The New York City Council has introduced a substantial amendment to the New York Community Opportunity to Purchase Act (“COPA”) under City Council Bill Intro 902-A. The amendment limits the scope of the bill while keeping the core component unchanged: qualified non-profit entities are entitled to a first opportunity to submit offers to buy certain residential property.
a) a vacant lot which can accommodate a multiple dwelling with four or more units, or
b) a four or more-unit building which is “distressed” or subject to affordability restrictions that have expired within the last two years or are set to expire within two years at the time of the sale of the building. It is possible this includes buildings in the 421a, 485g, 485x and Affordable NY programs.
Within the first year of the effective date of the bill, covered buildings include those with significant repair conditions involved in city enforcement programs, such as NYC Housing Preservation Development’s (“HPD”) alternative enforcement program, and those subject to a foreclosure action. After one year, the definition is expanded to include properties with at least one open hazardous or immediately hazardous violation with HPD, and those with unpaid charges to the NYC Department of Finance, Environmental Protection, or HPD of at least $1,500 per unit.
Owner-occupied buildings with 5 or fewer units, as well as judicial sales and sales pursuant to a bankruptcy proceeding are exempted from the bill.
The amendment also changes the timing restrictions on sale of covered properties. Owners would be required to provide written notice of intent to sell to HPD with detailed information about the property at least 5 days before taking any action that would result in the sale of the property, including soliciting offers to purchase the property. A qualified entity would have 45 days to submit a statement of interest in the property, then any entity that submitted a statement of interest would have an exclusive 90-day period to submit an offer to purchase. During this time, owners are not permitted to accept any offers from third parties.
An Owner is not required to accept an initial offer to purchase the property by a qualified entity. However, if an owner rejects an offer, the entity retains a right of first refusal over subsequent offers by third parties for a period of one year. During that time an owner must notify HPD and the qualified entity within 15 days of receiving an offer to purchase the property. The qualified entity would have 15 days to exercise its right to purchase the property at the identical price, terms, and conditions of the third-party offer.
Owners who fail to comply with any provision of the bill that results in the sale of a covered property would be subject to a civil penalty of at least 3% of the building’s purchase price and may face injunctive relief from the qualified entity.
There is currently no scheduled date for a vote to be held, but it could be passed as early as the end of this month. COPA is effective one year after the law is passed. It is likely there will be legal challenges by property owners if passed.
Please note, this version of COPA is a draft bill and is subject to change.
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Reach out to your BBG attorney of record or contact us here to discuss how this bill may apply to your specific situation.
Written by: Ryan D. Matthews, Associate, Administrative Law Department.
