Tenants will also suffer under the City Council’s poor plan to build apartments
The New York City Council aims to help nonprofits take over apartments, whether the owners want to sell them or not.
Last week, leftist Councilwoman Sandy Nurse re-introduced the Community Right to Buy Act, which would give city-chartered groups special treatment in the sale of certain apartment buildings – such as to force owners to sell them if they match competing private offerings.
Supporters say the bill will keep housing “affordable” and “focus on community control.”
But this crackdown on private property will stifle investment, damage inner-city housing – and fail to make housing affordable.
Late last year, an earlier version of COPA failed after Mayor Eric Adams voted it down on his last day in office.
The council could not remove him from office, but now it is biting at the apple again.
One significant problem with COPA is the heavy regulatory burden it can place on owners.
Anyone intending to sell a “covered property” would first have to notify both the city’s Department of Housing Preservation and Development and a list of nonprofit organizations approved by the department about the intended sale.
Parties will have 20 days to submit a “statement of interest” if they are considering a purchase. Those who have it will have another 70 days to make a donation.
If the nonprofit does not submit an offer, or if its offer is rejected, the owner can request confidential bids.
But the law would give nonprofits a “right of first refusal,” meaning they would have to be notified of all confidential offers received.
The owners will be forced to sell them if they match the terms made by another private buyer.
In other words, the city will force owners to contract with nonprofits of its choosing — a serious attack on property that my colleague Christian Browne noted may violate state law.
As written, COPA can sweep thousands of buildings across the city in its jurisdiction, including distressed buildings, foreclosed buildings, buildings with outstanding violations and those with expiring insolvency covenants.
Few buyers will want properties burdened by months of delays, high legal costs and uncertainty.
Even third party tenderers will think twice if the contract is not awarded under them.
A possible consequence of the bill: depressed property values. Shoddyer units. And employers suffer, respectively.
Owners who know their properties are undervalued will try to minimize their losses by putting less money into them.
Any improvement in “affordability” can come at the cost of quality; Buildings under COPA will be in worse shape than if left in private hands.
This is not just speculation. After decades on the books, Washington, DC, withdrew parts of its version of COPA.
Not only has the legislation introduced costly delays and uncertainty, it has failed to deliver the expected wave of tenant and nonprofit ownership.
It has created a weak housing market: delayed sales, less investment and old buildings left with owners wanting out.
In addition, many non-profit buyers will likely enter into conservation agreements with the city’s Department of Housing and Development to obtain property tax exemptions on their new properties.
When buildings stop paying property taxes, the city doesn’t cut money to make up the difference.
It’s up to the remaining taxpayers to pick up the slack – and fund the nonprofit sector and its jobs.
Even worse, non-profit organizations or “community-based organizations” are no better at providing housing.
Just because a building is owned by a non-profit organization doesn’t mean it doesn’t have to pay its bills. There is no escaping the harsh reality that rents need to cover costs.
The average operating income for a pre-1974 stable unit is just $512 a month – before paying off the mortgage. In the Bronx, it’s just $283.
More than 20% of the current portfolio of non-profit organizations does not even generate enough income to meet expenses.
But on the left side of the city, COPA offers an opportunity to strengthen the voter base by supporting activities in the housing sector of NGOs, which depend on the support of public companies.
It will do little to improve housing standards, and its ability to make apartments more affordable is questionable, at best.
If city leaders are serious about making housing more affordable and fostering long-term communities, they can be encouraging which is confidential investment – by making it easier to build new houses and reducing conflicts of control in and out of the housing market.
When regulation makes investment unattractive, society suffers: Just look at New York’s 50,000 vacant rental units, the result of laws that make it difficult to recoup costs to renovate apartments.
Whatever its intentions, COPA is a serious threat to private property from city leaders who have no intention of making housing better or more affordable.
Adam Lehodey is an investigative reporter at the Manhattan Institute’s City Journal.
