Article Courtesy of The Miami Herald
By MONICA HATCHER
Published May 27, 2009
In the midst of more
and more complaints from condo owners, the Florida Legislature took $6
million from the trust that funds the state's office that deals with those
Since Florida lawmakers ended the legislative
session without taking up condo foreclosure reform, consumer complaints
battering the state's condominium ombudsman's office have gained momentum.
''We're getting a lot of calls and complaints from
angry condo owners that legislators didn't do enough to help ease the
foreclosure crisis. People are really angry,'' said Bill Raphan, the
assistant condo ombudsman based in Fort Lauderdale.
Adding a little salt to the wound: Because of the
tight state budget, lawmakers are taking $6 million from the condominium,
timeshares and mobile home trust fund -- fed, in part, by a $4 fee charged
to each Florida condo owner annually.
The money from the trust supports the activities of
the ombudsman's office, which is housed in the state's Division of
Condominium, Timeshares and Mobile Homes. The ombudsman is a resource
about state condo laws for condo associations and is also their liaison
with the division. The office fields complaints -- tens of thousands each
year, mediates squabbles and supervises elections, among other things.
The legislators tapped more than two dozen state
piggy banks in the recently ended session to cover a $6 billion budget
While the shift will not affect the budget of the
ombudsman's office for the coming year, it represents the second hit to
the fund this year, following a separate $26 million raid in January.
It also comes at a particularly sensitive time for
the state's roughly 1.5 million condo owners, thousands of whom are
enduring extraordinary hardship stemming from Florida's housing troubles.
Over the past year, activists have been calling for reform and more staff
and services from the ombudsman to deal with a wave of condo woes, from
association fraud to foreclosures.
''Condo owners need the money more than ever and all
the help they can get. Shorting them of their own funds is really an
insult,'' said Jan Bergemann, president of Cyber Citizens for Justice, a
grass-roots community association organization. ''It's coming to the point
where condo owners should ask themselves why should they pay it,''
The provision is included in the $66.5 billion
budget Gov. Charlie Crist is expected to sign Wednesday morning. On
Tuesday, however, the governor indicated he would veto one such sweep --
$6 million from a fund that pays for concealed weapons applications. A
spokesman for his office said Tuesday he didn't know whether Crist was
contemplating a veto of the condo fund raid.
Condo owners will see no disruptions in services
over the coming year as a result of the sweeps, said Mike Cochran,
director of the Division of Florida Condominiums, Timeshares and Mobile
''[Condo owners] don't have reason to be concerned.
We're going to be operating like we always operate,'' Cochran said.
But many say the division and ombudsman office need
to step it up, especially in light of the housing blowout. Condo
associations across Florida have been socked by foreclosures and
association fee delinquencies, which are forcing many into insolvency.
Some buildings are falling into disrepair and losing essential utilities
because they can't pay the bills.
''These associations are having serious problems.
Owners aren't losing their homes because they don't pay their bills, but
because their neighbors don't pay their bills and the banks don't pay
their bills,'' Bergemann said.
Condo associations allege that banks often delay
foreclosing on units to avoid taking title and assuming ownership because
it would require them to pay association fees like other owners.
Several remedies were proposed this year but died in
the session as lawmakers dealt with seemingly more urgent emergencies. The
proposed laws would have required banks to foreclose more expeditiously on
condos while increasing the amount of past due fees they would have to pay
upon taking ownership. Currently, lenders are responsible for paying the
lesser of six months of past due payments or 1 percent of the original
Cochran said he was aware of the problems but was
limited in what he could do to help, saying foreclosures were contractual
matters between borrowers and lenders.
A separate measure would have created a condo police
force, funded by trust fund money and tasked with rooting out condo
association fraud and mismanagement that can cost communities millions.
Last year, the office logged 16,000 phone calls, 90
percent of them came from Miami-Dade, Broward and Palm Beach counties. The
trust fund, Cochran pointed out, is not entirely funded by condo owners.
Timeshare owners, who contribute $2 per seven-day period, are actually the
largest contributors to the fund. Mobile home owners pay $5 per lot
annually as well.
The fund generates an average of $15 million in
revenue from the fees. Cochran said that was enough to cover the
division's annual budget of over $7 million and continue funding the
ombudsman's office, whose budget is roughly $400,000.
At the end of 2008, the fund had a cash balance of
more than $29 million, before the Legislature swept out $26 million. Its
cash balance as of May 9 was $9 million.
Cochran said lawmakers had left the fund relatively
untouched until the economic crisis started punching larger and larger
holes in the budget.
Richard Steinberg, a Miami Beach Democrat whose constituency is largely
comprised of condo owners, said the ombudsman's office was short-staffed
and needed to hire more people to respond to growing demands. He, along
with Rep. Julio Robaina, urged the governor to veto the measure.
"People in my district are frequently calling with issues in their
condos, and we are often sending them to the ombudsman, and they're not
getting their issues resolved as quickly as they should be.''
Robaina, the Miami Republican who sponsored a major
condo foreclosure reform bill that went nowhere, said lawmakers were
raiding the trust fund as soon as the money was going in. He also feared
that the ombudsman, whose role is primarily to deal with the public, is in
danger of being eliminated.
''The ombudsman's office is hanging by a thread
without the trust fund money. It's basically down to nothing,'' Robaina
Humberto Sanchez, who owns a condo in Doral at
Summit Chase, said he wondered whether condo owners should sue to state.
''It's despicable to see that not only are they not
doing anything for us, for the condo owners, but on top of that they are
taking our money that is earmarked specifically for the condo section,''