BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 1224
                                                                Page  1

        CONCURRENCE IN SENATE AMENDMENTS
        AB 1224 (Veterans Affairs Committee)
        As Amended  August 14, 2012
        2/3 vote.  Urgency
         
        
         ---------------------------------------------------------------------- 
        |ASSEMBLY: |75-0 |(January 26,    |SENATE: |36-0 |(August 22, 2012)    |
        |          |     |2012)           |        |     |                     |
         ---------------------------------------------------------------------- 
         

         ------------------------------------------------------------------------ 
        |COMMITTEE VOTE:  |8-0  |(August 28, 2012)   |RECOMMENDATION: |concur    |
        |(V. A.)          |     |                    |                |          |
         ------------------------------------------------------------------------ 

        Original Committee Reference:    V. A.  

         SUMMARY  :  Makes technical changes to allow the Department of 
        Veterans Affairs (CalVet) to implement a cooperative housing 
        program.  

         The Senate amendments  :

           1)   Delete the language concerning the Employment Training 
             Panel.

        2)Authorize CalVet to adopt regulations necessary for cooperative 
          dwelling units in accordance with the Administrative Procedure 
          Act.

        3)Revise provisions relating to forfeiture and the calculation of 
          net gain in connection with the sale of a cooperative dwelling 
          unit.

        4)Eliminate the requirement that the higher amount of down payment 
          determined by the department to be paid by the purchaser be based 
          on the creditworthiness of the purchaser and instead provide that 
          the higher amount be determined based the creditworthiness of the 
          purchaser and with consideration of his or her military record, 
          employment record, financial condition, and other similar factors 
          as determined by CalVet.

        5)Contain an urgency clause allowing the bill to take effect 








                                                                AB 1224
                                                                Page  2

          immediately.

         AS PASSED BY THE ASSEMBLY  , this bill did not contain the language 
        concerning the cooperative housing program.  Instead the bill 
        concerned the Employment Training Panel.

         FISCAL EFFECT  :  According to the Senate Appropriations Committee, 
        pursuant to Senate Rule 28.8, there are negligible state costs.

         COMMENTS  :  This bill left the Assembly with different contents.  It 
        was amended in the Senate to remove the contents pertaining to the 
        Employment Training Panel and insert the current contents 
        pertaining to cooperative (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 an exclusive right to occupy a 
        particular unit owned by the corporation.   A shared equity co-op 
        is similar to a regular co-op except that a portion of the 
        corporation is owned by a non-profit who "shares" the unit with the 
        buyer and/or 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 and shared equity co-ops provide 
        low income individuals and families the opportunity to become 
        homeowners.

        This bill is at the request of CalVet in order to implement a 
        program already authorized in statute (AB 1084 (Davis), Chapter 
        377, Statutes of 2011) to expand the supply of housing for veterans 
        through a co-op housing program.  According to CalVet, most of 
        these changes are technical in nature but necessary to allow it to 
        move ahead with the program.  In particular, due to the differences 
        in cooperative dwelling unit projects from typical farm and home 
        loans, CalVet requires explicit statutory authority for it to enact 
        regulations for cooperative dwelling units in the areas of:

        1)Appraisal requirements.

        2)Drafting of the purchase contract.

        3)Insurance replacement cost coverage.

        4)CalVet discretion to discharge delinquent taxes, encumbrances, 
          etc. to keep property in good repair.









                                                                AB 1224
                                                                Page  3

        5)CalVet's options in the event of a contract cancellation and 
          property repossession.

        6)CalVet's obligations to the purchaser in the event of a default, 
          sale and realization of net gain on the sold property.

        This bill also alters the down payment provision which requires for 
        CalVet loans a down payment of 2% or a higher amount based on the 
        creditworthiness of the purchaser.  As amended by this bill, the 
        law would still require a 2% down payment and would still permit a 
        higher down payment based on the creditworthiness of the purchaser. 
         In addition to, not in lieu of creditworthiness, CalVet in 
        determining the higher amount, shall consider the purchaser's 
        military record, employment record, financial condition, and other 
        similar factors as determined by CalVet.


         Analysis Prepared by  :    John Spangler / V. A. / (916) 319-3550 


                                                               FN: 0005747