NEW SMYRNA BEACH, Fla. (PRWEB) August 18, 2022

When the 12-story Champlain Towers South in Surfside collapsed on June 24, 2021 and took the lives of 98 people with it, it put into motion sweeping legislation designed to address decades of a systemic lack of attention to condominium maintenance. Now, recertification will be required of buildings within three miles of the shoreline that are 25 years or older, and every ten years thereafter. For condominiums beyond the three-mile limit, recertification is required every 30 years. For some condominiums this could mean high special assessments residents are not prepared for and in cases where buildings are unrepairable, owners could face condemnation of their units, according to New Smyrna Beach Association Management.

This requirement has the potential to have a major effect on condominium communities throughout Florida. There are more 1.5 million condominium units in Florida operated by 28,000 associations. Of those, 912,000 are older than 30 years and are home to more than two million residents. As of December 31, 2024, an association may no longer vote to waive or underfund the reserves for repairs recommended in a structural integrity reserve study. Accordingly, unit owners will not be authorized to “opt-out” of this obligatory funding of reserves for these structural integrity-type future expenditures so that associations must have enough money in reserves to fund all repairs necessary to maintain the structural integrity of all buildings three stories or higher. All potential new buyers will now be given a copy of the structural integrity report and the reserves the condominium association has available.

Older residents living on a fixed income now fear the law will result in a special assessment, which could potentially add hundreds of dollars to their monthly HOA dues. Plus, many might not be able to afford a place to rent while their building is being repaired, and some of the repairs can take years to complete. An older resident (who asked to remain anonymous) had her condo renovated 20 years ago. It took four years to complete the updates, and her portion of the cost was $50,000. She reported that she can’t afford another $50,000 if that’s what the new assessment would be, and might have to sell her unit for a fraction of what it’s worth. This is a fear echoing across beach communities all along Florida’s 1,350 miles of coastline.

Sheila McCollum, CAM, CMCA, CFCAM, AMS, and founder of New Smyrna Beach Association Management, said the plight of the Smyrna Beach Club resident mentioned above is not unique. She estimates that up to 80 percent of all the beachfront condominium communities in the area will have to create renovation plans over the next two years based upon impending findings of the now-required Milestone Structural Inspections. This new legislation also will require condominium associations to perform Structural Integrity Reserve Studies to fund renovation in order to ensure that condominiums and cooperative buildings are safe for continued use. In fact, many of the older condominiums in New Smyrna Beach were built without fire suppression systems, which were not required by Florida Building Code at the time, and that will need to remedied with this new law as well. Many associations opted out of having a fire suppression system when their buildings were built.

“What this does is make people aware of how much it really costs to live in a condo near or on the beach,” said McCollum. “This is also a true paradigm shift in condominium association management, and it levels the playing field for everyone. Gone are the days when residents can rise up against their association management boards and vote down assessments for maintenance to keep their costs low. Board members who don’t comply open themselves up to lawsuits, which will include their personal assets and will lose any protections if they break their fiduciary duty.”

Robert Nordlund, PE, RS, and founder and CEO of Westlake Village, California-based Association Reserves, does not believe the collapse is Surfside is an exception, rather it’s the tip of the iceberg.

“There’s a body of associations that are not prepared for their own future, and every year their buildings get a little older and the deterioration increases exponentially,” said Nordlund.

Nordlund’s company prepared the 2020 Reserve Study for Champlain Towers South, which reflected the $7 million in deferred maintenance repairs recommended in the 2018 Morabito report. When the association addressed the study in early 2021, the estimated cost of remediation had jumped to $13.9 million. It’s proof that the problem gets bigger, faster, with every year it is ignored.

As a 35-year reserve study provider that has prepared over 70,000 reserve studies nationwide, Association Reserves has long known that Florida condominium associations have significantly weaker reserve funds due to years of owners empowered to waive reserve funding than their counterparts nationally. In recent studies by Association Reserves, they found that nearly 20 percent of association-governed communities in Florida had zero dollars in reserve, compared to only nine percent nationally. In fact, Florida and Ohio are the only two states that allow owners a line-item veto to waive reserve funding.

“There’s a familiarity bias in this country that buildings in the U.S. don’t come down,” said Nordlund. “But the cracks in Champlain Towers South did not appear overnight. The association and residents had years of advance notice that they could plainly see. The current association board did everything right, but unfortunately inherited 39 years of neglect.”

To combat this lack of transparency for condominium owners, buyers, and boards, Nordlund created Association Insights & Marketplace, or AIM, and a system to score a condominium community’s financial, physical, and operational strength known as the FiPhO Health Score. Like a FICO score to gauge personal credit worthiness, the FiPhO score is a simple and effective way for every association to know its score so they can be better prepared to govern. AIM is the first National Online Database of association profiles that are paired with such a scoring system. The FiPhO score lets healthy associations know they are prepared for upcoming maintenance and repairs, and gives those receiving a low score a target to aim for in next steps to ensuring their units are safe and well-funded for needed repairs now and in the future.

The Condominium Safety Bill was the brainchild of Florida Senator Jason Pizzo, who represents the Surfside community. While his law will go a long way in preventing another Champlain Towers South-style collapse, he warns there is still more to do.

“The state doesn’t have enough structural engineers to handle the workload required to make sure all the state’s high-rise condominiums are safe,” said Pizzo. “There are about 650 certified structural engineers in the state, and there’s a high demand for them in new construction alone.”

But Pizzo says there is still time prepare since most of the provisions of the law don’t take effect until 2024.

“It’s not all gloom and doom,” said McCollum. “There are professional consultants like me that can help these associations prepare for the inevitable. Now is the time to face this issue head on and preserve property values and lives for those living in beachside condominiums in Florida.”

Recently, Aventura-based Fountainbleau Development purchased all the units of a 53-year-old beachfront condominium building in Tequesta, Florida for $100 million only to terminate it. The residents were able to sell their units at a fair market value, and didn’t have to share high renovation costs.