It’s a tale as old as time, with several chapters unfolding in recent months in the Biscayne Times. February 2023’s “$46 Million Condo Shock” cover story and “Palm Bay’s Triple Trouble” in March have collectively told the story of three Palm Bay condominium buildings that have become battlegrounds over high repair costs or disagreements in management choices.
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Ten Palm Bay Yacht Club owners have filed a lawsuit in circuit court against its association, board of directors, property manager and others citing “questionable financial decisions,” along with allegations of fraud and negligence. |
Palm Bay Yacht Club
Condo Association President testified on April 3 that the
association had received more than $7 million in residents’
loan payments thus far. Miami-Dade Circuit Court Judge
Thomas Rebull shortly after denied residents’ injunction to
halt further collection of loan payments.
Those same residents who filed the lawsuit for fraud,
negligence and breach of fiduciary duty in October 2022 have
also emailed the Office of the Miami-Dade State Attorney
March 11 requesting an investigation. To date, they nor the
Times have heard back regarding whether that investigation
will be pursued.
Just days before on March 3, State Attorney Katherine
Fernandez Rundle and other elected officials held a press
conference to introduce state legislation that would
criminalize corruption affecting homeowners associations and
condo owners.
The Community Association Bill of Rights, if passed, would
reduce association election fraud, give owners greater
access to records and outlaw the acceptance of kickbacks.
The bill also proposes that any complaint to local police or
the Department of Business and Professional Regulation (DBPR)
be automatically forwarded to the Florida Department of Law
Enforcement as well.
Residents at Palm Bay Yacht Club claim they have more than
20 unanswered complaints with the DBPR.
In the meantime, the condo association at Palm Bay Yacht
Club vehemently denies all accusations of malfeasance
they’re accused of by plaintiffs.
Board members refused to speak to the Times when it was
gathering interviews for the original February cover story
about the ongoing lawsuit. It was only after four days of
evidentiary hearings and the publication of the March
follow-up story that the association’s lawyer surfaced to
express the board’s discontent with the way residents’
allegations were reported.
In particular, the association’s attorneys pointed out that
nearly all of the plaintiffs have run for election to the
board of directors and lost. The defendants further deny the
allegation made against them that elections may have been
rigged, citing the board’s decision to hire Susan Russo, a
state-registered ombudsman, to monitor the Jan. 12 election.
But residents’ qualms are not with Russo or the verification
of paper votes. Rather, the dissenting unit owners have
shared with the Times what they believe to be election
irregularities with those votes that had been cast online,
particularly through a third-party software developed by
online voting company ONR.
ONR came under scrutiny because of a landing page on the
company’s website titled “AKAM ONR Premier Support,” which
some residents interpreted as a partnership that warranted
suspicion. AKAM On-Site Inc. is the property management
company at Palm Bay Yacht Club, according to AKAM legal
counsel, and not AKAM Services Inc., although the latter is
a named defendant in the lawsuit filed by dissenting
residents.
Alan Guvovschi, co-founder of ONR, told the Times that the
website page is common practice and just one of many that
they share with several of their clients.
“We understand that there may be some confusion about our
relationship with AKAM,” said Guvovschi. “We want to
reiterate that we have no affiliation with them and do not
share any ownership or control. We operate as an independent
entity, and our focus is solely on supporting and serving
the community associations we work with.”
The connection between AKAM and Project Management Group
(PMG) – the owners’ representative overseeing the 40-year
recertification construction project – is Doug Weinstein. He
is a shareholder of AKAM as well as the vice president of
operations at PMG. While attorneys for each party insist
that this connection was at all times disclosed, and that
Weinstein has not received any compensation by the
association, plaintiffs have said that the “link” was
confirmed only after a confrontation took place.
Meanwhile, attorney Jonathan Bloom at Bloom & Freeling on
behalf of AKAM and PMG asserted in a March 20 letter to the
Times that none of the property management companies owned
by AKAM have any role in imposing condominium assessments or
benefitting from them, and that their only role is to
present proposals to association boards for them to
consider. He calls any further inferences by anyone
“misleading at best and patently false at worst.”
The fuel behind the lawsuit and accusations of fraud against
the board are reports from independently hired engineers who
claim that much of the scope of work originally enlisted by
the condo association is either unnecessary for a 40-year
recertification or could be completed for only a fraction of
the cost.
Palm Bay Yacht Club condo association attorney Steven Davis
with Haber Law P.A. is denying the validity of those claims,
insisting that the evaluations and analysis conducted by
EPIC Engineering on behalf of the association were far more
comprehensive than those sought by residents who have filed
suit. Further, Davis also stated that EPIC’s numbers were
simply estimates that will have to be verified once the work
is to be completed.
“The necessary repairs [for recertification] are expensive
but necessary and mandated by the City of Miami,” wrote
Davis in an emailed letter to the Times. “The Board of
Directors because of undertaking this unpopular but
necessary process have each had to endure false statements,
lies, and unjustified attacks on their actions which at all
times have been carried out in good faith.”
That independent engineers often tell concerned residents
“what they want to hear” after conducting subpar walk-throughs
of old buildings is not rare, according to Bob de la Fuente,
a founding shareholder of Lehtinen Schultz and the head of
the firm’s Land Use, Zoning & Local Government Group.
“It’s easy for someone to stand on the sidelines if you’re
not on the board and just challenging and questioning
everything that your volunteer board is doing,” said de la
Fuente, referring to objectors as oftentimes representing a
“disgruntled minority” whose “accusations are usually
without basis.”
De la Fuente often represents and defends associations in
these increasingly frequent condo wars.
Palm Bay Towers
If there ever was a question as to just how frequent these
disputes are, look no further than right next door from the
Palm Bay Yacht Club. Both the Palm Bay Towers and Palm Bay
Condominium buildings are experiencing conflicts between
their associations and select residents, as we’ve previously
reported.
Palm Bay Towers, due for its 50-year recertification, is in
the midst of paying off a $21.5 million assessment approved
by the board in 2021 that will cover concrete restoration,
spalling and sea wall repairs, upgrades of life safety
engineering systems, a new generator and geothermal system,
elevator improvements, impact glass installations and
aesthetic lobby upgrades.
Again in this case, some individual unit owners maintain
that the costs are largely inflated or unnecessary, but the
Palm Bay Towers condo association has defended its decisions
and attributed higher assessment fees to external factors,
such as a change in laws, an uptick in demand for
engineering work, supply issues and higher interest rates.
“Why is no one criticizing prior boards or owners that did
little to maintain their buildings? Or criticizing the State
of Florida for allowing associations to waive reserves and
not develop comprehensive maintenance plans?” read a letter
to the Times signed by Palm Bay Towers president John
Friedman, treasurer Migdalia Lagoa, secretary Don Sadler,
director John Walbridge and legal committee chair Lyndall
Lambert.
“Dealing with the consequences of 40 or 50 years of deferred
maintenance takes time and costs money,” the letter
continued. “There is no corruption, or kickbacks, or
misappropriation of funds, or personal vendettas, or
frivolous lawsuits, or ulterior motives.”
Lagoa, speaking on behalf of the entire board, declined to
be interviewed by the Times unless in a group setting.
Palm Bay Condominium
High assessments are not always the cause of these internal
conflicts, as shown by the neighboring Palm Bay Condominium.
Annabella Bucheli, who lives in that building, joined the
Palm Bay Towers lawsuit filed in 2021 to oppose the way both
associations had been dealing with a condemned marina of
which they share ownership.
As mentioned by Palm Bay Condominium’s board secretary,
Andrew Sherry, in his letter to the editor published last
month on BiscayneTimes.com, both buildings’ boards voted in
August 2022 to partner with Yacht Management of South
Florida to restore and operate the marina, denying any
allegations of neglect or malfeasance.
Bucheli scoffed at that decision in a written response: “A
75-year lease with SUNTEX first, and now a 30-year lease
with a rookie company, Yacht Management, for a meager
income.
“The lack of vision and financial savvy of the Board members
behind these actions will haunt generations of owners at our
community … Suffice to say, they disregarded hiring the most
experienced marina builder in South Florida, Kearns
Construction, who had offered a 15-year lease deal.”
More of her response is published in the commentary section
of this April edition.
Bucheli and some litigants in the other Palm Bay buildings
have told the Times that they suspect higher maintenance
fees and inadequate deals are all part of a ploy to lower
property values and increase foreclosures until a buyout by
hungry developers becomes imminent. But according to de la
Fuente, the opposite is usually true.
“Once these kinds of lawsuits get filed or these accusations
are thrown around, it makes it a lot harder to get a loan,
so what happens? The immediate effect is that that’s what
depresses property values,” he said.
Condo Feuds Escalating
Despite a long history of condominium feuds, de la Fuente
says their frequency only grew once vigilance increased
following the Champlain Towers South collapse in Surfside.
The Palm Bay Towers association’s letter also referenced the
2021 tragedy, insisting it was proof of “kicking the can
down the road.”
Whether higher costs are the cause of years of deferred
maintenance or the fault of fraudulent board members will
ultimately be up to a judge to decide. As for the chaos that
transpires on the road to the truth, de la Fuente makes just
one remark: “That’s condo life.”