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
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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