The Mayor’s Office of Housing and Community Development (MOHCD) released program rules for the Community to Purchase Act (COPA) on September 3, 2019. The recently enacted COPA program (codified in Chapter 41B of the San Francisco Administrative Code) gives qualified nonprofit organizations the right of first offer, and/or the right of first refusal to purchase buildings with three or more residential units, or vacant land that could be developed into three or more units throughout San Francisco.

The newly released program rules provide clarity around several issues, including the transfer of interest in a building with multiple owners, whether unlawful residential units count under COPA, and whether a seller of a vacant lot must comply with COPA if a buyer would need to obtain a variance or conditional use approval to develop three units or more on the vacant lot.

Qualified Nonprofit Organizations

Qualified nonprofit organizations may exercise their rights under COPA as of September 3, 2019.  The rules regarding application requirements and certification to become a qualified nonprofit organization under COPA are essentially the same as those requirements spelled out in Chapter 41B. Qualified nonprofit organizations that have entered into a purchase agreement with a seller under COPA may assign the purchase agreement, but only to another qualified nonprofit organization.

In the event that a qualified nonprofit organization purchases a building under COPA, the building must be maintained as rent-restricted affordable housing in perpetuity, with the average of all rent and utilities paid by all residential tenants not exceeding 30%-80% of Area Median Income (AMI). Gross household income of any new tenants may not exceed 120% of AMI.

Seller’s Obligations, Pending Sales

In light of the program rules release, a seller that has executed a written and binding purchase and sale agreement for a building or vacant land with a purchaser that is not a qualified nonprofit prior to September 3, 2019 will not be required to comply with COPA. However, if the purchase and sale agreement is terminated and/or expires after September 3, 2019, the seller will be required to comply with COPA prior to offering the building for sale. Sellers that have offered or listed a building for sale, but have not executed a purchase or sale agreement prior to September 3, 2019, must comply with the right of first refusal requirements under COPA, but not the right of first offer.

Once a sale has occurred, all sellers are required to provide to MOHCD within 15 days of the sale, a signed declaration, under penalty of perjury, affirming that the sale substantially complied with the requirements under Chapter 41B.

Enforcement

MOHCD will publish a list of building/vacant land sale addresses online. Qualified nonprofit organizations may institute civil action against any seller who fails to comply with the COPA requirements.