Community Opportunity for Purchase Act, or COPA: consequences

 A COPA-style first-offer-and-match regime acts like a government-imposed right of first refusal that tilts the playing field toward designated nonprofits. In a laissez‑faire view, that predictably reduces liquidity, depresses sale prices, slows transactions, raises risk premia, and discourages future private investment and new housing supply—ultimately working against long‑run affordability.

Details:

• Slower, riskier transactions: Sellers face added steps (notice, offer windows, match periods), which elongate escrows and increase fall‑through risk. Time is money; higher friction gets priced in as discounts or deters listings altogether.
• Lower expected sale prices: Priority bidding/matching by nonprofits reduces competitive tension and the option value of going to market. Rational buyers anticipate being “shopped” and bid less; rational sellers anticipate delays and accept lower prices to compensate.
• Reduced listings and capital flight: Small and mid‑sized owners, especially those reliant on quick, certain closes (e.g., retiring landlords, estates), are less likely to list. Capital reallocates to jurisdictions without such encumbrances, raising local required returns (cap rates).
• Less maintenance and reinvestment: If exit value is impaired and timelines are uncertain, owners defer capex and improvements. That degrades housing quality and, paradoxically, harms tenants over time.
• Chilling effect on new construction and rehabilitation: Developers and lenders underwrite lower exit values and higher entitlement/transaction risk, so fewer projects clear the hurdle rate. Supply growth slows, pushing market rents higher than otherwise.
• More legal and transaction costs: Compliance, notices, negotiations, and potential disputes add overhead. Those costs land on sellers, buyers, and ultimately tenants.
• Strategic behavior and adverse selection: Nonprofits can “free‑ride” on private price discovery by matching only the best deals. Private bidders become reluctant to spend diligence dollars when a nonprofit can step in at the eleventh hour, reducing the number and quality of bids.
• Workarounds and unintended consequences: Owners may favor off‑market deals, entity transfers, condo conversions, or earlier demolitions to avoid the regime—often reducing transparency and tenant stability.
• Short‑run benefit vs. long‑run cost: You may preserve some existing units in nonprofit ownership in the short term, but the cumulative effect of reduced investment and slower supply growth makes overall affordability worse in the long run. Market prices reflect risk, and COPA increases risk.

Market‑aligned alternatives (if the policy goal is affordability without distorting transactions):

• Expand by‑right upzoning and streamline approvals to increase supply.
• Reduce impact fees and time uncertainty; adopt predictable, fast permitting.
• Use portable, means‑tested demand-side aid (e.g., vouchers) rather than privileging specific buyers.
• If preservation is desired, fund nonprofits directly (transparent subsidies) without imposing rights that burden third‑party transactions; or use voluntary purchase options negotiated ex ante.