COPA is another attempt of the City of San Francisco to regulate the free market and prevent units from being converted from rental to owner occupied use.
It requires anyone selling a 3+ unit building to offer it for sale prior to marketing to a list of city approve non-profits related to affordable housing. If anyone receives an offer on a 3+ unit building without first offering it for sale to the non-profits, they have to give the non-profits a right of first refusal for a specified period of time. It will cause delay in the marketing and sale of this type of property. It will also take away the seller’s choice of who they sell to.
Some ways in which I see COPA as beneficial:
- It will allow a select group of housing oriented non-profit entitles to build an inventory of housing stock to do their good works.
- It will allow these non-profits to acquire properties where developers might have mass evictions planned and avert the loss of housing for the residents.
Some ways in which I COPA as detrimental:
- It will cause delay in the marketing and sale of 3+ unit buildings. I believe it will de-value them in that the target buyer for most of them is not developers. It is long term investors in a 1031 exchange, which have strict time limits. People in a 1031 exchange have only 45 days to identify a property they wish to acquire. If 30 days of this might be used up waiting to see if a non-profit will snatch the property from the investor using a right of first refusal, then it will discourage long-term investment in our rental housing stock.
- It will prevent a seller from determining who they sell their property too. For example, if I wanted to sell a building I own to a client, my best friend or even to my sister, it would potentially prevent me from doing this.
While the beneficial effects are certainly worthy goals, I feel that those who conceived it have failed to understand the implications of their plans and that the negative effects constitute significant burdens that property owners should not be asked to bear. I have heard that SFAR and SF Apartment Association are going to sue to alter or eliminate this law. I have not received any confirmation of this yet or been informed where I can send money to help, which I am willing to do. If you feel that you are adversely affected by this law, please let me know and I will try to connect you with someone who might be able to help.
COPA was originally slated to go into effect on June 2, 2019 after being voted into existence sometime in the spring of 2019. But, as often happens, a policy was conceived and created without those being responsible for implementation having time to get ready. The responsible entity, the Mayor’s Office of Housing, has decided to delay implementation until at least September 3, 2019.
You can get more details here: Link to SFMOH FAQ about COPA (that enough acronyms for you? 🙂 !!!)
You can get more details and see SFAR’s new advisory regarding the issue here: Link to SFAR COPA information