Did Real Estate Reduce COPA to Insignificance?

The looming Community Opportunity to Purchase Act has been stressing out the real estate industry for years. But is the final version now awaiting Mayor Zohran Mamdani’s signature really that bad?

Or did the industry succeed in shrinking COPA down to virtual irrelevance, like it did with Good Cause Eviction?

From a political perspective, the bill serves its purpose: virtue-signaling. Mamdani and City Council progressives can say that after years of failed attempts to pass such a measure, they have given tenants and nonprofits a real chance to take over buildings neglected by landlords.

Regardless of whether that’s true, it’s a talking point that Mamdani will add to his speeches and videos. His fans won’t read a single sentence of the bill, let alone digest its 5,200 words.

These are the same people who, in some cases, called their landlords to say the rent increases in renewal notices for their free-market units must be a mistake because Mamdani froze rents.

The Real Estate Board of New York can call the outcome a win because the COPA timeline was reduced to 145 days and its universe of buildings was narrowed to about 3,000. By and large, these properties are not owned by REBNY members. Given that some version of COPA was going to pass during Mamdani’s first year, the damage was limited.

Two kinds of buildings will have to give city-approved buyers time to make an offer before they are sold: distressed properties and those with 100 or fewer units and an affordability agreement (not 421a or 485x, but the kind you get with Article XI). “Distressed” is defined five different ways by the bill, and any one of them puts a building on the COPA list.

One risk for the industry is that the COPA universe could grow. “What we’ve come up with is a viable program that over time could expand as we see how people utilize it,” said its City Council sponsor, Sandy Nurse.

Time will tell if the bill’s passage was a foot in the door, but it will be many years before any viable effort is made to pass a new version.

However, tenants and activists could expand the COPA list on their own by running up violation counts with 311 calls. It’s no secret that a building’s violation count doesn’t necessarily reflect its actual condition. Tenants can create and report a violation, then deny access to their apartment so it cannot be cleared. COPA provides another incentive for tenants to weaponize the violation process.

What if Cea Weaver, who runs the Mayor’s Office of Tenant Protection and called A&E Real Estate’s Douglas Eisenberg a “slumlord” in the New York Times, asked her friends at DSA and tenant-organizing groups to go door-knocking in Eisenberg’s buildings? She would love to get them on the COPA list.

Would Housing Preservation and Development Commissioner Dina Levy — a former tenant organizer — stop her? I would think Deputy Mayor Leila Bozorg would, but keep in mind that her boss, the mayor, infiltrated an A&E building for a press conference in his first week in office.

In any case, nothing is stopping activist groups from acting on their own.

Even if tenants failed to push the average daily count of hazardous violations above COPA’s threshold of three per unit, just the attempt alone would cause a landlord innumerable headaches.

These are worst-case scenarios, but stranger things have happened in the world of tenant activism. The best-case scenario is that owners planning to sell will try to get their violation counts down to escape COPA.

The law gives owners a reason not to enter into affordability agreements with HPD, because doing so puts a building on the COPA list, making it harder to sell. For that and other unintended consequences, stay tuned.

Most likely, COPA will do little or nothing to increase sales to nonprofits of distressed buildings or those with regulatory agreements. Mission-oriented groups are struggling to maintain the buildings they already own, for the same reasons that for-profit buildings are in distress. Why would they buy more?

The few nonprofits in a position to do so have been able to make offers this whole time. COPA doesn’t improve the difficult economics of buying and operating distressed buildings. It just adds a layer of bureaucracy.