City Hall board of Supervisors

Supervisor Fewer’s proposal aims to curb displacement and turn privately owned units into nonprofit affordable housing, but passing the law would just be the beginning of a long journey.

Last Wednesday’s meeting of the Board of Supervisors’ Budget and Finance Subcommittee heralded early victories for the Community Opportunity to Purchase Act (COPA), housing legislation sponsored principally by Supervisor Sandra Fewer, that promises new policy tools against displacement. But concerns about Constitutional property rights and unintended consequences for tenants remain.

Once passed, COPA will grant a number of nonprofit housing providers approved by the City a "first right to purchase," that is to say both a right of first offer and the right of first refusal, over any privately owned residential building containing three or more rental units, including those under construction, as well as vacant lots where such buildings could be erected, once they come up for sale.  

Ian Fregosi, Fewer’s legislative aide, noted that while it does include specific parcels, its primary purpose "is less about developing housing than about expanding on efforts such as the Small Sites Program (SSP) to larger income properties and further preserve existing affordable rental housing and prevent tenant displacement."

Fregosi cited the Planning Department's Housing Balance Report, which indicates that over the past 10 years, the number of new affordable housing units permitted and acquired is still eclipsed by the number of units that have been removed from protected status, such as through Ellis Act and Owner Move-In (OMI) evictions, as making that expansion necessary.

Proponents of the new law have compared it to Washington, D.C.'s Tenant Opportunity to Purchase Act (TOPA) policy, which gives tenants first right of refusal if the property they live in is put up for sale. The law has given DC one of the highest concentrations of limited equity tenant co-ops in the country, hence its reputation as a highly effective tool against displacement.

Those benefits are not without problems. Skeptics have argued that TOPA has long been open to abuse, and the program drew criticism from The Washington Post over potential loopholes and ambiguity. Last year, amendments were passed to address those criticisms.

"DC changed the law recently to exclude one-family unit situations. That corrected one problem. Another issue is that TOPA allows tenants to assign their rights to developers which in my view creates outcomes that are nonconforming with the purpose of the law," said Paul Hunt, a Washington DC attorney who has done significant work on TOPA cases. 

Critically, though, San Francisco's COPA has some major differences from Washington's TOPA.

Under COPA, it's not tenants who would be given the right to purchase, but the City itself, through nonprofit housing provider contractors. In this regard, it bears more resemblance to Washington’s District Opportunity to Purchase Act (DOPA), passed by Washington in 2008, and which only now, some 11 years later, is on the road to implementation.

Moreover, under TOPA, rent-controlled buildings that get purchased maintain that protection. Under San Francisco’s COPA, the property is transferred to a nonprofit working on behalf of the City. The units in an otherwise rent-controlled building would transition from the private rental market to the rules of a deed-restricted, Below Market Rate (BMR) non-profit rental property, where tenants are subject to means testing and charged 30% of their income in rent.

That may turn out to be a rude wake-up call for some tenants. Perhaps the most extreme example of this has been in the case of Midtown Park, a large legacy nonprofit rental complex operated directly by the City, where outrage over proposed resetting of rents after a long lapse in tenant income certification, among other issues, has resulted in an ongoing rent strike.

San Francisco's own Small Sites Program has also been subject to criticism. Rental property owners have been known to complain of instances where nonprofit organizers created “environments of ill will” between tenants and landlords, who ostensibly feel pressured to sell their property to the nonprofit. 

Questions over funding sources have delayed the full implementation of DOPA in Washington, D.C., but the situation may be different in San Francisco.

In San Francisco, that question has been at least partially answered by the bill’s proponents, and in part by current and projected surpluses in the State-mandated Educational Revenue Augmentation Fund (ERAF), which can go back toward City services. February recently saw a conflict between the Mayor's Office and the Board of Supervisors over how to spend the ERAF surplus, including over how much of the most recent surplus to allocate to the Small Sites Program, as well as the eventual decision to use part of it as bridge funding for teacher raises. 

Those concerns did not come to light at Wednesday's subcommittee meeting. The Subcommittee, consisting of Chair Fewer, along with Supervisors Rafael Mandelman and Catherine Stefani, reviewed and approved a number of new amendments to the law based upon feedback from the Planning Commission, as well as the Mayor’s Office of Housing and Community Development (MOHCD).

Those changes include some clarifications of purchase rights where an initial offer by a nonprofit has been rejected by the landlord, additional "just cause" eviction protections, as well as incentives in the form of partial transfer tax exemptions for sellers. Supervisor Stefani added her name as a sponsor to the bill, ostensibly ensuring unanimous passage by the full Board of Supervisors if and when it gets there.

Fewer’s legislation was lauded by several members of the nonprofit housing community during public comment. They see COPA as a singular opportunity, offering a leg up in purchasing at-risk properties in a stratospheric real estate market.

Jordan Davis, a former member of the city's Single Room Occupancy hotel task force, commented on how she was "sick and tired of SROs being flipped into tech dorms,” and, in a cinematic turn, described COPA as "the DeLorean that will take us to a future where we won't need rent control, because housing will be finally treated as a utility and not as a commodity." Bruce Wolfe, president of the SF Community Land Trust, called the bill “amazing,” and said that it would provide organizations like his with the tools to “provide the most impact to prevent displacement, especially for people with disabilities and enable people who are approaching senior age, to age in place.”

Meanwhile, Charley Goss, Government Affairs Manager for the San Francisco Apartment Association, ended public comment with negative input: “We believe this legislation is illegal and unconstitutional. It violates the rights of property owners and we ask that you reject it on that basis. In an interview, Goss later said that the San Francisco Apartment Association “will be exploring its legal options”—and that in any case, “the City should be spending money to build new affordable housing units, not shuffle ownership of existing ones.” 

That in itself is a prescient question. In February, the Potrero View reported on how Proposition K, the 2015 voter-approved measure to expedite the setting aside of surplus City land for affordable housing development, remained largely unimplemented.

After public comment ended, Supervisor Fewer responded indirectly to Goss’ concerns by reiterating the amendments: "if a nonprofit makes an offer that a property owner isn't satisfied with, they are free to reject it."

Supervisor Rafael Mandelman argued that it was “delusional to believe that market-based solutions are going to come and solve the affordable housing situation in our city in any reasonable time frame,” and noted that the legislation comes at a time where, ironically because of rising property tax assessments, the City can take advantage of future ERAF surpluses to enable its continuing implementation.

The COPA bill was continued to the next meeting of the Budget and Finance Subcommittee because of the new amendments. It has at least another week before it will be heard by the full Board of Supervisors.

(CORRECTION: The article describes Jordan Davis as a "former member" of the SRO Task Force. She is in fact a current member and was reappointed this month. We regret the error.)

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