BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1330
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Salas
VERSION: 5/5/09
Analysis by: Mark Stivers FISCAL: Yes
Hearing date: July 7, 2009
SUBJECT:
Cooperative housing for veterans
DESCRIPTION:
This bill allows the Department of Veterans Affairs to establish
a pilot project for the purpose of operating one cooperative
housing project restricted to veterans and their families.
ANALYSIS:
The Cal-Vet loan program was established after World War I to
assist California war veterans in purchasing farms and homes by
providing long-term, below-market rate mortgages. The
Department of Veterans Affairs (CDVA) funds the program from
three different sources: general obligation bonds, revenue
bonds, and unrestricted funds it has available. Under federal
law, general obligation bond funds may only assist "wartime"
veterans who served prior to 1977. Under separate federal law,
revenue bonds may only assist veterans who are first-time
homebuyers and meet certain income restrictions. Between these
two programs and the limited unrestricted funds, CDVA is able to
assist almost all veterans, regardless of income, location, or
date of service.
Cal-Vet is different than a standard home loan program. Instead
of simply providing a loan, CDVA actually purchases a new or
existing home, farm, or manufactured home that has been selected
by an eligible veteran and then resells the property to the
veteran in accordance with a land sale contract requiring
installment payments by the veteran. Under the contract, CDVA
holds legal title to the property and the veteran holds an
equitable interest in the property until all payments have been
AB 1330 (SALAS) Page 2
made. Over its life, the Cal-Vet program has assisted more than
415,000 veterans in purchasing farms and homes.
Cooperatives are a form of housing in which resident members own
shares in a corporation that owns or controls the building(s)
and/or property in which they live. Each shareholder is entitled
to occupy a specific unit and has a vote in the corporation.
Every month, shareholders pay an amount that covers their
proportionate share of the expense of operating the entire
cooperative, which typically includes underlying mortgage
payments, property taxes, management, maintenance, insurance,
utilities, and contributions to reserve funds. In 2004, the
Legislature enacted AB 2266 (Committee on Veterans Affairs),
Chapter 834 to allow Cal-Vet to offer loans for the purchase of
shares of stock in cooperative housing corporations.
This bill allows CDVA to establish a pilot project for the
purpose of operating a cooperative housing project restricted to
veterans and their families. Specifically, the bill:
Allows CDVA to use Cal-Vet funds to operate a single
cooperative housing project, provided that the use of the
funds is consistent with all laws and regulations governing
the funds.
Requires CDVA to work in conjunction with the Department of
Housing and Community Development to implement the pilot
project.
Requires CDVA to prescribe the rules, regulations, and
conditions necessary to implement the pilot project.
Requires that the cooperative be restricted for use and
occupancy by military veterans and their families for at least
55 years.
COMMENTS:
1.Purpose of the bill . The author seeks to expand the
opportunities for addressing the housing needs of veterans by
allowing CDVA to finance cooperative veteran housing. The
pilot is limited to a single project in order to test the
model.
2.Going to the next level . Current law allows CDVA to finance a
veteran's purchase of an individual share (unit) within a
cooperative. This bill seeks to go one step further by
allowing CDVA to finance the purchase of an entire cooperative
development that will be occupied exclusively by veterans and
AB 1330 (SALAS) Page 3
their families.
3.Market-rate, not limited-equity cooperatives . Cooperatives
can either be market-rate housing or limited-equity (i.e.,
affordable) housing. While this bill allows for CDVA to
finance either type of cooperative, the idea is for the
cooperative in this pilot to be sold to veterans at market
rates.
4.Details to be determined . This bill provides very little
detail on the form or terms of financing that CDVA would
provide to a cooperative development. Presumably, CDVA would
build on its current model for financing single-family homes
by purchasing the cooperative project and then reselling it to
the cooperative entity pursuant to an installment land sale
contract. Given the pilot nature of this program, however, it
seems appropriate to allow for maximum flexibility to
facilitate the program.
5.Author amendment . The bill requires that the veteran
cooperative assisted by CDVA be restricted to veterans and
their families for 55 years. The author intends to offer
amendments in committee to delete the 55-year requirement and
instead require that the development be restricted according
to rules and regulations adopted by CDVA.
6.Technical amendments .
On page 2, line 4 strike "operating" and insert
"establishing"
On page 2, line 10 strike "operate" and insert
"establishing"
Previous Votes:
Senate VA: 6 - 0
Assembly Floor: 9 - 0
Assembly Appr: 15 - 0
Assembly HCD: 7 - 0
Assembly VA: 8 - 0
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
July 1, 2009)
AB 1330 (SALAS) Page 4
SUPPORT: California Association of Veteran Service
Agencies (sponsor)
OPPOSED: None received.