BILL ANALYSIS Ó AB 1024 Page 1 Date of Hearing: May 1, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 1024 (Torres) - As Amended: April 10, 2013 Policy Committee: Housing and Community Development Vote: 7-0 Judiciary 10-0 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill changes the law to assist in the development and finance of cooperative housing. Specifically, this bill: 1)Exempts a stock cooperative or community apartment project from the requirement to obtain a public report from the Bureau of Real Estate (BRE) if specified conditions are met. 2)Exempts stock cooperatives from the election provisions of the Davis Stirling Act governing common interest developments if the governing documents of the home owners association provide that all members and shareholders of the cooperative are automatically members of the board of directors of the association. 3)Allow members of a stock cooperative to bring a cause of action to challenge the election of the board of directors in a stock cooperative. FISCAL EFFECT Negligible fiscal impact COMMENTS 1)Purpose. A housing cooperative (referred to in statutes as a "stock cooperative") is created when a corporation is formed for the purposes of holding title to a property and where all, or substantially all, of the members or shareholders of the corporation are entitled to lease a unit in the property. AB 1024 Page 2 According to the author, housing cooperatives lower the barrier to property ownership, and create an important vehicle for the creation and preservation of affordable housing. The author argues AB 1024 would remove some of the more significant barriers to developing cooperative housing, in addition to making two minor amendments to facilitate the approval and operation of housing cooperatives. 2)Support. According to the sponsor, the California Center for Cooperative Development (CCCD), housing cooperatives offer home ownership opportunities for low and moderate income households, and help to create and preserve affordable housing. CCCD argues this bill will exempt housing cooperatives from costly public report requirements, but only under circumstances that protect potential buyers. CCCD notes the bill also makes reasonable changes that better facilitate cooperative financing arrangements. The Sustainable Economies Law Center and several other non-profit entities that promote housing cooperatives support this bill for similar reasons. 3)Background . The California Subdivided Lands Act requires that a new housing cooperative with five or more units apply for and obtain a public report from the BRE (formerly the Department of Real Estate) prior to leasing a unit to a cooperative member. A public report is designed to protect consumers by creating a set of documents to inform purchasers of financial and structural matters related to the purchase of a unit. To obtain a public report, a cooperative must prepare numerous documents and forms, often with the help of attorneys, accountants, and engineers and submit the information to BRE. Obtaining a public report could cost a new cooperative $10,000 to $20,000 in professional and filing fees, and could take up to a year. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081