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CR 99-04 Resolution Setting Fees - Valley Park Condominiums GITY OF ~ December 29, 1998 HOPKINS Council Rpt #99-004 . RESOLUTION SETTING FEES - VALLEY PARK CONDOMINIUMS Proposed Action Staff recommends approval of the following motion: Adopt resolution number 99-002 approving housing improvement fees for Housing Improvement Area No.3 - Valley Park 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 for Council consideration. 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 Valley Park Condominiums 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 1998, the Association members voted on the proposed program and in November submitted the required petitions to hold public hearings on . the creation of the housing improvement area and the setting ofthe fees. Petitions were signed by more than 50 percent of the owners. On December 15, 1998 the City Council held a public hearing and had the first reading on an ordinance to establish a housing improvement area for the Valley Park Condominiums. The law requires a second reading of the ordinance, a public hearing on the fees, and the adoption ofa resolution setting the fees for the area. Both of these actions can be stopped if vetoes are filed by at least 35 percent of the owners within a 45-day period. Primary Issues to Consider . Have the legal requirements been met? . What are the proposed improvements? . What is the fee? . How are the fees paid? . What is the risk to the City? . What is the timeline for the project? . . -. Valley Park Fees e Council Rpt. 99-004 Page 2 Analvsis of the Issues . Have the legal requirements been met? The Valley Park Condominiums Association has submitted the Long-term Financial Management Plan, required by State Law. The Plan is currently being reviewed by staff and the financial consultant for the project and will be discussed at the January 5, 1999 meeting. Through the development agreement, the City should have adequate assurances that the plan will be updated and followed for the term of the district. . What are the proposed improvements? The improvements that have been identified by the Valley Park Condominium Association for the capital improvement project include the following: Mansard Replacement Sidewalk Replacement Replace Patio Doors and Rails Rebuild Parking Lots Replace Downspouts Construct Trash Buildings . Upgrade Entries Rehabilitate Garages Repair and Paint Stucco Timbers . What is the fee? The total fee for each property within the Housing Improvement Area varies by unit size and amenities. The following is the fee structure and the estimated annual fee if not prepaid: Type of Unit Total Fee Estimated Annual Fee 1 bedrooml I bath down $ 7,394.63 $712.17 1 bedroomll bath up $ 7,875.00 $758.43 2 bedroomll bath down $ 9,739.80 $938.03 2 bedroomll bath up $10,320.98 $994.00 Garage $ 319.73 $ 30.79 The following is a breakdown of the costs of the project: Improvement Costs $1,345,150 Professional Services $ 74,500 City Administration $ 10,000 . Finance/Legal $ 35,000 UndelWriter's Discount $ 31,000 Valley Park Fee . Council Rpt. 99-004 Page 3 Capitalized Interest $ 77,000 Other $ 2,350 Total Costs $1,575,000 . 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). Once the annual fee has been certified to the County the fee cannot be "paid off', rather it must be paid annually for the term ofthe district. The fee has been structured in this manner so that the cash flow of the bonds is more predictable and because it contributes to making the fee appear tax deductible. Also, administratively it saves a significant amount of time and money. . What is the risk to the City? e 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 ofthe fees. This is being accomplished by setting the fees at 105 percent of what is required to retire the bonds and by requiring the Association to cover any delinquencies. . What is the timeline for the project? The following is the anticipated timeline for the project: December 15, 1998 Public hearing before the City Council on establishing the housing improvement area First reading of the ordinance to establish the housing improvement area January 5, 1999 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 . February 20, 1999 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 35 percent of the owners . Valley Park Fee Council Rpt. 99-004 Page 4 February 22, 1999- March 23, 1999 Prepayments accepted February 22, 1999 Construction begins May 15,2000 First installment offee is due, as shown on property tax statement This timeline is subject to change. Alternatives: Following the public hearing, the Council has the following alternatives: o Adopt resolution 99-002 establishing fees for Valley Park Condominiums o Amend resolution 99-002 prior to adoption. o Take no action. Delaying action will affect the construction schedule. . . - ------ , . CITY OF HOPKINS RESOLUTION NO.99-002 RESOLUTION APPROVING A HOUSING IMPROVEMENT FEE FOR HOUSING IMPROVEMENT AREA NO.3 (V ALLEY PARK) PURSUANT TO 1994 MINNESOTA LAWS, CHAPTER 587, ARTICLE 9, SECTIONS 22 TIIROUGH 31 BE IT RESOLVED by the City Council of the City of Hopkins as follows: Section L 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. 99-822 adopted January 5, 1999 (the "Enabling Ordinance"), the Council established Housing Improvement Area NO.3 in order to facilitate certain improvements to property known as the "Valley Park 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.3 have filed a petition with the City Clerk requesting a public hearing regarding imposition of a housing improvement fee for Housing Improvement Area NO.3. 1.05. The Council has on January 5, 1999 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.3, were given an opportunity to be heard. 1.06. Prior to the date hereof, Westbrooke-West Condominium Association, Inc., d.b.a. Valley Park Condominium Association (the "Condominium Association") has submitted to the City a fmancial plan prepared by Dunbar Strandness, Inc., an independent third party, acceptable to the City and the Condominium Association, that provides for the Condominium Association to finance maintenance and operation of the common elements in the Valley Park Condominiums 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 Imprnvement Area NO.3" and "Housing Improvements" have the meanings provided in the Enabling Ordinance. SJB-153964 HPIID-59 . . Section 2. Housing Improvement Fee Imposed. 2.01. The City hereby imposes a fee on each housing unit within Housing Improvement Area No. 3 (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. 459, Declaration for Condominium, Valley-Park Condominium, dated as of October 13, 1983. 2.02. The owner of any housing unit against which the Housing hnprovcment Fee is imposed may, at any time within 30 days after the effective date of this Resolution, pay all or a portion of 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 if only a portion is prepaid the prepayment amount must be at least 25% of the total fee for that unit. Any Housing hnprovement Fee (or a portion thereof) 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 hnprovement Fee shall be payable in equal annual installments extending over a period of 2019 years, the first of the installments to be payable in calendar year 2000, which annual payment shall be deemed to include interest on unpaid 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.3 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 hnprovements (the "Bonds") in accordance with the Enabling Ordinance and the Housing hnprovement 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 amount 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.3. Within 30 days after issuance of the Bonds the City Clerk shall mail to each housing unit owner a copy of Exhibit B to this e Resolution showing the final annual fee imposed against each housing unit for which the Housing Improvement Fee has not been prepaid. SJB-153964 HPIIO-59 - . Section 3. Notice of Right to File Objections. 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.3: a summary of this Resolution; notice that owners subject to the Housing Improvement Fee have a right to veto this Resolution if owners of at least 35 percent of the housing units within Housing Improvement Area No. 3 me 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 tl1e 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, 1999, the City Clerk shall file a certified copy of this resolution together with a fmal update of Exhibits A and B hereto to the Hennepin County Director of Taxation to be recorded on lhe property tax lists of the county. . Approved by the City Council of the City of Hopkins this 5th day of January, 1999. Charles D. Redepenning, Mayor ATTEST: Terry Obermaier, City Clerk . SJB-153964 HPII0-59 . . EXIllBIT A TO RESOLUTION NO, 99-002 Unit's Housine Unit Ownership Share Total Fee I-Bedroom/I bath down .4695% $7,394.63 1- Bedroom!1 bath up .5000% 7,875.00 2- Bedroom/I bath down .6184% 9,739.80 2-Bedroomll bath up .6553% 10,320.98 Garage .0203% 319.73 . . SJB-153964 HPllO 59 . . EXHIBIT B TO RESOLUTION NO. 99.002 [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.] . . SJB-153964 HPII0 59 . VALLEY PARK CONDOMINIUM ASSOCIATION Long- Term Financial Plan December 15, 1998 SUMMARY The Long-Term Financial Plan is based on the Long-Term Replacements Plan. Since the Replacements Plan uses current costs and does not factor in inflation, the Financial Plan is prepared with no inflation reflected in the figures. LIN E ITEM NOTES 1. Dues Increase Needed to Balance Operating Budget. This line indicates that with no inflation, dues would increase less than 1 % per year after the replacements set -aside is phased in between 2000 and 2004. 2. Association Dues. The dues are set at whatever amount will balance the budget for the year. 3. Late Fees. Late fees are projected to increase 0.5% per year without inflation. . 4. Coin Laundry. Laundry income is expected to increase 1 % per year without inflation. 5. Rents. Rental income is projected to increase 0.5% per year without inflation. This assumes that with the capital improvement program complete, rents will be increased each year. 6. Interest Income. Interest income is expected to increase 1 % per year without inflation. 7. Admirtistrative. Administrative expenses are projected to remain flat without inflation. S. Utilities. Utility expenses are projected to increase 0.5% each year without inflation. This assumes that electricity will increase only at the rate of inflation or slightly less, even with deregulation. This assumes further that water and sewer will increase only 1.5% each year without inflation, but with the installation of pressure reduction valves in all buildings and the installation oflow-flow toilets in units. Natural gas will increase 0.5% each year without inflation, but with deregulation and the implementation of further utility conservation measures. 9. Maintenance Contracts. These expenses are projected to increase 1.5% each year without inflation. . -- 1 -- . 10. Building Maintenance. Building maintenance expenses are projected to increase 1 % each year without inflation because of the continued general aging of the buildings. This is a relatively conservative assumption. 11. Laundry Repairs. Laundry repair expenses are projected to increase 1 % each year without inflation. 12. BoilerlMechanical Repairs. These expenses are projected to increase 1 % per year without inflation because of the continued general aging of the buildings. This is a relatively conservative assumption. 13. Lot/Grounds Repairs. These expenses are projected to increase 1 % per year without inflation because of climate and level of usage. 14. Insurance Related Repairs. These expenses are expected to remain flat without inflation. i i 15. Painting. Painting expenses are expected to increase 1 % per year without inflation because of the general aging of the buildings. 16. Swinnning Pool. Pool expenses are expected to remain flat without inflation. 17. Caretaker. These expenses are projected to increase 2% per year without inflation because . of a continuing shortage of qualified workers. 18. Depreciation. Depreciation is expected to remain flat. 19. Provision for Bad Debt. The need for this allowance is expected to remain flat. 20. Provision for Income Tax. Taxes are expected to remain flat. 21. Reserve Contributions. These figures are taken from the Long-Term Replacement Plan. 22. Replacement Set-Aside. These figures are taken from the Long-Term Replacement Plan. . -- 2 -- ----.. -- . . 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I I ffi iw I r<.J IN U'l !'6"I Itf'l' Iffi wi iU';llffi ffi ob'T 1.f;A 1'iIl' I....L N (.oJ IUl X I\..J ItA YJ W ~ffi I'" ~--..j ~ .....!~'~;w'~,mIN,i'J....... ~..... m ~ ~ ml~ ~ !~ ~ ~ --'-~ a .N . ffi\-~ \p '-8 g""g 'f I~ g; g -~ 'I~ ~ ~ ~ ~ ~ ~ ~ I~ :-~ {/)'~,~ ,-[g ~ 'N m .~ iO ----,-.'8!0 0 0 A.~ 0 0 ~ ~IA ~ ~ --'- ~....L N N 1~,lo ~:Wi~ w ~ ~ ~ ! -1- -....- \- i 1 ----- r!.. ,.y,. w ~ ifR l~ tR ffi i~ 'i:A- ,"t: Eft n l~ !-~.~ ~ ~ .re I~ %: ~:~ ~ ~ ~.~ ~ ~ ~ 1!'; IW ~ ~ if>? ~ 'Q? : . V ALLEY PARK CONDOMINIUM ASSOCIATION Lone- Term Replacements Plan December 15, 1998 SUMMARY Valley Park Condominium Association has historically used a programmed replacement plan for replacement of most capital items. A programmed replacement is a category of items that are replaced on a phased basis over a period of years. For example, ten percent of the laundry equipment is replaced each year. However, some items are replaced all at once as they reach the end of their economic life. For example, hallway lighting is replaced all in one year. Costs are in current dollars. Costs will be reviewed periodically, and the plan adjusted accordingly. LINE ITEM NOTES 1. Parking Lots. . 901-917 lot. To be replaced and upgraded in 1999. Thereafter, seal cracks and sealcoat every fifth year beginning in 2000. 900-920. To be replaced and upgraded in 1999. Thereafter, seal cracks and sealcoat every fifth year beginning in 2001. 921-941101. To be replaced and upgraded in 1999. Thereafter, seal cracks and sealcoat every fifth year beginning in 2002. Beginning in 2000, funds will be set aside towards the next replacement of the lots in 20029. 2. Grounds. a. Sidewalks. Front sidewalks to be replaced in 1999. Replace back stoop slabs in annual increments on a worst-first basis. b. Paths. Replace in 2004. Replace again in 2014. c. Fence. The only fence is located by the 906 building. It was installed in 1994. Replace in 2009. It -- I -- . d. Landscaping. Based on a master landscaping plan to be developed in 1999, make improvements to landscaping in arumal phases. 3, Trash Dumpsters and Recycling Carts, To be examined, rehabbed or replaced in 1999. Rehab or replace again in 2014. Dumpsters should last about 25 years, and carts should last about 15 years. 4. Flat Roofs. All the flat roofs were replaced between 1986 and 1993. Flat roofs should last 20 to 25 years. Replace again one roafper year, beginning in 2006. 5. Mansard Roofs. To be replaced in 1999 along with downspouts. Mansard roofs should last 30 years. 6. Windows and Patio Doors. All windows were replaced between 1990 and 1995. Windows should last 25 to 30 years. Starting in 2015, replace two buildings per year until all windows have been replaced again. . Patio doors to be replaced in 1999. Patio doors should last 30 to 35 years. 7, Doors. a. Front Doors. To be replaced in 1999. Starting in 2014, replace two sets offront doors each year on a worst-first basis. b. Back Doors. Replace four back doors each year on a worst-first basis begitll1ing in 2000. Starting in 2020, again replace four doors each year on a worst-first basis. c. Back Storm Doors. To be replaced in 1999. Starting in 2009, replace two doors each year on a worst-first basis. 8. Building Exteriors. a. Brick Facade. Fourteen of the 22 buildings have brick facades. Starting in 2000, go over two buildings per year, tuckpointing and replacing brick as necessary. Begin second go-around in 2011, again doing two buildings per year. b. Stucco and Cross Boards. Eight of the 22 buildings have stucco and cross board facades. Cross boards to be painted in 1999, and stucco to be inspected and repaired . -- 2 -- --- -------------- ---------------------------- . as needed. Starting in 2009, paint two buildings per year, and repair stucco as needed. c. Fascias and Soffits. To be replaced in 1999. They should last 30 years. 9. Hallways. a. Ceramic Tile. The tile is laid directly on the concrete slab and is showing no sign of wear. It should last indefinitely. b. Carpeting. All carpeting was replaced in 1992, 1995 or 1996. Starting in 2003, replace one third of the carpeting each year on a worst-first basis. Begin the cycle again in 2015. c. Wall Repairs and Painting. All hallways painted and decorated in 1991 to 1993. Starting in 2001, repair and paint one third of the hallways each year on a worst-first basis, eliminating wallpaper. Begin cycle again in 2011. d. Trim Boards. Starting in 2001, replace five hallways each year on a worst-first basis. The new trim should last 25 years with the next replacement cycle starting in 2026. e. Heat Runs. Starting in 2001, replace five hallways each year on a worst-first basis. . Begin replacement again in 2016. f. Railings. The hallway railings are wrought iron in good condition. They should last indefinitely. g. Mailboxes. Starting in 200 I , replace mailboxes in the same buildings that are getting repainted. Mailboxes should last 2S years. h. Fire Extinguishers. All fire extinguishers are examined and tested once per year. Replace as necessary. 10. Boiler/Meter Rooms. a. Boiler Controls. Upgrade the controls on two boilers each year until all controls have been upgraded. Controls should last at least 20 years. b. Inner Doors. The fire doors to the boiler and the meter rooms were installed in 1997. The doors should last indefinitely. c. Fire Doors. Starting in 2001, replace two per year on a worst-first basis. Doors should last 25 years. . .., -- -' -- . d. Floors. There are two deteriorated concrete boiler room floors that need major sections cut out and replaced. Repair one in 1999 and one in 2000. The rest of the floors need minor repairs. Repair one floor per year on a worst-first basis. Continue until all are repaired. Floors should last indefinitely. e. Ceilings and Walls. Repair and repaint the ceilings and wans of two boiler rooms or meter rooms each year, on a worst-first basis, beginning in 1999. f. Ventilation Fans. Replace as needed. g. Water Heaters. Replace one per year on a worst-first basis. h. Water Softeners. Beginning in 2000, replace two each year on a worst-first basis. Softeners should last 20 years. 11, Laundry Rooms. a. Washers and Dryers. Replace four pieces of equipment (washers or dryers) each year. so that they are all replaced on a IO-year cycle. b. Fire Doors. Beginning in 2001, replace two doors per year on a worst-first basis. . Doors should last 25 years. c. Floor Vinyl. Beginning in 2005, replace four floors each year until all vinyl is replaced. Vinyl should last 20 years. d. Wall Repairs and Painting. Starting in 2001, repair and paint one third ofthe laundry rooms each year on a worst-first basis. Begin cycle again in 2011. e. Sinks. Replace seven sinks in 2001, seven in 2002. and eight in 2003 on a worst.frrst basis. Sinks should last 30 years. f. Door Casings. Starting in 2001, replace casing in five rooms each year until all casings replaced. Baseboards should last 25 years. g. Heat Runs. Starting in 2001, replace heat run covers in five rooms each year until all covers replaced. Begin replacement cycle again in 2016. 12. Vehicle Plug-Ins. Plug-ins to be replaced in 1999. Plug-ins should last 25 years. . -- 4 -- . 13, Pool Area. Swimming pool area had a major overhaul in 1994 with a new deck and piping installed and a new pool shed built. In 2009, overhaul pool area again. 14. Signage. a. Assigned Parking. To be replaced in 1999. Signage will be carefully maintained thereafter. with individual signs replaced as they are damaged or otherwise wear out. b. Lot EntrancesIMain Walks. To be replaced in 1999. Signage will be replaced as it is damaged or wears out. 15. Lighting. a. Standards for Lots. To be replaced or upgraded in 1999. Standards should last 25 years. b. Garages. All rectangular wallpacks on the garages to be replaced in 1999. Replace again in 2014. c. Building Exteriors. All wallpacks were replaced in 1996. Wallpacks should last 25 . years. d. Building Entrances. New fixtures to be installed in 1999. Fixtures should last 20 years. e. Hallways. All hallway lighting was replaced and upgraded in 1996. Replace again in 2016. f. Laundry Rooms. All laundry room lighting and motion detectors were replaced and upgraded in 1996. Replace again in 2016. g. Boiler and Meter Rooms. All lighting was replaced and upgraded in 1996. Replace again in 2016. 16. Garages. Garages to be rehabbed in 1999. Rebab work should last 25 to 30 years. 17. TrashlRecycling Buildings. Trash/recycling buildings to be constructed in 1999. Buildings should last 30 years without . -- 5 -- . the need for any major rehab work. The foundation slabs should last indefinitely. 18. Boilers, The boilers are thoroughly inspected and tested by a heating contractor each fall. 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