After three local banks turned down condo owners’ loan requests, the city of Minneapolis is stepping in to help residents finance the costs to repair water damage.
This is the first time the city will use a finance tool that requires the creation of a Housing Improvement District and the sale of taxable general obligations bonds to finance repairs.
All of the costs of issuing and retiring the bonds will be paid by members of the Calhoun Place Condominiums Homeowners Association as part of their property tax payment, much like a special assessment is now paid.
“This is not a win,” said Council Member Lisa Goodman, who chairs the Community Development Committee and has stressed that this process is expensive for the homeowners but is available when no other financing can be found.
“What this does is stabilize a whole lot of homes,” she said.
Calhoun Place was built as an apartment building in 1987 with an exterior foam insulation system that was covered with synthetic stucco.
The foam insulation was sealed with caulk, which has resulted in moisture penetrating the façade and interior walls.
“Water infiltration is definitely an issue,” Brian Pellowski of the Homeowners Association told committee members.
To repair the damage, the entire outer surface of the building must be removed and replaced. All windows, balcony doors and door thresholds must also be removed and replaced.
The estimated cost of the work is $2.3 million. The homeowners association will pay $310,000 from its reserve funds, reducing the amount needed from the bond sale to $2 million.
About 20 percent of the 107 homeowners have indicated that they will prepay their share of the repairs and avoid the assessment being added to their property tax.
“This project keeps the property tax base in the city protected,” said Council Member Betsy Hodges, who represents the residents of Calhoun Place.
The Committee approved establishment of a Housing Improvement Area. The residents will now move ahead to acquire a $2 million construction loan, which will ultimately be paid off when bonds are issued following construction.