COPA Update: Compliance Not Required Until September 3, 2019

San Francisco’s Community Opportunity to Purchase Act (COPA) became effective earlier this month but the Mayor’s Office of Housing and Community Development (MOHCD) has clarified that sellers of multi-family residential rental properties and certain vacant lots in San Francisco will not be required to comply until September 3, 2019 (90 days after the effective date). That date is the deadline for MOHCD to release a formal implementation program, including a list of “Qualified Nonprofits” that have been granted certain rights of first offer and first refusal under COPA.

MOHCD has also confirmed that it will not require COPA compliance if a property owner has entered into a “binding contract for sale” prior to September 3, 2019. That term is not defined, but appears from the COPA legislation to include not only a binding purchase and sale agreement but possibly also other forms of contract, e.g., an option to purchase.

Although not addressed in the legislation, MOHCD has also provided guidance for property owners that list property subject to COPA for sale prior to September 3, 2019, but have not entered into a “binding contract for sale” prior to that date. Under that scenario, the yet-to-be-identified Qualified Nonprofits must be given a right of first refusal (ROFR), but not a right of first offer. Because the ROFR would be the seller’s first contact with “Qualified Nonprofits” they would presumably have 30 days (rather than five days) to respond; however, that wasn’t specified by MOHCD. The ROFR process is summarized in our March blog post and this graphic.

As reported in our May blog post, the San Francisco Apartment Association has stated that it believes the legislation is “illegal and unconstitutional,” and has indicated it plans to bring litigation against the City this year. We will be monitoring any legal developments surrounding the legislation.