BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1084|
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THIRD READING
Bill No: AB 1084
Author: Davis (D)
Amended: 8/30/11 in Senate
Vote: 27 - Urgency
SENATE VETERANS AFFAIRS COMMITTEE : 7-0, 6/28/11
AYES: Correa, Cannella, Berryhill, Calderon, Negrete
McLeod, Rubio, Lieu
NO VOTE RECORDED: Runner
SENATE APPROPRIATIONS COMMITTEE : 9-0, 8/25/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
ASSEMBLY FLOOR : 72-0, 5/23/11 - See last page for vote
SUBJECT : Veterans farm and home purchases: shared
equity cooperative housing
SOURCE : California Association of Veteran Service
Agencies
DIGEST : This bill allows the Department of Veterans
Affairs to fund a limited equity housing cooperative loan,
through the California Veteran Home Loan Program and
requires the fund transfer to take place within 30 days.
ANALYSIS : Existing law:
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1. Provides for farm and home purchase benefits for
qualifying veterans under the Veterans' Farm and Home
Purchase Act of 1943, and subsequent acts, which are
collectively referred to as California Veteran Home Loan
Program (CalVet).
2. 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.
3. Allows veterans to buy into a traditional co-op but not
into a shared equity co-op.
The California National Guard Members' Farm and Home
Purchase Act of 1978, administered by the Department of
Veterans Affairs (DVA), provides for farm and home purchase
benefits for designated members of the California National
Guard. The California National Guard Members' Revenue Bond
Act of 1978 authorizes, and prescribes a procedure for, the
issuance of debentures for home, farm, and mobilehome loans
under the California National Guard Members' Farm and Home
Purchase Act of 1978. The California National Guard
Members' Revenue Bond Act of 1978 creates the California
National Guard Members' Farm and Home Building Fund of
1978, and creates special accounts in that fund, including,
but not limited to, the National Guard Members' Revenue
Bond Revenue Account.
This bill:
1. Expands the definition of "cooperative housing
corporation" to include a shared equity cooperative.
2. Requires all moneys in the California National Guard
Members' Farm and Home Building Fund of 1978 and in any
account created in that fund that are not needed to meet
revenue bond obligations to be deposited into the
Veterans' Farm and Home Building Fund of 1943.
3. Requires any revenues that would have otherwise been
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required to be deposited into the California National
Guard Members' Farm and Home Building Fund of 1978, or
any other account in that fund, to be deposited into the
Veterans' Farm and Home Building Fund of 1943.
4. Appropriates all moneys deposited into the Veterans'
Farm and Home Building Fund of 1943 pursuant to this
bill to the department, and requires those moneys to be
used by the department to make shared equity cooperative
housing loans.
5. Repeals the California National Guard Members' Farm and
Home Purchase Act of 1978 and the California National
Guard Members' Revenue Bond Act of 1978, as provided.
6. Expands the definition of "home" to include a
cooperative dwelling unit, as defined.
7. Defines property, except when used in the phrase "real
property" or "personal property," as a farm or a home
and also makes changes conforming to those definitions .
8. Authorizes the appraisement of the market value of the
property to also be filed by an appraiser licensed or
certified in this state.
9. Allows the department to require a higher amount than
two percent of the selling price of the property as an
initial payment, and authorizes the department to allow
another form of security, other than a deed of trust, to
secure a loan.
10.Authorizes the department to add the costs of a stock
corporation's failure to pay, satisfy, discharge,
settle, and compromise the taxes, assessments, charges,
and encumbrances, and to insure buildings, improvements,
and crops, and to do work necessary to keep the property
in good order and repair to the selling price of the
property and authorizes the department to seek repayment
from the stock corporation for these costs.
11.Requires the department to allow a stock cooperative to
cure any failure by a purchaser to comply with the terms
of the purchase contract.
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12.Requires that a purchaser's right to occupy the property
under its contract with the department not be subject to
consent or approval by the stock cooperative, and
requires that a stock cooperative enter into an
agreement directly with the department as a condition of
taking title to a cooperative dwelling unit.
Background
The Veterans' Farm and Home Purchase Act of 1974 (Act) .
Authorizes the DVA to assist veterans in acquiring homes
and farms by generally providing that the department may
purchase a farm or home which the department then sells to
a purchaser, as defined. The Act includes in the
definition of "home" a condominium, a mobilehome, and a
residence with two or four units occupied by veterans and
their families. The Act requires, before the purchase of
any property by the DVA, that an appraisement of the market
value of the property be filed with the department by an
employee or authorized agent of the department, the Federal
Housing Administration, or the Veteran's Administration.
The Act requires the purchaser to make an initial payment
of at least two percent of the selling price of the
property and requires a loan to be secured by a deed of
trust. The Act authorizes the department to pay, satisfy,
discharge, settle, and compromise the taxes, assessments,
charges, and encumbrances, and to insure buildings,
improvements, and crops, and to do work necessary to keep
the home or farm in good order and repair if the purchaser
fails to do so. The Act also authorizes the department to
add the costs of the purchaser's failure to act onto the
selling price of the property and authorizes the department
to seek repayment from the purchaser for these costs. The
Act authorizes the department to cancel a contract,
forfeiting all rights of the purchaser, if the purchaser
does not comply with any terms of the purchase contract.
CalVet . CalVet, operated by DVA, 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
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which membership in the corporation, by stock, is coupled
with the exclusive right to possess a portion of the real
property.
Co-op housing . 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.
Related Legislation
AB 1330 (Salas), Chapter 524, Statutes of 2009, authorizes
the DVA to establish a pilot project for a cooperative
housing project, in which the DVA prescribes the rules,
regulations, and conditions necessary to implement the
pilot project. The bill requires that any cooperative
housing project established pursuant to those provisions be
restricted for use and occupancy by military veterans and
their families for a period of at least 55 years.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Share equity coops loans --- unknown, potentially
significant --- Special*
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Fund consolidation --------- approximately
$5,400 --------- Special**
--------- approximately ($5,400)
--------- Special*
*CalVet Home Loan Fund
**Cal Guard Home Loan Fund
SUPPORT : (Verified 8/29/11)
California Association of Veteran Services Agencies
(source)
AMVETS, Department of California
Associated Cooperatives and the Twin Pines Cooperative
Foundation
California State Commanders Veterans Council
New Directions
Swords to Plowshares
United States Veterans Initiative
Vietnam Veterans of California, Inc.
Vietnam Veterans of San Diego
ARGUMENTS IN SUPPORT : According to this bill's sponsor,
the California Association of Veteran Service Agencies
states "expanding CalVet to shared equity co-ops provides
an additional path for low income veterans to become
homeowners and a way for low income veterans and their
families to become homeowners and expand the pool of safe,
affordable low income housing."
Swords of Plowshares writes, "An expanded definition of
CALVET 'shred equity' co-op will provide an invaluable new
path for low income veterans to and their families to
achieve the dream of home ownership. With foreclosure
rates at historic levels, wages stagnating, and housing
costs spiraling, a 'shared equity' housing model provides a
veteran home ownership opportunities that are not only
affordable, but insulated from California's tumultuous real
estate market. More so, this type of third sector housing
ties ownership with a community based support system which
can provide strength and stability for low income urban
neighborhoods. Also, it assures affordable housing in
gentrified areas where prices have spiked well above market
value. Most importantly, 'share equity' ownership has
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proven to offer a vital stepping stone in the path from low
income housing to wealth building full market value
ownership. Along with providing a veteran home ownership
within their familial community, the passage of AB 1084 has
shown to have only minor absorbable costs associated with
its passage in addition to no representative impact
fiscally, or on the General Fund."
ASSEMBLY FLOOR : 72-0, 5/23/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Davis, Dickinson, Eng,
Feuer, Fletcher, Fong, Fuentes, Furutani, Beth Gaines,
Galgiani, Garrick, Gatto, Gordon, Grove, Hagman, Hall,
Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso,
Huffman, Jeffries, Jones, Logue, Bonnie Lowenthal,
Mendoza, Miller, Mitchell, Monning, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. Pérez
NO VOTE RECORDED: Cook, Donnelly, Gorell, Halderman,
Knight, Lara, Ma, Mansoor
RM:kc 8/29/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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