Since 2015, tenants rights groups, community law centers, and land trusts have been exploring TOPA as an anti-displacement strategy locally and regionally, using Washington D.C.’s TOPA and other similar policies as models.
Starting in 2019, the East Bay Community Law Center, Northern California Land Trust, and Bay Area Community Land Trust worked closely with Mayor Jesse Arreguin, and consulted with tenants and tenant advocates, to develop a TOPA policy tailored for Berkeley – one that stays true to Berkeley’s vision of democratic, community controlled affordable housing. EBCLC attorneys drafted the policy.
February 20 – Mayor Arreguin announced TOPA at a Southwest Berkley property where tenants had partnered with a community land trust to purchase their homes and keep them permanently affordable.
March 5 – TOPA was presented to the Land Use, Housing and Economic Development Committee followed by public comment and initial discussion/questions by committee members. See detailed background information and legislation here, as well as the presentation.
Stay tuned for additional committee meetings, hearings and ways to get involved.
HOusing Crisis in BErkeley
Low-income tenants and communities of color are at risk of being displaced from Berkeley.
Key drivers of this displacement are a skyrocketing housing market and lack of affordable housing. There are too many incentives for landlords to cash in and sell their properties to outside investor-purchasers.
- The median price of a home in Berkeley is a staggering $1,331,000 as of July 2019.
- The average rent for a 1-bedroom apartment is $3,000. Median rents in most parts of Berkeley rose by 30% or more between 2000 and 2015.
- The Bay Area has the fastest turnaround for home sales nationwide as of April 2018.
- Berkeley permitted 817 units for above moderate-income residents and only 120 units for very low, low and moderate income earners between 2015-2107.
- Berkeley estimates 2,000 people experience homelessness in Berkeley each year.
HOW TOPA WORKS
Tenant decision- making – TOPA empowers tenants with options when the property they live in is going to be sold. Tenants can purchase the property, select an ownership structures, assign rights to a qualified organization (who meet requirements and are vetted annually by the city) or remain renters at an affordable rate.
First right of offer & refusal – TOPA will create legal rights for tenants to make the first offer to purchase the property they live in when the owner decides to sell, or tenants can assign their rights to a QO to make an offer. If tenants wave their rights, QOs have an opportunity to make an offer on the property, for the purpose of stabilizing housing for the tenants and preserving the property as permanently affordable. If an owner rejects the initial offer from tenants/QO and subsequently enters into a third-party contract, then tenants/QO (whoever made the initial offer) have the right to match the offer and purchase the property (“right of first refusal”).
Tenant protections. In any scenario where tenants remain renters following a TOPA transaction, the tenants are protected against evictions (except for good cause in compliance with existing local and state law).
Fair market value – TOPA will still allow owners of rental properties to receive fair market value for the sale of their property. In the narrow situation where an owner rejects the initial offer from tenants/QOs and does not have an arm’s length third-party contract to substantiate their subsequent offer to the tenants/QO, the tenants/QO may believe the offer being made by the owner is not a bona fide offer. In this situation, the tenants/QO may invoke an appraisal to determine the fair market value of the property. So long as the appraisal meets certain requirements, the appraised value would set the sales price in that transaction.
Permanent affordability – TOPA requires tenants or qualified organizations to commit to keeping newly-purchased properties permanently affordable for future generations.
Extended timelines – The Bay Area has the fastest real estate timelines in the country, which privileges investors. TOPA includes timelines that make it possible for tenants and QOs to organize, negotiate a contract, secure financing, and close a deal.
Technical assistance – TOPA connects tenants with technical assistance move through the steps for completing a purchase or assigning rights.
Berkeley’s ordinance differs from Washington, DC as follows: 1) tenants cannot sell their TOPA rights, 2) qualified affordable housing developers (QOs) have secondary rights if tenants waive their rights, 3) all housing purchased through TOPA will be deeded as permanently affordable.