CR 95-47 Resolution Setting Fees - Meadow Creek Condominiums
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. March 14, 1995 o P K \ "'- Council Rpt #95-047
RESOLUTION SETTING FEES - MEADOW CREEK CONDOMINIUMS
Proposed Action
Staff recommends approval of the following motion: Adopt resolution number 95-18 approving
housing improvement fees for Housing Improvement Area No.1 - Meadow Creek Condominiums
and authorize staff to prepare development agreement.
With this motion, the 45 day veto period will begin and a development agreement will be
prepared.
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 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 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.
On March 7, 1995 the City Council held a public hearing and had the first reading on an ordinance
to establish a housing improvement area for Meadow Creek. The law requires a second public
hearing, a second reading ofthe ordinance and the adoption of a resolution setting the fees for the
area.
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 What are the responses to the issue of garages?
o How are the fees paid?
o What is the timeline?
SupportiOl~ Information
o Resolution 95-18 / .. J. .
o ~eadow Creek Long- Term Fmanclal Management Plan
o _Letters fr~ou _~trahdness regarding garages and project timeline
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~rsten Iverumr"ng Coordinator
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e Meadow Creek Fees
Council Rpt. 95-047
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,
focused on establishing the service district. A second public hearing on March 21, 1995, will
discuss the fees for the district.
The law requires the homeowner's association to submit a finance plan which details future
. reserve levels and scheduled maintenance. The association has submitted the plan, prepared by
Dunbar Strandness, Inc. and staff has found it to be acceptable. As part of a development
agreement, the City will require a compliance audit on the finance plan to assure the association is
adhering to the schedule and not deferring maintenance of the property.
o What is the risk to the City?
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
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. Meadow Creek Fees
Council Rpt. 95-047
Page 3
o What are the responses to the issue of garages?
At the March 7, 1995, City Council meeting two residents questioned the rehabilitation of garages
and voiced a desire to have the construction of additional garages included in the City-financed
improvements. Attached is a letter from Doug Strandness, Property Manager for Meadow Creek
addressing these concerns. Aside from the physical and cost barriers, adding the construction of
garages or changing the fee distribution would require another public hearing and delay the
project significantly, possibly an entire construction season due to the need to go back to the
association with an amended list of improvements.
It is important to note that the association has had extensive discussions on this subject and the
improvements, as proposed, have been approved by the majority of the members. Additionally,
the association board continues to investigate the construction of new garages using other
financing available to the association.
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). Attached as Exhibit A to the resolution is the fee schedule, showing
the total fee per unit. The actual yearly costs for those who do not prepay will depend on interest
rates at the time the bonds are sold in September 1995.
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
.
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e Meadow Creek Fees
Council Rpt. 95-047
Page 4
May 5, 1995 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 of35 percent of the owners
May 8, 1995-
June 7, 1995 Prepayments accepted
May 15, 1995 Construction begins
May 15,1996 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 95-047 establishing fees for Meadow Creek
o Amend resolution 95-047 prior to adoption, subject to approval of bond counsel.
. o Take no action.
e
CITY OF HOPKINS
. RESOLUTION NO. 95-18
RESOLUTION APPROVING A HOUSING IMPROVEI\1ENT FEE FOR
HOUSING IMPROVEl\1ENT AREA NO. 1 (MEADOW CREEK) PURSUANT
TO 1994 MINNESOTA LAWS, CHAPTER 587, ARTICLE 9, SECTIONS 22
THROUGH 31
BE IT RESOLVED by the City Council of the City of Hopkins as follows:
Section I. 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. By Ordinance No. 95-759 adopted March 21, 1995 (the "Enabling On:linanceJl), the
Council established Housing Improvement Area No. 1 in order to facilitate certain improvements to
property known as the "Meadow Creek Condominiums," all in accordance with the Housing
Improvement Act.
. 1.04. 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 imposition of a housing improvement fee for Housing
Improvement Area No.1.
1.05. The Council has on March 21, 1995 conducted a public hearing, duly noticed in
accordance with the Housing Improvement Act, regarding adoption of this resolution at which all
persons, including owners of property within Housing Improvement Area No.1, were given an
opportunity to be heard.
1.06. Prior to the date hereof, Westbrooke Condominiwn Association, d.b.a. Meadow Creek
Condominiums (the "Condominium Association") has submitted to the City a financial plan prepared
by Dunbar Strandness, Inc., an independent third party, acceptable to the City and the Condominiwn
Association, that provides for the Condominium Association to finance maintenance and operation of
the common elements in the Meadow Creek Condominiwns and a long-range plan to conduct and
finance capital improvements therein, all in accordance with Section 25 of the Housing Improvement
Act.
1.07. For the purposes of this Resolution, the terms "Housing Improvement Area No. I" and
"Housing Improvements" have the meanings provided in the Enabling Ordinance.
.
. Section 2. Housing Improvement Fee Imposed.
2.01. The City hereby imposes a fee on each housing unit within Housing Improvement Area
No. 1 (the "Housing Improvement Fee"), as specified in Exhibit A attached hereto, which Housing
Improvement Fee is 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 Condominium, dated as of October 22, 1981.
2.02. The owner of any housing unit against which the Housing Improvement Fee is imposed
may, at any time within 30 days after the effective date of this Resolution, pay the total Housing
Improvement Fee imposed against such housing unit as specified in Exhibit A hereto to the City
Treasurer, without interest thereon; provided that in the event of such prepayment, the owner of such
housing unit shall be entitled to a credit of $41.00, which amount shall be subtracted from the total fee
payable for such housing unit specified in Exhibit A . Any Housing Improvement Fee not prepaid in
accordance with this Section shall be payable solely in accordance with Section 2.03 hereof.
2.03. If not prepaid in accordance with Section 2.02 hereof, the Housing Improvement Fee
shall be payable in equal annual installments extending over a period of 16 years, the first of the
installments to be payable in calendar year 1996, which annual payment shall be deemed to include
interest on lll1paid total Housing Improvement Fee from the date of this Resolution at an annual interest
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 bonds to be issued by the
City issued to finance the Housing Improvements (the "Bonds") in accordance with the Enabling
Ordinance and the Housing Improvement Act. Upon issuance of the Bonds, the City Clerk shall cause
. to be prepared a schedule indicating the annual payment for each housing unit for which the Housing
Improvement Fee has not been prepaid, which schedule shall be attached as Exhibit B to this
Resolution in the City's official records.
2.04. The Housing Improvement Fee, unless prepaid in accordance with Section 2.02 hereof,
shall be payable at the same time and in the same manner as provided for payment and collection of ad
valorem taxes, as provided in Section 26 of the Housing Improvement Act.
2.05. The Housing Improvement Fee imposed against each housing unit shall not exceed the
amOtmt specified in Exhibit A hereto; provided, however, that the Housing Improvement Fee may be
reduced at any time before issuance of the Bonds, which reduction shall be applied pro rata to each
housing unit's Housing Improvement Fee on the basis described in Section 2.01 hereof; and further
provided that if any housing unit owners have prepaid the Housing Improvement Fee prior to any
reduction in that fee, the City shall promptly reimburse such housing unit owner in the amount of the
pro rata share of any reduction in the fee amount. Upon any reduction in the Housing Improvement
Fee, the City Clerk shall cause to be prepared a revised copy of Exhibit A hereto, which shall be
attached to this Resolution in the City's official records and shall be promptly mailed to all housing unit
owners within Housing Improvement Area NO.1. Within 30 days after issuance of the Bonds the City
Clerk shall mail to each housing lUlit owner a copy of Exhibit B to this Resolution showing the final
annual fee imposed against each housing unit for which the Housing Improvement Fee has not been
prepaid.
.
Section 3. Notice of Right to File Obiections.
. 3.01. Within five days after the adoption of this Resolution, the City Clerk is authorized and
directed to mail to the owner of each housing unit in Housing Improvement Area NO.1: a summary of
this Resolution; notice that owners subject to the Housing Improvement Fee have a right to veto this
Resolution ifowners 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 Resolution; and notice that a
copy of this ordinance is on file with the City Clerk for public inspection.
Section 4. Effective Date.
4.01. This Resolution shall be effective 45 days after adoption hereof
Section 5. Filing of Housing Improvement Fee.
5.01. Within 30 days after issuance of the Bonds, but it no event later than November 15,
1995, the City Clerk shall file a certified copy of this resolution together with a final update of Exhibits
A and B hereto to the Hennepin County Director of Taxation to be recorded on the property tax lists of
the county.
Approved by the City Council of the City of Hopkins this 21st day of March, 1995.
. Charles D. Redepenning, Mayor
ATTEST:
James A. Genellie, City Clerk
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EXHIBIT B TO RESOLUTION NO. 95
.
[Description of annual fee for each housing unit; to be attached upon issuance of the Bonds in
accordance with Section 2,05 of this Resolution.]
.
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. Westbrooke Condominium Association
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MEADOW CREEK CONDOMINIUMS
1995 CAPITAL IMPROVEHENT PROGRAM:
Long-Term Financial Management IReserve) Plan
March 15. 1995
SUMMARY
There are three components to the Plan: programmed replacements,
reserved replacements and City-financed replacements.
A programmed replacement is a category of items which are
replaced on a phased basis over a period of time equal to the
economic life of one item. For example, a washer or a dryer has
an econom1C life of 10 years. Each year, Meadow Creek replaces
10% of its laundry equipment. With this approach, it 1S not
necessary to reserve funds for programmed replacements.
A reserved replacement 1S a category of items which are replaced
. at one time. Accordingly, funds are reserved over time, so that
the funds are on hand at the point ln time when the items must be
replaced.
The City-financed replacements are those categories of items
which will be replaced ln 1995 with funds borrowed through the
City of Hopkins. With these categories of items replaced, they
will then be added to the list of reserved replacements, and
funds accumulated towards their next replacement.
Costs are ln current dollars. Costs will be reviewed on an
annual basis, and the plan adjusted accordingly.
LINE ITEM NOTES
Pro~rammed Replacements
1. Drives and parking lots. Replacement work will be done on a
5-year cycle, with $87,200 budgeted per cycle.
~. Trash and recycling containers. Dumpsters will be serviced
on a 7-year cycle with 7 overhauled each year. Dumpsters
and carts will be replaced on a IS-year cycle with 3 each
replaced per year.
. 3. Sidewalks. Problem sidewalks will be replaced over the next
5 years, and then sidewalk replacement will shift to a 20-
.
MEADOW CREEK: Long-Term Reserve Plan Page 2
Narch 15, 1995
year cycle.
4, . Railings. Problem railings will be replaced over the next 2
years! and then railing replacement will shift to a 20-year
cycle.
;) . Paths. The majority of the paths have been replaced over
the past 3 years, and the remainder will be replaced over
the next 2 years. The paths will then last 15 years and be
replaced over the following 4 years.
6. Roofs. Over the next 3 years, 4, roofs per year will have
their shingles torn off and replaced. At that point, all of
the roofs will have been overlayed or reroofed once. The
reroofing program will then shift to a LoO-year cycle with 3
roofs redone each year.
I. Roof maintenance. Chimney saddles will be installed on all
the chimneys this year. Roof maintenance will then be done
on a a-year cycle,
. 8 . Facias and soffits. These will be maintained on a lO-year
cycle.
9. Gutters and diverters. Over the next 5 years, the remaining
diverters will be replaced with gutters. Gutters will then
be replaced on a 20-year cycle.
10. Gables. The gables will be repaired and upgraded over the
next 4 years. Gable maintenance will then be on a 8-year
cycle.
11. Haster antennas. Antennas are being replaced on a 15-year
cycle.
12. Insulation. Insulation problems at the outer edges of the
attics will be corrected over the next 3 years. Insulation
will then be maintained on a 3D-year cycle.
13. Building exteriors. The brick exteriors of the buildings
will have all necessary repair work done to them over the
next 4 years. Brick maintenance will then be done on a 15-
year cycle.
14. Doors. Front doors and back storm doors will be replaced on
. 30- and 15-year cycles respectively. The back prime doors
will be replaced over the next 10 years, and then their
. CREEK: Long-Term 3
MEADOW Reserve Plan Page
March 15. 1995
replacement will shift to a 3D-year cycle as well.
15. Hallways. Last year, 1994, was the first year of the
hallway refurbishing program. This program will be
completed over the next 6 years~ with 10 hallways completed
per year. After that, the various components of the
hallways will be replaced on the cycles indicated.
16. Laundry rooms. Las t, year was also the first year of the
laundry room refurbishing program. This program will also
be completed over the next 6 years, with 10 laundry rooms
completed per year. Replacement of the varlOUS components
will then shift to the cycles indicated.
17. Boiler room doors and ceilings. Doors will be installed and
ceilings replaced over the next 7 years. Replacement will
then be on a 3D-year and a 20-year basis respectively.
18. Boiler/meter room floors. These will be replaced over the
next 10 years, and then replacement will be on a 30-year
e basis.
19. Boiler controls. Controls will be upgraded over the next 4
years, and then replacement will shift to a 15-year cycle.
20. Water heaters. Over the next 3 years, the last of the
original water heaters will be replaced. Replacement will
then be on a 15-year cycle.
21. Water softeners. Two softeners per year are being replaced
creating a 15-year replacement cycle.
22. Ventilation fans. Roof-top fans are being replaced on a 9-
year cycle.
Reserved Replacements
1. Retaining walls. Sections of the current timber retaining
walls will be replaced in the years indicated. The new
walls will be constructed from concrete landscaping blocks
and will last at least 30 years.
2 . Monument signs. These will be replaced this year, and will
lasl:. at least 20 years.
. 3. Doors. The common area fire doors should last indefinitely.
. CREEl\.:
MEADOW Long-Term Reserve Plan Page 4
March 15, 1995
.1. Boilers. Funds are being reserved towards the replacement
of the boilers at the end of 10 years. However, the boilers
have all been inspected and may last another 15 to 20 years.
5. Pool area. The different components of the pool area will
be replaced In the the years indicated.
City-Financed Replacements
All of the indicated items will be replaced In 1995. They will
then be included under the list of reserved replacements, and
funds will be reserved based on the indicated economic lives.
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Westbrooke Condominium Association dba
tlPMEADOW CREEK CONDOMI~IUMS
1995 CAPITAL IMPROVEMENT PROGRAM:
Long-Term Financial Management (Reserve) Plan
March 10, 1995
PROGRAMMED REPLACEMENTS
Cycle Unit Cycle
Item Quantity (Yrs) Cost Cost
---- -------..... ....---- ---- ----......
Drives & parking lots: 9 lots
- Asphalt Variable 5 $8.50/SY $39,000
- Crack sealing Variable 5 $O.47/LF $8,800
- Curb replacement 6,900 LF 5 $4.25/LF $13,200
- Seal coating 45,000 8Y 5 $0.50/SY $22,500
- Striping 913s + 45f1 5 $1. 80+$7.20 $3,700
Trash/recycling:
- Dumpster servicing 47d 7 $55/d $2,585
- Replacement of dumpsters & carts 47d + 41c 15 $250+$100 $15,850
Grounds:
- Sidewalks 5.400 LF 5+20 9i16.50/LF $89,100
.- Rai lings 20 sets 2+20 $675/set $13,500
- Paths 1,200/LF 2+15+4 $8.25/LF $9,900
Roofs:
- Overlays & tear-offs 67 roofs 3+20 $7,500/roof $502,500
- Roof maintenance Variable 1+5 $l50/roof $10,050
- Facias & soffits Variable 10 MOO(bldg $26,800
- Gutters & diverters BOg + 54d 5+20 $460+$60 $40,040
- Gables 66 gables 4+8 $525/gable $2~,400
- Master antennna systems 28 sets 15 $9DO/set $25,200
Insulation:
- Ventilation & bypass problems 67 attics 3+30 $375/attic $25,125
Building exteriors:
- Maintenance of brick facade 67 bldgs 4+15 $500/bldg $33,500
- Chimneys & chimney caps 58 chimneys 4+15 $200/chllmy $11,600
Doors:
- Front doors 67 double 30 ~n640/pair $109,880
- Storm doors 67 single 15 $160/door $10,720
- Back doors 67 single 10+30 $430/door $28,810
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PROGRAMMED REPLACEMENTS: Cont'd
. Cycle Unit Cycle
Item Quantity (Yrs) Cost Cost
---- ---....-.....-- ----- ---- -----
Hallways:
- Ceramic tile 67 entries rndef $275/entry $18,425
- Carpeting 67 halls 5+10 $1,060/bldg $71,020
- Trim boards Variable 6+20 $2.75/LF $18,425
- Drywall repair & painting Variable 6+15 $285/hall $19,095
- Heat runs 67 units 6+15 $80/entry $5,360
- Railings 67 sets Indef $700/bldg $46,900
- Mailboxes 6'7 banks 6+30 $480/bldg $32,160
- Fire extinguishers 134 units 20 $25/unit $3,350
Laundry rooms:
- Washers & dryers 67 pair 10 $1,260/pair $84,420
- Sinks 67 sinks 4+30 $225/sink $10,350
- Floor vinyl 67 rooms 6+30 $790/room $52,930
- Trim boards Variable 6+20 $2.75/LF $7,370
- Drywall repair & painting Variable 6+15 $llO/room $'7,370
- Heat runs 67 units 6+15 $60/room $4,020
Boiler/meter rooms:
- Inner doors 28 single 7+30 $350/door $9,800
- Floors 67 rooms 10+30 $650/room $43,550
- Ceilings 28 rooms 7+20 $325/room $9,100
~- Boiler controls 28 systems 4+15 $475/unit $13,300
- Water heaters 28 units 3+15 $2560/unit $71,680
- Water softeners 28 units 15 $1l50/unit $32,200
- Ventilation fans 134 fans 9 SUO/fan $14,740
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RESERVED REPLACEMENTS
.tem Unused Unit Replmnt
Life Cost Cost
----..... -----......- .....--- -------
Grounds:
- Retaining walls 1200 LF 2-10 $48/LF $57)600
Signage:
- Monuments 3 locations 20 $4,230/ea
Doors:
- Laundry room doors 67 single Indef $430/door $28)810
- Boiler/meter room doors 67 single Indef $430/door $28)810
Boiler/meter rooms:
- Boilers 67 modules 10 $1940/unit $129,980
Pool area:
- Rehab of pool house One pool 20 $13,100
- Pool patio One pool 20 $27,600
- Main pool & deck One pool 10 $52,000 $52,000
- Wading pool & deck One pool 10 $3,000 $3,000
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CITY-FINANCED REPLACEMENTS
4111 tem Unused Unit Replmnt
Life Cost Cost
---- ------ ---- -...........--.-......
Signage:
- Assigned parking 268 signs 15 $75/ea
- Lot entrances & main sidewalks 21 signs 10 $225/ea $7,700
- Building entrances 67 signs 15 $75/ea $3,350
Car plug-ins 30 posts 20 $585/post $17,500
Garages:
- Rehab of existing garages 28 banks 20 $10,715/ea $257,600
Trash/recycling sheds:
- Rebuilding of sheds 15 sheds 20 $5625/shed $42,000
Lighting:
- Standards for drives & lots 28 units 20 $HZ5/unit $23,100
- Garages 20 units 20 $l25/unit $2,500
- Building exteriors 90 units 20 $150/unit $13,500
- Building entrances 67 pairs 15 $195jpair $12,090
- Hallways 67 halls 20 $235/hall $15,745
- Laundry rooms 67 rooms 20 $245/room $16,415
- Boiler & meter rooms 67 rooms 25 $70/room $4,690
- Back doors 67 units 10 $45/unit $3,015
~atio doors & windows:
- Shutters 1,287 pair 25 $59/pair $75,390
- Lintels 670 lintels 25 $ 78/linte 1 $51,925
- 3i lls 1,031 sills 25 $52/si11 $53,950
- Painting 1240 windows 25 $100/window $124,000
- Storm window units 720 units 25 170/unit $122,400
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,~ S~~~~~'~~~~~~3 (612) 935-9565
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March 14, 1995
C it y Coun c i ]
Ci ty of Hopkins
1010 South First Street
Hopkins, MN 55343
Re: Meadow Creek Housing Improvement Area
Dear Council Members:
As you are aware, three Meadow Creek owners raised questions about
garages at the hearing last Tuesday evenIng. The questions were
about the rehab of the existing garages and the construction of new
garages. I am writing to address those questions.
e Rehab of Existing Garages
The $ 1 . 1 million capital improvement program, for which you are
considering the approval of City bond financing, includes $299,716
for the rehab of the existing garages at Meadow Creek. At the
hearing. two Meadow Creek owners questioned the inclusion of the
garage rehab In the overall program. Their argument was that all
Meadow Creek owners will be paying for the program, but only one-
third of the owners have garages.
This issue has been reviewed and discussed at great length, bo t h by
the board of the Association and at the two member meetings which
we had last fall. The conclusion has been that the inclusion of
garage rehab in the program 1 s legally required, equitable and
immediately necessary. The reasons behind this conclusion are:
1. Legally Required. Enclosed IS a letter from Meadow Creek's
1 ega I counse J . As explained in the letter, the Association IS
legally required to maintain the exterior of the garages and
to correct any structural problems. Thus, i f the garage rehab
were not included in the current program, the Association
would simply be required to find the money elsewhere in order
to fu I fill its obligations to the garage owners. What is
surprISIng; gIven the condition of the garages, IS that no
garage owner has threatened to sue the Association for failing
e to maintain the garages.
!\.1eadol.\ t rL'l,k C,lndnnlllHum" h dl~ hll'iine~,.. na nh: of
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Letter to Hopkins Ci ty Counc i I Page 2
. March 8, 1995
:2 . Equitable. A garage owner pays an extra $7 per month In
Association dues for their garage. Since the inception of the
Association, garage owners together have paid an extra
$175,000 In current dollars towards the maintenance of the
garages. To date, the Association has spent approximately
$25,000 on garage maintenance.
After the garage rehab IS completed, the garages should need
only minimal maintenance for the next 20 to 25 years. During
that period of time, the garage owners wi II pay an extra
$305,000 to $382,000 In dues.
From this analysis, it is clear that the garage owners are not
only covering the cost of the garage rehab, but also
contributing to the overall operating budget of the
Association.
3. Immediately Necessary. As a practical matter, the Association
must include the garage rehab In the overall program. The
current condition of the garages has been identified by FHA
(the Federal Housing Administration) as their major concern
with Meadow Creek. FHA wi I I suspend our eligibility for FHA
. mortgage insurance if we do not complete the garage rehab In
1995.
I should also point out that also as practical matter, all members
of the Association wi II directly benefit from the rehab of the
garages. The biggest factor that determines the saleability or
rentab i I ity of units at Meadow Creek IS our curb appeal. The one
serious detraction from our curb appeal IS the current condition of
the garages. wi th the garage rehab completed, all Meadow Creek
owners should experience a noticeable improvement in the
saleabi lity or rentability of their units.
As a final comment, I believe that part of the dissension over the
garage rehab is the result of confusion. Some owners without
garages are saYIng that owners with garages should pay in
proportion to the value of the garages to them. Instead, the
comparison should be between what garage owners pay in additional
dues and the cost of garage maintenance. As indicated above, there
IS more that a fair balance in this regard. The vast majority of
Association members recognIze this and are comfortable with how the
capital improvement program has been structured.
Construction of New Garages
The original plan for Meadow Creek's capital improvement program
. included the construction of 360 new garages. This would have
Letter to Hopkins City Council Page 3
. March 8, 1995
provided a garage for every unit which currently does not have one.
However, after conducting extensive so i 1 tests, i t was concluded
that i t is not currently financially feasible to construct any new
garages.
To address the problems identified by the soil tests, Meadow
Creek's engineers came up with two basic approaches. The
approaches included:
-- Digging out existing soils, laying a mat, and then fill i ng
wi th new soils, and
-- Surcharging existing soils to compress them sufficiently to
hu i 1 d on them.
The costs for these approaches ranged from $400 per garage stall to
$1 ,800 per stall.
Based on that analysis, this results HI the fa llowi ng range of
costs:
Low End High End
. Construction per stall $ 5,100 $ 5,100
So i 1 correction per stall 400 1,800
Total Upfront Costs $ 5,500 $ 6,900
Debt payments per stall per month $ 56.60 $ 71. 00
Maintenance per stall per month 1. 25 1. 25
Total Monthly Costs $ 57.85 $ 72.25
Maximum monthly rent $ 50.00 $ 50.00
The obvious result of this i s that if the Association built garages
and rented them ou t , the Association would be subsidizing that
rent. That would not be acceptable to Association members.
This does assume that the garages would be owned by the
Association. This assumption is based on the advice of the
Association , s legal counse 1 . Based on Meadow Creek's
organizational documents, the construction and sale of new garages
would require the approval of 75% of the Association members and
100% of the lenders who hold mortgages on the units. As a
practical matter, i t would be impossible to obtain the approval of
100% of the lenders.
e However, despite this analysis, the board of the Association is
Letter to Hopkins City Council Page 4
. March 8, 1995
determined to find some way to bu i 1 d new garages. While i t is
highly unlikely that any way can be found to build 360 garages, the
Board's position is that the construction of any number of garages
would be a significant improvement for Meadow Creek. Accordingly,
i t is a long-term goal of the Association to continue to
investigate how new garages might be bu i 1 t on a financially sound
basis.
I hope that this addresses the garage issues from the March 7th
hearing 10 your satisfaction. Please let me know if you have any
other questions or concerns.
Thank you for your continuing support and assistance!
S in c ere 1 y ,
\
! ','"" -IL '"., ~....: .,""....._ >c ..... - < ~~ ~, ~" -"
Dougla~" D. Strandness
Property Manager
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DAVID J. VAN HOUSE" V~ HOUSE "CutiJIe<l by t~. R.,.] ?ropeit}'
TODD R. ILIFF' L.a.w Se1:tion IJf the Minn~ta
& ILIFF, P.A. Slate Bar A.s.50ciilli()n il.3 iL
. CHAD A. JOHNSON Real ?rope"l' Law Spooiallot
_ DERRICKN'. WEBER
ATIORNEYS AT LAW
November 30, 1994
Mr. Doug Strandness
Meadow Creek Condominiums
823 Old Settlers Trail
Hopkins, Minnesota 55343
Re: Meadow Creek Condominium Association ~ General
Our File No. 508.9001
Dear Doug:
This letter is in response to you request of me regarding improvements to the garages
and Common Elements at Meadow Creek. The first question which you asked was whether
. or not garages are Limited Common Elements and whether the Association could assess only
the owners of the garage units for improvements made to the garage units.
Paragraph D of the Declaration for Condominium of Westbrooke Condominium
("Declaration") indicates that the garage units are condominium units and as such, under the
definition sections of the Minnesota Common Interest Ownership Act (Chapter 515B), which
went into effect on June 1, 1994, the garage units are therefore considered to be Units. Since
the definition of Limited Common Elements under 515B excludes the Units (see Minn. Stat.
9 515.1-103(7), (20) and (33) [a Limited Common Element is a portion of the Common
Elements designated for the exclusive use of one or more, but less than all Units, whereas a
Unit is allocated specifically and exclusively to one Owner]), the garage units are Units rather
than Limited Common Elements. As such, as with the condOIpinium units, the Association is
responsible for the repair, maintenance and replacement of the exterior (non-interior) portions
of the garage units, just as with the exterior portions of the condominium units themselves.
Thus, it is clearly the case that the owners of the existing garages cannot be specially assessed
for the repair, maintenance and/or replacement of the garage units.
You also inquired as to whether structural-type improvements to the garage units, such
as repair or replacement of the slabs, would be considered to be the Association's
responsibility . Again, it is clear that this type of repair or replacement is the Association's
responsibility and not the responsibility of the individual garage unit owners.
.
AMERICANA BANK BUlLDlNG . 5050 FRfu~CE AVENUE SOUTH. SUITE 240 . EDINA, MINNESOTA 55410
(612) 922-4647' FAX (612) 922-4788
--- . -- - - -
. :tv1r. Doug Strandness
November 30, 1994
Page 2
Should you or any members of the Board have any further questions, comments or
concerns with respect to this matter, please do not hesi all me.
Todd R. Iliff
Attorney at Law
TRI/tls
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,~ R~~;;~"~~~~~~J (612) 935-9565
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March 14, 1995
Ci ty Counci I
City of Hopkins
1010 South First Street
Hopkins, MN 55343
Re: Meadow Creek Housing Improvement Area
Dear Council Members:
I am writing to raise the issue of timing regarding the housing
improvement area and the bond financing that you are considering
for Meadow Creek. Next Tuesday, March 21st, you will he
considering the granting of your final approval for both.
. On behalf of the board and the owners of Meadow Creek, I
respectfully request that you grant that final approval on Tuesday
as time i s of the essence.
I t IS extremely important for at least two reasons that we move
forward as rapidly as possible with the capi tal improvement program
for which we are requesting bond financing. Those reasons are:
1. Continuing EI igibi I (1..Y for FHA Mortgage Insurance. Several
events of the past week have highlighted that we are at a
critical juncture wi t h HUD in our effort to preserve Meadow
Creek's el igibi I i ty for FHA mortgage Insurance. The big
ohstacle to our continuing eligibility, which HUD has
identified, is the condition of our garages and our storm
windows. Combined, these two items make up 74% of the capital
improvement program. Any delay In starting the work to
correct this condition may trigger the suspension of our
eligibility for FHA mortgage insurance.
2. Timing on ConstructiClll. The engineering firm which IS
managing the construction work for the capital improvement
program has repeatedly stressed to us that we must start
construction by May 15th or run a serious risk of not
completing the work this construction season. If we do not
start by May 15th, we may run out of acceptable weather at the
e end of the construction season. In addition, our contractors
i\h'adc.\\ Cn..'d. Cl~lllbHllllllllJlJ:-' I" [ill" hll."i!r1r....~:'l nan1\' nl
\\'~.',~ht(l(d,:. (~HnlnTllllli\lm .-\"''''IIL'iclti~m
Letter to Hopkins ci ty Counci 1 Page :2
. March 14, 1995
may have to move onto other projects if they cannot start at
Meadow Creek by May 15th.
I realize that the housing improvement area and the bond financing
are being presented to you as a final package without the
alternatives being spelled out In detail. However, I want to
assure you that the board of Meadow Creek has researched the
options available to the Association In exhaustive de t ail and
concluded that the approach being recommended to you IS the best
approach for Meadow Creek and its individual owners. This
conclusion by the Board has also been exhaustively debated by the
owners of Meadow Creek at two lengthy Association meetings, and the
overwhelming majority of owners has agreed that the Board's
conclusion 1 S correct.
Wit h we 11 over 400 individual owners, it IS very un like ly that the
Association could gain unanlmous support for any plan. There wi 11
always be individual owners who argue that other approaches must be
considered. However, the plan that you are considering has been
very carefully thought out and does have the support of most Meadow
Creek owners.
. Thank you agaIn for your assistance and support.
Si~cerely,
"./ ! i i
. <. ~. I "/ I
Dl""luglas D. Stranclness
Property Manager
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