For years, Florida collected millions for condo owner education. Lawmakers diverted the money instead.

By Clayton Park & Jeffrey Schweers, The Daytona Beach News-Journal, July 10, 2021

The state of Florida collected $13.7 million in fees in 2020 from condominium owners associations, vacation timeshares and mobile home parks.

But instead of using that money for its intended purpose — including training condo associations about things like maintenance — the Florida Legislature swept $5 million of it into the state’s general fund.

It’s a pattern that’s been going on for years, a review of records by the USA TODAY NETWORK – Florida revealed. In the wake of the collapse of the Surfside condominium in South Florida, some legislators believe it’s a practice that needs to stop.

“I’m pretty sure this (sweeping the Division of Florida Condos trust fund) is something that will be discussed in the next Legislative session,” said state Sen. Tom Wright, R-New Smyrna Beach.

The state’s Division of Florida Condominiums, Timeshares and Mobile Homes Trust Fund is supposed to be used to investigate complaints lodged by condo owners as well as educating condo association board members on their responsibilities as stewards of their buildings.

Diverting some of those fees collected into the state’s general fund is something the state Legislature does every year.

The Legislature has siphoned off $65 million — nearly 40% of the $167 million raised by those condo association fees since 2008. That’s the same year state lawmakers took away much of the division’s compliance and enforcement powers.

“For years, we’ve said please don’t sweep that fund,” said Travis Moore, a St. Petersburg-based lobbyist for the Community Associations Institutes which represents condo owners’ associations throughout Florida. “But every year, the Legislature reallocates that money.”

Poor decisions by Florida condo boards is big concern

The June 24 collapse of a 40-year-old, 12-story oceanfront condo in Miami-Dade County raises questions regarding the role the building’s homeowner’s association board may have played in the disaster.

The board’s then-president resigned in 2019 after association members balked at spending several million dollars to make repairs recommended in an inspection report the previous year, according to news reports. In April of this year, the board’s current president warned residents in a letter that the building’s deterioration was “accelerating.”

Although it will take months to determine specifically what caused the collapse, experts say timely repairs could have made a difference.

“I don’t know if it would have averted the collapse because we still don’t know all the factors, but had they repaired the building properly, it would have been stronger,” said Joel Figeuroa-Vallines, an Orlando-based structural engineering consultant who is also a fellow with the American Society of Civil Engineers.

As of late Thursday, the death toll for the collapsed condo in Miami-Dade County’s Surfside community topped 60 people with dozens still missing.

The Surfside condo collapse underscores the need to better educate condo association board members throughout Florida on what it takes to properly maintain buildings, particularly those in coastal communities, said Moore.

“The biggest thing we face is educating these board members,” he said.

The most recent annual report from the Division of Florida Condominiums, Timeshares and Mobile Homes shows it held 22 training sessions that reached 4,176 condo association board members in the fiscal year that ended June 30, 2020.

The topics addressed included the process for filing complaints, certifying board members, and the rights and responsibilities of condo unit owners and condo associations.

“Twenty-two classes, that’s a joke,” said Moore, whose Washington, D.C. area-based company that represents condo associations throughout the country. “That’s less than two a month and we have more than 20,000 condo associations in Florida. There’s also nothing in that about the consequences of deferred maintenance and reserves.”

The Sunshine State has more than 1.5 million condo units, the most of any state in the nation. Many were built in the 1960s, ’70s and ’80s.

Patrick Fargason, a spokesman for the Division of Florida Condominiums, Timeshares & Mobile Homes, said he could only respond to emailed written questions. As of Thursday night, he had yet to respond to inquiries for this story.

“We are working through the dozens of requests for information regarding condos and Surfside as they are received and hope to have you something back soon,” he wrote in an email early Friday morning.

Legislature known for diverting Florida condo funds

State Sen. Wright said diverting money from the Division of Florida Condos trust fund into the state’s general fund is par for the course for the Legislature.

“The Legislature sweeps whatever we can get our hands on like we were doing for the Sadowski Fund for affordable housing,” said Wright. “The Legislature sweeps a lot of accounts. We finally put a stop to sweeping the Sadowski Fund.”

But state Rep. Paul Renner, in line to be the next speaker of the state House, defended the practice.

“We have dozens and dozens of funds. The title of the trust fund in some ways is a misnomer,” the Palm Coast Republican said. “Just because it went into the general fund doesn’t mean the money wasn’t spent on something equally important.”

The Legislature has been taking hundreds of millions of dollars out of dozens of state trust funds for decades to shore up holes in the budget, especially during times of economic downturn when revenues are short.

Once it goes into the general fund, it’s impossible to track.

But one thing is for sure, the money didn’t go to condominium regulation and education as intended.

“Those monies should be spent on condominium owners themselves. They’re the ones who pay the fee,” said Eric Glazer, a South Florida attorney who has represented both homeowners and associations for more than 30 years. “Condo owners in effect are being taxed.”

For lawmakers motivated by reform after the tragic collapse of the Champlain Tower South condominium in Surfside, ensuring that the money collected from condo owners is used for its intended purpose might be a good place to start, he said.

How condo fees are supposed to be used in Florida

Condo associations must pay the state $4 per unit by January of each year. Mobile home owners pay $5 a year, while timeshare unit owners pay $2 per unit each year.

What they are supposed to get for that tax, which raises an average of about $14 million annually, is a host of services from the division — investigating complaints, reviewing and approving condominium documents, employing lawyers to oversee non-binding arbitration over disputes, and educating condo owners and board members about the law.

But the ever-changing 157-page Florida Condominium Act limits the investigative jurisdiction of the Division of Florida Condominiums, Timeshares & Mobile Homes once a condo building has been constructed and turned over to residents. After that, the division only investigates complaints related to “financial issues, elections and unit- owner access to association records.

That wasn’t always the case.

Prior to 2008, the division had oversight responsibilities regarding maintenance of condo buildings. That authority was taken away when a new bill was signed into law that year requiring associations to hire an architect or engineer to perform a structural integrity check every five years.

The new law didn’t make the state responsible for enforcing that rule. It also allowed condo boards to opt out if a majority of its members voted against the inspection.

In 2010, after several condo associations complained about the high cost of getting inspections done, the Legislature passed a bill repealing the five-year inspection rule.

Property appraisals no substitute for inspections

Under the Florida Condo Act as currently written, the only periodic check that condo associations are required to make is an independent property insurance appraisal every three years to determine the cost of replacing the shell of the building as well as its common area amenities.

“An insurance appraisal is not a substitute for structural inspections,” said Gary Maehle, owner of Allied Appraisal Services in Pompano Beach. “When we appraise a condo building, we do not make a physical inspection of the condition of the building. Essentially, we measure the building and find out all the components of construction to determine the replacement cost.”

Dreux Isaac, an Orlando-based insurance appraiser who evaluates condo buildings throughout the state, concurred. “Insurance appraisals of condo buildings are not an investigation,” the owner of Dreux Issac & Associates said. “It’s not an engineering study in any sense. An appraisal to determine replacement cost is somewhat of a modified shell appraisal. The appraiser does not look at the structural condition of a building.”

“I’ve looked at so many condo buildings over the years in coastal communities throughout the state and corrosion is a prevalent problem,” said Dreux Isaac. “It becomes this monster where repairs are deferred and delayed and the problems continue to snowball.”

Money already there to improve condo oversight

Between 2002 and 2004, the Legislature swept over $10 million out of the Condominium, Time Share and Mobile Home Trust fund to help subsidize the working capital trust fund.

It left the condo trust fund alone for four years after that, until 2008, when it grabbed $10 million and swept it into the general fund.

That same year, then-Gov. Charlie Crist signed a bill that took away the condo division’s authority over fiduciary and maintenance issues, leaving it to only handle disputes over elections and access to financial records.

From then on, it’s been a steady onslaught of cherry-picking anywhere from $2 million to $6 million as needed.

For the past four years, the state has allocated just over $7 million a year to compliance and enforcement and swept $5 million into the general fund.

Glazer said that money could buy enough inspectors to cover the state and back office staff to write up violation letters and compliance notices.

“The money is clearly there to do that,” Glazer said. ”Those extra dollars could create an entirely new state division under the Department of Business and Professional Regulation with inspectors throughout the state to check on the structural integrity of condominiums.”

Moore, the condo association lobbyist, would like to see the $5 million a year collected from condo fees that is currently being diverted to instead be used to pay for more training for association board members — including classes on how to properly maintain oceanfront buildings.

He said he envisions the Legislature adopting some sort of a statewide program mandating structural inspections for re-certification of condo buildings every 10 years, beginning at either year 20 or 30.

“They could either make it an unfunded mandate by having local inspectors or they could use some of the $5 million for a statewide high-rise re-inspection program,” Moore said. “Without having to raise any more money, they can have a much better program.”

Sen. Wright said he is normally a proponent of home rule, but in the case of high-rise condos, “Don’t you think the state should come up with uniform state standards for condo maintenance and inspections, like it does for building codes?”

Rep. Renner said he is not ready to take that step.

“It’s too early to determine what should be done,” he said. “We should be careful not to adopt new laws that don’t sufficiently address the problem. We’re definitely going to address it and not leave anything off the table at the next legislative session, but we need to let the facts guide us.”

 Image Credits: Sam Navarro, USA TODAY NETWORK

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