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Article Courtesy of The Herald-Tribune
By Kevin McQuaid
Published
October 31, 2011
SARASOTA - Dolphin Tower owners won a
legal victory this week against their insurance company, but the
troubled downtown condominium faces a growing exodus of paying residents
and its board is fielding expanding criticism of its handling of the
crisis and dwindling resources to deal with it.
A
ruling by a federal judge this week kept alive the homeowners
association's legal fight with Great American Insurance Co. of New
York. The Ohio-based insurer, which has denied Dolphin Tower's claims
for money it needs to repair the 15-story building, failed to get a
judge to strike the association's defenses.
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Meanwhile,
the number of owners refusing to pay the assessments
needed to keep up the fight and pay for repair costs
at the 117-unit tower is now up to about three dozen.
Lenders are refusing to loan the association money
unless that roughly 30 percent delinquency rate is
brought under 10 percent, internal documents from the
association show.
To
cope, the tower's board is ratcheting up the penalties
against those who decide not to pay.
With
a voice vote on Tuesday, the condo's board was
authorized to charge delinquent accounts 18 percent
interest, plus other fines. That interest rate is
allowed under state condominium laws.
But
some residents have balked at the prospect of a
$95,000 assessment and the thought of charging former
neighbors the double-digit penalty. Paying owners
already are handing over $540 per month and have paid
roughly $9,000 each in assessments to study repair
options and to pay consultants.. |
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Dolphin
Towers in downtown Sarasota has structural problems that forced
all residents out in 2010. The residents have been in a legal
fight with their insurer, which has denied claims for money to
repair the building. Meanwhile, the number of owners refusing to
pay the assessments needed to keep up the fight and pay for
repair costs at the 117-unit tower is now up to about three
dozen.
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"The
owners need to get current or Dolphin Tower will pursue foreclosure,"
a memo to residents stated this summer.
Some
resident have been rankled by the board's decisions and how the group's
president has handled the crisis that abruptly forced residents out in June
2010.
They
have complained that board president Charlotte Ryan does not communicate
well, is condescending to fellow owners, shows a lack of compassion and
often takes a dismissive tone to complaints — especially from financially
struggling owners who despair over repair bills that will likely top $10
million.
Three
members of the board already have resigned from the five-member panel,
leaving Ryan with greater control but also more isolated.
"I
went to one meeting and was humiliated," said Rita Dreyfus, 84, a
former owner who has moved to Manatee County. "I couldn't get Charlotte
to answer my questions. I think people in Minnesota know more about what's
going on than folks here."
"Life
is a disaster now for so many people who lived in that building," said
Moira Doherty, whose cousin owns a unit on Dolphin Tower's eighth floor.
"To not be empathetic is incredible."
Those
sentiments were echoed by roughly a dozen residents in interviews with the
Herald-Tribune.
"At
times, the board has had an absolute air of superiority," said Sarita
Roche, who lived on the 10th floor of the building at 101 S. Gulfstream Ave.
"A lot of people in the building now are destitute — some people are
losing everything — and it's uncalled for."
Ryan,
for her part, disagrees with the assessment, and maintains that the board
has been communicative through regular resident meetings and messages to
owners.
"I
don't think there's a reality there," said Ryan, who paid $475,000 in
August 2008 for a 10th floor condo with a $250,000 mortgage, according to
county property records.
"We've
been very open. I think people are just frustrated and angry because they're
not in the building," Ryan said. "Some people need a
scapegoat."
Since
the concrete discovery 16 months ago, some owners have either sold their
units at firesale prices or have had to abandon their condos because of the
expenses associated with cracks and corrosion in a key concrete slab. Repair
work, slated to take at least 18 months to complete, has not begun, nor have
appropriate city building permits been applied for.
The
financial pressure on the association also has been growing.
As
of June 30, the tower had total reserves and savings of $339,293, according
to an internal building balance sheet. By the end of September, that figure
had shrunk to $202,023, another balance sheet shows. From January to June,
the building's net income was a negative $63,125.
Legal
costs have contributed to the problem.
Great
American sued Dolphin Tower in June, contending a policy it maintains on the
building did not cover the design or construction defects that led to the
concrete problems.
Dolphin
Tower's attorneys argued in defenses that there are no exclusions to the
tower's policy and any "ambiguities" should be construed in
Dolphin Tower's favor.
"The
Court determines that each such defense passes muster," U.S. District
Court Judge Virginia Hernandez wrote in her decision. "Dolphin Tower's
defenses put into issue relevant and substantial legal and factual
questions."
Donna
DeVaney, a Tampa attorney representing the building, said the ruling
this week was a "good result."
A
trial in the case has been tentatively set for September 2012, with
non-binding mediation scheduled for early next year.
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