Title
Approval of Tenant and Community Opportunity to Purchase Recommendations
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve recommended actions regarding tenant and community opportunity to purchase.
Report
Issue:
Whether to approve recommended Tenant and Community Opportunity to Purchase actions.
Staff Contact:
Christa Lenssen, Senior Housing Program Specialist, Community Development, 360.570.3762
Presenter(s):
Christa Lenssen, Senior Housing Program Specialist, Community Development
Background and Analysis:
Tenant Opportunity to Purchase (TOPO) policies establish a process that notifies tenants when a property is being sold and provides them an opportunity to purchase it, sometimes including the right to match offers from other buyers. These policies may also extend purchasing rights to nonprofit affordable housing organizations, local governments, or public housing authorities (known as Community Opportunity to Purchase or COPO). They can apply to various housing types, including single-family homes and multifamily properties, and may help preserve long-term affordability through models such as limited-equity cooperatives.
TOPO and COPO policies can help tenants compete with investors, stabilize housing costs, preserve affordable housing, and prevent displacement. The City’s Housing Action Plan and Comprehensive Plan direct City Council to consider TOPO as a tool to preserve manufactured home communities and multifamily rental housing, particularly existing affordable housing.
These policies carry potential legal risks, including challenges related to unconstitutional takings or substantive due process violations. However, statewide advocates have successfully navigated similar legal concerns through the enactment of legislation establishing an opportunity to compete to purchase manufactured home communities.
Staff Recommendations
Staff is participating in statewide discussions convened by the Northwest Cooperative Development Center (NWCDC) to explore opportunities to build on successful manufactured housing conversions to cooperative ownership. Staff recommends supporting these statewide efforts before pursuing local policies or programs. Given the need for technical assistance and financial resources to help residents acquire properties, staff does not recommend a local policy or pilot program at this time unless funding is identified to support resident purchases. Staff has prepared a Policy Suggestions and Lessons Learned document to guide future efforts if funding becomes available.
Staff recommends the following actions:
• Next 6-9 months: Conduct outreach and education for landlords and tenants to help facilitate the sale of single-family rental homes to current tenants. Stakeholder input indicates that property owners are often willing to offer homes to existing tenants before listing them publicly. Connecting tenants with existing homebuyer resources may be more effective than adopting new policies.
• Next 6-18 months: Continue monitoring state and regional policy and funding discussions, advocate for changes that support a statewide opportunity-to-purchase framework where appropriate, and ensure local funding aligns with identified needs.
• Longer term (18-24 months): Explore revenue options to support resident property acquisitions. If funding and sufficient staff capacity are available, consider developing a local policy or program informed by stakeholder input and lessons learned from other jurisdictions.
The attached report provides additional background on alignment with City work plans, regional and state efforts, the City's process for exploring this issue, stakeholder input, lessons learned, and staff recommendations.
Climate Analysis:
The recommended actions are not expected to have an immediate impact on greenhouse gas emissions. If a policy or program is adopted, preserving existing housing and preventing displacement may allow tenants to remain in their homes, potentially reducing commute distances and associated greenhouse gas emissions. Additionally, properties acquired with State Housing Trust Fund dollars would be required to meet state requirements for renovation and upgrades under the Evergreen Sustainable Development Standards.
Equity Analysis:
TOPO strategies can help prevent displacement when rental properties are sold, stabilize households and housing costs, and create opportunities for homeownership and wealth building. Historically, many communities have faced barriers to homeownership and have had fewer opportunities to build individual and intergenerational wealth. The average American homeowner has a net worth approximately 40 times that of the average renter. Expanding homeownership opportunities can improve immediate housing stability while creating long-term opportunities for wealth building. Reducing housing costs for cost-burdened households can also provide greater financial flexibility for food, healthcare, and other essential needs.
Homeownership and housing stability disparities are evident in Olympia. According to American Community Survey (ACS) data, approximately 82% of Olympia households headed by single mothers rent rather than own their homes. HUD Comprehensive Housing Affordability Strategy (CHAS) data show that 50% of white households in Olympia rent, compared to 61% of BIPOC households and 73% of Hispanic/Latinx households. The Washington State Department of Commerce report Improving Homeownership Rates for Black, Indigenous, and People of Color in Washington estimates that 2,866 additional BIPOC households in Thurston County would need to become homeowners to achieve the same homeownership rate as white, non-Hispanic households.
Income disparities further demonstrate the need for housing stability and wealth-building opportunities. HUD CHAS data indicate that 24% of BIPOC households and 22% of Hispanic/Latinx households in Olympia earn less than 30% of Area Median Income (AMI), compared to 15% of white households. According to 2020 ACS data, people with disabilities earned an average of $26,075 annually, compared to $37,168 for people without disabilities. Additionally, just over 33% of single-mother households in Olympia had incomes below the federal poverty level, compared to 11% of the overall population.
If a TOPO policy is considered in the future, additional requirements and longer transaction timelines could create administrative and financial burdens for rental property owners. Demographic data on landlords is limited. Approximately 71% of landlords who completed the City's 2022 Rental Housing Code update survey identified as white, a percentage similar to Olympia's overall population. However, the survey had a limited sample size, and not all respondents provided demographic information.
Neighborhood/Community Interests (if known):
Affordable housing is of great interest to the community. In a community survey completed as part of the Assessment of Fair Housing in 2022, increased access to homeownership was identified as a key priority. Over half (340 of 605) of survey respondents selected increased access to homeownership as one of the most important strategies to increase equity and address housing disparities in Thurston County. The community has ranked housing and homelessness as a high priority in surveys conducted by the City of Olympia. Any work on this topic will draw local and regional attention and public engagement.
Financial Impact:
Staff’s recommended actions will only require existing staff’s time, but no additional funding. If a policy or pilot program is enacted, additional resources and staff time will be needed. Notification of eligible parties when a property is listed for sale may require additional staff support, as well as any enforcement action for noncompliance. Additional programmatic supports may be necessary to realize the benefits of the policy, such as financial assistance for low to moderate income residents to acquire and rehabilitate their property and technical assistance for tenant organizing, operations and management, obtaining financing, and legal assistance. Any additional City resource allocations will need to be managed by staff.
Options:
1. Move to approve recommended actions regarding tenant and community opportunity to purchase.
2. Move to approve, with modifications, recommended actions regarding tenant and community opportunity to purchase.
3. Take no additional action.
Attachments:
TOPO Recommendations Report
Policy Suggestions and Lessons Learned
Homeownership Project Final Brief
WA Multi-Family Opportunity To Compete Playbook