CR 97-13 Ordinance 97-796 Establishing Housing Improvement Area 2 Westbrooke Patio Homes
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January 13, 1997
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Council Rpt #97-13
ORDINANCE NO. 97-796 ESTABLISHING HOUSING IMPROVEMENT AREA NO.2 -
WESTBROOKE PATIO HOMES
ProDosed ActioD
Staff recommends approval of the following motion: Following the public hearing. move to adopt
Resolution 97-6. anproving Ordinance 97-796 for first reading.
With approval of this motion, staffwill schedule Ordinance 97-796 for a second reading.
Overview
The City of Hopkins has the authority to establish housing improvement areas under the Housing
Improvement Act (1994 Minnesota Laws, Chapter 587, Article 9, Sections 22 through 31).
Within a housing improvement area, the City can sell bonds to pay for various improvements to
individual housing units and common areas. Those bonds are then repaid through fees imposed on
the owners of the units.
The Westbrooke Patio Homes Advisory Committee and Board of Directors have identified the
improvements proposed to be financed though the creation of a housing improvement area and have
held a series of informational owner meetings. In October and November 1996, the Association
members voted on the proposed program and in December submitted the required petitions to hold
public hearings on the creation of the housing improvement area and the setting of the fees. Petitions
were signed by more than 35 percent of the owners.
The first step in providing financing to the Westbrooke Patio Homes Association is the establishment
of the housing improvement area. This requires a public hearing and the adoption of an ordinance.
The next step is a second public hearing on the proposed fees for the area and the adoption of a
resolution setting the fees. Both of these actions can be stopped if vetoes are filed by at least 35
percent of the owners.
Primarv Issues to Consider
o What is the process for establishing a housing iinprovement area and setting the fees?
o What is the risk to the City?
o What are the proposed improvements?
o How are the fees paid?
o What are the major concerns regarding the project?
o What is the timeline for the project?
SUDDortin2 Information
o Resolution 97-6
o Ordinance 97-796
o Plan for Housing Improvement Area No.2
mo m t stbrooke Patio Homes Association
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Housing Imp. Area
Council Rpt. 97-013
Page 2
Analvsis of the Issues
o What is the process for establishing a housing improvement area and setting the fees?
The process involves two steps:
o adoption of an ordinance by the City to establish the housing improvement area
o adoption of a resolution by the City to set the fees in the amount necessary to produce
the revenue required to pay for the housing improvements
Both steps require a public hearing and either step can be stopped by the formal objection of at least
35 percent of the owners within the housing improvement area before the effective date of the
ordinance or the resolution (45 days after adoption).
The public hearing on January 21, 1997, will focus on establishing the housing improvement area. A
second public hearing on February 4, 1997, will discuss the fees for the area.
o What is the risk to the City?
The source of funds for the project is City-issued general obligation bonds, backed by the full faith
and credit of the City of Hopkins. However, the financing has been structured to reasonably assure
that the City is protected against compensating for any delinquencies that may be experienced in the
collection of the fees. This is being accomplished by setting the fees at 105 percent of what is
required to retire the bonds, by requiring a $164,000 reserve, and by requiring the Association to
cover any delinquencies through a development agreement.
The $164,000 reserve would be released to the Association to be used in the financing of Phase II of
their capital improvrnent program if there have not been significant delinquencies in the payment of
the fee.
o What are the proposed improvements?
The improvements that have been identified by the Westbrooke Patio Homes Association for Phase I
of the capital improvement project include the following:
o Replace roofs, including gable areas,
on 40 buildings
o Extend soffits on main buildings
o Remove fireplace chimney housings and add
rain collars
o Install gutters and downspouts
o Install draft walls in attics, insulate,
and reroute exhaust vents
o Replace flat roofs on garage buildings
Housing Imp. Area
Council Rpt. 97-013
Page 3
Additionally, the Association anticipates that by 1999, Phase II of the capital improvement project
will be undertaken. Phase II will involve exterior improvements to the 41 buildings as well as
drive and parking area improvements. It is anticipated that the Phase II improvements will be
financed through the City; however, it will require another petition, public hearing and adoption of an
additional fee.
o How are the fees paid?
Upon successful passage by the City of the ordinance and resolution setting the fees, owners will be
given 30 days to prepay a portion or the entire amount of the fee. If an owner chooses not to
prepay, payment of the fee will then be made twice annually for the term of the district. This will be
accomplished through a fee on an owner's property tax statement (including interest and associated
financing costs). The total fee for each property within the Housing Improvement Area is
anticipated to be $6,905. Ifnot prepaid, the estimated annual fee is $717.
Recently, the City was notified that the Federal Home Loan Bank approved a $273,000 grant to be
used to help subsidize the cost of the improvements for low to moderate income homeowners. The
grant funds would reduce the amount eligible homeowner's must pay to approximately $4,000.
o What are the major concerns regarding the project?
Although there appears to be significant support for the proposed project, staff did receive a number
of calls from owners who voiced a variety of concerns. Many were related to the cost of the project
and the owner's inability to pay their portion of the fee. The grant funds will help to address this .
concern.
Several other issues or concerns of the owners are addressed by the Association in a January 13,
1997, memo included in this report.
o What is the timeline for the project?
The following is the anticipated timeline for the project:
January 21, 1997 Public hearing before the City Council on establishing the housing
improvement area
First reading of the ordinance to establish the housing improvement
area
February 4, 1997 Second reading and adoption of the ordinance to establish the
housing improvement area
Public hearing before the City Council on setting the fees for the
housing improvement area
Resolution setting fees adopted
Housing Imp. Area
Council Rpt. 97-013
Page 4
March 21, 1997
45-day objection period expires, the ordinance establishing the
housing improvement area and the resolution setting the fees go
into effect if not vetoed by a minimum of 3 5 percent of the owners
March 24, 1997 -
April 22, 1997
Prepayments accepted
April 14, 1997
Construction begins
May 15,1998
First installment of fee is due, as shown on property tax statement
Alternatives:
The Council has the following alternatives following the public hearing:
o Adopt Resolution 97-6, approving Ordinance 95-796 establishing Housing
Improvement Area No.2.
o Amend 0 rdinance 97-796 and approve first reading.
o Delay adoption of ordinance until a later date. This alternative will delay the
construction timeline for the project.
o Deny establishment of the housing improvement area.
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION 97-6
RESOLUTION APPROVING ORDINANCE NO. 97-796,
ESTABLISHING A HOUSING IMPROVEMENT AREA ENCOMPASSING
THE WESTBROOKE PATIO HOMES, HOPKINS, MINNESOTA
WHEREAS, the City of Hopkins is authorized under 1995 Minnesota laws,
Chapter 587, Article 9, Sections 22 through 31, to establish housing improvement
areas within the City of Hopkins; and
WHEREAS, within these housing improvement areas, improvements can be
made or constructed and the cost of improvements paid in whole or in part from fees
imposed within the areas; and
WHEREAS, prior to establishing a housing improvement area, owners of at least
25 percent or more of the housing units that would be subject to the fees in the
proposed housing improvements area must file a petition requesting a public hearing
on the proposed action with the City Clerk; and
WHEREAS, the City of Hopkins has received a petition signed by approximately
35 percent of the property owners of the Westbrooke Patio Homes Association Project,
Hopkins, Minnesota, requesting the City of Hopkins to hold a public hearing to create a
housing improvement area; and
WHEREAS, the City of Hopkins has held a public hearing on January 21, 1997,
at 7:30 p.m., concerning the creation of a housing improvement area encompassing the
Westbrooke Patio Homes Association Project.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Hopkins, Minnesota, that Ordinance No. 97-796, authorizing establishment of a
housing improvement area encompassing the Westbrooke Patio Homes Association
Project, Hopkins, Minnesota, be approved subject to a second reading and shall take
effect 20 days after the date of publication or 45 days after adoption, whichever is later.
Adopted this
day of January, 1997.
Crarles D. Redepenning, Mayor
ATTEST:
Terry Obermaier, City Clerk
CITY OF HOPKlNS
ORDINANCE NO. 97-796
AN ORDINANCE ESTABLISHING HOUSING IMPROVEMENT AREA NO.2
PURSUANT TO 1994 MINNESOTA LAWS, CHAPTER 587, ARTICLE 9,
SECTIONS 22 THROUGH 31
BE IT ORDAINED by the Council of the City of Hopkins as follows:
Section 1. Recitals.
1.01. The City of Hopkins ("City") is authorized under 1994 Minnesota Laws, Chapter 587,
Article 9, Sections 22 through 31 (the "Housing Improvement Act") to establish by ordinance a
housing improvement area within which housing improvements are made or constructed and the costs
of the improvements are paid in whole or in part from fees imposed within the area.
1.02. By Resolution No. 94-55 adopted June 7, 1994, the Council approved the Housing
Improvement Act.
1.03. The City has determined a need to establish Housing Improvement Area NO.2 as further
defined herein, in order to facilitate certain improvements to property known as the "Westbrooke Patio
Homes," all in accordance with the Housing Improvement Act.
1.04. The City has consulted with the Westbrooke Patio Homes Association, Inc. and with
residents in Housing Improvement Area No. 2 regarding the establishment of Housing Improvement
Area NO.2 and the housing improvements to be constructed and financed under this ordinance.
Section 2. Findings.
2.01. The Council finds that, in accordance with Section 23 of the Housing Improvement Act,
owners of at least 25 percent of the housing units within Housing Improvement Area No.2 have filed a
petition with the City Clerk requesting a public hearing regarding establishment of such housing
improvement area.
2.02. The Council has on January 21, 1997 conducted a public hearing, duIy noticed in
accordance with the Housing Improvement Act, regarding adoption of this ordinance at which all
persons, including owners of property within Housing Improvement Area No.2, were given an
opportunity to be heard.
2.03. The Council finds that, without establishment of Housing Improvement Area No.2, the
Housing Improvements (as hereinafter defined) couId not be made by the homeowners association for,
or the housing unit owners in, the Westbrooke Patio Homes.
2.04. The Council further finds that designation of Housing Improvement Area No.2 is
needed to maintain and preserve the housing units within such area.
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Section 3. Housing Improvement Ar~ D.,fined.
3.01. Housing Improvement Area No.2 is hereby defined as the area of the City legally
described in Exhibit A attached hereto.
3.02. Housing Improvement Area No.2 contains 328 housing units as of the date of adoption
of this ordinance.
Section 4. Housing Improvements Defined.
4.01. For the purposes of this ordinance and Housing Improvement Area No.2, the term
"Housing Improvements" sha1l mean the following improvements to housing units, garages, and
common areas within Housing Improvement Area No.2:
Phase One:
Replace roofs, including gable areas, on 40 buildings
Extend soffits on main buildings
Remove fireplace chimney housings and add rain collars
Install gutters and downspouts
Install draft walls in attics, insulate, and reroute exhaust vents
Replace flat roofs on garage buildings
Phase Two:
Building exteriors
Streets, driveway, and parking area improvements
4.02. Housing Improvements shall also be deemed to include:
(a) all costs of architectural and engineering services in connection with the activities
described in Section 4.01;
(b) all administration, legal and consultant costs in connection with Housing
Improvement Area No.2; and
(c) costs of issuance of bonds to finance Housing Improvements under the Housing
Improvement Act, subject to the terms of Section 5.04 hereof.
Section 5. Housing Improvement Fee.
5.01. The City may, by resolution adopted in accordance with the petition, hearing and notice
procedures required under the Housing Improvement Act, impose a fee on the housing units within
Housing Improvement Area No.2, at a rate, term or amount sufficient to produce revenues required to
provide the Housing Improvements (hereinafter referred to as the "Housing Improvement Fee"),
subject to the terms and conditions set forth in this Section. The Housing Improvement Fee may be
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imposed in phases, with one fee imposed for the improvements described as Phase One under Section
4.01, and a subsequent fee imposed for Phase Two.
5.02. Any Housing Improvement Fee shall be imposed on the basis of the total cost of the
Housing Improvements to be financed by the Housing Improvement Fee, divided by the number of
housing units in Housing Improvement Area No.2 as of the date of any fee resolution.
5.03. Any Housing Improvement Fee shall be imposed and payable for a period no greater
than 20 years after the first installment is due and payable.
5.04. Any Housing Improvement Fee shall be prepayable in full or in part by housing unit
owners within 30 days after the effective date of the resolution setting the Housing Improvement Fee,
provided that if only a portion is prepaid, the prepayment amount must be at least 25% of the total fee
for that unit. After such 30-day period the Housing Improvement Fee (or unpaid portion thereof) shall
not be prepayable.
5.05. The resolution imposing any Housing Improvement Fee may provide that any fee (or
portion thereof) not prepaid by the housing unit owner shall be deemed to include interest on unpaid
Housing Improvements costs at a rate that will produce total fee revenue collected from all units in
Housing Improvement Area No.2 in an amount that equals 105 percent of the debt service payable
each year on the bonds to be issued under Section 6 hereof.
5.06. Any Housing Improvement Fee shall be collected at the same time and in the same
manner as provided for payment and collection of ad valorem taxes, in accordance with Section 26 of
the Housing Improvement Act and Minnesota Statutes, Section 428A05. As set forth in Section 26 of
the Housing Improvement Act, the Housing Improvement Fee is not included in the calculation of
levies or limits on levies imposed under any law or charter.
5.07. Any Housing Improvement Fee shall not exceed the amount specified in the notice of
public hearing regarding the approval of such fee; provided, however, that the Housing Improvement
Fee may be reduced after approval of the resolution setting the Housing Improvement Fee, in the
manner specified in such resolution.
Section 6. Issuance of Bonds.
6.01. At any time after a contract with Westbrooke Patio Homes Association, Inc. for
construction of all or part of the Housing Improvements has been entered into or the work has been
ordered, and the 30-day period for prepayment of the Housing Improvement Fee has expired as
described in Section 5.04 hereof; the Council may issue bonds in the principal amount necessary to
finance the cost of the Housing Improvements that have not been prepaid together with costs of
issuance of the bonds. Such bonds shall be issued pursuant to and in accordance with Section 27 of the
Housing Improvement Act.
Section 7. Annual Reoorts.
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7.01. On August 15, 1997 and each August 15 thereafter until there are no longer any
outstanding bonds (including refunding bonds) issued under the Housing Improvement Act in
connection with Housing Improvement Area No.2, the Westbrooke Patio Homes Association, Inc.
(and any successor in interest) shall submit to the City Clerk a copy of the association's audited
financial statements.
7.02. Westbrooke Patio Homes Association, Inc. (and any successor in interest) shall also
submit to the City any other reports or information at the times and as required by any contract entered
into between that entity and the City.
Section 8. Notice of Right to File Obiections.
8.Ql. Within five days after the adoption of this ordinance, the City Clerk is authorized and
directed to mail to the owner of each housing unit in Housing Improvement Area No.2: a SUIIIIIlIIl)' of
this ordinance; notice that owners subject to the proposed Housing Improvement Fee have a right to
veto this ordinance if owners of at least 35 percent of the housing units within Housing Improvement
Area No.2 file an objection with the City Clerk before the effective date of this ordinance; and notice
that a copy of this ordinance is on file with the City Clerk for public inspection.
Section 9. Amendment.
9.01. This ordinance may be amended by the Council upon compliance with the public hearing
and notice requirements set forth in Section 24 of the Housing Improvement Act.
Section 10. Effective Date.
10.1. This ordinance shall be effective 45 days after adoption hereof, or 20 days after the date
of publication of this ordinance, whichever is later.
First read at a regular meeting of the Council of the City of Hopkins held on January 21, 1997,
and finally read, approved and adopted and ordered published at a regular meeting of said Council on
February 4, 1997.
City Clerk
Mayor
Approved as to form:
City Attorney
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EXHIBIT A
Description of Housing Improvement Area No.2
Lots 2 through 181, inclusive, Block I and Lots 2 through 331, inclusive, Westbrooke Patio
Homes, according to the recorded plat thereof; Hennepin County, Minnesota.
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.
Plan for
Housing Improvement Area No.2
(Westbrooke Patio Homes)
City of Hopkins, Minnesota
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January 15, 1997
EHLERS AND ASSOCIATES, INC.
Table of Contents
Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Definitions ................................................................. 1
Housing Improvement Area No.2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Description of Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Adequacy of Petition ................................................... 3
Ordinance Establishing Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Findings .................................................................... 3
Description of Improvements ................................................. 4
Fees ........................................................................ 5
Basis for imposing fees. ................................................. 5
Amount to be charged against properties in area. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Ability To Prepay ...................................................... 6
Annual Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exempt Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '6
Adequacy of Petition ................................................... 6
Resolution Imposing Fees ............................................... 7
Finance Plan ................................................................ 7
Agreements With Association .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Development Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Long Range Finance Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Annual Reports .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Appendix A - Preliminary Finance Plan ........................................ 9
Housing Improvement Area No.2
Purpose
The purpose of this Plan is to provide the information required by State Law and
the City of Hopkins to establish a housing improvement area and to create a plan
for financing improvements to housing units in the area.
In 1994, the City of Hopkins received special legislative authority to establish
housing improvement areas. On June 7, 1994, the City Council adopted
Resolution #94-55 approving the special legislation and making it effective.
The legislation does not require a specific plan for the housing improvement
area, but does set forth requirements for using these powers. This plan has been
prepared to serve as a reference for decision making. It contains the information
needed to comply with statutory requirements. It also contains information
needed by the City Council and the property owners to understand the
implications of establishing an area and undertaking improvements.
Definitions
Certain terms are used throughout this plan and have the following meaning:
A. Act. The special legislation relating to the Hopkins Housing
Improvement Area, Minnesota Laws 1994, Chapter 587, Article 9, Sections
22 through 31.
B. Annual Fee. The amount of fee for a unit payable in annual installments.
C. Area. Housing Improvement Area No.2.
D. Association. Westbrooke Patio Homes Association, Inc., the homeowners
association representing property owners in the Area.
E. Bonds. Bonds issued by the City to finance the Project and secured by fees
collected from the Area.
F. City. The City of Hopkins.
G. Fee. The amount imposed on a housing unit in the Area to finance the
Project (also called the "Total Fee").
H. Fees. Revenues collected from the Area to pay for the cost of the Project.
Page 1
Housing Improvement Area No.2
I, Ordinance. The ordinance adopted by the City establishing Housing
Improvement Area No.2.
J. Project. The improvements to housing units in the Area proposed to be
undertaken through this plan.
K. Proiect Costs. The total cost of designing, building and financing the
Project, including the costs establishing the Area and local administration.
L. Resolution. The resolution adopted by the City imposing fees on units in
the Area.
Housing Improvement Area No.2
Description of Area
The Westbrooke neighborhood is located in the southern part of Hopkins. The
neighborhood contains almost 1,300 condominium and townhouse units located
in five housing developments. Each development is represented by a separate
homeowners association. Housing Improvement Area No.2 covers the housing
units, garage units and common property of the Westbrooke Patio Homes
Association, Inc. The boundaries of the Area are shown in Figure 1.
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Figure I
Housing Improvement Area No.2
Page 2
HouSIng Improvement A rea No.2
There are 328 housing units In the Area. As of January 1, 1996, the property in
the Area had a tax capacity value of $231,631.
Adequacy of Petition
The City has received sufficient petitions from property owners in the Area to
initiate the process to establish a housing improvement area. As of the date of
this Plan, the City has received petitions signed by persons representing over
35% of the owners of housing units that would be subject to fees within the Area.
The petition exceeds the 25% owner threshold required by the Act to initiate the
process.
Ordinance Establishing Area
On January 21,1997, the City will conduct a public hearing on the adoption of an
ordinance to establish the Area. Prior to January 11, notice was mailed to the
owner of each housing unit proposed for inclusion in the area. Notice of the
hearing was published in the Hopkins Sun-Sailor on January 8,1997.
.
Findings
The City has carefully investigated the need for the proposed housing
improvement area and the alternatives to the proposed plan of finance. These
efforts enable the City to find that:
. Proposed improvements could not be made without the creation of the
Area.
. The creation of the Area is needed to maintain and preserve housing
units.
The following documents provide information supporting these findings:
. Letter to Jim Kerrigan and Kersten Elverum, Westbrooke Rehabilitation
Financing Analysis, prepared by Springsted Incorporated, February 14,
1992.
. Housing Improvements in the Westbrooke Neighborhood, Creating a
Plan of Action, Hoisington Koegler Group, November 1993.
Page 3
Housing Improvement A rea No.2
. Memorandum to Mayor and City Council from Kersten Elverum on
Westbrooke Work Plan, April 26, 1993.
Description of Improvements
The City has consulted with residents of the Area and the Association to define
the Project and develop a list of proposed improvements. The Project consists of
rehabilitation improvements to the housing units, garages, streets/driveways,
and common area in the Area. The improvements are anticipated to occur in two
phases. Phase 1 would occur in 1997. The second phase is scheduled to occur
prior to 2000.
Figure 2 contains a list of the type and estimated cost of improvements proposed
to be made. This list was provided by the Association.
Phase 1
Replace roofs, including gable areas.
Extend soffits on main buildings.
Remove fireplace chimney housing and replace rain collars.
Install gutters and downspouts
Install draft walls in attics, insulate and reroute exhaust vents
Replace flat roofs on garage buildings.
Phase 2
Building exteriors
Street, driveway and parking improvements
Figure 2
List of Improvements
The total cost of these improvements including engineering and construction
contingency is estimated to be $1,895,000 for Phase 1 and $2,000,000 for Phase 2.
These costs do not include costs of finance and administration. The estimated
costs are based upon the best information now available. It is anticipated that
the items of cost of each improvement may decrease or increase, but that the total
cost of improvements will not exceed the amount stated here.
Page 4
Housing Improvement Area No.2
Fees
Basis for imposing fees
The City will impose fees on the housing units in the Area at a rate, term and
amount sufficient to produce revenue required to finance the Project. Each unit
in the Area will bear an equal share of the total cost of the improvements.
Amount to be charged against properties in area
Finance/Legal
$1,895,000
10,000
164,000
40,000
40,770
113,250
1,980
$2,265,000
Improvement Costs
City Administration
Reserve Fund
Underwriter's Discount
Capitalized Interest
Other
Total Costs
Figure 3
Total Costs To Be Charged Through Fees
The amount to be charged against properties in the Area equals the estimated
cost of improvements plus the costs related to financing the Project and city
administrative costs (see Figure 3). The Total Fee to be charged against
individual properties will be calculated by dividing the Total Costs by the total
number of units.
The resolution imposing the fees will be based on estimated costs and terms of
financing. The fees will not exceed this amount. The City reserves the right to
reduce the fees if actual project costs reasonably allow for lower fees prior to the
time that the fees are first certified to the County for initial collection.
Page 5
Housing Improvement Area No.2
Ability To Prepay
The Fee may be prepaid within thirty (30) days of the effective date of the
resolution imposing the fees. The summary of the resolution sent to each
property owner shall contain the specific dates for the prepayment period.
Prepayment may be in part or in whole. A partial prepayment may not be in an
amount less than 25% of the Fee. The City will use prepaid fees to reduce the
size of the Bonds.
Annual Fee
All units not exercising the ability to fully prepay the Total Fee shall pay fees on
an annual basis as described in this section. The Annual Fee for each unit
represents the payment of the Total Fee (less the amount of partial prepayment)
plus interest in equal annual installments over a twenty (20) year period. The
rate of interest used to determine the Annual Fee will be equal to the net interest
rate on the Bonds plus 0.10% The City will provide each property owner subject
to the Annual Fee a written statement of the applicable amount within thirty (30)
days of the issuance of the Bonds.
The fees will be imposed in 1997 for initial collection with taxes payable 1998.
The City anticipates that fees will remain in effect for a period of twenty (20)
years, through taxes payable 2017. The City, in consultation with the
Association, may reduce or eliminate the final year of fee collection if revenues
from the fees are not needed to pay debt service on the Bonds.
Exempt Units
No units are proposed to be exempt from any portion of the fee.
Adequacy of Petition
The City has received a petition to conduct a public hearing on imposing fees on
units in Housing Improvement Area No.2. As of the date of this Plan, the City
has received petitions signed by persons representing over 35% of the owners of
housing units that would be subject to fees within the Area. The petition exceeds
the 25% owner threshold required by the Act to initiate the process.
Page 6
Housing Improvement Area No.2
Resolution Imposing Fees
On February 4, 1997, the City will conduct a public hearing on the adoption of a
resolution imposing fees. Prior to January 25, 1997, notice was mailed to the
owner of each housing unit proposed for inclusion in the area. Notice of the
hearing was published in the Hopkins Sun-Sailor on January 22, 1997.
Finance Plan
The City will issue Bonds to finance the Project. The Bonds will be taxable
general obligations of the City, backed by the City's full faith and credit.
Revenue to pay debt service will come from revenue collected through the
payment of Annual Fees.
It is anticipated the Bonds will be issued in May 1997 and the Bonds will be
dated 6/1/97.
The Project will be undertaken by the Association. The City will disburse funds
to the Association in accordance with the Development Agreement.
Reserve Fund will be established with a portion of the Bond proceeds. The
purpose of the Fund is to provide additional security to the City and an
economic incentive for the Association to undertake Phase 2 of the
improvements. The monies on the Reserve Fund will be disbursed pursuant to
the development agreement.
The City anticipates that monies collected from the payment of Annual Fees
remaining after the payment of all principal, interest and related costs on the
Bonds will be paid to the Association for construction of future housing
improvements. This issue will be addressed in the Development Agreement.
The preliminary analysis of the finance plan appears in Appendix A.
Page 7
Housing Improvement A rea No.2
Agreements With Association
Development Agreement
The City and the Association shall enter into agreements necessary to execute
this Plan and to provide for the administration of the Project.
Long Range Finance Plan
Prior to the adoption of the Resolution, the Association shall submit to the City a
financial plan prepared by an independent third party that provides for the
Association to finance maintenance and operation of the common elements and a
long-range plan to conduct and finance capital improvements.
Annual Reports
At a minimum, the Association must, by August 15, annually submit a copy of its
audited financial statements to the City. The City may in the Ordinance and/ or
in the Development Agreement require the submission of other reports and
information.
Page 8
Housing Improvement Area No.2
Appendix A - Preliminary Finance Plan
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WESTBROOKE
PATIO HOMES ASSOCIATION
1317 Wagon Wheel Rd.
Hopkins, MN 55343
(612) 936-9692
Fax: (612) 938-2731
January 13, 1997
To:
City Council,
City of Hopkins
From:
Board of Directors and Advisory Committee,
Westbrooke Patio Homes
Re:
City Bond Financing for Capital Improvement Program, Phase I: Replacement of
Roofs and Related Work
The Board of Directors and the Advisory Committee ofthe Westbrooke Patio Homes Association
(the Association) has been working for several years on the Capital Improvement Program for the
Patio Homes. Under Phase I of the Program, the Association will:
Extend the building soffits, reroof the buildings, and install gutters and downspouts.
Install smoke draft walls in the attics, seal attic bypasses, make needed changes to the exhaust
venting, and upgrade the attic insulation.
Reroofthe garages, and replace the decks and fences on some of the garage roofs.
The Association is requesting that the Council establish the Patio Homes as a Housing Improvement
Area (IDA) and finance the needed improvements by issuing bonds and setting a fee (tax) for the lllA
which will generate the income necessary to pay back the bonds.
BACKGROUND
I. HistoIy. Like many townhomes from the 1970's, the Association was set up with artificially
low dues and no provision for a replacement reserve fund. As a result, by the beginning of
the 1990's, the Association was struggling with deferred maintenance, a deteriorated property,
and financial resources insufficient to deal with the problems. After an attempt to pass a
lump-sum special assessment failed, the Board and a committee of concerned owners (which
later became the Advisory Committee) began working to develop a program to address the
problems. The Association took a leading role in the City-sponsored study of the problems
of the Westbrooke neighborhood in 1991-92, and Association representatives worked with
City staff and the Hopkins legislative delegation on the 1994 special service district legislation
that permits IDA's and City-financed improvements within IDA's.
During the fall and winter of 1994-95, the Association commissioned an engineering study
of the Patio Homes to catalogue the physical problems and to outline solutions. The study
report which was issued in February, 1995, identified needed improvements and divided the
A COMMUNITY OF 328 PATIO HOMES
improvements into two categories: (a) work to be done as part of ongoing operations, and
(b) work for which the Association would need to obtain financing. In the later category
were three major areas of work: (a) building and garage roofs, (b) building exteriors, and (c)
driveways.
During the summer and fall of 1995, the Association conducted an indepth study of the
management and operations of the Patio Homes, the context in which the Capital
Improvement Program will be undertaken. Based on this, the Association undertook several
major new initiatives, the most important of which was the hiring of a full-time, experienced,
professional property manager.
The winter of 1995-96 brought a serious acceleration of the problems with the building and
garage roofS. The Association concluded that the roof work could not wait while the issues
surrounding the building exteriors and the driveways were resolved. As the result, the
replacement of the roofs became Phase 1 of the Capital Improvement Program.
2. Design and Engineering. The design issues involved in replacing the roofs have been worked
on for a number of years. As part of the 1994-95 engineering study, the conclusions
previonsly reached were given further study and validated. In the spring of 1996, a structural
engineer conducted a detailed study of all the roofs. Based on that study, a detailed scope
of work was developed.
With this scope of work, a prototype was undertaken. That is, one of the 41 buildings, which
make up the Patio Homes, had all of the planned roof replacement and related work done to
it as a test of the proposed Phase 1. The prototype was undertaken for at least 6 reasons:
To investigate the actual construction of the buildings as it will be affected by the
work since there are no "as-built" architectural plans for the property.
To test the effectiveness of various aspects of the design and engineering for the
project.
To confirm the cost estimates.
To try out the process to be followed in doing the work.
To look at the difficulties involved in coordinating the work with ongoing operations.
To review the performance of prospective contractors.
The prototype provided very valuable information on all of these points, information that
could not have been obtained otherwise.
3. Review and Approval by Association Members. The Association has gone through a lengthy
approval process with its members before coming to the City. There were special meetings
of the members held on March 9 and August 22, 1996, to provide indepth information on the
Capital Improvement Program. The Program was the major topic of discussion at the annual
meeting of the Association on October 19, 1996. After that meeting, members were given
30 days during which to cast their vote for or against the Program. During that time, 7
infonnation meetings were held. On November 18, 1996, the votes were authenticated and
tabulated by a CPA firm. The final vote was almost four to one in favor of the Program.
ISSUES
1. Alternatives to Proposed Program. There are no acceptable alternatives to replacing the
roofs. The original roofs were put on in 1973 and designed to last 15 years. The roof
problems cannot be ignored and cannot be handled piecemeal over a period of years. It is
proving to be a struggle to make it through this winter, and the roofs will not make it through
another winter. In addition, the $273,000 grant recently approved by the Federal Home Loan
Bank will be lost if the work is not done in 1997.
2. Alternatives to City Financing. There are no feasible alternatives to financing the proposed
work through the City. The Association does not have the funds to undertake the work, most
Association members could not pay the cost of the work in one lump sum, and the
Association cannot qualify for conventional financing.
3. Alternatives to Proposed Design. There have been two components of the design that some
Association members have objected to: extending the soffits of the building roofs to create
a straight, continuous edge to the roofs, and installing gutters and downspouts. The Patio
Homes is a very dense townhouse development, and water runoff from the roofs has been a
continual problem. Gutters and downspouts will allow the Association to get control of this
problem. Without extending the soffits, gutters cannot be installed in any reasonable,
effective manner. Extending the soffits also has a major, positive impact on the appearance
of the buildings.
4. ('..ost Benefits. The estimated cost of the annual HIA fee or tax to the individual Association
member is $704 per year. However, for most members, there will be cost savings to offset
this cost. The fee is a tax and can be deducted on individual income tax returns for a savings
of up to $162 per year. The engineering studies and the prototype have identified ways in
which utility consumption can be significantly reduced, as much as $160 per year in some
cases. As a result, the cost may be reduced to as low as $382 per year or $32 per month.
5. FHA Mortgae;e Insurance. Undertaking the Capital hnprovement Program will not guarantee
eligibility for FHA insurance. However, the Program will greatly improve the chances of
qualifying for FHA insurance, and without the Program, eligibility would be impossible
6. Association Members with New Roofs. Some of the few members with new roofs have
argued that they should not be part of the Program. However, these new roofs were provided
out of Association resources or through Association insurance. More importantly, the
Association is a partnership where costs are shared, and much like taxpayers in the larger
commnnity of Hopkins, members share in the cost of the various projects that the Association
undertakes, whether or not they directly benefit.
The above is a brief summary. We look forward to providing you with additional information and
answering your questions on January 21 st. Thank you for your continuing interest and support.