Another amendment to the Community Opportunity to Purchase Act (“COPA”) has been introduced, and a vote is expected by the City Council next week. The controversial bill grants qualified non-profit entities the right to make a first offer to purchase certain real property, coupled with a subsequent right of first refusal.
Two aspects are particularly troubling. First, forcing a property owner to enter into a contract and transfer its property to a specific entity raises significant legal issues that, we expect, will result in protracted litigation. Second, after setting forth the qualifications for participation in COPA, the bill permits NYC Housing Preservation & Development (“HPD”) to establish “any other criteria” by which a building could be made subject to COPA. This sort of open ended power creates an avenue for unfettered expansion of buildings subjected to COPA.
Under the proposed amendment, the list of buildings no longer includes those with recently expired affordability requirements, but would continue to apply to buildings with affordability restrictions set to expire within two years. Buildings with “affordability requirements” is defined and limited to buildings with income-based occupancy restrictions subject to a regulatory agreement with HPD. The bill would additionally no longer apply to vacant lots or to properties with unpaid municipal charges.
Changes also include a reduction in the amount of time by which a qualified entity must make an offer to purchase a property. After an Owner notifies HPD of its intent to sell a covered property, a qualified entity will have 25 days to submit a notice of interest and thereafter 80 days to submit a formal offer to purchase the property.
The current draft of the bill keeps the right of first refusal for qualified entities. While an owner is not obligated to accept the initial offer from a qualified entity, if an offer is rejected, the entity retains the right to purchase the property at the identical price, terms, and conditions of any offer received by the owner within one year of the rejection.
In the event of non-compliance resulting in a sale, a qualified entity may commence a civil action against an owner and be awarded an unspecified amount of “civil penalties”. Previously the bill had listed penalties at a minimum of 3% of the purchase price of the building. Once again, this creates an open-ended quality to this bill.
Exemptions have been expanded to transfers of real property between family members and certain transfers of corporate interests where the owner remains the same.
For a full review of the proposed amendments to the bill, and to discuss applicability to your property, please contact your BBG attorney.
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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.