Critics of COPA call it the Community “Obstruction” to Purchase Act. Here’s another alternative: The Corruption Opportunity to Plunder Act.
Errol Louis just penned a New York magazine column warning that the Community Opportunity to Purchase Act would attract immoral and criminal operators. The NY1 anchor and former Democratic City Council candidate cited the long history of nonprofits exploiting city-funded programs.
Louis mentioned the recently jailed nonprofit landlord Malcolm Punter, scandals involving homeless shelters and Covid services and other examples of malfeasance.
That list should include cluster housing — a program that the de Blasio administration ended in part by buying dilapidated buildings from the notorious Podolsky brothers in March 2019 for an astonishing $173 million.
That was $370,000 per unit — about four times more than the current price of rent-stabilized apartments.
But COPA, as written, would provide no public money. If the bill passes with no funding for nonprofits to buy buildings, as is likely, why should anyone be worried about thievery?
Although COPA has no subsidies to steal, the potential for financial gain is real. Nonprofits that use it to buy distressed buildings for cheap would make money by collecting rent and property-management fees, just like for-profit landlords.
Some of the rent would be from CityFHEPS, Section 8 and state vouchers. Those are not COPA subsidies per se, but it’s all public money.
And while nonprofits don’t have investors, they are businesses just like any other. The more they increase revenue, the more they can pay themselves and their favorite contractors — all under the cloak of mission-driven benevolence.
Nonprofits do have unpaid boards that are supposed to provide independent oversight, but scandals typically reveal boards that are feckless, oblivious or in the pocket of the executive director.
To promote the new COPA bill, the Mamdani administration will promise to thoroughly vet nonprofits prior to qualifying them to make offers for multifamily buildings before anyone else. Only “responsible” organizations with strong track records will be included, HPD will say.
The city always makes such assurances, yet its nonprofit partners get into trouble anyway. BHRAGS Home Care is about to receive another $200 million in city contracts — and that’s after federal prosecutors charged its leaders with bribery and embezzlement.
BHRAGS previously got $130 million in city contracts, plus $500,000 funneled to it by City Council member Farah Louis. The Department of Homeless Services eventually became suspicious and alerted investigators. Two years later, the indictments hit and the feds raided Louis’ house.
No one should be under any illusions that nonprofits are incorruptible, have no profit motive and are entirely mission-driven. The city cannot babysit them 24/7 to ensure they hire only talented and honest executives.
Nor is there any guarantee that nonprofits will operate buildings any better than for-profits do. Even those that are not corrupt or self-serving are struggling to collect rent, pay the bills and keep buildings in good repair in tenant-friendly New York.
One thing that will limit COPA scandals is that the law is not likely to produce many sales. Even supporters of similar laws in other cities acknowledge they accomplish little when no public funding is provided. Instead, the laws merely delay sales for the sake of nonprofits and tenants that lack the capacity to close deals.
If and when COPA passes and takes effect, political pressure to add subsidies will build as the law produces no sales. The more taxpayer money that is pumped in, the more will be lost to corruption. That’s not cynicism. That’s history.
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