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