RESOLVED, that the proper city officials are authorized to execute that common interest community declaration, a copy of which is on file in the office of the city clerk as Public Document No. _____________, for Common Interest Community No. 55 related to the Mountain Villas condominiums located on the Spirit Mountain Recreation Area.

STATEMENT OF PURPOSE:  The purpose of this resolution is to authorize execution of the common interest community declaration for the Mountain Villas at Spirit Mountain.

As councils know, the Mountain Villas were originally constructed in the middle 1970's by a private development company on area property which was leased to it for the development and operation of rental housing to provide on-site rental housing to users of the area. The property covered by the lease was described in the aggregate without reference to the individual units. Then, in about 1979, the original developer determined that the operation was not sufficiently profitable, and they sold off the units to individual owners who ultimately formed an owners association to operate the units as a single rental business. However, the units were then individually owned but the land attributable to each unit was never legally designated or described.

With the passage of time, individual units have to be sold and individual owners have needed to secure mortgage financing either for purchase of the units or to pay for various improvements and this financing has been complicated by the county reorder’s reluctance to record the financing documents because the lack of a definitive legal description to record them against. The recorder finally indicated to the owners’ association members that their office would stop accepting such documents for recording unless the property could be described in a legally acceptable manner.

The problem is further complicated by the fact that, because the units were all constructed under common ownership, there are common elements such as access roads and utilities which the individual units need to access in common with other units.

Fortunately, condominium law has greatly advance since the properties were originally sold to individual owners and this provides a mechanism for dealing with these problems. By creating what is known in Minnesota statutes as a “common interest community” the Villas owners will be able to have legally recognized descriptions for their units which in turn will allow mortgage financing related to them to be perfected.

Because the city is the owner of the property upon which the Villas are located, the city is the party which must authorize and sign the declarations so that the common interest community can be created. It should be noted, however, that by its terms the community and its governing documents continue to be subordinate to the lease between SMRAA and the owner’s association, which lease is approved by the city council, and in and when the lease ever goes away, the common interest community can be terminated by the city or SMRAA, subject to applicable state law.

The Spirit Mountain board of directors approved the CIC document at their meeting of February 15, 2007 and requested that the city authorize and execute the documents creating this entity.