New NYC Legislation Aims to Aid Nonprofits but May Stall Real Estate Sales

The New York City Council is deliberating a new piece of legislation aimed at enhancing nonprofit access to residential and commercial real estate. Known as the Community Opportunity to Purchase Act, or COPA, this bill could unintentionally complicate and delay real estate transactions, raising concerns among industry stakeholders.

If passed, COPA would mandate that owners of buildings with three or more residential units notify the Department of Housing Preservation and Development (HPD) and a list of “qualified entities” when their properties are slated for sale. This provision would grant nonprofits the first right of refusal to purchase these residential properties. While the intention is to expand affordable housing options, many in the real estate sector warn that the proposal could lead to increased costs and significant delays in the closing process, potentially extending it by as much as 180 days.

Advocates for affordable housing, including the New York Community Land Initiative, argue that the legislation is modeled after successful policies in cities like Washington, D.C. and San Francisco. Council Member Sandy Nurse, the bill’s lead sponsor and representative of parts of Brooklyn, stated that COPA would “level the playing field” for nonprofits seeking to preserve at-risk affordable housing.

Conversely, many small property owners express concern that the bill could introduce bureaucratic hurdles that might add months to the selling process. Ann Korchak, board president of Small Property Owners of NY (SPONY), said that the legislation could slow transactions, reduce competition among buyers, and ultimately depress property values. Korchak emphasized that the proposed waiting period could freeze thousands of transactions, creating uncertainty for sellers, especially those under financial strain.

According to Korchak, “It’s going to devalue the buildings. It’s not just the owners. It’s everyone involved, the transactional attorneys, title insurance companies, appraisers, insurance, brokers, and banks.” Such delays could worsen financial situations for owners, who must continue to manage their tax obligations during potential transaction freezes.

The HPD estimates approximately 90,000 buildings citywide could be impacted, including around 25,000 rental buildings sold annually. Korchak pointed out that this could harm both small property owners and the city’s financial health, noting that SPONY members collectively manage 5,700 housing units.

While supporters of COPA believe it would facilitate community-led housing initiatives, critics argue it complicates an already intricate market. The Hudson Gateway Association of Realtors has warned that the proposal could slow the housing market and limit fair transactions, ultimately harming homeowners across New York City.

Legal perspectives also highlight potential complications. Holland & Knight, a law firm with substantial real estate expertise, noted that the bill’s implementation might deter prospective buyers. Francis Korzekwinski, Senior Executive Vice President at Flushing Bank, added that the regulation could hinder transactions by requiring potential buyers to navigate an extended process without guaranteed commitments.

Despite these concerns, housing advocates maintain that nonprofit community purchases have a proven track record in enhancing affordability. The East New York Community Land Trust recently facilitated a successful acquisition of a neglected property, demonstrating the potential benefits of community-led initiatives. Board Member Brianna Soleyn stated, “Through COPA, the city can support acquisitions like these.”

As deliberations continue, it remains to be seen whether the New York City Council will strike a balance between supporting nonprofit housing initiatives and addressing the valid concerns raised by property owners. The ultimate impact of COPA on the New York real estate landscape is yet unclear, but the implications of such legislation could resonate throughout the city’s housing market.