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CR 2012-081 Resolution Approving Transfer of Excess Fee Revenuesia July 26, 2012 Council Report 2012-081 RESOLUTION APPROVING TRANSFER OF EXCESS FEE REVENUES Proposed Action Staff recommends that the Council approve the following motion: Move to approve Resolution 2012-030 transferring all excess Fee Revenues to the Association. Overview In 1995, the City of Hopkins and Meadow Creek entered into an agreement to fund certain improvements at Meadow Creek. The original projects have been completed and there now exists excess fee revenues from the sale of bonds used to fund these improvements. There is approximately $130,000 in excess fee revenues. The choice before the Council is whether the City wants to tell the Association what improvements should be made or whether it should allow the Association to make this decision. At the June 19 City Council meeting there was testimony regarding the current board and whether it could be trusted to spend the excess fee revenues in an appropriate manner. There was also conflicting testimony about which projects should be undertaken. The current board, however, has approved a list of capital improvements for this year and will be spending money on these improvements no matter what the City decides to do with the excess fee revenues. Primary Issues to Consider What projects are authorized by the original agreement and Ordinance 95-759? What options does the Council have for distributing excess Fee Revenues? Is there a deadline for distributing the excess Fee Revenues? What additional improvements could the City Council include in a project fund? Supporting Information ♦ Resolutions ♦ Meadow Creek Condominiums Approved Reserve Expenses ♦ Mel Pittel letter dated July 20, 2012 ♦ Memorandum from Chief Specken regarding smoke alarms d ,�z James A. enellie Assistant City Manager Council Report 2012-081 Page Two Primary Issues to Consider What improvements are authorized by the original agreement and Ordinance 95-759? Rehabilitation of garages Installation of new signage Rebuilding of trash and recycling areas Parking lot repairs Upgrading of building exteriors Site Improvements Replacement of lighting fixtures What options does the Council have for distributing excess Fee Revenues? The Council has two options for distributing the excess fee revenues: The Council can pass a resolution disbursing all or part of the excess funds to the Association to be deposited in an "Excess Revenue Subaccount" of a Replacement Reserve Fund. Money in the Excess Revenue Subaccount could only be spent for improvements, authorized by Ordinance 95-759, as determined by the Association. The Association would have to submit plans and written estimates to the City Building Official prior to undertaking the improvements. and/or The Council can pass a resolution specifying additional improvements, as authorized by Ordinance 95-759, and transfer all or a portion of the excess money into a supplemental project fund. This fund would be used to reimburse the Association for the money it spent on the specified improvements. Is there a deadline for distributing the excess Fee Revenues? There is no deadline in the Agreement or the Ordinance on when the excess Fee Revenues need to be disbursed. What additional improvements could the City Council include in a project fund? Should the City Council wish to specify additional improvements, there are a number of projects already planned or contemplated for Meadow Creek. The Meadow Creek Board of Directors approved a list of projects which would meet the criteria set out in Ordinance 95-759. (See Meadow Creek Condominiums Approved Reserve Expenses) Mr. Pittel has provided the City with a letter recommending the excess fee revenues be used for smoke alarms in the hallways. The Board has also indicated that they are interested in a project of this type. Mr. Pittel's letter gives the impression that the Council can order this project done immediately and that the excess fee revenues could pay for it. The City can deposit the excess fee revenues in a project fund but the Association will have to undertake the project. There is no provision in the development agreement for stipulating when a project must be done. The amount of money available will be insufficient to complete the smoke alarm installation project. Such a project, in order to meet code, would require not only the installation of smoke alarms in the hallways but would also require the installation of additional units in every bedroom. Council Report 2012-081 Page Three Alternatives Alternative #1: Approve Resolution 2012-030 transferring all excess Fee Revenues to the Association. This alternative would result in disbursing all the excess funds to the Association to be deposited in an "Excess Revenue Subaccount" of a Replacement Reserve Fund. Money in the Excess Revenue Subaccount could only be spent for improvements, authorized by Ordinance 95-759, as determined by the Association. The Association would have to submit plans and written estimates to the City Building Official prior to undertaking the improvements. There currently is only one governing body for the Meadow Creek Condominiums, the Westbrook Condominium Association. Regardless of allegations against the board, it is the only body empowered to undertake repairs and upgrades to the Meadow Creek buildings and grounds. The current board has approved a list of capital expenditures which the current owners will have to pay for. Transfer of the excess fee revenues will help defray the cost of these capital projects. Alternative #2: Approve Resolution 2012-049 specifying additional improvements, as authorized by Ordinance 95-759, and transfer the excess money into a project fund. This alternative would specify two improvements for the Meadow Creek complex, replacing rear exterior doors and installing smoke alarms in hallways. The City would transfer the excess money into a project fund. This fund would be used to reimburse the Association for the money it spent on the specified improvements. The current board has already approved spending money on replacing the rear doors. Meadow Creek owners are going to have to pay for this project one way or another. Setting aside money in a project fund will help pay for a project that is already going to take place. Setting up a project fund for smoke alarms in the hallways, will help fund a project that some of the owners want to see done soon. It is also a project that the current board has said that it intends to do in the next few years. Having the money in a project fund will provide an additional incentive to complete this project. Alternative #3: Approve Resolution 2012-050 transferring all excess Fee Revenues to the Association upon resolution of the lawsuit Melvin H. Pittel, et. al. v. John Ward, et. al. This alternative would have the City retain the excess fee revenues until the current lawsuit is resolved at which point the revenues would be transferred to the Association. There is an existing lawsuit between certain owners and members of the current board of the Westbrooke Condominium Association. The City could hold on to the excess fee revenues until this lawsuit is resolved. However, it may take some time before the lawsuit is resolved. Even if a judgment is entered against one side or the other, there could be appeals. Staff recommends Alternative #1. 0 CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA RESOLUTION NO. 2012-049 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HOPKINS, MINNESOTA TRANSFERRING EXCESS FEE REVENUES WHEREAS, by Ordinance No. 95-759 adopted March 21, 1995, the City Council established Housing Improvement Area No. 1 in order to facilitate certain improvements to property known as the Meadow Creek Condominiums, and WHEREAS, Minnesota State Statutes authorized the City to issue Housing Improvement Bonds (the 'Bonds") in the amount necessary to defray the expense to be incurred in making the housing improvements; and • WHEREAS, the City of Hopkins, in May 1995, entered into a Development Agreement (the "Agreement") with Westbrooke Condominium Association, D.B.A. Meadow Creek Condominiums (the "Association"); and WHEREAS, Bonds were issued and fees were charged to each housing unit in Housing Improvement Area No. 1 in order to finance certain improvements as defined in Ordinance No. 95-759; and WHEREAS, the Housing Improvements that were funded by the Bonds have been completed and paid for; and WHEREAS, the Bonds have been paid in full and the City has determined that it has excess Fee Revenues as defined in the Agreement; and WHEREAS, the City Council may, by resolution, specify additional housing improvements (as 0 defined in Ordinance No. 95-759) and transfer all or any portion of such excess Fee Revenues into a project fund (the "Supplemental Project Fund"); and WHEREAS, amounts in the Supplemental Project Fund shall be disbursed to the Association to pay the cost of the housing improvements specified by the City; and WHEREAS, City staff have identified specific Housing Improvements at Meadow Creek Condominiums that should be completed; NOW, THEREFORE, the City Council of the City of Hopkins, Minnesota hereby resolves as follows: The City of Hopkins shall transfer all such excess Fee Revenues into two Supplemental Project Funds. $65,000 will be transferred into a Supplemental Project Fund for the purpose of replacing rear exterior doors in the buildings. The remainder of the excess Fee Revenues will be placed in a Supplemental Project Fund for the purpose of installing fire alarms in the entry areas. All such • funds shall be disbursed in accordance with the provisions of the Agreement. Adopted by the City Council of Hopkins, Minnesota, this 6th day of August, 2012. ATTEST: City Clerk • CITY OF HOPKINS, MINNESOTA Its: 2 0 CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA RESOLUTION NO. 2012-050 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HOPKINS, MINNESOTA TRANSFERRING EXCESS FEE REVENUES WHEREAS, by Ordinance No. 95-759 adopted March 21, 1995, the City Council established Housing Improvement Area No. 1 in order to facilitate certain improvements to property known as the Meadow Creek Condominiums, and WHEREAS, Minnesota State Statutes authorized the City to issue Housing Improvement Bonds (the "Bonds") in the amount necessary to defray the expense to be incurred in making the housing improvements; and • WHEREAS, the City of Hopkins, in May 1995, entered into a Development Agreement (the "Agreement") with Westbrooke Condominium Association, D.B.A. Meadow Creek Condominiums (the "Association"); and WHEREAS, Bonds were issued and fees were charged to each housing unit in Housing Improvement Area No. 1 in order to finance certain improvements as defined in Ordinance No. 95-759; and WHEREAS, the Housing Improvements that were funded by the Bonds have been completed and paid for; and WHEREAS, the Bonds have been paid in full and the City has determined that it has excess Fee Revenues as defined in the Agreement; and WHEREAS, there currently exists a lawsuit, Melvin H. Pittel, et. al. v. John Ward, et. al., (the i"Lawsuit") between certain owners of Meadow Creek Condominiums and members of the 1 • current Board of Directors; and WHEREAS, the City Council has determined that it is in the best interest of the Association to defer the transfer of the excess Fee Revenues until the Lawsuit is resolved; WHEREAS, the Lawsuit shall be deemed to have been resolved upon the occurrence of either of the following events: a. The voluntary dismissal of the Lawsuit as evidenced by an Order entered in Hennepin County District Court dismissing the Lawsuit with or without prejudice; or b. Entry of a final, non -appealable judgment in Hennepin County District Court resolving all claims and causes of action in the Lawsuit. NOW, THEREFORE, the City Council of the City of Hopkins, Minnesota hereby resolves as follows: The City of Hopkins shall disburse all such excess Fee Revenues to the Association for deposit • into the replacement fund maintained by the Association (the "Replacement Reserve Fund") upon resolution of the Lawsuit. At that time the Association shall establish and maintain a n U separate subaccount in the Replacement Reserve Fund (the "Excess Revenue Subaccount") in which the excess Fee Revenues, together with interest earnings thereon, shall be maintained. Amounts in the Excess Revenue Subaccount of the Replacement Reserve Fund shall be disbursed in accordance with the provisions of the Agreement and expended only for housing improvements (as defined in the Ordinance No. 95-759) that are selected by the Association. Adopted by the City Council of Hopkins, Minnesota, this 6th day of August, 2012. ATTEST: City Clerk CITY OF HOPKINS, MINNESOTA 0 Its: 2 • CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA RESOLUTION NO. 2012-030 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HOPKINS, MINNESOTA TRANSFERRING EXCESS FEE REVENUES WHEREAS, by Ordinance No. 95-759 adopted March 21, 1995, the City Council established Housing Improvement Area No. 1 in order to facilitate certain improvements to property known as the Meadow Creek Condominiums, and WHEREAS, Minnesota State Statutes authorized the City to issue Housing Improvement Bonds (the 'Bonds") in the amount necessary to defray the expense to be incurred in making the housing improvements; and • WHEREAS, the City of Hopkins, in May 1995, entered into a Development Agreement (the "Agreement") with Westbrooke Condominium Association, D.B.A. Meadow Creek Condominiums (the "Association"); and WHEREAS, Bonds were issued and fees were charged to each housing unit in Housing Improvement Area No. 1 in order to finance certain improvements as defined in Ordinance No. 95-759; and WHEREAS, the Housing Improvements that were funded by the Bonds have been completed and paid for; and WHEREAS, the Bonds have been paid in full and the City has determined that it has excess Fee Revenues as defined in the Agreement; 0 • NOW, THEREFORE, the City Council of the City of Hopkins, Minnesota hereby resolves as follows: The City of Hopkins shall disburse all such excess Fee Revenues to the Association for deposit into the replacement fund maintained by the Association (the "Replacement Reserve Fund"). The Association shall establish and maintain a separate subaccount in the Replacement Reserve Fund (the "Excess Revenue Subaccount") in which the excess Fee Revenues, together with interest earnings thereon, shall be maintained. Amounts in the Excess Revenue Subaccount of the Replacement Reserve Fund shall be disbursed in accordance with the provisions of the Agreement and expended only for housing improvements (as defined in the Ordinance No. 95- 759) that are selected by the Association. Adopted by the City Council of Hopkins, Minnesota, this 6th day of August, 2012. • FA00 -111 City Clerk • CITY OF HOPKINS, MINNESOTA IC Its: 2 • Replace 67 rear doors Replace 67 rear light fixtures Replace 8 front doors Insulate 21 building attics Total • • Cost $77,964 $14,320 $19,200 $63,000 $174,484 June 18, 2012 0 July 20, 2012 Dear Mr. Genellie: As was discussed during the June 191h Council Meeting, a number of residents living at Meadow Creek Condominiums have asked for some intervention in regards to the refund from the 1996 Hopkins Improvement Area Bond. Since the Council decided to postpone any distribution of the approximately $130,000, some concerns about the distribution of this money have come to my attention. As you know, we would like to see the money used for installation of smoke detectors and an alarm system put in to all 67 buildings. The refund from the bond issue is enough to cover the costs and would benefit every person living at Meadow Creek IMMEDIATELY! There is nothing more important than a SAFETY/LIFE issue. Following are some of the things I want to bring to the Council's attention and feel we all need answers about: 1) In 1996 when the bond was issued one of the items mentioned for use of the $1,165,000 was to be "installing smoke detectors in building entryways". That was 16 years ago and it HAS NOT been done. Isn't it time the money is spent on its original intended use? 2) Meadow Creek received the $1,165,000 and was supposed to notify the City EVERY YEAR how the money was spent and to itemize those costs; in addition the Board of Directors was supposed to develop a Capital Improvement program for future expenditures. AGAIN, THIS • WASN'T DONE. Two questions here: (a) What was the money used for, as smoke detectors were not installed and no new garages were built, and (b) where did the money go? One of the terms of the bond required an annual reporting to the City of expenditures which has never been documented or supported, and there has been no explanation of how Meadow Creek benefited from these funds. Which brings us back to the SAFETY/LIFE issue of a community that comprises 7% of all Hopkins residents: we have sought proposals to fulfill one of the original intended purposes of the funds, and a few are attached here. These proposals not only are "affordable", they are acceptable to Fire Chief Specken and have his endorsement. (The Tyco proposal seems to be our joint preference.) We feel that if the funds are not used for this purpose at THIS time, it will never get done as it is already 16 years behind schedule. Since the Meadow Creek Board of Directors has had ample time to develop a CAPITAL IMPROVEMENT PROGRAM (it is now 8 years and counting and has yet to be made known to the City or Meadow Creek owners) we request and encourage the City Council to exercise its option to supervise the distribution of the funds for the installation of the proposed smoke detectors. Thank you for your consideration of our request. Sincerely, Mel Pittel , and other concerned owners • Encl. • To: Jim Genellie From: Dale Specken CC: Chris Kearney Date: July 27, 2012 Re: Meadow Creek This memo is to address our conversation on Wednesday July 25'h regarding the Meadow Creek Condo's. The Fire Department would like to see smoke detection in all of the condos at Meadow Creek. For this to be accomplished the buildings will need to be brought to current code as per the Minnesota State Fire Code (MSFC). I believe that there is some perception that a single station smoke detector can be installed and that will be sufficient for the buildings. That presumption is not correct. The MSFC section 907.3 states you must provide an approved fire alarm system. Such system shall be installed in accordance with is the 2007 MSFC and NFPA 72. This code states that you must have 75dbl at the pillow. That can only happen if horn strobes are placed inside each individual unit. I have had a couple of conversations with alarm companies that had been contacted by Mr. Pittel. I have instructed them that, if they are contracted for the job, they will need to bring the building up to the current code and all plans need to be approved by the fire department. These fire alarms would improve the safety of the residences of Meadow Creek and the Hopkins Fire Department supports this project.