Florida legislators don’t plan on bailing out condo associations that face steep maintenance and special assessment costs after having years to prepare the necessary funds following the state’s reforms in the wake of the 2021 Champlain Towers South deadly disaster.
“The position of the House is there will be no financial bailouts at all,” said state Rep. Vicky Lopez during the Miami Association of Realtors conference on condos late last week. Lopez was joined at the event by state Sen. Jason Pizzo, the only member of the Florida Senate who lives in a condominium.
The warning dims hopes condo association board members and owners may have harbored over whether the Florida legislature would be providing financial assistance to help cover the costs from new requirements after the collapse of Champlain Towers South in Surfside, Florida, north of Miami. The incident killed 98 people and is one of the deadliest building failures in the country’s history.
The state legislature requires aging condo buildings at least three stories tall to be inspected for safety every 10 years. The costs for necessary repairs can reach millions of dollars. Higher costs have led to a 45% increase in condo association fees since 2021 for buildings in Miami-Dade and Broward counties, according to an analysis by the Miami Realtors.
From the Homes.com blog: HOA Fees Explained: What Every Homebuyer Should Know
Pizzo, whose District 37 includes Surfside, acknowledged that although condo associations had been allowed to essentially police themselves in the decades running up to the Surfside collapse, they would no longer be able to put off necessary repairs or avoid maintaining the needed funds for building maintenance.
“The next 30 years start now," Pizzo said.
The deadline for condos to complete their reserve studies was at the end of last year. But only about 39% of condominium and townhouse projects in Miami-Dade, Broward, Palm Beach, Martin and St. Lucie counties have completed maintenance studies as of February, according to the analysis from the Miami Realtors.
Pizzo said owners at one condominium in his district, The Hemispheres in Hallandale Beach, were justifiably upset that they were in some cases paying upward of $70,000 for a special assessment, depending on their unit. The 1,249-condo tower sits on the waterfront and while the units may only be valued at a few hundred thousand dollars each, there was a lot more value in the “raw dirt” underneath.
“How much do you think 17.2 acres is worth right on the beach? $1.6, $1.7 billion? Here's the point. I cannot convey those people as sympathetic victims to my colleagues in good faith. They're sitting on a lot of equity,” Pizzo said. “Now, we just need to be able to help them find it, to tap it,” he added.
Legislators are exploring potential avenues for financing such as allowing condominiums to invest their reserve funds to help generate income, or opening lines of credit with local financial institutions to help pay for the necessary studies and maintenance, Pizzo said.
Other proposals are being considered ahead of the legislative session that is set to begin March 4 as part of the state’s ongoing condo reform. Those include increasing the budgets of the Florida Department of Business and Professional Regulation and at the newly minted Miami-Dade Sheriff's Department to help tackle condo board corruption, lawmakers said. Other potential changes could include requiring buildings to offer a prospectus disclosing the financial health of the condominium and extending remote or virtual voting for condo board meetings.
Lopez said she is considering adding “real consequences” for condominiums and townhouses that did not complete their reserve studies or maintain the necessary funds for maintenance by the deadline.
“If you don't think that we're serious, I got news for everybody: consequences are coming. Honestly, you're either going to get with the program of ensuring your buildings are safe or you're not, and you're going to be paying for it one way or the other,” Lopez said.