New Bill Would Help California Tenants and Nonprofits Buy Rental Properties

California legislators are considering making it easier for tenants and mission-driven nonprofits to buy rental properties that go up for sale. It’s called the Tenant and Community Opportunity to Purchase Act, also known as TOPA or COPA.

San José Assemblymember Ash Kalra’s bill, AB 919, would give tenants the first right of refusal to buy their buildings. They could also transfer that right to an affordable housing group. While owners are free to take the highest price for their properties, tenants and nonprofits would get more time to bid.

San Francisco operates a similar program that applies only to buildings with three or more rental units. Since the ordinance went into effect in Sept. 2019, it’s already helped nonprofits preserve 15 buildings containing 230 permanently affordable apartments.

And, officials in Oakland and Berkeley have floated their own TOPA proposals. They're expected to debate those as early as this spring.

Having such a program is something Shannon Way said would have made all the difference.

Way rented in Oakland for 20 years, about half of that in a rent-controlled triplex on Baker Street.

“I found Oakland to be a very hopeful place,” she said. “In spite of the hard knocks that everybody has taken in the city and some of the terrible things that have happened, there's this spirit of resilience, especially on this block.”

In 2019, her landlady, 75-year-old Kathleen Vaughn, decided to sell the building. It, along with a few units she rents in her own home, has been her main source of income since she went on disability at the age of 43.

“I knew that if I sold it, I could pay off basically all my debt and have some money to invest and to support my elder years,” she said.

Way enlisted the Oakland Community Land Trust to buy it. If that happened, Way knew the building would remain affordable in perpetuity. Land trusts can buy a property, and then sell the building back to the tenants at an affordable price. By maintaining control of the land, the trust ensures any subsequent sales are similarly affordable.

Way also hoped the land trust could make repairs to the old building — the kind she said owners only interested in maximizing the return on their investment often defer.

The building was listed at $1.1 million, Way said, but it needed a number of repairs. So, the trust put in a bid for $925,000.

“Nonprofits move a little slower, but I mean, we still came in with a great offer,” she said.

Way said they were beat out without having a chance to counter the highest bid. But she was so determined to stay anyway, even under the new owner, that she turned down a $35,000 buyout.

“The market felt really crazy and intimidating,” said Way.

Ultimately, she found life under the new owner, Rony Joseph, stressful. She was paying less than market rate and felt he wanted her out — something he disputes. He admits turning one unit into an Airbnb for months until the city forced him to stop. Way said it all became too much; about a year ago, she left for Walnut Creek, doubling her daily commute to San Francisco.

Meanwhile, Joseph has already put the Oakland house back up for sale. His family owns and operates about 60 housing units in Concord, and he said he grew weary of managing improvements and tenants in an entirely new location.

“I think we have maybe $100,000 in profit after we walk away from this,” Joseph said of the anticipated sale. “But it's nothing outlandish.”

Both landlords, Vaughn and Joseph, said they have no problem with the spirit of the new bill.

“I think I would be pretty supportive of local residents wanting to keep their house and keep their neighborhood and be there,” Joseph said. “I think that’s a very positive thing.”

But he cautioned that the devil is in the details.

The bill would give tenants a month to make a first offer, and between one and four months to secure financing, depending on the size of the building. The landlord can reject the offer in favor of a better one, but a renter or qualified nonprofit would have 10 days to match it.

Joseph said that months-long waits might be OK for most sellers, but harder for those trying to do a simultaneous purchase, known as an exchange.

“The only thing is,” Joseph said, “I would need to know that they would be able to perform in the set amount of time.”

The bill is expected to get its first hearing later this month.