City Council Eyes Nonprofit-First Home Sales; Brooklyn Owners Brace for a Six-Month Pause

Legislation granting nonprofits a right of first refusal in New York City property sales pledges affordable housing, but risks snags for sellers, buyers, and the city’s fiscal health.

When a property hits the market in New York City, time is typically money—a maxim threatened by a proposal that could add six months to the dance between buyers and sellers. At stake is the future of tens of thousands of buildings and the ambitions of lawmakers and advocates eager to tip the scales in favour of nonprofit ownership of housing. The City Council’s latest gambit, the Community Opportunity to Purchase Act (COPA), seeks to inject nonprofits into the front lines of property transactions, albeit with ripples that could spread throughout the city’s prickly real estate ecosystem.

The provisions, spelled out in Intro 902, are presented as straightforward: owners of residential buildings with three or more units must notify the Department of Housing Preservation and Development (HPD) and pre-approved “qualified entities”—avowedly nonprofit organisations—prior to putting their units on sale. These nonprofits are afforded the coveted right of first refusal: a chance to make the initial bid, and if bested, to match the prevailing offer. On its face, the intent is democratic—allowing groups such as the New York Community Land Initiative a fighting chance to preserve “at-risk” affordable housing, as Council Member Sandy Nurse, the bill’s sponsor, asserts.

Yet the mere act of pausing for nonprofit consideration portends lags of up to 180 days, according to critics, during which time property values may fluctuate and eager buyers must cool their heels. The HPD estimates the legislation would touch some 90,000 buildings citywide, with the annual sales of roughly 25,000 rental buildings potentially subject to the new regime. As Ann Korchak of the Small Property Owners of New York (SPONY) put it in recent testimony, “That’s a significant number of transactions that could be delayed, derailed, or devalued, harming both small property owners and the city’s fiscal health.”

The proposed law, patterned after versions in San Francisco and Washington, D.C., joins a swelling chorus of local policymaking that aims to use nonprofit stewards as bulwarks against galloping rents and displacement. Nonprofits typically prioritise long-term affordability, sheltering tenants from the predations of speculative investment—a goal both noble and, in New York, daunting. Affordable housing advocates reckon that such legislation may help shore up a vanishing stock: some 1 million apartments citywide are rent-regulated, but only a slim and shrinking sliver are insulated from the vagaries of the private market.

Small property owners, meanwhile, fear becoming casualties of good intentions. For mom-and-pop landlords—who, Korchak says, own the lion’s share of the city’s smaller, often rent-stabilised units—the spectre of transaction delays and possible price depression looms large. Not only could a six-month hold diminish the appeal of their assets, adverse timing might collide with repairs, debt service, or personal financial need. Real estate groups argue, not without cause, that constricting competition for sales could erode prices and, by extension, city property tax revenues—an effect bemoaned less by Wall Street titans than by the small proprietors who account for a chunky portion of the city’s residential stock.

Wider economic considerations are not lost on city officials. New York’s fiscal health depends in marathon part on the property market, delivering some $30 billion annually through property taxes—about one-third of the city budget. Should large numbers of buildings be sold to nonprofits, especially at suppressed prices, a theoretical risk emerges to the city’s bottom line; though in practice, the effects may be diluted by the sheer size and dynamism of the city’s real estate sector. The HPD would, of course, bear a new administrative burden, tasked with overseeing compliance, maintaining lists of qualified nonprofits, and potentially refereeing disputes—a recipe for additional delays.

Lessons from other cities suggest that nonprofit purchase rights are no magic bullet

Elsewhere, similar laws show the limits as well as the promise of such interventions. In Washington, D.C., the Tenant Opportunity to Purchase Act has empowered some tenant groups to preserve affordability, yet prompt critiques about slowing the market and entangling deals in bureaucracy. San Francisco’s implementation produced more modest uptake than advocates hoped, with transactions rarely outnumbering the frustrations of buyers and sellers alike. Both cases hint at a truth New Yorkers already suspect: well-intended roadblocks, when poorly calibrated, can gum up the gears without generating much affordable housing at all.

Proponents of COPA reckon that New York’s acute housing squeeze justifies extraordinary measures—a perspective not lacking in urgency. However, the city’s formidable market complexity and the liquidity needs of small landlords mean that delays and transaction costs must be watched with hawk-like scrutiny. If nonprofits are unable to marshal financing within the assigned window, a 180-day pause could amount to little besides lost time and opportunity for all parties.

The act also raises the perennial problem of scale. The nonprofit sector, while dynamic, is still a light heavyweight in a ring crowded with private capital and large operators. Granting a first right of refusal does not endow these groups with the deep pockets required to snap up properties en masse. Financing challenges—bank requirements, regulatory mazes, and time constraints—could mean that only the sturdiest organizations regularly benefit, calling into question the breadth of the reform’s impact.

That said, COPA’s supporters are right to point out that laissez-faire orthodoxy has failed to preserve affordability for lower-income New Yorkers. The proposed legislation is a nudge toward pluralistic property ownership and a hedge against the city’s penchant for boiling-point gentrification. We take a sceptical—though not dismissive—view. Rather than offering a panacea, COPA would be one tool among many: a gadget best wielded judiciously, lest it become another source of frustration in the city’s sprawling regulatory arsenal.

As so often in New York, the devil will be in the execution. Policymakers would be wise to define tight deadlines, streamline notifications, and set realistic expectations for all parties involved. Robust monitoring of market effects will be crucial. Housing in the city occasionally requires boldness; it always requires a cool head and a wary eye on unintended consequences.

Legislation designed to “level the playing field” may well do so—or it may leave both buyers and sellers tripping over fresh obstacles. Vigilance, not wishful thinking, is the order of the day if New York wishes to expand affordable housing without grinding its storied property market to a halt. ■