BILL ANALYSIS AB 2087 Page 1 Date of Hearing: April 28, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 2087 (Torres) - As Amended: April 19, 2010 Policy Committee: Veterans AffairsVote: 9-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill expands the definition of "home," for purposes of the CalVet Home Loan Program, to include a residence of two to four units that otherwise meets specified requirements of the federal Internal Revenue Code and is occupied only by veterans and their families. FISCAL EFFECT Expanding the types of dwellings that could be purchased under the CalVet program could increase demand for loans. The net impact of this change on the Farm and Home Building Fund of 1943 is unknown, but could exceed $150,000 in any fiscal year. (The fund consists of revenue bonds and self liquidating general obligation bonds which are retired with payments from program beneficiaries.) COMMENTS 1)Background . The Cal-Vet loan program was established after World War I to assist California war veterans in purchasing farms and homes. Since 1922, the Legislature has passed, and the voters have approved, 27 Cal-Vet bond issues totaling $9.3 billion. These bond funds have allowed Cal-Vet to assist over 420,000 veterans in purchasing farms and homes by providing long-term mortgages. The most recent bond measure totaled $900 million and was approved in November 2008. Though these are general obligation bonds backed by the full faith and credit of the State of California, the Cal-Vet loan program is fully AB 2087 Page 2 self-supporting. The principal and interest on the bonds and the administrative costs are repaid from interest charged to the veteran loan holders. 2)Purpose . AB 1330 (Salas)/Chapter 524 of 2009 authorized the Department of Veterans Affairs to set up a pilot project for the purpose of operating co-operative housing projects for veterans. The DVA is sponsoring AB 2087 to add two- and four- unit multifamily housing units to the statutory definition of "home" because the department contends this change is necessary to allow cooperative housing as a possible use under the CalVET program. This bill is also intended to permit veterans to collectively purchase a duplex or four-plex so that they can live in a supportive environment. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081