BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1084
                                                                  Page  1

          Date of Hearing:   May 11, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                 AB 1084 (Davis) - As Introduced:  February 18, 2011 

          Policy Committee:                              Vets Vote:7-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:               

           SUMMARY  

          This bill would expand the definition of cooperative housing 
          corporation to include a shared equity cooperative for purposes 
          of the California Veteran Home Loan Program (CalVet).

           FISCAL EFFECT  

          Minor additional cost pressure to CalVet funding.

          Funding for the CalVet program comes primarily from general 
          obligation bonds that are repaid through monthly mortgage 
          payments. The program has no General Fund costs. Voters have 
          passed 23 veterans bonds since 1943 to provide funding for 
          CalVet. The last veterans' bond to pass was Proposition 12 in 
          2008, which authorized $900,000,000 in bonds for the program.  

           COMMENTS  

           1)Rationale  . According to the sponsor, the California 
            Association of Veteran Service Agencies, expanding CalVet to 
            shared equity co-ops provides an additional path for low 
            income veterans to become homeowners.  

           2)CalVet,  operated by CDVA, offers home loans to qualified 
            veterans at competitive interest rates with a low or no down 
            payment. Properties purchased with a CalVet loan must be 
            owner-occupied and located in the state.  Existing law defines 
            "cooperative housing corporation" for purposes of CALVET to 
            mean a real estate development in which membership in the 
            corporation, by stock, is coupled with the exclusive right to 
            possess a portion of the real property.   









                                                                  AB 1084
                                                                  Page  2

           3)Co-op housing  is a form of home ownership in which a 
            corporation owns residential property, typically a condominium 
            style property. Owners purchase a share in the corporation, 
            which gives them the right to occupy a particular unit owned 
            by the corporation.  A shared equity co-op is similar to a 
            regular co-op except a portion of the corporation is owned by 
            a non-profit who shares the unit with the buyer/homeowner. 
            Purchase of the shared equity units is limited to defined 
            low-income buyers, seniors, families, veterans, etc. When the 
            homeowner sells, a portion of the equity gain is shared with 
            the non-profit partner. Shared equity co-ops provide low 
            income individuals and families the opportunity to become 
            homeowners.

            Existing law currently allows veterans to buy into a 
            traditional co-op but not into a shared equity co-op.  

           4)Technical amendments may be necessary for bond counsel  . 
           


          Analysis Prepared by :    Geoff Long / APPR. / (916) 319-2081