Memo Westbrooke Work PlanDate: April 26, 1993
To: Honorable Ma Berg and the Hopkins City Council
From: Kersten Elver , Housing Coordinator
Subject: Westbrooke Work Plan
II. Overview
C I T Y O F H O P K I N S
1. Purpose of Discussion
MEMORANDUM
In a recent goal setting session, the Westbrooke
neighborhood was again ranked as a top concern of the City
Council. In an effort to determine if the current course of
action is adequately addressing the needs of the area, the
following report was prepared to be used as a basis for
discussion at the May 11, 1993 Council Worksession.
The intent of this discussion will be to identify and rank
the City Council's goals for the Westbrooke developments and
to determine if there is interest in pursuing actions which
are not currently outlined in the Westbrooke work plan.
The Westbrooke neighborhood consists of two housing types,
condominiums located east of 11th Avenue and patio homes, or
town homes, located west of llth Avenue. (See attached map)
The area is divided into five separate associations as
follows:
Association # of Units
Westbrooke West 176
Westbrooke North 88
Westbrooke Park 168
Meadow Creek 536
Westbrooke Patio Homes 328
1,296
In February of 1992 the Westbrooke Rehabilitation Financing
Analysis was completed by Springsted, Inc. The Analysis
made the following recommendations:
o Convert Westbrooke Way to a public road and extend
Westbrooke Way to Smetana Road
o Assist Westbrooke North with parking lot renovations
through a bidding process
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o Pursue the concept of special purpose revenue bonds
to finance the common are improvements in the Patio
Homes (and condominiums)
o Coordinate leasing activities /establish a property
manager coalition
As a result of the study and it's recommendations, a work
plan was developed. (See attached) The Westbrooke Way road
project has been approved with construction scheduled to
begin this spring /summer. Additionally, the City has
organized a Property Manager's Coalition in which the
Westbrooke condominium association's managers are involved.
The City did attempt to assist Westbrooke North with parking
lot bids when the Westbrooke Way road project was let,
however, the bid for the parking lot did not come in lower
than the association had received independently. The
association is going forward with the parking lot
improvements this summer.
Staff has been pursuing the concept of special purpose
revenue bonds to finance the common area improvements in
both the Patio Homes and Meadow Creek Condominiums. At this
time, it is still unknown whether or not this is a viable
option.
Meadow Creek has identified improvements totalling
approximately $1.5 million which they wish to finance
through a bond issue. The Patio Homes have only recently
indicated that they are interested in pursuing this option
and have not thoroughly outlined the improvements they wish
to undertake. Staff has met with the Board president and
have requested that the Patio Home Board identify a
comprehensive list of improvements to be financed (including
those improvements needed in order for the units to be FHA
eligible), their costs and possible sources of security for
the bond.
Staff has met with financial advisors regarding the possible
bond issue for Meadow Creek. The question continues to
relate to security to back the bonds. Meadow Creek is
currently exploring the possibility of using revenue
generated from renting the new garages which will be
constructed with the bond financing to partially secure the
loan. Additionally, the associations would probably be
required to pledge all reserve funds and obtain a letter of
credit from a local lender(s).
III. Current Status
Attached are two graphs showing sales activity for the Patio
Homes and Meadow Creek Condominiums. Past sales indicate
that both the Patio Homes and Meadow Creek Condominiums had
continually dropped in value until 1992 when sale prices
increased by an average of 3% and 5% over the previous year.
While it may be premature to draw conclusions based on this
information, it is an encouraging trend.
Staff has met with each of the association representatives
and below is a summary of each association's current status.
Patio Homes
Since becoming self - managed a year ago, the Patio Homes
Association has concentrated on reducing their operating
expenses by taking over such activities as groundskeeping
and snow removal. They feel that by reducing their monthly
operating expenses it will allow them to finance the major
repair projects that are needed.
They have been working slowly repairing /replacing decks and
fences, asking the owner to pay material cost while the
association provides the labor. They feel that "little by
little" things are getting done but some owners are forced
to wait a long time for the work to be completed.
They have a great deal of major improvement projects which
need to be addressed in the near future including the
replacement of 36 roofs, repairing garage roofs, installing
draft stops, installing individual unit water shut offs, and
road repair /replacement. They have not budgeted for these
items and therefore may be interested in bond financing for
these improvements.
Westbrooke West, Park and North Associations
In meeting with the association manager for Westbrooke
North, Park and West it was stated that all three of these
associations have made progress in their maintenance
programs. Westbrooke North has recently adopted a volunteer
assessment to pay for the renovation of their lobby areas.
They have completed the replacement of their roofs and will
be addressing their parking lots this summer. Westbrooke
West has recently completed replacing their roofs and
Westbrooke Park will be completing the remainder of their
roofs next year.
However, through exterior inspections it is evident that
there are other needs not currently being addressed such as
the replacement of deteriorated windows in many of the
buildings.
Meadow Creek Association
The present management and Board have developed an
improvement plan which they feel will give them "a shot in
the arm" and significantly improve the salability of the
units. The plan includes constructing additional garages,
repairing existing garages, exterior lighting, signage,
replacing storm doors and windows and pool area
improvements. The Board appears to have the support of the
owners on this plan and are seeking bond financing through
the City to finance the improvements.
The association also feels that the Westbrooke Way road
project will have a significant impact on the image and the
accessibility of the development.
The Meadow Creek owner - occupants have formed a resident -
owner group to promote their development, neighborhood
cooperation and increased owner - occupancy in these
condominiums. Additionally, positive changes have come as a
result of a growing rental management and condominium sales
business specifically for Meadow Creek condominiums.
IV. Identified Problems
In order to review the City's work plan and establish goals
for the Westbrooke neighborhood, the problems within the
developments need to be reviewed. These are generalized
statements, not true for all units within the associations.
Condominiums:
o Lack of amenities including parking /garages; security
systems; updated interiors.
o Absentee Landlords
o Poor screening of tenants
o Undercutting of rents brings down entire rent
structure
o Lack of activities for and supervision of children
o Inability of Association to evict tenants
o High debt to value ratio for some owners resulting in
inability to take on additional debt
o Deferred maintenance
Patio Homes:
o Inadequate reserve levels (currently $30,000 in
reserves for 328 units)
o Inability to obtain FHA financing
o Poor condition of roofs, siding, interior roads,
garage doors, etc...
o Landfill /Image
o Division between Board and residents; lack of
leadership
o High debt to value ratio in some instances
These issues have an impact on the City as a whole because
Westbrooke represents 15% of housing stock, problems are
concentrated and the decline in property values affects the
overall tax base for the City.
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V. Goals
In order to determine if the current work plan for the
Westbrooke neighborhood is addressing the Council's concerns
and also to determine the suitability of other options, the
Council's goals for the Westbrooke developments must be
identified and ranked. As part of the discussion at the May
11, 1993 Council Worksession, these goals should be
established. Due to differences in the various
associations, goals will likely vary.
The following is a list of possible goals to begin this
discussion:
o Stabilize values or increase values
o Rehabilitation of common areas
o Updating interiors
o Increase owner occupancy
o Address social problems
o Improving the management of the units
In addition to identifying the goals, they must be ranked
according to importance and categorized as mandatory or
secondary.
VI. Alternatives
The City has the option of continuing to implement the
Westbrooke work plan or to amend it to reflect a change in
the approach to the situation. If the Council feels that
additional City involvement is warranted or that a different
approach should be examined, there are alternatives
depending on the goals for the developments. Assuming that
one major goal is to upgrade and maintain the structures,
the following are examples of actions the City could take:
Code Enforcement:
Using the codes, the City is limited in mandating
corrections to both the Patio Homes and the condominiums.
Items such as the deteriorating interior roads and parking
areas cannot be addressed through the codes. Other items,
such as deteriorating siding can be ordered to be corrected.
Many of the deficiencies of the neighborhood are aesthetic
and cannot be addressed through either the housing or
Nuisance code.
While the current codes do not allow the City to mandate the
correction of all the items contributing to the blight of
the area, they could be used where applicable to correct
some items. In the past, correction orders through the
Inspection Department have been focused on the more serious
items and the Department has not been as aggressive on the
less serious items.
The City does have the authority to adopt a maintenance code
which would address the aesthetic concerns of the
neighborhood.
Alternate Source of Funds:
The City does have a limited amount of funds available
through the Tax Increment Account, #213 Housing
Rehabilitation Fund, and the #204 Economic Development Fund.
Additionally, it may be possible to use future years CDBG
funds on Westbrooke. However, due to the limited amount of
funds available through the various accounts and the
extensive amount of rehabilitation needed in the
developments, staff is not recommending use of these funds.
Purchase /Rehabilitation:
A more aggressive approach to addressing the problems of the
condominiums would be to purchase 100% of the units in any
one association, rehabilitate the property and either sell
the units, perhaps through a lease - purchase program, or rent
the units while the HRA or a non - profit organization
maintains ownership. With this concept in particular, there
are a number of possibilities depending upon the goals of
the Council. They could range from the HRA purchasing the
units and remaining the owner, to the City simply
facilitating the purchase and redevelopment through a non-
profit organization.
This would be an option for West, Park or North
Associations, but not recommended for the Patio Homes or
Meadow Creek due to higher owner - occupancy levels and the
potential for financing needed improvements through a bond
issue.
Staff has discussed this approach with several housing and
finance professionals. Springsted, Inc. has proposed
completing a feasibility study to determine what type(s) of
project(s) would be possible and then designing the project
including identifying the financing and the participants
(developer, owner, etc...). Their fee would vary depending
on the difficulty of the project, but have estimated between
$13,000 and $20,000. The fee could be less if City staff
were involved in research and development.
Staff has also discussed the idea with representatives of
the Twin Cities Housing Development Corporation and the
Metropolitan Housing and Redevelopment Authority, among
others. Initially, there has been some interest by these
parties and if the Council is interested in pursuing this
alternative it may be possible to conduct our own
feasibility study with the assistance of an experienced
•
organization, such as Twin City Housing Development
Corporation.
Additionally, the City has been approached Apartment Home
Equity Program, Inc. (AHEP) who recently began selling the
Westbrooke condominium units owned by MERF under a special
financing program. They would like the City to purchase
additional units which would be sold through their
organization, with the end result being increased owner -
occupancy and control of the association boards.
The concept of purchasing the units as a way of gaining
control may or may not be feasible depending upon the
willingness of the current owners to sell their units and
the cost of total project.
Staff has discussed this option with the property manager
for Westbrooke North, Park and West and she indicated that
all owners would probably be willing to sell "if the price
was right ". However, the amount of debt the various owners
have on their unit(s) differs greatly and those with
original mortgages may not be willing to sell at current
market values. The first step in evaluating the potential
for a conversion would be to survey the owners in one or
more of the associations.
In order to determine the feasibility of this alternative
and also to save time and money, the parameters of what is
acceptable should be established. As part of the discussion
at the worksession, the Council should be prepared to
identify what is and is not acceptable. For example, if the
Council feels the purchase of a particular development is a
viable alternative, would the Council require those units to
be owner - occupied or would the Council support a project to
purchase a development and convert it back to an apartment
with one owner?
VII. Conclusion
Current sales information and discussions with the various
associations indicate that values have stabilized and some
progress is being made towards addressing maintenance needs.
The Westbrooke Way road project will have a positive effect
on the Meadow Creek development and if bond financing proves
to be viable it will also significantly improve the area.
However, because West, Park and North condominium
associations are not interested in participating in the bond
financing, those units are not being addressed in any
significant manner. Options exist, however, they represent
a change from past policies of the City.
To date, the City has approached the concerns of the
Westbrooke area by implementing strategies which are non-
controversial. Additional involvement by the City may mean
implementing strategies which involve a more aggressive
stance by the City.
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MEADOW CREEK
PATIO HOMES
WESTBROOKE NEIGHBORHOOD REHABILITATION WORK PLAN
Recommendations Based on Analysis
Convert Westbrooke Way to a public road and extend
Westbrooke Way to Smetana Road
o Community Development and Public
Works staff to meet with Meadow Creek completed
property manager to discuss road project
and outline requirements of City including
petition from property owners.
o City considers feasibility study completed
agreement with Meadow Creek.
o Feasibility study completed. completed
o City receives petition from property
owners requesting City to proceed with road
project and outlining conditions of project. completed
o City and Meadow Creek Association
enter into development agreement; Meadow
Creek Assoc. dedicates right of way and grants
necessary utility and drainage easements. completed
o Plans and specifications are ordered;
including repaving of North Association's
parking areas and the reconstruction of
Old Settler's Trail; bids let. completed
o Bids opened; assessment hearing
held; contract awarded. completed
o Begin construction. Spring 1993
Assist Westbrooke North with parking lot renovation through
a bidding process
o Plans and specifications are drawn;
bids let. completed
o Westbrooke North escrows cost of
repaving with City. Not applicable
o Contract awarded. Not applicable
Pursue the concept of Special Purpose Revenue Bonds to
financ th common ar a improvements in th Patio Homes and
the condominiums
0
o Staff meets with Bond Counsel /Underwriter
to discuss parameters of a bond issue completed
o Meet with Patio Home and condominium
Associations to further discuss the Revenue Bond;
outline requirements and answer questions;
request letter of intent.
o Receive letter(s) of intent from
those associations interested in participating
in a bond issue.
o Meet with City's bond counsel to
refine details of the bond issue; negotiate
specifics of issue
o City and association board seek
letter of credit or other loan guarantee.
Coordinate Leasing Activities /Image Building
o Encourage associations to require
absentee owners to contract with professional
rental agents to manage units.
o City staff work with associations in
the establishment of a property manager
coalition; provide support as needed.
Recommendations Based on Council Work Session
City Council to Tour Westbrooke Neighborhood
o Tour Westbrooke Condominiums and Patio
Homes; meet with owners to discuss concerns.
Identify the Alternatives for Assisting in Garbage
Collection in the Westbrooke Neighborhood
o Include the Westbrooke neighborhood
as an alternate in bid package if City
decides on private collection.
o Work with the EPA to determine possibility
of using the landfill property for recreational
purposes.
completed
completed
Aug 1992
Aug 1992
completed
completed
completed
May 1992
Oct /Sept 1992
Continue to Pursue the Development of a Golf Course on the
Landfill Site
Ongoing
65
60
g 55
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50
45
1987
22 SALES
WESTBROOKE PATIO HOME SALES
1988
12 SALES
WESTBROOKE CONDOMINIUM SALES (MEADOW CREEK)
1988 1989
16 SA LES 19 SA LES
1989
21SAIES
1990
24 SA LES
1990
14 SALES
1991
7 SALES
1992
28 SALES
1992
22 SA LES