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Social Housing and Opportunity to Purchase Acts
For almost a decade, the Poverty & Race Research Action Council (PRRAC) has worked to promote social housing as a necessary solution to the crises of rental housing unaffordability, homelessness, and racialized inequality in the United States. Social housing is housing that is permanently and deeply affordable, permanently removed from the for-profit market, and owned and controlled by public, non-profit, or community entities, or the tenants themselves.
Tenant or community opportunity purchase acts, often referred to as TOPA or COPA, can be a vehicle for transitioning existing homes to social ownership. A TOPA policy gives tenants the first opportunity to purchase their buildings when landlords want to sell. The first TOPA policy was adopted by the District of Columbia in 1978. D.C.’s TOPA has since resulted in the preservation of thousands of units of affordable housing over the decades, with many held in limited-equity cooperatives, an archetypal form of social housing. With COPA, depending on the specific law, local government, qualified nonprofits, or both have the same type of right of first refusal. San Francisco has a notable COPA law that is starting to bear fruit.
By providing leverage at a time when the risk of displacement is at its highest due to the likely inclination of private market purchasers to maximize rents, these laws not only strengthen the social housing pipeline, they help foster long-term integration in gentrifying neighborhoods. When applied to manufactured home parks, the policies can also protect a rare source of affordable housing in rural and exurban communities.
Opportunity to Purchase Acts Withstand Legal Challenges
Notwithstanding specious arguments to the contrary, the U.S. Constitution does not impair the authority of states and localities to adopt opportunity to purchase acts. D.C.’s TOPA has been on the books for nearly half a century and has withstood legal attacks from property owners, including under the Takings Clause of the Fifth Amendment of the U.S. Constitution. Likewise, the Massachusetts Supreme Judicial Court has upheld that state’s law providing manufactured home park residents with a right of first refusal to purchase their parks in the face of a similar challenge. Although the Washington Supreme Court once came to the opposite conclusion, it subsequently determined that it had applied the wrong test when doing so, thereby reducing the persuasiveness of its earlier opinion.
These results should not be surprising. The Takings Clause framework that most readily applies to regulations like TOPA or COPA and that courts have applied to a litany of other progressive housing policies – such as rent stabilization, eviction moratoria, and inclusionary zoning – is that supplied by the Supreme Court’s decision in Penn Central Transportation Co. v. New York City. That case dictates that courts must evaluate these kinds of regulations through a nuanced, fact-specific inquiry that focused principally on whether a regulation has interfered with a property owner’s reasonable, investment-backed expectations. This is a standard that affords states and localities the latitude that they need to craft effective policy interventions that serve the public interest, and courts seldom invalidate regulations after applying this test, even when the changed policies would reduce a property’s value by more than half. Because TOPA and COPA policies require the purchaser who is exercising a right of first refusal to match the price that the private market would bear, any reduction in property value would be much less than that indeed.
Since the Supreme Court decided Cedar Point Nursery v. Hassid in 2021, a new argument for why regulations like TOPA and COPA violate the Takings Clause has emerged, but it is similarly without merit. In Cedar Point Nursery, the Court invalidated – in an admittedly unfortunate decision – a California statute that required farm owners to allow labor organizers to access their properties in order to speak with workers, holding that the challenged law impaired the owners’ “right to exclude,” which was posited as a fundamental component of property rights. Landlords have picked up on the argument that regulation that constrains the exercise of a component of an owner’s property rights could constitute a Taking, but those arguments have failed more than they have succeeded, in large part because landlords invite tenants onto their properties unlike farm operators who invite farm workers but not labor organizers. And the Supreme Court has declined to review lower court decisions that upheld housing-related regulations in the face of attempts to extend the logic of Cedar Point Nursery to a new context.
For purposes of TOPA and COPA, it is also worth noting that the attempt to bootstrap Cedar Point Nursery would entail elevating the “right to alienate” to the privileged level of the “right to exclude,” which is a move not yet countenanced in the courts. Moreover, TOPA and COPA still allow property owners to sell at their preferred price. Elevating not only the right to sell, but the right to choose to whom to sell, to a privileged constitutional status would be a significant change in underlying doctrine and one with potential implications for civil rights laws that even a conservative Supreme Court would not want to invite.
PRRAC’s Strategic Interventions
As an organization that provides needed strategic infrastructure to grassroots movement organizations and coalitions, including legal analysis, policy design, and research translation, PRRAC has worked to prevent purported legal critiques of TOPA and COPA that are not grounded in precedent from derailing grassroots campaigns. To do this, PRRAC draws from its team’s longstanding engagement in the defense of other progressive housing policies from Takings Clause challenges and supplements that knowledge base with legal research specific to challenges to TOPA, COPA, and other right of first refusal laws. PRRAC shares its expertise with grassroots organizers and the broader housing justice field by presenting on the subject to groups that are involved in active TOPA and COPA campaigns. Additionally, PRRAC intervenes as an external validator before key persuadable audiences, including through the participation of its Executive Director, Thomas Silverstein, at a continuing legal education event regarding COPA held at the New York City Bar Association. PRRAC remains ready, willing, and able to provide technical support to grassroots organizations around the country that are fighting for TOPA and COPA policies in their communities.
