(WSVN) - As we continue our series on South Florida’s housing crisis, tonight we focus on condos. Some of the estimated 3.5 million Floridians living in condo units face a perfect storm of financial problems, with no easy fix. 7’s Karen Hensel has this special assignment report, “Paradise Lost.”
The Palm Bay Yacht Club in Miami and Palm Lakes in Margate could not be any more different. One is 27 stories, the other just four. One overlooks Biscayne Bay, the other is west of the Turnpike.
But what both condominiums have in common is financial strain set in motion by the condo collapse in Surfside more than two years ago.
Robert Norris, president, Palm Bay Yacht Club: “I knew right then, you know, our lives were all changing immediately, because our building was built at the same time that the Champlain was built.”
Robert Norris is the Palm Bay Yacht Club Board president.
Robert Norris: “We’re looking at a $33 million project for our 40-year recertification. So all of the board members felt the pressure.”
That project includes everything from concrete demolition and restoration to redoing balconies.
And those repairs come at a cost. The average assessment is around $140,000 per unit owner.
Robert Norris: “I can’t even begin to explain the number of nights that I couldn’t sleep because I knew that there would be people in this building that might not be able to afford it.”
And in Margate, some owners in the Palm Lakes Condominium can’t afford it.
Bonnie Underwood, condo unit owner: “You know, I’m kind of old to be homeless.”
Bonnie Underwood and the other residents are facing nearly $2,000 a year more in maintenance fees next year.
Bonnie Underwood: “It’s absolutely killing me, and I don’t think I’m the only one here in this association who’s feeling this, because the buildings are emptying out.”
Efi Barakakos, condo unit owner: “It’s tragic. People do not know what to do. They’re trying to sell their units, but where are they going to go? It’s very difficult.”
The reason for that difficulty is a state law passed after the Surfside collapse. It requires condo associations to collect reserve money for costly future major repairs like structural work.
Efi Barakakos: “We’re on fixed incomes here, and it’s very difficult for people to afford 100% reserves. We’re a four-story building, which is considered low-rise. We’re 11 miles away from the ocean. We can’t compare it to Surfside at all.”
David Podein, attorney, Haber Law: “I think it is a dire situation on the horizon.”
Condo law attorneys David Podein and Jonathan Goldstein are sounding the alarm.
David Podein: “Between skyrocketing insurance costs, the huge capital needs for the structural repairs and the mandatory reserve funding, we felt that there is this confluence of factors that could create a ‘zombie condo.'”
“Zombie condos” are large buildings that are mostly empty because many of the owners couldn’t afford to live there anymore.
Robert Norris: “I would think a lot of buildings in South Florida, that they’re just not to be able to do it. It’s going to be an Armageddon of some sort.”
Robert feels fortunate his association found financing for their $33 million project, which would allow unit owners to pay the assessment over time.
Still, he says, their insurance situation is a challenge.
Robert Norris: “We can’t get full insurance value for this building. This building is valued at $100 million. We’re only insured up to $20 million, and our insurance went up 60%.”
According to the Insurance Information Institute, associations have seen premium increases as high as 500%. Some are calling on state lawmakers to fix these complex condo problems. “Paradise Lost” continues Thursday at 10 p.m. with a look at tenants who say landlords are taking advantage of them in a tight rental market.
Karen Hensel, 7News.
“The Condominium Special Assessment Program is designed to provide funding assistance to help condominium owners in Miami-Dade County pay for special assessment requirements that arise from rehabilitation and repairs due to applicable building integrity recertification requirements.”
FOR MORE INFORMATION:
miamidade.gov/global/service.page?Mduid_service=ser1689262443911730
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