Many California workers will have a new resource when it comes to affordable housing. The California Legislature unanimously voted in favor of AB 1246, which Gov. Schwarzenegger later signed.
Rep. Dave Jones (D-Sacramento) authored the new bill that authorizes the establishment of “workforce housing cooperative trusts.”
“Californians of all income levels need access to housing, and I am proud that this bill creates a new form of affordable housing,” Jones said in a written statement on his website. “AB 1246 will allow employer and labor organizations to develop and fund workforce housing cooperatives, which will provide new lower cost home-ownership opportunities.”
Cooperative housing is designed to allow a sponsor such as an employer, labor union or other social institution to buy a plot of land and then parcel it to individual members of a cooperative. The sponsoring organization holds a common mortgage over all of the properties, and individuals buy a share in the cooperative along with the right to occupy a housing unit.
Ordinarily, a property’s equity increases as the debtor makes payments against the mortgage balance or as the property value appreciates.
AB 1246 defines housing cooperatives as limited equity housing, meaning equity increases are enjoyed by the entire cooperative and not just by individual members. The bill aims for individual payments within the cooperative to become more affordable over time even in a fluctuating real estate market.
Collective ownership through sponsor organizations is further facilitated by the sponsor organization’s membership in the San Francisco-based Federal Home Loan Bank, which will provide subsidized loans to the sponsor to help affordably finance the property.
AB 1246 has a direct effect on Davis, said David J. Thompson, who sponsored the bill and is president of Twin Pines Cooperative Foundation. For example, the Davis Joint Unified School District already owns two large sites zoned for housing. DJUSD could lease the land to a sponsor organization allowing district employees to form a cooperative on the already-owned land.
“I think there is always a moment when there is a downturn in the economy when people have to come to terms with the idea that things they could have done themselves are not possible or at least as easy anymore,” Thompson said. “You can either drop out of the [housing] market completely, or you can look at other people in your position and form a co-op.”
Sen. Lois Wolk (D-Davis) voted for the bill.
“This was a good bill sponsored by our very own David Thompson” Wolk said. “In this time of economic and housing depression this is one more option for Californians.”
Dos Pinos is a cooperative located in Davis. Between 1986 and 2004, Dos Pinos had the lowest monthly housing cost to owners anywhere in Davis, according to Thompson in a 2004 article in the Cooperative Housing Journal. Dos Pinos also had the only units which have been consistently accessible to the same or lower income groups, according to Thompson’s article.
One key difference is that cooperatives formed under the new bill would have less leeway to dissolve through member votes and transfer equity to individual owners.
“One of the dilemmas is that limited equity cooperative housing creates a fairly sizable asset,” Thompson said.
He said it is important to keep the cooperatives as a public good rather than a way to make unjust private profits.
SAMUEL A. COHEN can be reached at email@example.com.