-time investment in public financing can create essentially perpetual affordability. Some co-ops have also partnered with land trusts. There’s also a movement to combine tenant opportunity to purchase with publicly held land to layer on mechanisms and stewardship mechanisms that will ensure that the properties stay affordable for longer.
Also rental subsidy can be a part of the development. We do have a local rent subsidy that can be another layer that can ensure that whatever residents can afford to pay, that they’re always paying roughly 30 percent to 40 percent of their incomes. I think the key piece is just that the investment and the keeping it affordable over time in some ways decommodifies or makes the housing noncommodified so it’s not subject to the fluctuations of the market.
The housing costs are more predictable over time with small increases …10, 20, 30 years later you do see cooperatives that were developed under TOPA that have significantly lower carrying charges, for better or for worse for the operations of the building, but really provide a true affordability for the resident incomes living in the building. I think there’s some of the ways that TOPA really does ensure ongoing housing affordability.
Dubb: Tram, you’re working in a lot of different cities with the coalition. If you’re starting a new policy, what lessons are you drawing from places like San Francisco and D.C. to do it better, if you will?
Hoang: I’ll start with the promoting ongoing housing affordability. With that, I see TOPA and COPA as both an offensive and defensive housing strategy. The defense is more obvious. We think about how tenants use TOPA or COPA to defend themselves against displacement. I think the offensive strategy is something that we need to think about at a regional state and federal scale. [It’s] leveraging tenant and community ownership to actively combat the increased concentration of ownership of our local housing stock in the hands of private equity and corporate landlords.
I’m sure we’ve all seen the reports about how corporate landlords, who are often financed by private equity firms, are more likely to evict and displace tenants. They have more predatory property management practices, increase rent at a higher rate. Private equity now represents over half of the financial backing amongst the 35 largest owners of multifamily buildings. This is a huge problem. The direct acquisition of low rent buildings through laws like TOPA and COPA [is] one of the most direct tools that we have to push back against this trend. Especially since we know that low rent buildings and homes and disinvested neighborhoods are more likely targeted due to their potential rent growth.
As to the question about … talking to other cities and states about how they’re building out their policies, I put it under four categories in terms of building the right ecosystem for the policy because the policy must exist with infrastructure. I think the first bucket which has the most to do with policy is clear timelines for notice and acquisition. I think D.C. having the longer timeline obviously is— the longer the better. The more time the better to know how much time tenants have to organize, to make an offer, to get funding, all of that.
I think the second part of the ecosystem that’s very important is technical assistance across the spectrum. Not only are we talking about public education awareness so that tenants know what their rights are but we also need legal support so that they can navigate the real estate transaction and then funding for tenant organizing so that they can actually have the capacity to organize to buy their building or negotiate.
The third piece is financing. As folks have talked about, there’s pre-development financing, acquisition, rehab or construction, and then the long-term permanent financing, and all of that needs to be considered as you’re designing a policy and more importantly a program for implementation beyond that.
Then the last piece—I think we’re so concerned with saving the property in the first place that we often forget it—we need long-term support for building management and sustainability.
I think you have in New York City a great … cooperative housing organization [Urban Homesteading Assistance Board] that supports tenant co-ops in owning, managing their building. Whether that means figuring out property management duties or calculating shared equity or how do we finance capital improvements? Those are all big decisions that people should receive guidance on and that’s a big consideration for building out a policy and program.
Dubb: Elin, I think you’ve written a bit about this too. What are some lessons you would take from D.C. that you would advise other communities to take into consideration?
Zurbrigg: Tram, you hit the nail on the head in terms of the first line of defense, which is the housing counselors and the tenant organizers and technical assistance providers. In D.C. there is grant support for some organizations doing this work on the ground. The funding always comes up during the budget cycles and sometimes it shifts or it changes, but I think consistent funding of the work is really important, and also growing it to meet the growing need.
It’s always at risk and I think it’s been cut or at risk of being cut many times in recent history. We have a lot to learn from the TOPA law in D.C. after almost 45 years. There are so many lessons and … folks around the country who are developing TOPA and COPA laws have reached out to folks in D.C. to learn from our experience.
It’s far from perfect. It’s been utilized well over the years and … I’ve written about the key piece being coordination between government agencies and nonprofit and technical assistance providers on the timing of when buildings are becoming available for sale and on when funding would be available and what funding would be available. We have some good policies, we have a local housing production trust fund. We have community development finance institutions that are providing bridge loans and pre-development grants and loans. We have an infrastructure to support affordable housing development under TOPA and yet in recent years it’s been less effective than in the last, I would say, 5 to 10 years. There have been fewer tenant associations exercising the rights, fewer limited equity co-ops being formed, and it is a method of home ownership that’s accessible to very-low-income BIPOC renters, that has a strong future component of shaping the ownership stake in the city to be owned by the residents themselves.
How do we get to promoting more of this? I think it takes both changes in policy and then coordination between government agencies and nonprofits and the resident groups themselves as well as funding, and smart funding. We’re spending hundreds of thousands of dollars each project on bridge loan interest. Those loans get taken out by public sources that then are paying $500,000 to $1,000,000 more in total development costs of public financing.
If we could figure out an acquisition tool that doesn’t burden the project with that level of interest, whether it’s the first right to purchase loans that used to be a permanent soft loan payable based on available cash flow that then you can add private financing to it. You can add some additional public funds for building renovations, but just thinking about this smartly so that we can really use public dollars wisely and plan over the years based on when buildings become available. I think it really takes critical coordination and commitment to making sure that tenant opportunity to purchase will facilitate affordable housing development.
Axel-Lute: We’ve had a couple questions about the ways that tenants negotiate better terms and conditions with a nonqualified purchaser.
Zurbrigg: Mi Casa has negotiated with tenant associations to assign their rights to Mi Casa to preserve affordable rental housing. What that looked like was many meetings with the residents over time and with their attorney, with housing counselors, and essentially hearing from them what they valued, what was important to them. In general, the things that were important to them are … important to all of us: improved safety, quality of life, improved heating and cooling, improved building conditions, and affordability.
Then I would say first and foremost, all of the tenants that we meet with, the first thing that is of vital importance to them is, “I want to stay in my home. I want to stay in my neighborhood. This is where I work, my kids go to school. This is where I go to church. This is where I have family, I have friends. This is important to me. How can I stay here?”
In some cases, there isn’t an interest in forming a cooperative and people are clear about that; they just want to maintain their affordable rental housing. We will negotiate a development agreement with them that clearly spells out in writing what it is we are committing to, to the residents. Very specifically, who are the residents? How are they going to benefit? What the affordable rent levels will be because we’ve done assessment of resident incomes and we’ve set the affordable rent levels based on those incomes. In addition, we commit to improving the building conditions and to long term affordability. Those are some of the things that are spelled out in that agreement very explicitly. I think that’s key because residents can be assured that those things that are going to happen.
Dubb: How many families benefit? I know the number of TOPA residents in D.C. is certainly in the thousands after 40 years of policy but give a sense of scale also in San Francisco with COPA.
Garcia: I’ll actually tell a story of how it can change folks’ lives, [about] our initial two COPA deals. [When] we get a COPA notice, we reach out to the tenants because it’s a tenant-driven process. If tenants don’t want us to purchase their home, it’s all right, good luck. If some folks want to take the buyout … I’ve heard [of] buyouts here in San Francisco … anywhere from $40,000 to $60,000 for them to move out.)
A good story is, we got COPA notices. We found out a five-[member] family is living in a studio. Parents are living in the closet, kids are studying. During COVID, they’re living, studying, going to school, eating, doing everything at home in one studio. We were able to acquire the first two COPA properties. In one of the COPA properties, there was a vacancy of a three bedroom, which we were able to acquire, rehab, and able to relocate into another COPA property after the rehab was complete, for them to live a good quality of life.
Another [story] I can share that is very touching for me because it was actually one of my first projects here at MEDA is we were able to transfer through different acquisitions during the SF half phase. For example, an elder that was amputated, —he was actually pulling himself upstairs to go into his unit—we were able to transfer to another site that actually had an elevator.
Those are the stories that we’re able to do when we get to communicate with the tenants. If it wasn’t for those notices, we don’t even get an opportunity to call the tenants, [to say] how are you doing? Your property’s going for sale. Do you want to stay here? We can work with you. If it wasn’t for getting those notices, there’s probably a lot of the stories that we could have supported some of our community members.
Zurbrigg: I’ll just throw out a stat because I think it’s pretty impressive: over time, D.C. TOPA has enabled the development and preservation of more than 16,000 affordable housing units. The 99 limited equity co-ops, or more than 4,000 units of affordable limited equity cooperatives, in the district, the majority of those were formed under TOPA, but there’s so many amazing stories. One [was] the little engine that could… it was a really small project. We work on projects that get the notice of sale from 5 units to 99 units and up, but typically we’re working in most of D.C.’s naturally occurring affordable housing (or NOAH) [which] is 20- or 30-unit buildings.
These were townhomes in an area very close to the D.C. Housing Authority and residents who had public housing vouchers were living in them. Folks who had been living in them for many, many years, had raised their kids, and now grandmother was raising her grandkids in two of the houses. [And they were used to being told that they have to move, [and] once they’re told they have to move, they believe it. There were actually several times when they were packing up to move, thinking that they had to leave because they got the notice of sale, and a lawyer—I believe it was from Bread for the City—knocked on one of their doors.
They loved to tell this story. If it wasn’t for [Bread for the City] saying, “No, you don’t have to move. You have rights, you have options,” they wouldn’t have known that and they wouldn’t have exercised their rights to purchase. What they actually did was they worked with Mi Casa to form a limited equity co-op that was financed using local money, federal money, and then also enhanced Section 8 vouchers that gave them the income that they needed to operate the townhomes as a cooperative. Still in existence today. I think that’s reflective of a lot of these stories. There are many amazing stories about how the residents came together and were able to organize and form a cooperative through many impediments.
Ultimately, seeing it through and celebrating that they were able to not only preserve their affordable housing but really build a strong community and a strong association through the process and get to know their neighbors and get to feel a shared sense of both responsibility and values and importance of the work that they were doing together to preserve their homes.
Hoang: I have a follow-up question for Elin regarding negotiation. I’m wondering when, let’s say the building’s being sold, and the tenants want to negotiate but it’s not with a buyer like Mi Casa. It’s a private buyer, not a qualified nonprofit. What advice do you have for tenants who are in that position with a negotiation where you don’t have a values-aligned buyer who is going to sit down and give you a seat at the table? What is the hook, or how do tenants get those buyers to recognize their power in those situations?
Garcia: I can share a little bit. We don’t have much here at MEDA because we just don’t get an adviser providing any legal advice. We do have tenant organizations that we obviously partner and work with on many deals, or we just connect them to tenant rights organizations. … We connect them with those attorneys but we try to stay away from … any legal advice from our community real estate team.
Zurbrigg: I would echo that we work with very effective TOPA attorneys who are knowledgeable and can advise residents. One or two of them were responsible, basically for co-authoring the D.C. TOPA law. It’s those folks that we turn to in times when there needs to be clarity according to the law.
Axel-Lute: In your various programs, what is considered affordable? Is it defined? When we’re talking about keeping these properties affordable, what are we talking about?
Garcia: That’s a tough question. When I share the numbers here in San Francisco, it’s kind of sad. The program actually is trying to reach an 80 percent average AMI affordability in the long run. We set their rents. Even if they’re paying 30 percent AMI, ideally, we set up the performance for ideally at some point, the building to reach 80 percent AMI. Eighty percent AMI in San Francisco for a family of four is $119,000 a year. But right now, in the Mission District, what we’re seeing is anywhere from 30 to 60 percent AMI.
Sixty percent here in San Francisco for a family of four is $90,000. That’s what the program is trying to achieve, 80 percent AMI in the long run. But we keep their rents at where they’re at. If they’re at least 20 percent rent burdened, they stay where they’re at, and a maximum of 3.5 percent increase going forward. That’s for COPA in San Francisco and Small Sites Program in San Francisco.
Zurbrigg: When we look at developing affordable housing under TOPA, we start with income surveys of residents to identify who’s living in the building and what is affordable to them. That’s not what everyone does. We do that because it is important to identify what people can afford to pay and what will be sustainable for them and to ensure the success for them and for housing stability in the future. We do find that, on average, the buildings that we work with, the income levels in [some of the smaller] D.C. rental buildings, are somewhere between 30 percent and 50 percent of area median income.
The D.C. region has a high median income. That’s more than $150,000. What that means for a family of 4 is below 30 percent is about 45, give or take—the new guidelines might have just come out. Fifty percent for a family of 4 is about $76,000.
Garcia: I just wanted to add the rent amounts that we see here. For that 80 percent that I was speaking about for a family of 4—hopefully, they’re living in a 2-bedroom—without utilities [it’s] approximately $2,600 a month. While the $90,000 that I shared might seem doable, when you’re comparing to the rent amounts, it’s very tough.
Dubb: [Would] you speak to the broader funding and programmatic infrastructure needed beyond opportunity to purchase? How do you think of this in the larger frame of housing justice?
Hoang: One of the things we can try to do is, you mentioned homeownership, but achieving homeownership is much easier— relatively, of course, there are weaknesses in our homeownership structure as well—than tenant and collective ownership. I actually think that one of the largest industries we can take lessons from is the homeownership industry, even with its flaws, and I’ll tell you why.
When I was a renter and became lucky enough to be in a position to buy a home, I was very nervous about the process. Then I met with a Realtor and I felt like I was on a lazy river to homeownership. You have realtors, you have renters, you have title officers, escrow officers.
Every piece is in place to guide you towards owning your home. It can take weeks. At the same time, I was reading about an effort in Minneapolis, where tenants were trying to purchase their building from their slumlord, whose rental license had been revoked by the city. This was years in the making. In many ways, I compare … my and many people’s experience of the lazy river of homeownership … to tenant or cooperative ownership, which feels like whitewater rafting upstream.
Why haven’t we invested the resources, the millions of dollars, the decades in building an infrastructure for tenant or community ownership that compares to or equals the machine that we have created for homeownership?
Tram Hoang, PolicyLink
The question we have to ask ourselves is not why is it so hard for tenants to get their stuff together and figure out how to buy their building. It’s really why haven’t we invested the resources, the millions of dollars, the decades in building an infrastructure for tenant or community ownership that compares to or equals the machine that we have created for homeownership? Equally importantly, I think we have to ask why we see the failure to increase homeownership as a policy issue and a public responsibility, whereas the inability to increase tenant ownership is always the tenant issue. People just don’t know how to move through the process.
I hope that’s what this conversation starts to shift. How do we reframe and see our collective responsibility in building out the infrastructure? Oftentimes, in those four buckets that I described earlier—but really thinking about a big picture—what is the machine that needs to exist, the industry that must exist to support tenants moving through this system, just like we have to support prospective buyers into homeownership?
Zurbrigg: I think that’s exactly right. It’s something that, again, we have wonderful, amazing historic tools in D.C. and resources. We are far ahead, but we have had them in practice for longer time than many other jurisdictions and yet we don’t have a coordinated system to utilize tenant opportunity to purchase to ensure that residents can become homeowners or to ensure that those buildings will stay affordable. I think we’re close to getting there. As you said, it’s creating more of that infrastructure, investing more in that infrastructure, investing in all the tools that we know that work and coordinating those efforts, and making it a priority.
This idea of social housing [has] gained some traction and popularity in D.C. as well. Again, building on the foundation of limited-equity co-ops and tenant opportunity to purchase, which in and of themselves meet the definition of social housing, very tenant-led, very community-based development with strong voice led by the residents themselves and then deeply invested in affordable housing over time. That looks very much like the social housing model when you create a limited equity co-op or, let’s say, a limited equity co-op paired with a land trust or city-held land with long-term affordability requirements.
I think those are within reach. It’s just creating that pathway to achieving those goals more holistically and making it a reality for more very low-income renters who have gotten the short end of the benefit from reinvestment and redevelopment of our cities. It’s a question still unanswered: How do we get there?
Axel-Lute: Tram, can you talk about how some of the campaigns around the country that are formulating new policies to try to get them passed are addressing some of these questions that we’ve talked about recently—the affordability, the encouraging actual purchase by tenants and various things like that. What are the conversations like, as they’re deciding what the policies they’re pushing for look like?
Hoang: Some of the important pieces are designing the policy to fit the local market. I think that question of why [we are] exempting single-family homes is an important one because in a lot of markets, we are seeing corporate landlords actually target those single-family homes. [We’re] questioning how we can target our benefits to the most vulnerable populations or communities. That’s one conversation that’s happening. One of the biggest pieces of conversation in our campaigns is building out that infrastructure. What are ways that we can leverage state financing, bonds, city financing, even pathways of using federal funding for TOPA and COPA for acquisition, rehab, all of that.
It is really dependent on what local resources you have, what local financing tools you have. I also think that looking at low-income housing tax credits—[they’re like] the person in our family that is just there, we don’t necessarily like them, but we have to live with them—leveraging that tool because there are ways that we can impact qualified allocation plans, which are how state housing finance agencies decide where to allocate tax credits.
We can start to impact those scorecards and really think about [how to] tell the Minnesota Housing Finance Agency that when they’re figuring out how to allocate their tax credits, they actually prioritize deeper affordability, they prioritize nonprofit developers and prioritize buildings that will have a built-in right of first refusal tenant opportunity to purchase or community opportunity to purchase piece when the building is sold. I think that’s one pathway also that folks can be thinking about creatively.
Then the last thing I’ll say … is what is a model policy. I think that really depends on who you’re asking. You ask the real estate lobby, a model policy is no policy. If you ask me, it’s probably the one that has the longest on-ramp for tenant acquisition with the most funding. I think what we have to consider is that what has been won in the past is not necessarily what is possible and the best, because those policies that have been fought for have had to negotiate with a very powerful lobby that influences their legislators, which is not to say that they are great policies to have, but I think Elin and Jose would maybe agree that there are ways to make it stronger.
If they were talking to people who were starting from scratch, they would recommend specific elements of policy design that would be stronger than what they were able to win in their communities. What exists is not necessarily best practice because what we have won is what we’re able to win with all the odds against us.
Zurbrigg: How do we consider the way forward? I think that this is really our challenge right now. It’s a challenging economic time. It’s a challenging time economically for very low-income families. We still see many very low-income residents being displaced from neighborhoods and communities as a result of development, even when they do have opportunities to purchase.
How do we hone all of the policies and all of the well-intended policies like promoting Black homeownership, promoting tenant and community ownership, social housing that engage residents long term in the direction of their housing and their quality of life and ultimately ensure that we have more equitable communities? I think that there [is] some low-hanging fruit in terms of how we could change policy and change and better coordinate between the sectors. Then I think there are some more ideal visionary goals that we have as people who work in the society to promote equity and inclusion. That will take a lot of concerted effort.
Abraham: I think that TOPA is really crucial for providing agency to tenants at a time when most of the solutions that get promoted don’t really have anything to do with tenants. They’re sort of like not the main actors of this story when all we talk about is the importance of market-rate development. They’re really important for preserving affordability. I would also add that in D.C. according to the report that CNHED put out, the amount of units being purchased [has] precipitously declined. I don’t know if it was specifically because of the single-family carve-out, but around the time that that carve-out happened, I’m looking at stats went from an average of 1,469 units annually to 415 the next year. In 2020 it was 342. These are real issues that we have to grapple with.
Garcia: Hopefully, we continue learning from all our mistakes throughout this process but prioritize funding, funding, funding. No matter where we get with the policy, if we don’t get the funding that we need, we can’t do this work. Continue to advocate for funding.
Thank you.
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