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