The Tenants Option for Purchase Act is a powerful policy tool in the city of Washington D.C. that can help prevent real estate speculation and displacement. But leveraging it is complicated, writes Elin Zurbrigg, deputy director of LISC-partner Mi Casa, Inc. and an expert on TOPA and helping mobilize residents to wield it. The lessons from D.C., she argues, can provide an important blueprint for other parts of the country where tenants are fighting to upend the forces of gentrification. Zurbrigg’s article continues our essay series with Nonprofit Quarterly, “Community Strategies for Systems Change.”
The excerpt below was originally published on Nonprofit Quarterly:
How DC Can Leverage the Tenant Right to Purchase to Achieve Housing Justice
By Elin Zurbrigg, Mi Casa, Inc.
Washington, DC’s Tenant Opportunity to Purchase Act (TOPA), enacted in 1980, requires that tenants in buildings that are for sale be offered the first opportunity to purchase the building. TOPA has been a critical tool for enabling tenants to create housing cooperatives and condominiums, as well as preserving affordable rental housing. According to a 2020 report by the local Coalition for Nonprofit Housing and Economic Development, the city has 99 limited equity cooperatives providing an estimated 4,362 units of affordable housing (13) with most of these cooperatives “created through TOPA” (11).
For a long time, TOPA seemed like an anomaly, a product of the “home rule” movement in which the then Black-majority city finally won limited self-government from Congress in the 1970s. But in recent years, other US cities have begun to look at TOPA as a model for creating and preserving affordable housing, especially in the San Francisco Bay Area. TOPA proposals have also surfaced in Massachusetts, New York, and Minnesota.
For over 40 years, TOPA has benefitted thousands of DC families. Nonetheless, the city has yet to realize the full effect of its TOPA law, which in combination with other tools could achieve a coordinated affordable housing strategy that would stem the tide of gentrification and displacement sweeping through the city.
What’s at Stake? Why a Tenant Right to Purchase Matters
A 2019 report from the National Community Reinvestment Coalition indicated what many District residents already suspected—namely, that Washington, DC, had the highest percentage of gentrifying neighborhoods of any US city. DC reflects an alarming trend in cities globally in terms of class stratification, with a growing divide between those who own and those who do not. In DC, this disparity is compounded by race, as most of the city’s low-income households are non-white.
Because of TOPA laws, when buildings go up for sale in DC, tenants can negotiate with landlords or third-party buyers to guarantee an outcome that is more beneficial to them and their community by, for example, preserving affordable rent levels, negotiating building improvements, facilitating homeownership, and securing public funding that preserves long-term affordability.
What’s at stake is more than just tenancy for the building’s residents, but also retaining housing opportunities in DC neighborhoods for long-term and working-class residents, maintaining racial and economic diversity, and preventing the transportation cost burden that low-income households take on when they are forced to live far from where they work.
TOPA also provides an incomparable bridge between renting and homeownership for low-and-moderate-income tenants, who may purchase their buildings directly and become housing co-op or condominium owners. DC’s TOPA law, along with flexible, low-cost funding from the DC Department of Housing and Community Development (DHCD), has facilitated the preservation of thousands of affordable housing units. As noted, more than 4,000 families throughout the city live in limited equity cooperatives.
In such a cooperative, most of the equity stays with the co-op when residents leave, but generally, upon moving, residents can keep a small portion of any increase in the building’s value. (In a group equity co-op, a common model in DC, the co-op secures blanket financing and retains all equity in the building; this means residents don’t gain equity themselves, but it also boosts long-term affordability even more.) However, the benefits of co-op ownership extend beyond equity gain; they include democratic governance (one member, one vote) and predictable monthly housing expenses that tend to increase at a much lower rate than condo fees. Other benefits include the ability to “buy-in” with no or limited credit or ability to obtain an individual mortgage (in some cases paying only the cost of a security deposit), to leverage the power of blanket or group financing to improve building conditions, and to pass on co-op membership to family members.
Effectively, a limited equity co-op functions like a community land trust, which TOPA has recently facilitated in Anacostia. Specifically, a limited equity co-op costs less to buy into than a condo. In exchange, the buyer agrees to sell their share of the co-op back to the association or to a new income-qualified resident, preserving affordability for the next generation.
In many ways, this type of housing becomes non-commodified, outside (or beyond) the fluctuations of the housing market. In this manner, a community-based asset is created that provides an ongoing service to residents by maintaining their proximity to employment, schools, and commercial centers, and most importantly, the cohesive social networks of low-income communities.
And because TOPA is a local law supported by local statutes implemented by city agencies, the District Department of Housing and Community Development (DHCD) has largely supported tenant purchase with public financing. Such financing is accompanied by regulatory agreements or affordable housing covenants, which in turn require longer term affordability than typical rental or tax-credit developments (a minimum of 40 years), ensuring that the affordable housing remains a community asset for two generations or longer.