Tag: real estate

A hotly debated housing bill that would give nonprofits first dibs on property purchases — vetoed by former Mayor Eric Adams hours before he left office — is likely to get a new chance to pass under the Mamdani administration. Its sponsor is already anticipating lawsuits attempting to stop it. 

The Community Opportunity to Purchase Act would keep housing in the hands of the community and curb landlords selling to big property groups, say advocates and bill sponsor Council Member Sandy Nurse. 

It does so, Nurse said, by giving qualified groups like community land trusts the right of first refusal on distressed residential buildings with four or more units. The nonprofits have 25 days to submit a statement of interest, then 80 days to make an official offer on the property before other buyers can take a shot at it.

Since the city began considering COPA five years ago, it’s faced sharp criticism from the real estate industry and Republican council members who say it would open the city up to legal challenges. Critics argue the bill violates private property rights, a landlord’s right to freedom of contract and the Constitution’s takings clause.

Nurse said she’d been told by the city’s Law Department her legislation was legally defensible before the council passed it with a 31-10 vote in December. 

However, the city’s Law Department later reached out to Nurse to raise legal red flags — doing so days before she was set to bring COPA back to the floor in an attempt to override Adams’ last-minute veto. Nurse called the move “extremely frustrating” and an example of the “chaotic nature and disorganization” of the Adams administration.

Now, Nurse said, she and her team are working with the Law Department and “seeking to propose some new language to address the concerns.” She declined to share what those concerns were, as discussions were still ongoing.

“The Law Department told us the bill was defensible, but they wanted to make it even stronger … because of the amount of attention on the bill and because the real estate industry spent so much time trying to oppose the legislation,” Nurse said. “We want to make sure that it is as strong as possible in anticipating somebody wanting to sue the council over the legislation.”

The council member said she had “every intention to pass this legislation,” and was working as quickly as possible to reintroduce it.  

Mayor Zohran Mamdani, who supported COPA on the campaign trail, said he’d work with the council to ensure it passes. 

His office told amNewYork Law the act would give tenants “a real opportunity to shape the future of their homes.”

“Our administration looks forward to working closely with Council Member Nurse to reintroduce and pass the legislation,” a spokesperson for Mamdani said in a statement.  

The future of COPA

City Council Speaker Julie Menin brought up the COPA legal advising mishap when she spoke earlier this month at the confirmation hearing for Steve Banks as head of the Law Department. 

Menin said the failure demonstrated that the council needs proactive legal opinions on bills.  

“It put the council in a very difficult situation where, weeks after the bill passes, we are hearing red flags from the Law Department,” Menin told Banks. “That cannot happen again.”

Banks promised the speaker nothing similar would happen under his leadership, adding that he had already spoken with Nurse about the bill and that they had “talked about ways to try to move forward” with the legislation. When asked for more details after the hearing, the Law Department said it couldn’t comment on privileged communications. 

Menin, who abstained from voting on COPA last year, didn’t respond to questions from amNewYork Law regarding the nature of the red flags and whether she’d support the bill upon reintroduction.

Some real estate attorneys aren’t convinced that just a few changes would prevent the bill from legal challenges. 

Sherwin Belkin, a founding partner of real estate firm Belkin, Burden & Goldman, said the entire concept of the bill is problematic. 

“I think the notion of the state deciding who a property owner can sell its property to raises significant legal and constitutional questions regarding private property and contract rights,” he said.

“The property owner may feel that [another] party, not the nonprofit, has greater economic stability, will be a better partner to align itself with on sale … This is restricting that,” Belkin continued. “This is saying that’s not really for the seller to determine, but in fact, that’s very much part of private property rights and contractual rights — to be able to determine the stability and feasibility of the party with whom you’re about to enter into a contract.”

Elena Rodriguez, a staff attorney for the New Economy Project, which has advocated for COPA, shot down arguments that the bill would violate private property or contract rights. She emphasized the bill only applies when an owner is voluntarily selling a building, and said landlords are free to turn down a nonprofit’s offer and sell to someone else — they just have to give the nonprofit the chance to make the first offer.  

If a landlord does receive an offer from another buyer after they reject a nonprofit’s, they must offer the community group a chance to match it, and then sell to the group if it does. If no nonprofits express interest within the initial 25-day window, a property owner is automatically exempt from granting them the right of first refusal.   

“Courts have repeatedly upheld regulations that govern the process of a voluntary sale, and similar laws in San Francisco and elsewhere have taken effect without being struck down,” Rodriguez said. 

She added that COPA would only operate prospectively, meaning it wouldn’t interfere with any property actively under contract if passed, and it doesn’t regulate a building’s sale price.  

Market concerns 

Critics of COPA have also raised concerns that the law would slow down property sales, thus potentially driving down prices and the pool of would-be buyers.

That could create an argument that COPA violates the Constitution’s takings clause, which prevents government overreach into private property, because the procedural hurdles installed by the government could hurt property owners’ return on investment. But even some real estate attorneys say that might be a stretch. 

Belkin said the constitutional claim is significantly weaker than the property rights path. 

“That argument, I think, is a little more difficult, because you have to demonstrate that there has been an economic injury caused by the bill,” Belkin said. “It would be more speculative at this early time to be able to demonstrate that …but the argument would be that, by so limiting the pool of prospective purchasers, the purchase price will be negatively impacted.”

He and other attorneys said a potential fix might be to reduce the timeframes for nonprofits to make their offers, but Nurse said that wouldn’t be happening. The windows are already shorter than she initially wanted them to be, and it’s necessary to give nonprofits enough time to properly consider making an offer and to gather the necessary funds.

“The real estate industry … wants unfettered access to any potential property. They don’t want to be subject to any interventions that, personally, we think would help address the housing crisis,” Nurse said. “This legislation is meant to create a small window of opportunity for our trusted, mission-driven affordable housing providers to take these properties, purchase them, do light repairs and rehabilitation if needed, and provide safe, affordable housing that New Yorkers can live in.” 

“It’s not a guarantee, it’s just an opportunity,” Nurse continued. “It’s a small window of time, and once that window is closed, the private sector can continue to move forward with their mission, which is to make as much money as possible.”

COPA is expected to come up for a vote within this legislative session and will need only a simple majority vote to be sent to Mamdani’s desk.