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CR 95-40 Ordinance For Housing Improvement Meadow Creek Condominiums ; March 1, 1995 Council Rpt #95-040 e ORDINANCE NO. 95-759 ESTABLISHING HOUSING IMPROVEMENT AREA NO.1 - MEADOW CREEK CONDOMINIUMS Proposed Action Staff recommends approval of the following motion: Move to adopt resolution 95-16 approving Ordinance 95-759 for first reading. With approval of this motion, staffwill schedule ordinance 95-759 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, Section 22 tlrrough 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 Meadow Creek Condominium Association has been working for more than two years on a capital improvements program that is proposed to be financed though the City of Hopkins. In . December 1994, the Association voted on the proposed program and, in February, 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 50 percent of the owners. The first step in providing financing to the Meadow Creek Condominium Association is the establishment of the housing improvement area. This requires a public hearing and the adoption of an ordinance. Primarv Issues to Consider o What is the process for establishing a housing improvement 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 is the timeline? Supporting Information o Resolution 95-16 o Ordinance 95-759 o Plan for Housing Improvement Area NO.1 . : ?,-t_:;zi/)'i___<.. /E&J-i'-f~~ Kersten Elverum, Housing Coordinator -. - . Housing Imp. Area e Council Rpt. 95-040 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 March 7, 1995, will only focus on establishing the service district. A second public hearing on March 21, 1995, will discuss the fees for the district. o What is the risk to the City? e The source of funds for the project are 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% of what is required to retire the bonds and by requiring the Association to cover any delinquencies through a development agreement. o What are the proposed improvements? The improvements that have been identified by the Meadow Creek Association include the following: o Rehabilitation of existing garages o Replacement of lighting fixtures o Installation of new signs o Rebuilding of trash and recycling areas o Upgrading building exteriors o Parking lot repairs and other site improvements 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 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). On page 8 of the attached "Plan for Housing Improvement Area No.1" are examples of estimated fees to be imposed. -_.-- .-.-.. ------ e Housing Imp. Area Council Rpt. 95-040 Page 3 o What is the timeline? The proposed timeline for implementing the proposed project is as follows: March 7, 1995 Public hearing before the City Council on establishing the housing improvement area First reading of the ordinance to establish the housing improvement area March 21, 1995 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 May 5, 1995 45 day objection period expires, the ordinance establishing the . housing improvement area and the resolution setting the fees go into effect ifnot vetoed by a minimum of35 percent of the owners May 8, 1995 - June 7, 1995 Prepayments accepted May 15, 1995 Construction begins May 15, 1996 First installment offee is due, as shown on property tax statement Alternatives: The Council has the following alternatives following the public hearing: o Adopt resolution 95-16 approving ordinance 95-759 establishing Housing Improvement Area No.1. o Amend ordinance 95-759 and approve first reading. o Delay adoption of ordinance until a later date. o Take no action. e . CITY OF HOPKINS e Hennepin County, Minnesota RESOLUTION NO. 95-016 RESOLUTION APPROVING ORDINANCE NO. 95-759 ESTABLISHING A HOUSING IMPROVEMENT AREA ENCOMPASSING THE MEADOW CREEK CONDOMINIUM PROJECT, 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 area; and WHEREAS, prior to establishing a housing improvement area owners of at least 25 percent or more of the housing units which would be subject to the fees in the proposed housing improvement 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 50 percent of the property owners of the Meadow Creek Condominium 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 March 7, at 7:30 p.m., concerning the creation of a housing improvement area encompassing the Meadow Creek Condominium Association Project. NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Hopkins, that Ordinance No. 95-759, authorizing establishment of a housing improvement district encompassing the Meadow Creek Condominium 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 , 1995. . Charles D. Redepenning, Mayor ATTEST: James A. Genellie, City Clerk e CITY OF HOPKINS Hennepin County, Minnesota ORDINANCE NO. 95-759 AN ORDINANCE ESTABLISHING HOUSING IMPROVEMENT AREA NO.1 (MEADOW CREEK) 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. 1 (Meadow Creek) as further defined herein, in order to facilitate certain improvements to property known as the "Meadow Creek Condominiums, " all III accordance with the Housing Improvement Act. 1.04. The City has consulted with the Westbrooke Condominium Association, d.b.a. Meadow Creek Condominiums and with residents in Housing Improvement Area No. 1 regarding the establishment of Housing Improvement Area No. 1 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. 1 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 March 7, 1995 conducted a public hearing, duly noticed in accordance with the Housing Improvement Act, regarding adoption of this ordinance at which all persons, including owners of property wi thin Housing Improvement Area No.1, were given an opportunity to be heard. 2.03. The Council finds that, without establishment of Housing Improvement Area No.1, the Housing Improvements (as hereinafter defined) could not be made by the condominium association for, or the housing unit owners in, the Meadow Creek Condominiums. 2.04. The Council further finds that designation of Housing Improvement . Areas No. 1 is needed to maintain and preserve the housing units withm such area. . . Section 3. Housing; Improvement Area Defined. . 3.01. Housing Improvement Area No . 1 (Meadow Creek) is hereby defined as the area of the City legally described as follows: Condominium No. 0246, Westbrooke Condominium, Hennepin County, Minnesota. 3.02. Housin~ Improvement Area No. 1 contains 536 housing units as of the date of adoption of thIS ordinance, along with 182 garages and other common ~rea. Section 4. Housing Improvements Defined. .,.....-- 4.01. For the purposes of this ordinance and Housing Improvement Area No.1, the term "Housing Improvements" shall mean the following improvements to housing units, garages, and common areas within Housing Improvement Area No.1: Rehabilitation of garages Rebuilding of trash and recycling areas Upgrading of building exteriors Replacement of lighting fixtures Installation of new signage Parking lot repairs Site 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.1; 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.1, 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. 5.02. Except as otherwise provided III Section 5.04 hereof, the Housing Improvement Fee shall be imposed on the basis of each housing unit's Percent of Undivided Interest in Common Elements, Votes and Facilities, as described in Exhibit A to Condominium No. 246, Declaration for Condominium, Westbrooke Condominiums dated as of October 22, 1981. 5.03. The Housing Improvement Fee shall be imposed and payable for a period no greater than 16 years after the first installment is due and payable. . . 5.04. The Housing Improvement Fee shall be prepayable in full by housing e unit owners within 30 days after the effective date of the resolution setting the Housing Improvement Fee, after which 30-day period the Housing Improvement Fee shall not be prepayable. If the Housing Improvement Fee is prepaid, the fee will be reduced by a credit, specified in the resolution setting the Housing Improvement Fee, representing the amount necessary to pay costs of issuance of bonds to be issued under Section 6 hereof. Such credit shall be a uniform dollar amount per housing unit determined through consultation with the City's financial advisor. - 5.05. The resolution imposing the Housing Improvement Fee may provide that any fee 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. 1 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. The 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 428A.05. 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. The 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 Condominium Association, d.b.a. Meadow Creek Condominiums for construction of all or part of the Housing Improvements has been entered into or the work has been ordered, and the 3D-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 wi~ costs of issuance of the bonds. Such bonds shall be issued pursuant to and III accordance with Section 27 of the Housing Improvement Act. Section 7. Annual Reports. 7.01. On August 15, 1995 and each August 15 thereafter until there are no longer any outstanding bonds (including refunding bonds) issued under the Housing Improvement Act III connection with Housing Improvement Area No. 1, the Westbrooke Condominium Association, d. b.a. Meadow Creek Condominiums (and any successor III interest) shall submit to the City Clerk a copy of the condominium association I s audited financial statements. 7.02. Westbrooke Condominium Association, d.b.a. Meadow Creek Condominiums (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 Objections. . 8.01. 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 m Housing Improvement Area No.1: a summary 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. 1 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 to. 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 March 7, 1995, and finally read, approved and adopted and ordered published at a regular meeting of said Council on , 1995.| . City Clerk Mayor Approved as to form: City Attorney .