What is a Housing Improvement Area?
The 1996 Minnesota State Legislature enacted a law (428A.11) intended to provide cities with a means of assisting homeowners associations with financing improvements to common areas. A Housing Improvement Area is a designated portion of a community in which housing improvements are financed with public funds. The public financing is then repaid through fees imposed against the beneficiary housing units.
Housing Improvement Areas are used in much the same manner as special assessments such as sidewalk widening and park improvements. The law is designed to assist areas where common elements of the property are maintained by owners associations which do not have an appropriate reserve fund to finance improvements.
In order for a city to create a Housing Improvement Area, a petition must be received from at least 25 percent of the affected property owners. The local government must determine the feasibility and need for the improvement. Additional public hearings must be held for the affected property owners in order to discuss the improvements. These hearings will also focus on the potential tax burden the affected property owners would have to bear following the improvement.
If the local unit of government makes the required findings of need, it will adopt an ordinance establishing a Housing Improvement Area. Subsequently it will establish a fee that must be repaid by future taxes on the property owner to cover the improvements. Click here for more information on the process of establishing a Housing Improvement Area.
What problems can Housing Improvement Areas solve?
Many older common interest communities constructed in the 1960-70's did not collect adequate association fees. This led to depleted reserve funds that made it impossible to finance large scale improvements. Both the fund balance of the association and the burden on the property owners is a factor in determining whether or not to create housing improvement areas. The creation of a housing improvement area can be an excellent tool to address deferred maintenance and maintain the quality of common interest properties. In addition, the financing is generally provided with low interest rates and long terms so that the monthly payments are affordable to the owners in the designated area.
What are the benefits of a Housing Improvement Area?
The quality of a city's housing stock is a window into the city's priorities and values. A clean, well-maintained community will attract residents seeking a safe and reliable place to call home or raise a family. By the same token dirty and deteriorating areas signal to residents a lack of care and diminished safety. In areas that have large concentrations of multi-unit ownership properties, creating improvements to common areas is often dependent on the financial condition of the residents' association. Investing the funds to improve the quality of the environment will help attract new residents to the area and strengthen the feelings of belonging for existing residents.
Related Case Studies
Westbrooke Patio Homes
The City of Hopkins created a Housing Improvement Area to allow for the financing of a $2.3 million improvement project...