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East Palo Alto to discuss controversial housing purchase policy

The Opportunity to Purchase Act is viewed as an affordable housing tool by one side and as an unnecessary government overreach by the other

The apartment complexes on Euclid and Manhattan avenues in East Palo Alto. Embarcadero Media file photo by Veronica Weber.

A housing policy proposed by the city of East Palo Alto is attracting the attention — and vitriol — of homeowners and landlords.

On Sunday, opponents rallied in front of East Palo Alto City Hall to protest the policy. In recent weeks, residents and outside community members have waited in a digital queue to comment in hourslong, evening City Council meetings that extended close to midnight.

And on social media and in email inboxes, criticism and sometimes calls for termination have been lobbed at city officials.

"There have been folks on the social media pages, in public, who have directly attacked staff, asking for their firing," Mayor Carlos Romero said during a council meeting on Dec. 7. "This is depriving someone of their livelihood. … I don't think that's appropriate."

The controversial law in question is the Opportunity to Purchase Act (OPA), which so far has been characterized as a tool to create more affordable housing by proponents and a destructive policy that meddles with the rights of homeowners and mom and pop landlords by opponents.

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"The big lie in OPA is that renters are going to be the homeowners of this process," said Mark Dinan, one of the lead opponents of the policy and moderator of East Palo Alto Neighbors, a Facebook group with more than 8,000 members, including a few council members. "They're not. They're going to be the ones living there, but they're just gonna have a different landlord."

The gist of the policy, which the council is scheduled to deliberate on in a special meeting Wednesday night, is to give tenants, affordable housing nonprofits and the city itself first dibs to purchase a property before it's put on the open market.

The process proposed in East Palo Alto so far is as follows: For a property to which OPA applies, an owner provides a notice to eligible purchasers of his or her intent to sell the property. Eligible purchasers, such as a tenant, a nonprofit or the city, can express interest in buying the property or can waive that right.

If the prospective purchaser is not interested, the owner can put the home on the market. If one of the three groups wants to buy, however, they will make an initial offer.

Owners can then choose to reject or accept it. If the owner rejects, then they can proceed to list the property on the market and enter into what's called a "conditional contract" with a third party. During that time, the interested tenant or nonprofit may still have a chance to match the offer of the third party.

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Other Bay Area cities where housing is a hot-button issue have implemented or are considering this policy, including San Jose, Oakland and Berkeley. San Francisco passed its own version of the law in 2019, called the Community Opportunity to Purchase Act (COPA), which gave nonprofits first rights to purchase multifamily residential buildings.

The spirit behind implementing the housing policy is the same — to establish more affordable housing.

'We have people on city staff say that delaying the home sale by (270) days would not affect the home price, and that's just flat out wrong.'

-Mark Dinan, opponent of OPA

But each version of the law is different in subtle and large ways, with varied ramifications depending on where the policy is enacted.

Most of the concerns about the policy center on the impact on home prices, which would drop, OPA critics say. City leaders have disputed this, saying that owners can still sell their homes at market value.

Part of this fear comes from the ordinance's inclusion of unoccupied single-family homes — houses in which the owner does not live.

The city has exempted occupied single-family dwellings from the OPA proposal, including those that have accessory dwelling units (also known as granny units), but it has done little to convince the opposition that this exemption will prevent property devaluation.

If one rental home is sold at a certain price, Dinan argues, then other real estate buyers will use "strongarm tactics" to lower the appraisal value of surrounding homes.

In an interview, Romero said that the assertion of dropping home values is baseless. He has heard figures thrown out that assessed the total value of every single-family home in the city — around $7 billion — would drop by 30%.

"They have absolutely no either academic or empirical studies that can point to any type of diminution in value," Romero said.

But if owner-occupied single family homes are exempt from the law, which unoccupied single-family homes does the city have in mind? According to Romero, the city wants to target the 33% of city's single-family homes owned by "outside investors."

'They have absolutely no either academic or empirical studies that can point to any type of diminution in (property) value.'

-Carlos Romero, mayor, East Palo Alto

"That is a huge percentage of our land that has been acquired through the foreclosure crises or through just a natural escalation in housing prices, in which outside investors have decided to try to have some sort of arbitrage here and make money off of our housing," Romero said. "That's fine. It is the market. But nevertheless, it is one of the police powers of the city to try to address some of these issues of accessibility — not affordability, at this point — but accessibility to making an offer on properties."

Another concern of opponents surrounds the timelines offered to the potential buyers.

Every OPA policy dictates a timeframe for each step of the purchasing process. And cities can implement deadlines that depend on the type of home that's up for sale. For example, East Palo Alto proposes that purchasers of a dwelling of four or more units have 90 days to give an initial offer. From the statement of interest to closing, purchasing a home through East Palo Alto's OPA can take anywhere from 100 to 270 days.

This table outlines three cities' timelines under their unique Opportunity to Purchase Act policies. Courtesy city of East Palo Alto.

Dinan argues that the city's timeline appears to be "intentionally designed to kill home prices." He points to other jurisdictions, such as San Francisco, which gives five days to show interest, whereas East Palo Alto provides 30.

"We have people on city staff say that delaying the home sale by (270) days would not affect the home price, and that's just flat out wrong," he said. "You can't make an offer on a house in June and wait until December to see if you got it. That's just not how real estate works."

Opponents also fear that the law will provide a legal tool to strong-arm homeowners. They often cite a recent change in 2018 to Washington D.C.'s Tenant Opportunity to Purchase Act (TOPA), which was first enacted in 1980. An investigation found that some renters used OPA as a cudgel to charge landlords an exorbitant amount of money to be released from their TOPA rights. As a result, the D.C. council exempted all single-family homes from the law.

Dinan and many homeowners who have launched a campaign against OPA believe that, ultimately, the policy as it currently stands doesn't protect local residents or safeguard against large investment firms swiping up homes but instead targets smaller mom and pop landlords. They propose, at the very least, that the city continue to do more outreach particularly to property owners and call for an economic analysis of the policy's impact in the city.

Dinan also argues there are other mechanisms to address affordable housing, but OPA, and including single-family homes in the policy, is not one of them.

Opponents of the Opportunity to Purchase Act are concerned that the value of single-family homes, like this two-bedroom cottage, could drop. Embarcadero Media file photo by Veronica Weber.

"If you're really concerned about addressing affordable housing and displacement, you do not use single-family homes to do that," he said. "You rezone East Palo Alto. You build more apartment buildings that have an affordability component. Using single-family homes to address displacement is like using Teslas to address the issue of how you get kids to school in the morning. You use school buses; you don't use any $80,000 cars."

Romero, however, argues that OPA is just one of about 14 other laws that East Palo Alto has already implemented that he hopes will provide some stability for the city's residents.

"This is one additional policy that neither serves as a silver bullet or a panacea but is another tool, simply stated, that we can use to attempt to (create) further stability in the city," he said.

Wednesday's council study session meeting will be held on Zoom starting at 6 p.m. To access the meeting, go to us06web.zoom.us/j/86520513649. Those wishing to speak at the meeting must use the link on the city's website to sign up before 5:45 p.m.

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East Palo Alto to discuss controversial housing purchase policy

The Opportunity to Purchase Act is viewed as an affordable housing tool by one side and as an unnecessary government overreach by the other

by Lloyd Lee / Palo Alto Weekly

Uploaded: Tue, Dec 21, 2021, 10:22 pm

A housing policy proposed by the city of East Palo Alto is attracting the attention — and vitriol — of homeowners and landlords.

On Sunday, opponents rallied in front of East Palo Alto City Hall to protest the policy. In recent weeks, residents and outside community members have waited in a digital queue to comment in hourslong, evening City Council meetings that extended close to midnight.

And on social media and in email inboxes, criticism and sometimes calls for termination have been lobbed at city officials.

"There have been folks on the social media pages, in public, who have directly attacked staff, asking for their firing," Mayor Carlos Romero said during a council meeting on Dec. 7. "This is depriving someone of their livelihood. … I don't think that's appropriate."

The controversial law in question is the Opportunity to Purchase Act (OPA), which so far has been characterized as a tool to create more affordable housing by proponents and a destructive policy that meddles with the rights of homeowners and mom and pop landlords by opponents.

"The big lie in OPA is that renters are going to be the homeowners of this process," said Mark Dinan, one of the lead opponents of the policy and moderator of East Palo Alto Neighbors, a Facebook group with more than 8,000 members, including a few council members. "They're not. They're going to be the ones living there, but they're just gonna have a different landlord."

The gist of the policy, which the council is scheduled to deliberate on in a special meeting Wednesday night, is to give tenants, affordable housing nonprofits and the city itself first dibs to purchase a property before it's put on the open market.

The process proposed in East Palo Alto so far is as follows: For a property to which OPA applies, an owner provides a notice to eligible purchasers of his or her intent to sell the property. Eligible purchasers, such as a tenant, a nonprofit or the city, can express interest in buying the property or can waive that right.

If the prospective purchaser is not interested, the owner can put the home on the market. If one of the three groups wants to buy, however, they will make an initial offer.

Owners can then choose to reject or accept it. If the owner rejects, then they can proceed to list the property on the market and enter into what's called a "conditional contract" with a third party. During that time, the interested tenant or nonprofit may still have a chance to match the offer of the third party.

Other Bay Area cities where housing is a hot-button issue have implemented or are considering this policy, including San Jose, Oakland and Berkeley. San Francisco passed its own version of the law in 2019, called the Community Opportunity to Purchase Act (COPA), which gave nonprofits first rights to purchase multifamily residential buildings.

The spirit behind implementing the housing policy is the same — to establish more affordable housing.

But each version of the law is different in subtle and large ways, with varied ramifications depending on where the policy is enacted.

Most of the concerns about the policy center on the impact on home prices, which would drop, OPA critics say. City leaders have disputed this, saying that owners can still sell their homes at market value.

Part of this fear comes from the ordinance's inclusion of unoccupied single-family homes — houses in which the owner does not live.

The city has exempted occupied single-family dwellings from the OPA proposal, including those that have accessory dwelling units (also known as granny units), but it has done little to convince the opposition that this exemption will prevent property devaluation.

If one rental home is sold at a certain price, Dinan argues, then other real estate buyers will use "strongarm tactics" to lower the appraisal value of surrounding homes.

In an interview, Romero said that the assertion of dropping home values is baseless. He has heard figures thrown out that assessed the total value of every single-family home in the city — around $7 billion — would drop by 30%.

"They have absolutely no either academic or empirical studies that can point to any type of diminution in value," Romero said.

But if owner-occupied single family homes are exempt from the law, which unoccupied single-family homes does the city have in mind? According to Romero, the city wants to target the 33% of city's single-family homes owned by "outside investors."

"That is a huge percentage of our land that has been acquired through the foreclosure crises or through just a natural escalation in housing prices, in which outside investors have decided to try to have some sort of arbitrage here and make money off of our housing," Romero said. "That's fine. It is the market. But nevertheless, it is one of the police powers of the city to try to address some of these issues of accessibility — not affordability, at this point — but accessibility to making an offer on properties."

Another concern of opponents surrounds the timelines offered to the potential buyers.

Every OPA policy dictates a timeframe for each step of the purchasing process. And cities can implement deadlines that depend on the type of home that's up for sale. For example, East Palo Alto proposes that purchasers of a dwelling of four or more units have 90 days to give an initial offer. From the statement of interest to closing, purchasing a home through East Palo Alto's OPA can take anywhere from 100 to 270 days.

Dinan argues that the city's timeline appears to be "intentionally designed to kill home prices." He points to other jurisdictions, such as San Francisco, which gives five days to show interest, whereas East Palo Alto provides 30.

"We have people on city staff say that delaying the home sale by (270) days would not affect the home price, and that's just flat out wrong," he said. "You can't make an offer on a house in June and wait until December to see if you got it. That's just not how real estate works."

Opponents also fear that the law will provide a legal tool to strong-arm homeowners. They often cite a recent change in 2018 to Washington D.C.'s Tenant Opportunity to Purchase Act (TOPA), which was first enacted in 1980. An investigation found that some renters used OPA as a cudgel to charge landlords an exorbitant amount of money to be released from their TOPA rights. As a result, the D.C. council exempted all single-family homes from the law.

Dinan and many homeowners who have launched a campaign against OPA believe that, ultimately, the policy as it currently stands doesn't protect local residents or safeguard against large investment firms swiping up homes but instead targets smaller mom and pop landlords. They propose, at the very least, that the city continue to do more outreach particularly to property owners and call for an economic analysis of the policy's impact in the city.

Dinan also argues there are other mechanisms to address affordable housing, but OPA, and including single-family homes in the policy, is not one of them.

"If you're really concerned about addressing affordable housing and displacement, you do not use single-family homes to do that," he said. "You rezone East Palo Alto. You build more apartment buildings that have an affordability component. Using single-family homes to address displacement is like using Teslas to address the issue of how you get kids to school in the morning. You use school buses; you don't use any $80,000 cars."

Romero, however, argues that OPA is just one of about 14 other laws that East Palo Alto has already implemented that he hopes will provide some stability for the city's residents.

"This is one additional policy that neither serves as a silver bullet or a panacea but is another tool, simply stated, that we can use to attempt to (create) further stability in the city," he said.

Wednesday's council study session meeting will be held on Zoom starting at 6 p.m. To access the meeting, go to us06web.zoom.us/j/86520513649. Those wishing to speak at the meeting must use the link on the city's website to sign up before 5:45 p.m.

Comments

John Carter
Registered user
East Palo Alto
on Dec 22, 2021 at 12:01 pm
John Carter, East Palo Alto
Registered user
on Dec 22, 2021 at 12:01 pm
We Are The People
Registered user
East Palo Alto
on Dec 22, 2021 at 2:45 pm
We Are The People, East Palo Alto
Registered user
on Dec 22, 2021 at 2:45 pm

This Argument about OPA, began with Dinan. To fully understand What is truly happening. You MUST have background info. [Portion removed.] Dinan see's OPA against his Agenda for "Rebranding" of EPA. Meaning that the Tenants that he wants removed, will remain, if given the "1st Right of Refusal".
Dinan's Agenda is to remove The "Traditional Citizens" to detached them from EPA. He's made this NO Secret. He's posted remarks on Other Social Media Sites. In EPA's real World, he is known as "The Mayor of East Palo Alto NEIGHBORS". [Portion removed.] Dinan fines a "Boogie Man" and gives Him a name. All in getting others involved. Using them as a "Cats Paw". Dinan even tried to get Woodland Parks/Sandhill involved & Other Corporations. They told Him that they didn't have a "Dog in the Fight". Dinan was seeking Big Names with Deep pockets. The Bottom-line of this matter is that the Proposal isn't even completed? The other Bottom-line is that this is NOT the 1st time that this Ordinance appeared. Brought to our attention by Elizabeth Jackson, the Founder of the Law Project, at last Night CC Meeting. In the Mid-1980's.


Neal
Registered user
Community Center
on Dec 22, 2021 at 2:47 pm
Neal, Community Center
Registered user
on Dec 22, 2021 at 2:47 pm

There's only one thing wrong with this proposed policy...It WON'T WORK.


Optimist Pessimist Realist
Registered user
East Palo Alto
on Dec 22, 2021 at 4:37 pm
Optimist Pessimist Realist , East Palo Alto
Registered user
on Dec 22, 2021 at 4:37 pm

It’s clear from the facts laid out by Lloyd Lee that opponents of T/C/OPA have been misled or lied to. It’s sad that the result is so many people are needlessly stressed out.


EPA resident
Registered user
East Palo Alto
on Dec 22, 2021 at 4:51 pm
EPA resident, East Palo Alto
Registered user
on Dec 22, 2021 at 4:51 pm

This ordinance does not increase housing supply at all. If it passes, here are some possible scenarios
1.owners might just move in to be exempt from this ordinance and causing move-in eviction on existing tenant.
2. Owners might sell before it goes into effect in summer 2022 and non profit/city/tenant will get nothing.
3. Owners might try their best not to sell after it goes into effect, futher reducing house supply.

This ordinance simply does not work, not to mention it might very well cause costly litigations against city. It's never a good look that city spend taxpayer's monty to fight the same taxpayer while, not to mention those legal fees are totally avoidable, and can be spending on the real solution, like actually building more affordable housing.


M
Registered user
Old Palo Alto
on Dec 23, 2021 at 9:54 am
M, Old Palo Alto
Registered user
on Dec 23, 2021 at 9:54 am


All sales will be conditional and uncertain. That has a cost. Mayor Romero is not correct studies do not exist that show that a sale with conditions is of less value than a clean sale.

What isn't studied is whether this policy will produce more housing, how it will affect the mix of housing (owned or rented), and who will own it. There is a risk it will simply adjust the value of housing in East Palo Alto. It seems a lot like Prop 13, which was sold on emotions and has had serious negative consequences.

Mayor Romero's temperament also seems to be a red flag. He seems to be lashing out at others who are upset at what they legitimately perceive as lost value in their homes and properties, similar to way he lashed out at Palo Alto during the ABAG new housing quota discussions. This issue is for residents of East Palo Alto to decide, but given the close relationship and dependencies between our communities, I would urge full deliberation and caution before proceeding too quickly with this policy.


Optimist Pessimist Realist
Registered user
East Palo Alto
on Dec 23, 2021 at 4:04 pm
Optimist Pessimist Realist , East Palo Alto
Registered user
on Dec 23, 2021 at 4:04 pm

Interestingly when Mr Dinan is included there’s a sudden focus on councilman Romero but Dinan isn’t called out for
straight up lying repeatedly targeting this possible law.


James
Registered user
Midtown
on Dec 23, 2021 at 9:15 pm
James, Midtown
Registered user
on Dec 23, 2021 at 9:15 pm

To increase affordability you can do either of these things: Increase Supply, or Decrease Demand. Obviously there is no practical way to decrease the demand. So the only option is to increase supply.

To increase supply you encourage high density housing, you encourage land owners to build more and more, higher and higher.

But OPA does not seem to be able to achieve that objective.

First of all, it discourages home owners to build ADUs. SB9 paves the way for home owners to build large ADUs, with the intention to list the units on the market for renters. But with OPA home owners will be discourage to this. No one wants to have the ADU renters claim that they will be first in line to buy the house, should the owner wants to sell. This simply does not make any sense.

Secondly, since SB9 I've heard many investors are preparing plans to buy R1 houses with the aim of turning them into multi-unit houses. They are willing to pay higher prices, with the expectation that it will be profitable to sell the multi-units, even though the selling price for each unit will be lower than a comparable R1 house. These investors will increase the supply of units in EPA housing market. However OPA will put such investors at a disadvantage.

OPA itself does not increase supply at all. No matter what the intention is, the ordinance will inevitably make the housing market more complex then it should be, and add extra overhead to transactions, in terms of lawyer fees, consultations, delay of sales, etc.

My guess is that the real hidden intention of OPA is to give renters a way to get some money out of selling landlords. A renter, while typically won't be able to afford buying the house, will have a tool to milk the landlord some extra bucks for waiving his/her rights. In essence it is a reverse "droit du seigneur" tax, charged by the renter to the landlord.



Optimist Pessimist Realist
Registered user
East Palo Alto
on Dec 24, 2021 at 4:42 pm
Optimist Pessimist Realist , East Palo Alto
Registered user
on Dec 24, 2021 at 4:42 pm

James needs to catch up, T/C/OPA does not discourage adus at all. The intent isn’t to increase housing or get money from landlords. The intent is give tenants additional chances to buy or lessen displacement if another organization buys it. There are already laws saying when landlords have to pay out renters and there’s nothing in the T/C/OPA from what I saw to get money from the owner for the renter. Renters don’t move just because a house is on the market or gets sold.


James
Registered user
Midtown
on Dec 25, 2021 at 12:52 pm
James, Midtown
Registered user
on Dec 25, 2021 at 12:52 pm

@Optimist Pessimist Realist, you did not provide any explanation. Just a broad statement, which is certainly not convincing at all. My reasoning, on the other hand, is quite straightforward.

Yes there are already state laws that makes it difficult for homeowners to force an eviction of ADU renters. OPA makes the situation even worse.

OPA is just another way for renters to milk landlords, in addition to whatever existing laws and ordinances. It is not going to increase housing stock, or lower housing prices.



Optimist Pessimist Realist
Registered user
East Palo Alto
on Jan 3, 2022 at 3:10 pm
Optimist Pessimist Realist , East Palo Alto
Registered user
on Jan 3, 2022 at 3:10 pm

Explanation for what, James? You can visit the city’s T/C/OPA page and the pro-T/C/OPA website. ADUs aren’t discouraged by this ordinance. It’s not intended to lower prices or increase housing, but nice try with misleading info. The ordinance can’t milk anyone. It’s a right of first refusal law. You’re obviously not familiar with East Palo Alto housing laws. Go familiarize yourself and then we can continue.


Online Name
Registered user
Embarcadero Oaks/Leland
on Jan 13, 2022 at 4:44 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Jan 13, 2022 at 4:44 pm

“If pure density ensured affordability, Manhattan would be the most affordable place to live.”

Also Singapore, Tokyo, London etc etc.


EPA resident
Registered user
East Palo Alto
on Jan 25, 2022 at 11:05 pm
EPA resident, East Palo Alto
Registered user
on Jan 25, 2022 at 11:05 pm

Some questions:
1. If OPA will let the tenant to buy at the current market price as city claimed.
Why can't the tenant, maybe partner with nonprofits to do so now without the OPA? California law says owners must give tenants 60 days notice if they want to sell, so tenants and non profits can have 2 months to get pre-approval before it hits the market. These logically contradicting claims that city pushed so hard are the reason why people think this will bring down home values, not the flyers from BAHN or Mr.Danin)

2. Nora the RE economist said: Because funds are limited, non profits will only be able to buy very limited number of housing at market price, so the city's property tax loss would be immaterial.
So this economist that speak for the city is admitting OPA won't convert much existing housing into affordable housing, not to mention it will create 0 new affordable housing? What's the point then?

3. absentees owners or not, all landlord are paying city property tax as well as providing rental housing supply to EPA, they should be a stakeholder and be part of the discussion too.
But city choose to villianfy these tax payers that are funding the city and just call them lying Trumpian ? So their punishment from the OPA is justified ???

4.Corporate landlord like woodland park that owns thousands of units are not impacted by OPA at all but mom and pop landlord that own 1 house are subjected to it. How is it fair???


Optimist Pessimist Realist
Registered user
East Palo Alto
on Jan 28, 2022 at 11:49 am
Optimist Pessimist Realist , East Palo Alto
Registered user
on Jan 28, 2022 at 11:49 am

EPA’s #4 isn’t true. From what I read Woodland Park is not exempt from T/C/OPA. I’ve seen their attorney’s letters to the city about it.


Optimist Pessimist Realist
Registered user
East Palo Alto
on Feb 10, 2022 at 7:38 pm
Optimist Pessimist Realist , East Palo Alto
Registered user
on Feb 10, 2022 at 7:38 pm

Editor, is there an update to this T/C/OPA?


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