Vermont Legislature SmartTranscripts:

[Rep. Marc Mihaly (Chair)]: Good morning everyone, it is Tuesday, January 27, this is the House Committee on General and Housing. We are continuing to hear H-seven 57, which is an act relating to manufactured homes and limited equity co ops. Because of the snow, most of the committee is online, and some are going to be arriving a little late. What we're doing this morning first thing is before the floor is we are continuing legislative council's presentation of the context of the bill and the bill, and we got through a lot of it on Friday, and now we are focusing on limited equity co ops. So, Cameron, do you want to identify yourself and take it away?

[Cameron Wood (Office of Legislative Counsel)]: Yes, happy to. Good morning. For the record, Cameron Wood, Office of Legislative Counsel. Just going to reorient the committee on where we were Friday afternoon. We began talking about age seven fifty seven as a whole. You got to walk through specific sections of the bill from some of my colleagues and legislative council, and then we kind of took a step back and we really just were talking about manufactured homes in general and the chapter in Title IX related to the sale of manufactured homes and how they're sold via bill of sale residential real estate, etcetera. We took a pause because we wanted to come back, Mr. Chair, as we mentioned this morning and really shift gears a little bit and just kind of talk more broadly about what is a limited equity cooperative because the bill itself, it makes amendments to the mobile manufactured homes chapter and then it also makes amendments to certain limited equity cooperatives. If you all recall related to the stormwater management that a radiant walk through make some amendments related to taxes for limited equity walk throughs that John Brady had walked through, etc. So I wanted to start this morning and really just talk about what is a limited equity cooperative. And so for everyone I'm going to share my screen again and we're not going to talk about the bill, we're just going to talk about what is current law. Just taking a few things off my screen so I can see, okay zoomed in now.

[Rep. Marc Mihaly (Chair)]: A little bigger maybe if you want, if you can, you might not be able. Yeah, okay.

[Cameron Wood (Office of Legislative Counsel)]: So we are in title 11, which is corporations, partnerships and associations. Title 11A deals with private corporations and title 11B I believe deals with non profit corporations, but that's what we're talking about here, we're talking about corporations. A cooperative housing ownership or a co op, is a type of corporation that is incorporated under this chapter of Title XI. So in corporation's title, Chapter 14, Cooperative Housing Ownership Act. Now fifteen eighty two, the first section I want to point out, what is the purpose of these entities? The purpose of this chapter is to foster creation and preservation of affordable housing in Vermont by enabling individuals to form cooperative housing corporations, including a limited equity cooperative, for the purpose of developing, acquiring, owning, and operating housing on a cooperative basis. That's what these entities or the purpose of what these entities were originally set out to do, to allow individuals to collectively form a corporation to invest in and develop housing. Now we're going to skip through the definitions, we're going to come back to some of these here in a minute, but I just want to highlight one other section quickly is section fifteen eighty five, the use of the terms cooperative housing, housing cooperative or cooperative apartments or any variance thereof in identification of a dwelling unit is reserved to cooperative housing corporations organized under this chapter. So anytime you're hearing or using the phrase cooperative housing, housing cooperative, etc, it should be referring to a corporation that is organized under this chapter. Okay, so how do these entities exist or how do they operate? Essentially they operate in a similar manner to a corporation in that there are articles of incorporation that have to be filed and certified with the Secretary of State. The articles have to include this list of information, a statement that there is only one class of stock, statement of the restriction on transfers of sales, rates of dividends if any, reservations of the right of the cooperative housing to acquire membership shares, basis of distribution of assets upon dissolution, etc. So essentially the way this works is you have a collective group of individuals, they form this corporation, they all get one share of said corporation. And that share grants them a proprietary, the rights to a proprietary lease from the cooperative housing itself. So I'm not going to run through every single section here this morning because I want to talk about limited equity cooperatives then I'll just back up and out loud for questions, but you know there are sections in here regarding certain minimum occupancy requirements, there have to be I think it's at least 80% of the occupancy of the housing has to be occupied by the members. There are certain restrictions on how subleasing can happen, it can only happen one year at a time. There is, you know this section here is about membership, you get capital stock in the corporation. As I mentioned, that gives you a right to a proprietary lease to live in the housing that is owned by the Cooperative Housing Corporation. By law requirements, voting, every individual gets one vote. And then there are certain sections related to governing the board of directors, etcetera, etcetera. I'm not going get into all that necessarily this

[Rep. Marc Mihaly (Chair)]: morning unless there are specific questions that come up. So this is a corporate form, it's just a very specific corporate form.

[Cameron Wood (Office of Legislative Counsel)]: Yes, sir. Okay, now there is a specific section in here fifteen ninety eight limited equity cooperatives. This is a subset or a sub type of a cooperative housing corporation, and it is the purpose right here, it is for the purpose of providing and preserving housing for persons and households of low and moderate income at the time they purchase their memberships. There is a definition of low and moderate income in the definitions section. Low income is tied to 80% of area median income, moderate is tied to 100% of area median income essentially. How does the LEC go about doing that? Well, number one, first off the articles have to require that the cooperative interest, so the interest that you have, the stock, the one capital stock that you own that gives you a right to that proprietary lease to live in the housing of the housing corporation, it cannot be sold or excuse me, it has to be sold at not more than a transfer value determined by a limited equity formula contained in the articles. Now this formula again is designed to ensure that the stock, the purchase price to gain that stock to be a member of the housing corporation has to be at a price that is available to individuals of low and moderate income. What those formulas exactly look like and how these entities come up with those formulas, I'm not the best person to answer that question and you may want to

[Rep. Marc Mihaly (Chair)]: get But it's in the, it's got to be in, it's in each.

[Cameron Wood (Office of Legislative Counsel)]: It has to be in the articles itself.

[Rep. Marc Mihaly (Chair)]: Right, so the law isn't specifying how you do it, it's just telling you that the purpose is to make sure that you're carrying out the purpose of the living.

[Cameron Wood (Office of Legislative Counsel)]: Right, the purpose is to make sure that this is available to individuals at these income levels, you are limited in selling it, the stock at whatever this formula that has been designed to ensure that it's accessible to these individuals And then it's capped at that point and it can only be amended only if the amendment does not, this is in sub two here, does not make the membership unaffordable for that class of individuals. So there is this statutory restriction that it has to be accessible to these people and how you go about creating that formula isn't prescribed in the statute.

[Rep. Ashley Bartley (Vice Chair)]: This is a new concept for me. I'm just trying to wrap my head around it. Who is then liable or responsible for checking this information if someone, you know, they have somebody who now wants to buy, someone someone's looking to sell, someone who wants to buy it and, like, transfer that, who is then Secretary of

[Rep. Marc Mihaly (Chair)]: State or

[Cameron Wood (Office of Legislative Counsel)]: is it

[Rep. Ashley Bartley (Vice Chair)]: the Who who has to check all of that information? When I bought my house, it goes through the underwriters and know, what happens there?

[Cameron Wood (Office of Legislative Counsel)]: The statute goes all the way back to the late 80s. Okay. What I can say is the only kind of check that I can imagine, so this is a lot of assumptions on my part, so the first part of my answer to you is I don't know the answer to that question. But what I can say is in this sub two it does say that as mentioned you have this formula once established can only be amended if it remains affordable for these individuals and then it says as determined and certified by the commissioner of housing, that would be THC, Department of Housing and Community Development. I don't know how that department goes about continuing to monitor these, if they are monitoring at all, if they actually do sign off in practice, I don't know how that is shaping up. But arguably, the articles of incorporation have to be filed with the Secretary of State. I don't know to what extent the Secretary of State is doing an initial check on what this formula looks like before they certify them as a corporation. Subsequently, if there is an amendment, it says as determined and certified by the commissioner of THCD, I don't know to what extent they are certifying them as well. Individuals you would probably want to have in incumbents.

[Rep. Marc Mihaly (Chair)]: I think the Secretary of State, that process is so automatic and so quick, I can't imagine that there's much substantive review. In many states for these charitable corporations, it's the Attorney General's Office has a charitable section that does this, but I suspect the answer is, as is so much the case in Vermont, that the law is there and it's not enforced by any of it.

[Rep. Ashley Bartley (Vice Chair)]: Was a practical matter. That had been my assumption, but

[Cameron Wood (Office of Legislative Counsel)]: A few other pieces I want to highlight for these limited equity cooperatives, that are kind of restrictions on the ability of the LEC to sell property or transfers. Cannot, this is the sub three, they can't sell or substantially alter its assets to circumvent the public purpose of this section. The articles have to require that the cooperative has the right of first repurchase of a member's cooperative interest because as a member you have the right to sell or transfer that membership share to other individuals. That right can be restricted by the Articles of Incorporation, but I just want to be clear for everybody, mean you own a piece of capital stock and that stock can be sold or transferred to other people. But I think the key piece are five and six here. The articles and corporations shall require that the total distribution out of capital to a member shall not exceed the transfer value, which again as we mentioned above, the transfer value has to be limited based on this formula to help be available to low and moderate income individuals. And then the sub six here is the articles of incorporation shall require that upon dissolution of the housing cooperative, if it's an LEC, any assets remaining after retirement of corporate debts and distribution to members shall be distributed to a charitable organization described as a 501c3, a public agency or another limited equity cooperative. So what that means is if the individuals vote to dissolve the limited equity cooperative, they sell the property for whatever they can get at market value presumably, they pay off their debts, they pay the individuals back their transfer fee, which again is capped because it's supposed to be for individuals of low and moderate income, and then whatever remains can only be transferred to a non profit or to another limited equity cooperative. So there are these restrictions on what individuals can get for these shares and restrictions on what the LEC as a whole can do with any remaining assets after dissolution. So I'm gonna pause there, maybe just open it up to questions, I'll just leave you with this. Really these are corporations that exist to help people with collective homeownership and then keep in mind as you're walking through and you're hearing from individuals, you have cooperative housing corporations and then you have limited equity cooperatives. So as a subset. As a subset of those and then as we've discussed, started discussing on Friday, you have a subset of manufactured home communities that are limited equity cooperatives. So not every limited equity cooperative is a manufactured home community or a mobile home park. So when you're talking about limited equity cooperatives, just understand that you could also be talking about many other things that aren't mobile home parks, manufactured home communities And also understand that there is this distinction because some of these entities may be in a more for profit type model, Cooperative Housing Corporation, that's not a limited equity cooperative, which appears to be more designed for low moderate income individuals and appears to

[Rep. Marc Mihaly (Chair)]: be restricted more as a type of nonprofit. So one of the things, a remark for the committee, what this means is that in drafting, marking up this bill, we have to make sure that we don't inadvertently have a If we have a provision that we really just want to apply to limited equity co ops that are mobile home, that are manufactured home communities, If we wanna do that, we have to make sure we're doing it. Here's the end goal. We wanna make sure that we're not going beyond to inadvertently make new law that would apply to all cooperative community housing or even to all limited equity co ops, including those that aren't manufactured home communities.

[Cameron Wood (Office of Legislative Counsel)]: Here's a good example. You were walking through last Friday specific provisions of the bill and you met Michael O'Grady in here and he was talking to you about the storm water fees. The way the language is currently drafted, it says, and this is going to be on page 13 for those individuals who may have the bill in front of them, I'll pull it up as well so if I can see it this case. So this is the section related to stormwater permits, stormwater management, and then down here it says a permit shall not be required for stormwater discharges, I'm on line 21, page 14, for stormwater discharges from infirmary surfaces controlled by a cooperative housing corporation registered as a limited equity cooperative. So that would apply to any limited equity cooperative regardless of whether it's a manufactured home community or not. That is the It

[Rep. Marc Mihaly (Chair)]: really gets put in there either by definition or specified, and also there's a provision on limiting the ability to sublease and defining the amount of rent, which is different than what's in the statute, and if we amend the statute, we have to be very clear. I hope I'm saying this right, Gayle, we have to be clear that we're talking about limited equity co ops that are manufactured housing communities. Correct.

[Cameron Wood (Office of Legislative Counsel)]: And so a few things, for starters I will, apologies, I'm gonna get back to sharing my screen. I will comment that there already is in the statutory framework a slight distinction for entities that are what it says are mobile homes. Just forgive me for the scroll because I wanna get there. Okay. So

[Rep. Gayle Pezzo (Member)]: Fifteen ninety.

[Cameron Wood (Office of Legislative Counsel)]: What this section is here for is it's saying you've created a corporation, a cooperative housing corporation. Again, it's intended to have membership shares and those membership shares people are supposed to live in this housing entity and so this section says that within two years after issuance of the certificate of corporation, the Cooperative Housing Corporation shall secure memberships or subscription agreements representing not less than 80% of the units in the co op. So this just applies to all of them, LEC's or not, it's all of them. You're going to create a housing corporation within two years you need to have 80% of the housing needs to be filled with members. But then it deals with in cases of conversion, so if you're converting a current apartment building for example, into a corporation that's going to be a cooperative housing corporation, you have to at the point of incorporation, you have to have no less than 50% of the units have to be secured prior to issuing the certificate. So you need 50% of the units have to be members in order to do it before we're even going to certify you as a corporation. If it is a mobile home park, that rate goes down to 25%. So middle of this paragraph here in the case of conversion of a mobile home park subscription agreements representing no fewer than 25% of the units, so a lower threshold for a mobile home park to be converted into a property of housing corporation. So I'm only bringing this up, I'm not trying to confuse everybody, I'm only bringing this up to say there are distinctions in the chapter.

[Rep. Marc Mihaly (Chair)]: Is mobile home park defined in the chapter?

[Cameron Wood (Office of Legislative Counsel)]: I believe it probably references back to the definition in 10 BSA, but I actually don't know that it is, I'm checking right now. It's not a defined term in the definition section and I'm not seeing it defined here either. So maybe worth either again having your own definition if you're going to make other changes in the statutory section, or you want to limit things to manufacturing communities that are LEC's, you may want to define the term in this chapter or reference back to what you got typed in.

[Rep. Ashley Bartley (Vice Chair)]: Just going over conversion, in the case of a manufactured community, it's after conversion, no fewer than 25% before the articles are certified, correct?

[Cameron Wood (Office of Legislative Counsel)]: It is at the point of conversion, before you get your R and D corporation, you need to have secured at least 25% of the homes But with

[Rep. Ashley Bartley (Vice Chair)]: then in the two years after, it goes back up. Yes. What happens if you don't?

[Cameron Wood (Office of Legislative Counsel)]: My understanding is then it would dissolve, it does not become a cooperative housing corporation. Well, we've made it.

[Rep. Marc Mihaly (Chair)]: Our group is added by one, Elizabeth just came in.

[Rep. Ashley Bartley (Vice Chair)]: Cameron, I don't think you're the right person to ask, and I apologize. Do you know how many LEC's we have in the state of Vermont?

[Rep. Marc Mihaly (Chair)]: Do you know, Gayle, how many LEC's that are manufactured home communities there

[Rep. Ashley Bartley (Vice Chair)]: That's not what they asked. That's not what they asked.

[Rep. Marc Mihaly (Chair)]: But I'm just asking. Okay, answer my question first. He just says he doesn't know.

[Cameron Wood (Office of Legislative Counsel)]: The Secretary of State's office should be able to provide you with that information because again these are rich in corporations. Okay,

[Rep. Marc Mihaly (Chair)]: you're muted.

[Rep. Gayle Pezzo (Member)]: Did did Ashley just ask only LECs? No. How

[Rep. Marc Mihaly (Chair)]: many LECs? But she wants to know LECs without limit as to whether they're manufactured home care. Correct.

[Rep. Gayle Pezzo (Member)]: So there's 19, there's actually 19 LEC manufactured homes and of that 19 it's either 16 or 17 that a resident owned mobile home, the definition of mobile home park, limited equity, cooperatives, non profit. Wait.

[Cameron Wood (Office of Legislative Counsel)]: So that's about nonprofit, not then?

[Rep. Ashley Bartley (Vice Chair)]: Yes.

[Cameron Wood (Office of Legislative Counsel)]: If you don't mind well.

[Rep. Ashley Bartley (Vice Chair)]: Is that different?

[Cameron Wood (Office of Legislative Counsel)]: Okay, so I'm going to jump back to the bill real quick. So this is section two beginning on page eight. You all remember section one was amending the sections related to mobile homes, residential real estate, the deeds have to be in a specific form and you're striking all of that information. So okay, now we're moving to section two, which is amending limited equity cooperative. So as you can see, we're in that section we were just walking through. What I'm doing or what the bill is doing here is on page ten, seven, subsection seven, it is

[Rep. Marc Mihaly (Chair)]: currently

[Cameron Wood (Office of Legislative Counsel)]: the language states that the articles of incorporation require that any sublease of a unit in a limited equity cooperative shall provide, this is line twelve and thirteen, shall provide for monthly payments by the subleasee in excess of 110 percent of monthly payments for the unit provided for in proprietary It says no sublease shall provide for monthly payments in excess of 110%. What does that mean? So keep in mind, let's just, we have a housing corporation. It's set up as a limited equity block. So it's designed to be available to individuals who are of low and moderate income. You have your proprietary lease to live in the apartment manufactured home, whatever it is, you're paying monthly to the housing corporation for your proprietary lease. That payment I imagine can cover a range of things depending on how the corporation is set up. Presumably it should be paying for maintenance, taxes, administration of the cooperative itself but could be paying for other things, depends on how it's set up like I said. Currently there are limitations on subleasing because the point of these entities is you get a membership and you're supposed to live there, that's the concept, that's the purpose of why these are created. There are restrictions that say that 80% of the housing corporation should be, individuals living there should be members of the corporation. There's a restriction in a separate section that says if you're going to sublease a unit, you can only sublease them for one year at a time. What this section seven currently says is if you're going to sublease a unit from a limited equity cooperative, you cannot sublease it from, you have to require that no sublease shall provide for monthly payments by the subleasee in excess of 110% of the monthly payments for the unit provided in the proprietary lease. So if your proprietary lease says that you pay $100 a month, this section says you can't pass that monthly payment on to the sub lessee for more than 110%. So in that case, more than $110 As I read this, putting it in context of the remainder of that section, it's to ensure that these housing units are available to individuals with moderate income. That's how you protect that, as you say you can't lease it or you can't pass on this monthly payment. What this change is going to do is it's going to say for a limited equity cooperative organized prior to 07/01/2026, the effective date of the action, that. The origins of incorporation require that for any sublease the total cost of the rent for the units including utilities not covered etc shall not exceed applicable fair market rent. My understanding is this is intended to address a bit of confusion about what the current section says, so again the current section is shall not provide for monthly payments by the sub lessee and it's just 110%

[Rep. Marc Mihaly (Chair)]: and it's confusing about what the term monthly payment is. Part of what is going on here and then of course in section B, if it's after July 1 it's prohibited.

[Cameron Wood (Office of Legislative Counsel)]: Unless there is a waiver because of a hardship. You can't sublease after for a co op established after July, you can't sublease period unless there's a hardship. So the idea was

[Rep. Marc Mihaly (Chair)]: for organizations, for limited equity co ops organized before the date of the act, the feeling was that it's, let's say your monthly payment is $500, and so this would allow you to charge $5.50. And the feeling is that the extra $50 is not fair because it doesn't take into account the value of the house, that is the value of the unit itself. So, let's say HUD fair market rent, which is below market, is actually below market because that's the way it is, is a thousand dollars a month, then you can charge a thousand dollars a month. But, if you're organized after the act, you just can't suddenly settle.

[Rep. Ashley Bartley (Vice Chair)]: Are hardships defined in this and or who is responsible for granting hardships, and or why?

[Cameron Wood (Office of Legislative Counsel)]: It's not defined, and it would be the board of directors.

[Rep. Ashley Bartley (Vice Chair)]: Could I just put a pin in that for the committee, I don't love that.

[Rep. Marc Mihaly (Chair)]: Okay,

[Cameron Wood (Office of Legislative Counsel)]: so the next thing, I'm, Rev. Bartley, I wanna get back to the question you were about to ask, gets me to the subsection B here. So this says, notwithstanding any law to the contrary, Cooperative Housing Corporation organizes a limited equity cooperative shall be treated as if it has incorporated as a nonprofit corporation under the laws of the state. Here's where you're going to need to get the Secretary of State's office in here to discuss this. Forgive me, I know this stuff is very technical and dense. The chapter that we're in that authorizes cooperative housing corporations to register, it references when it makes a reference to other definitions, when it makes a reference to certain things required by the articles of incorporation, etc. It references back to title 11A. Title 11A deals with registration and creation of for profit corporations. Non profit corporations are governed by title 11B. At one point, at some point, the Secretary of State's office was essentially registering or treating LEC's as if they were non profits And they were registering them as such in their systems. At some point, they changed that, and they started treating them more as a for profit model. Why? Because the references I just mentioned in the chapter reference to for profit entities, not nonprofit entities, because the structure of the corporation is not set up as if it were a nonprofit. So in a nonprofit, you don't have shares. There aren't members with stock. Even though there are these restrictions on what certain individuals can do with their shares in a cooperative housing corporation, and there are further restrictions on what people can do if it's a limited equity cooperative, you still have ownership stock in a corporation. So it is slightly different than what a nonprofit is designed to be. So what this section is doing is it's saying, regardless of that, you need to treat them as if they are a nonprofit. Whether the Secretary of State's office thinks that this language will actually affect something and what that will do, you need to have them in to have a conversation because at the end of the day, what does it mean? Nonprofits have different annual reporting requirements, they have different fees associated, etcetera. So there are slight differences but how that will actually work on the ground with the secretary of state's office, you need to talk with them, they have new systems, they have new processes they're going through, etcetera. So you just may want

[Rep. Marc Mihaly (Chair)]: to have them come in and talk. Couple of questions. First of all, just to, I think it really matters a lot if you're going to get grants because a lot of grants are not available to support products. But the other thing that mystifies me is there is such a thing as a cooperative, it's not a for profit, it's not a five zero one(three), it's a co op. We have all kinds of co ops in the state. Does the Secretary of State not have a co op category?

[Cameron Wood (Office of Legislative Counsel)]: And that's why I'm saying, so to answer them in a reverse order, that's why I think you need to have the Secretary of State in to ask them that question. Again, my understanding is some are registered as non profits in their system, some are registered as for profits and then I don't know to what extent some of them are registered in this third category of co op. I don't know if their new system allows you to designate it as a cooperative housing corporation and it doesn't matter whether it's a for profit or a nonprofit. And that's the question you got to ask, what does it matter if it's treated as a nonprofit or a for profit? It's going to determine what are their reporting requirements, what are their annual fees, if any, and so there are some impacts there, don't get

[Rep. Marc Mihaly (Chair)]: me wrong. Well, and third parties consider it important.

[Cameron Wood (Office of Legislative Counsel)]: And then to your first question is going to be, well, is where you need to have other individuals who maybe operate limited equity cooperatives come in and speak to their experience about accessing certain funds. My understanding is you can't access certain grants at either the federal or the state level if you are a for profit entity and so this could help impact certain state grants. Keep in mind, is the state, this is the federal, we have no control over federal funds. These entities, my understanding is they can try to register as a nonprofit at the federal level. You don't have to be a nonprofit at the state level to become a five zero one(three) for the IRS purposes. Keep in mind, this is five zero one(three) is an IRS designation that deals with your federal tax obligations. So the state determining that you are one thing isn't impacting what the IRS is going to say that you are. So having this provision in here isn't going to change what you can and can't do at the federal level and how you go

[Rep. Marc Mihaly (Chair)]: about doing that. You're saying that as a matter of state law, right? I can tell you that when you file your five zero one(three) form, you have to include your nonprofit designation by the state.

[Cameron Wood (Office of Legislative Counsel)]: But it's not my understanding and again that's where you need to speak to other secretaries of state, etc, you're not required to be a nonprofit at the state level to get a nonprofit designation. They're exclusive determinations. But it also impacts in developing this, we had some conversation with certain limited equity cooperatives, their attorneys and their financial advisors, etcetera. I mean, are impacts here, significant impacts on how these entities receive grants if they're treated as revenue, etcetera, based on their state and federal designation. So I'm not minimizing the impacts here at all. I'm just wanting to make sure you all as a committee understand, A, you want to make sure this language is something that the Secretary of State's office comfortable with, you're directing them to do what you want them to do. And then whether it has a significant impact on how they're registered with the Secretary of State, you wanna ask them that question. And then just making sure you all understand that regardless of what you do at the state level, there are these federal impacts that it's not going to change. And so you may want to have people come in and speak to that so you understand some of those distinctions. The last piece here, the subsea was again more of just trying to indicate at the state level that for state funding and grant purposes, a cooperative housing corporation organized as a limited equity cooperative shall be treated as serving individuals with low and moderate incomes. Trying to put in language here to indicate for state funding purposes, these entities serve these types of populations of people, so that hopefully these entities would then be eligible to access certain funds that are specifically designated to serve individuals of low and moderate income. I

[Rep. Marc Mihaly (Chair)]: think the purpose here is to try to short circuit a rather complicated paperwork problem that limited equity co op mobile home communities have, manufactured home communities, which is every time they apply for a grant they have to certify that they serve low and moderate income, and they have to prove it, and this is saying they can cite this section and say it's generic. One thing I would say that you should think about is, I mean, it's pretty clear to me that all of these sections need to be refined to limit them the limited equity co ops that are manufactured in health communities. And the question is, for you, just a drafting question, do you want to do that in each section or do you want to create a definition of a limited equity? Do a definition, create a definition of a limited equity co op that is a manufactured home community and then use that throughout. I would probably do it the latter way. Okay, you might think about that, because I think that's pretty obvious and I see Gayle nodding that we're going to have to do that, because I don't think we want to take on the entire limited equity co op world. One of the things just for those who arrived recently, there's a whole section, I'm just going to restate and correct me counsel if I'm not saying it correctly, there's a specific code section that deals with housing cooperatives, and then a subset of housing cooperatives called limited equity coops. The issue we're dealing with is that limited equity coops can be, they don't have to be manufactured home communities, they can be an apartment building. And so, manufactured home communities are a subset of limited equity co ops and we have to make that clear if we want to. Have you had conversations with the Secretary of State? I had an initial conversation when we

[Cameron Wood (Office of Legislative Counsel)]: were drafting a language, originally, And that is where some of the questions that they had posed to me that I'm now posing to Right, okay. And where you would probably wanna hear from. Okay, great, thank you.

[Rep. Ashley Bartley (Vice Chair)]: Can I

[Rep. Marc Mihaly (Chair)]: ask a question? Yes, please.

[Rep. Ashley Bartley (Vice Chair)]: Why? Why what? Why do we want to avoid taking on the whole LEC world?

[Rep. Marc Mihaly (Chair)]: Because I think it's gonna take us more than as much time as we have just to take on the LEC's that are mobile home communities. If we get the whole cooperative world in here to testify, it will take forever. That's my fear. I think that if we ever did wanted to, we could, but it would be sort of a larger, separate undertaking. Cameron, do you have more for us?

[Cameron Wood (Office of Legislative Counsel)]: I don't have more, I will just say you've now, in its somewhat distributed fashion, you have walked through the bill. Just remember or I will just try to very quickly remind, you have a section amending mobile home chapter and the sale of mobile homes, removing the specific language about what a deed or a claim deed looks like in substantially that form, removing the conversion process of a bill of sale to a deed, flags and concerns for you all there. You have this piece in the limited equity cooperatives and then you have the storm water piece where you are taking away the storm water permit requirement for limited equity cooperatives. You have the municipal zoning piece allowing know by right manufactured housing and you know for municipal zoning restriction and then you have the tax piece

[Rep. Marc Mihaly (Chair)]: that John Gayle, you have a question or a statement or something before can we close out for the morning until after floor?

[Rep. Gayle Pezzo (Member)]: I would just like to respond to Elizabeth's question. So this bill is about manufactured home LEC's. And I think that we just needed to know what an LEC cooperative means. If we were not to change it, then all of the bill does not coordinate with it being a mobile home LEC. You understand what I'm saying? The storm water, all of do.

[Rep. Ashley Bartley (Vice Chair)]: Thank you for that. I appreciate that.

[Rep. Marc Mihaly (Chair)]: Yes, please. Go ahead.

[Rep. Ashley Bartley (Vice Chair)]: And I feel like this has probably been answered, but I just want to reiterate. So, this bill is just for mobile or manufactured communities or LACs. No other community.

[Rep. Marc Mihaly (Chair)]: No, there's no. Well, there's think that's

[Rep. Ashley Bartley (Vice Chair)]: where I'm getting confused because Rep. Pezzo is saying one thing and then my understanding was something else. I just want to make sure I understand when I'm rereading this. It's 20 pages, but there's a lot in there. So

[Cameron Wood (Office of Legislative Counsel)]: I would say it this way, and Brett Pezzo can jump in and correct me. My understanding from the sponsor, both of them are in the room, is that the intention was to address manufactured home communities that are limited equity cooperatives, or at least that's the discussion on the table. The language in the bill is a little broader than that. It doesn't make that distinction. It just talks about limited equity cooperatives as a whole. And so that is what the chair representative Mihaly was saying a second ago. Currently the impacts would be to limited equity cooperatives as a whole. And so if you're wanting to narrow that impact down to just limited equity cooperatives that are also manufactured home communities, then we'll need

[Rep. Marc Mihaly (Chair)]: to gain I guess I want to clarify something and again, tell me if I'm wrong. There are two separate issues. This bill addresses mobile home communities, Period. Some sections of the bill, such as the ones having to do with clarifying deeds and how they work, clarifying loans and how they work, apply to all manufactured home communities, not just LHCs. That was my understanding. Yeah, that is then, there are some sections the

[Rep. Gayle Pezzo (Member)]: Can I just interrupt for a second, Marc? Not just communities, just purchasing Emilie? Yeah,

[Rep. Marc Mihaly (Chair)]: it's just facilitating the So my understanding was correct. Yes, the overall purpose of the bill is to try to make simplify and to make easier the purchase, the sale, the operation of mobile homes and mobile home communities, there are specific sections that deal with issues relating to limited equity co ops, And one of the things, as counsel just said, is we have to be careful that we are limiting those sections to limited equity co ops that are mobile home, that are manufactured home. Thank you. We are going to reconvene at 01:00 after the floor. We're going to hear from Rachel Siegel. Rachel is with the Pew Charitable Trust. She'll be testifying by video, I believe. She the Pew Charitable Trust has been very active in the whole mobile home, manufactured home issue, and we thought it would be great to get her sort of introducing the subject, and then we will have a number of specific people to testify about both manufactured homes and limited equity co ops. They will include a representative of East Rise, which is one of the banks. It's it's actually a credit union in the state that are most active in financing of purchase of limit of manufactured homes as well as their lawyer. So we'll reconvene at one, and you all have nine minutes before the floor.