BILL ANALYSIS
AB 1330
Page 1
Date of Hearing: April 29, 2009
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 1330 (Salas) - As Amended: April 22, 2009
SUBJECT : Veterans: pilot project: cooperative housing.
SUMMARY : Authorizes the California Department of Veterans
Affairs (CDVA) to establish a pilot project for the purpose of
operating a cooperative housing project. Specifically, this
bill :
1)Requires CDVA to work with the Department of Housing and
Community Development (HCD) to develop a pilot project for the
purpose of operating a cooperative housing project.
2)Allows CDVA to use existing home loan funds to operate the
pilot project.
3)Directs CDVA to develop the rules, regulations, and conditions
necessary to implement the pilot project.
4)Requires any cooperative housing project that is established
through this project must be restricted for use and occupancy
by military veterans for a period of at least 55 years.
EXISTING LAW
1)Establishes the Veterans Farm and Home Purchase Act of 1974
and subsequent acts to provide veterans with an opportunity to
acquire farms and homes (Military & Veterans Code Section
987.50 et al).
2)Authorizes CDVA to assist veterans in acquiring homes and
farms by generally providing that the department may purchase
a farm or home, which the department then sells to a purchaser
(Military & Veterans Code Section 987.51).
3)Defines "home" as any of the following:
a) a parcel of real estate upon which there is a dwelling
house or other buildings that will, in the opinion of CDVA,
suit the needs of the purchaser and the purchaser's
dependents as a place of abode;
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b) a condominium;
c) a mobilehome; and
d) cooperative housing. (Military & Veterans Code Section
987.51)
4)Permits CDVA to contract with a veteran for construction of a
dwelling house and other improvements for a farm or house
under the following terms and conditions:
a) CDVA approves the property submitted;
b) The veteran agrees to reside on the property within 60
days of purchase or within 60 days after the residence is
completed and will reside in the property until all
payments due to CDVA are paid;
c) The veteran is the owner of the real property upon which
the home is to be built or the mobilehome is to be located;
d) The veteran pays a reasonable fee to CDVA to cover the
cost of processing the application;
e) The veteran files adequate plans and specifications for
the improvement to be constructed upon the real property
and a contract by a licensed contractor for the
construction of the improvements within 12 months of
acquiring the real property with CDVA; and
f) CDVA approves any other required documents or security
instruments associated with the property.
(Military and Veterans Code Section 987.60)
5) Authorizes the Veterans Bond Act of 2008 for the purpose of
creating a fund to provide farm and home aid for veterans in
the amount of $900 million (Military and Veterans Code
Section 998.400) .
FISCAL EFFECT : Unknown
COMMENTS : In 1921, the Legislature created the CalVet Program
(CalVet), to provide farm and home buying assistance to the
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veterans returning from World War I. CalVet currently operates
under the authority of the Veterans Farm and Home Purchase Acts
of 1943 and 1974 and various bond acts set forth in the state
Military and Veterans Code. In 2008, the voters approved
Proposition12: the Veterans Bond Act of 2008, which authorized
$900 million for CalVet [SB 1572 (Wyland), Chapter 122, Statutes
of 2008].
Since its inception 83 years ago, the state has assisted more
than 400,000 California veterans of World War I and World War
II, through CalVet, as well as those serving on active duty
during the Korean, Vietnam, and Persian Gulf conflicts. The vast
majority of state assistance has been provided for the purchase
of single-family homes, although some farm, mobilehome, and
condominium purchases have also been financed through the
CalVet. California is one of five states to operate such a
program.
CalVet is different then a standard home loan program. CDVA
purchases new and existing homes, farms, and mobilehomes that
have been selected by an eligible veteran and then resells the
property in accordance with a contract requiring installment
payments by the veteran. Despite this distinction, CalVet
operates very much like a conventional home loan program.
Veterans participating in the CalVet make monthly mortgage
payments just like any typical borrower.
Cooperative Housing : A "limited equity housing cooperative"
(cooperative) is a corporation which is organized as a nonprofit
public benefit corporation of which holds title to real property
for the benefit of a trust. Cooperatives are made up of members
who own stock in the corporation.
Rather than paying a mortgage payment each month, each share
holder pays his or her share of the total operating costs of the
corporation. Benefits to the share holder under such an
arrangement include establishing personal income tax deductions,
lower turnover rates, lower real estate tax assessments (in some
local areas), controlled maintenance costs, and resident
participation and control.
By design, the transfer value of an owner's membership in the
cooperative is limited in order to keep the housing affordable.
The transfer value of a membership must be defined in the
articles of incorporation or bylaws of the cooperative and are
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further limited in state law. Existing law establishes the
transfer value of a members share as the aggregate of the amount
the first occupant paid for the share, the value of any
improvements made by the member (and that were approved by the
board of directors) to the share and the accumulated interest on
the share not to exceed 10% annual increase on the amount
originally paid for the share.
The author of this bill seeks to expand the opportunities for
addressing the housing needs of veterans by directing CDVA to
develop a pilot project in consultation with HCD for the purpose
of operating cooperative housing.
If CDVA were to develop a pilot project for cooperative housing
one possible outcome could be affordable housing for veterans,
in a cooperative setting, limited to veterans' occupancy for 55
years. Veterans as shareholders of the cooperative would
realize the benefits listed above of cooperative housing.
Committee amendments:
1)The committee may wish to extend the restriction that limits
cooperative housing to veterans for 55 years, developed by
this program, to veterans' families. This change is
consistent with the existing standard for homes purchased
using CalVet.
Double referred : The Assembly Committee on Rules referred AB
1330 to the Committee on Veterans Affairs and Housing and
Community Development. The bill passed the Committee on
Veterans Affairs on April 14, 2009 by a vote of 8-0.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085