If you live in Minneapolis, you may have received a mailing recently about something called TOPA. Though the meaning of the acronym is never spelled out in the mailers, what is clear is that the people behind the flyers, the Minneapolis Area Association of Realtors, believe TOPA will hurt Minneapolis’ housing market.
Here’s what TOPA actually stands for — and what it would potentially mean for the city:
What is TOPA? And what would it do?
TOPA stands for Tenant Opportunity to Purchase Act, and it gives tenants of rental properties the right to purchase the building if the owner puts it up for sale.
Under a proposal being considered by Minneapolis and co-authored by City Council Members Cam Gordon, Jeremiah Ellison, Jeremy Schroeder and Steve Fletcher, it would apply in the city to all rental housing — save certain properties with fewer than five units.
Tenants who live in eligible properties would have the option of pooling their resources together as a co-operative to provide financing to buy the building. Alternatively, the current proposal would allow tenants to team up with non-profit housing organizations — or the city — to secure funding to finalize a deal with the owner.
The goal is to avoid displacing renters when their building is sold — and to give renters the opportunity to build wealth by becoming homeowners. Advocates also say TOPA could also help do something about the city’s racial disparities in real estate ownership.
Even if the TOPA process doesn’t end with tenants purchasing the housing complex, advocates argue, the right of first refusal requirement could also give renters some leverage when their building is put on sale. “It ensures that the tenants who are displaced, aren’t displaced with nothing in hand,” said Ellison. “They end up getting, sometimes, settlements; they end up getting bought out to leave the building.”
So why are people in Minneapolis getting flyers about it?
The Minneapolis Area Association of Realtors views TOPA as an infringement of ownership rights, the kind that will complicate housing sales and scare off prospective buyers and developers. The organization launched a mailer campaign in June urging Minneapolis residents to contact their City Council representatives and declare their opposition to TOPA. “Don’t let this happen to Minneapolis,” reads one of the mailers.
“The definition of homeownership is represented by being able to buy it, sell it, or let it for rent without unreasonable government restriction,” said Eric Myers, director of government affairs for the realtors association. “When you buy a house, you’re not just buying the house, you’re buying the house and the land and those rights.”
Requiring sellers to provide tenants with the right of first refusal, said Myers, is a step his realtor group finds “unreasonable.” The time it would take to offer that right, said Myers, makes the proposal unfair to owners trying to capitalize on the market and make a swift sale.
Since the Minneapolis proposal does not have an exact timeline in place, Myers and the Minneapolis Realtors looked to Washington, D.C.’s TOPA as an example. Under the Washington D.C. policy, if a tenant group chooses to pursue a purchase and exhausts every option in bringing that goal to fruition, it can take more than 250 days to finalize a deal. Compared to around 30 days — the average time it takes to close a housing deal, especially for smaller complexes, says Myers — the several months it might take to offload a property to tenants under TOPA could cause buyers and developers to avoid the Minneapolis housing market entirely. Or as one TOPA flyer warns, it potentially, “decreases future investment in Minneapolis, reducing the supply of affordable housing.”
What do TOPA supporters say about the realtors’ criticism of the idea?
One of the proposal’s authors, Fletcher, noted that the city already has multiple regulations in place that put delays into the sale of a housing complex, and that adding a delay for a tenant purchase option isn’t unreasonable. He and the other council members behind the proposal see TOPA as an extension of an ordinance already on the books — a 2019 law that requires owners of affordable housing buildings to provide notice to the city and tenants at least 60 days before making the building available for sale.
Fletcher also points out that TOPA would not impact the price of the building sale. “We’re allowing people to sell their property at the price they want to sell it for,” he said. “I don’t think it really infringes on that right to give tenants an opportunity to match that price. We’re not taking anything away from them.”
Why is this happening now?
The realtors campaign has picked up steam just as the TOPA ordinance has moved through the city’s law-making process. The proposal is currently before the city’s Business, Inspections, Housing & Zoning Committee, where city officials are likely to debate what kinds of properties should be exempt, and what a timeline for the tenant option should be. Fletcher said he anticipates the full City Council will discuss and vote on TOPA sometime later this year.