We generally leave politics to the politicians, but as community members ourselves we feel we can contribute productively to the discussion, and as Realtors we feel we have a duty to help keep our clients informed.

 

East Bay homeowners should be aware of far-reaching legislation being considered locally right now that could significantly impact their investment and what they can do with it.

 

The Tenant Opportunity to Purchase Act (TOPA) requires that owners notify tenants before they sell. They also need to notify every single one of the “Qualified Organizations,” which are nonprofit housing developers, community land trust, or housing cooperatives. This gives tenants the right of first offer, right of first refusal, and right to assign to a qualified affordable housing developer. It also means owners could have to wait 80-165 days before marketing their property.

 

It will directly affect approximately 43% of all Berkeley properties, especially small property owners, many of whom struggle with the high cost of housing themselves. In particular it applies to anyone who owns a rental property, or lives in a multi-unit and rents one of the units to defray expenses, temporarily rents their home while they’re away, or uses a 1031 Exchange.

 

• Property values will be negatively affected because open market buyers are dissuaded when property is subject to a right of first refusal. The median days on market for pending and sold properties of 2-4 units so far in 2021 in Berkeley is 14!

• Buyers who wish to owner-occupy multi-unit properties as a way of entering the housing market will also be dissuaded, further reducing values.

• Timelines will make it nearly impossible for owners to sell a property and roll it into another tax-deferred investment (1031 Exchange).

• Owners of rental property are already reacting to the possibility of these restrictions by selling, or otherwise ceasing to rent units. This is already starting to reduce the rental pool, hurting tenants, not helping them.

• As Washington, D.C.’s experience with TOPA has shown, it will primarily benefit nonprofit “Qualified Organizations,” not tenants.

• These are among the reasons Richmond residents defeated a TOPA proposal in their city in 2019.

If you think you will be negatively affected by TOPA, you should participate. TOPA is being debated in Berkeley and is very likely to be considered in other East Bay cities if it passes. That’s why the time to speak up is NOW, whether or not you live in or own property in Berkeley.

 

• Show up! TOPA is being considered in the City of Berkeley’s Land Use, Housing & Economic Development Committee this Thursday, May 6 at 10:30 am. Join the meeting through this Zoom link.

• Write! In Berkeley, legislation must pass out of its assigned committee before being considered by the full City Council. However, TOPA is moving so quickly that it makes sense to let every city council member know what you think. You can contact them all at once, including the mayor, via email at [email protected]. If you’d like to send them a letter, address it to your council member at: Berkeley City Council, 2180 Milvia Street, Berkeley, CA 94704.

• Call! Yes, people still do that. Here is your council district and here is your council member’s phone number.

No matter how you choose to raise your voice:

 

• You can find the proposed legislation in its current iteration starting on page 22 here.

• Let them know if you live in Berkeley. Even if you participate anonymously, you can mention your council district.

• Personal contact with your council member makes an impact. Reach out to them personally.

Feel free to reach out to your Red Oak Realtor to discuss what TOPA means for you, and contact the East Bay Rental Housing Association or the Berkeley Rental Housing Coalition for further resources. To learn how the California Association of Realtors is supporting housing equity and solutions to housing affordability, visit Housing for California.