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HIA Recommendation (10-17-06) - Page 1 of 5 REQUEST FOR HRA ACTION Date: 10-17-06 Item No: 8.b. Staff Approval: Agenda Section: CB Action Item Description: Recommendation for Establishment of Housing Improvement Area for Westwood Village I (HF0052) 1.0 Background 1.1 The HRA staff has been working with the Westwood Village Town Home Association regarding establishment of a Housing Improvement Area (HIA) as a method to assist in the financing of major exterior improvements needed to the 47-unit town home complex. 1.2 A HIA is a tool available to local units of government provided by MN Statute 429A.11 – 429A.21. The HIA can be created to help fund improvements to common areas within housing areas that can not otherwise be economically feasible through private financing. The HIA works similar to a public assessment process with the payback on the cost of the improvements, plus interest and administration costs, which are added to the taxes of the owners within the identified area over a period of years. 1.3 Sue Shea, association representative from the Westwood Village I, spoke to the HRA in August to provide a summary of their needed improvements and inability to finance those improvements with the association’s existing reserves. Several questions were raised and answered at the HRA meeting as follows: Question – How have the other Westwood Village complexes (II, III) been able to finance their improvements and Westwood Village I can not? 1. Answer by Westwood Village Association Representative - Each Westwood Village complex has been separate entities since their inception. The only connection/commonality is the complex names; Westwood 1, 2, or 3 (named by the contractor for the order they were built). In all fairness it’s not comparing appl es to apples. That’s like asking how Burger Barn and Burger King could pay for something; but, Burger Hut could not. They are separate businesses, run differently, and have different issues and financial situations. Westwood Village I does not know how the others did their financing. Maybe they had a larger reserve fund making financing less of an issue. Material prices, interest rates and transportation cost have all risen since the others did their complexes too. In addition, single-board, cedar siding was a big selling point for the original builder; owners were told when a board goes bad they could just pop it off and replace it. Since 1969 wh en the complex was built, previous owners believed what the contractor promised a nd never budgeted for full siding replacement. Today’s owners are faced with attempting a ma jor restoration without any funds reserved for this purpose. Preliminary estimates indicate this project will run about $1.2 million dollars for 47 units. The monthly payments from c onventional/shorter term financing would be hefty; causing an extreme hardship on most owners. In addition, it is virtually impossible to the “association” to borrow these funds with normal financing methods.