BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 2087 (Torres) Hearing Date: 07/15/2010 Amended: 04/19/2010 Consultant: Maureen Ortiz Policy Vote: VA 4-0 _________________________________________________________________ ____ BILL SUMMARY: AB 2087 expands the definition of "home" for purposes of the CalVet Home Loan Program to include a residence of two to four units which are occupied only by veterans and their families. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Home loan expansion ------unknown, potentially over $150 annually--- Special* *Cal-Vet Home Loan Fund _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense file. There is currently over $900 million available in the Cal-Vet Home Loan Fund which is used to assist veterans in purchasing home, farms, condominiums, and mobile homes. The effect of expanding the eligibility of the use of those funds to multi-unit housing is unknown, but it would diminish the amount of money available for these purposes at a much quicker pace. This bill is intended to conform to Internal Revenue Code Section 143(k)(7) which defines a single-family residence to include a residence of two to four units, and furthers that definition to require that all units must be occupied by veterans and their families. By expanding the definition of home to include two to four multi-family units, this bill is intended to permit veterans to collectively purchase a duplex or four-plex so that they can live in a supportive environment. The program is operated by the Department of Veterans Affairs which purchases a new or existing home that has been selected by the eligible veteran, and then resells the property to that veteran. The monthly payments are set in an amount sufficient to do all of the following: 1) reimburse the department for its costs in purchasing the farm, home, or mobile home, 2) cover all costs resulting from the sale of the bonds, including interest on the bonds, and 3) cover the costs of operating the program. The Cal-Vet Home Loan Program has been funded through a series of voter-approved, self-supporting bonds - the latest being one in the amount of $900 million approved under the Veterans Bond Act of 2008 (Proposition 12). AB 1330, Chapter 524 Statutes of 2009, authorized the Department of Veterans Affairs to establish a pilot project for the purpose of establishing one cooperative housing project. AB 2087 would enable veterans to purchase homes consisting of two to four units which could ultimately be used for cooperative housing.