The Community Opportunity to Purchase Act, or COPA, is once again up for consideration. This was first proposed nearly three years ago as part of an anti-displacement proposal from San Jose’s housing department. Last year, COPA was stalled from moving forward because it did not have the votes to pass. It’s back again with the new council.
So, what is COPA and why is it a bad policy? COPA would give qualified nonprofits an opportunity to make the first offer to buy residential properties before properties are put on the open market. In short, when a property owner wants to sell their property, they must provide notice to a predetermined group of qualified nonprofits.
The qualified nonprofits have the exclusive opportunity to make an offer for 15 days. Property owners can’t market their property to the public without the risk of hefty fines from the housing department. If a qualified nonprofit submits a letter of intent, it now has up to 25 days to perform due diligence and submit an offer. This policy, if passed, would give the nonprofit up to 120 days to secure financing and close.
There are many reasons why this is a bad policy. For one, it depresses property values by forcing owners to wait before they can put their property on the free and open market, which is exactly one of the goals of COPA. By restricting competition in the open market, it essentially allows these qualified nonprofits to skip the line and slide into first position while also artificially forcing down the property value. That in itself is bad, but it gets worse.
These qualified nonprofits would be handpicked by the housing department and some might already receive funding from the city, which seems to be a conflict of interest. There are also discussions about providing tax incentives to the nonprofits. So essentially a small group will receive government funding and have an incredible opportunity to grow their housing portfolio, all while potentially receiving tax breaks. This is way too much power to give a select group of corporate nonprofits.
San Francisco adopted COPA in 2019. This program has been difficult to administer and requires significant funding each year to maintain. It has not produced one new unit or made San Francisco a more affordable city. The stated goal was to preserve 1,000 units a year; only 234 units have been preserved since 2019. In addition, San Francisco’s initial investment for this program from 2019-20 was a whopping $37 million. Berkeley, East Palo Alto and Redwood City all explored COPA, but none of them chose to pursue it. It is difficult to comprehend why we are even considering this failed policy. Do we think we could adopt a similar program and somehow get different results?
The unintended consequences of COPA are significant, including actually causing rents to increase and limiting investment into future housing that we desperately need. A far better approach to addressing displacement is to consider funding housing vouchers for those that have hit a rough patch in life and need a hand up to stabilize their housing situation. Measure E funds are best used for building more housing, but I think providing housing vouchers can be implemented more quickly and will be far more effective and efficient in keeping more people housed as compared to COPA.
Think of all the staff resources and expenses that have been used in the last three years to bring COPA forward. Just last month, several councilmembers voted to deny residents in Districts 8 and 10 the opportunity to select their own representatives because the city could not afford a special election. How then, could we possibly afford COPA? What message are we sending the voters of San Jose if we restrict housing from a free and open market on the heels of taking the right away from the constituents of D8 and D10 to have a free and open election to determine who should represent them?
San José Spotlight columnist Neil Collins is CEO of the Santa Clara County Association of Realtors, a trade association representing more than 6,000 real estate professionals in Santa Clara County and surrounding areas. His column appears every fourth Thursday of the month. Contact Neil at [email protected] or follow @neilvcollins on Twitter.
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