“Limited-equity housing cooperative” or a “workforce housing cooperative trust” means a corporation organized on a cooperative basis that, in addition to complying with Section 817.1 as may be applicable, meets all of the following requirements:
(a)
The corporation is any of the following:
(1)
Organized as a nonprofit public benefit corporation pursuant to Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code.
(2)
Holds title to real property as the beneficiary of a trust providing for distribution for public or charitable purposes upon termination of the trust.
(3)
Holds title to real property subject to conditions that will result in reversion to a public or charitable entity upon dissolution of the corporation.
(4)
Holds a leasehold interest, of at least 20 years’ duration, conditioned on the corporation’s continued qualification under this section, and provides for reversion to a public entity or charitable corporation.
(b)
(1) The articles of incorporation or bylaws require the purchase and sale of the stock or membership interest of resident owners who cease to be permanent residents, at no more than a transfer value determined as provided in the articles or bylaws, and that shall not exceed the aggregate of the following:
(A)
The consideration paid for the membership or shares by the first occupant of the unit
involved, as shown on the books of the corporation.
(B)
The value, as determined by the board of directors of the corporation, of any improvements installed at the expense of the member or a prior member with the prior approval of the board of directors.
(C)
Accumulated simple interest, an inflation allowance at a rate that may be based on a cost-of-living index, an income index, or market-interest index, or compound interest if specified in the articles of incorporation or bylaws. For newly formed corporations, accumulated simple interest shall apply. Any increment pursuant to this paragraph shall not exceed a 10-percent annual increase on the consideration paid for the membership or share by the first occupant of the unit involved.
(2)
(A)Except as provided in subparagraph (B), for purposes of a return of transfer value, both of the following are prohibited:
(i)
A board of directors returning transfer value, either full or partial, to a member while he or she still remains a member.
(ii)
An existing member accepting the return of his or her transfer value, either full or partial.
(B)
A board of directors may return to an existing member and the existing member may accept return of his or her transfer value in the event that the member moves within the cooperative from a category of unit initially valued at a higher price to a different category of unit valued at a lower price.
(c)
The articles of incorporation or bylaws require the board of directors to sell the stock or membership interest purchased as provided in subdivision (b) to new member-occupants or
resident shareholders at a price that does not exceed the “transfer value” paid for the unit.
(d)
The “corporate equity,” that is defined as the excess of the current fair market value of the corporation’s real property over the sum of the current transfer values of all shares or membership interests, reduced by the principal balance of outstanding encumbrances upon the corporate real property as a whole, shall be applied as follows:
(1)
So long as any such encumbrance remains outstanding, the corporate equity shall not be used for distribution to members, but only for the following purposes, and only to the extent authorized by the
board, subject to the provisions and limitations of the articles of incorporation and bylaws:
(A)
For the benefit of the corporation or the improvement of the real property.
(B)
For expansion of the corporation by acquisition of additional real property.
(C)
For public benefit or charitable purposes.
(2)
Upon sale of the property, dissolution of the corporation, or occurrence of a condition requiring termination of the trust or reversion of title to the real property, the corporate equity is required by the articles, bylaws, or trust or title conditions to be paid out, or title to the property transferred, subject to outstanding encumbrances and liens, for the
transfer value of membership interests or shares, for use for a public or charitable purpose.
(e)
Amendment of the bylaws and articles of incorporation requires the affirmative vote of at least two-thirds of the resident-owner members or shareholders.