Support & Expand Housing Improvement Areas for Common Interest Properties

Dec 2015

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. Learn more about the process of establishing a Housing Improvement 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.

Where has a Housing Improvement Area been utilized?

The City of Hopkins created a Housing Improvement Area to finance improvements to the Westbrooke Patio Homes.

Finance Tools, Housing Counts Policy Toolbox, Housing Policy, Preservation

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