Before the Champlain
Towers South Condominium collapsed, the owners and the
complex's board of directors spent years clashing over the
cost and extent of safety and structural repairs for the
12-story building near Miami.
"Why is all of this so complicated and expensive?" read a
question that topped the board's meeting minutes over a list
of major structural problems last October as the deadline
for a state-required recertification of the Surfside,
Florida, building approached.
On April 9, Jean Wodnicki, president of the Champlain Towers
South board, warned in a letter to owners that the problems
had worsened. “We have discussed, debated, and argued for
years now, and will continue to do so for years to come as
different items come into play,” she wrote.
"A lot of the work could have been done or planned for in
years gone by. But this is where we are now," Wodnicki said.
The disagreements represent an extreme but familiar version
of the infighting and financial planning battles that play
out across the nation in condos, homeowner associations and
co-ops – roughly 380,000 community associations in all.
Owners or shareholders of the associations square off with
volunteer and sometimes inexperienced board members elected
to oversee the complexes in a struggle to maintain aging
buildings while keeping monthly fees low and enticing new
buyers.
"There's always pressure to put off costs for the future
that might be better allocated today," said Thomas Skiba,
chief executive officer of Community Associations Institute,
a Virginia-based membership organization focused on building
better residential communities. "Some boards are better than
others. Some communities are better than others."
One of the most financially and emotionally fraught battle
lines is special assessments. They represent levies that may
total tens of thousands of dollars to pay for such things as
a new roof, major plumbing problems or extensive repairs to
exterior walls. A Champlain Towers South special assessment,
with payments that were to have been due this month, ranged
from $80,000 for a one-bedroom unit to $336,000 for a
penthouse.
Design flaw to blame? New documents show residents in
Florida's collapsed condo feared flaws in original design
Special assessments are often necessary because the
financial reserve accounts for many condos, homeowner
associations and co-ops fall well short of covering the
costs.
Robert Nordlund, a registered professional engineer, is a
founder and the chief executive officer of Association
Reserves, a consulting company that advises board members of
condos, home associations and other organizations on the
size of reserve funds for major and long-term expenses. The
firm has more than 60,000 clients across the nation, he
said.
He said roughly 30% of associations have a weak reserve fund
for dealing with major costs and emergencies – less than 30%
of the funds needed for such projects. They're likely to
need a special assessment to pay for big-ticket expenses,
Nordlund said. Forty percent of associations rate "fair" for
the financial reserves, and 30% have strong financial
positions for major expenses and emergencies, Nordlund said.
"A fair percentage follow our recommendations" about how
much income from common charges and other fees should be set
aside for long-term maintenance and emergencies, he said.
"But it's unfortunately common that organizations don't
follow our recommendations fully."
Champlain Towers South was among those that rated in the
weak category, based on the report that Association Reserves
researched and prepared for the condo in 2020. It showed
that the complex had an available reserve of $706,460. The
complex's projected costs at the time totaled nearly $10.3
million, the report said. That meant the condo had just 6.9%
of the funding needed for major repairs.
"We should have started saving at least five years ago,"
said a slide prepared for the Champlain Towers South board's
meeting May 28, 2020.
Nordlund said he could not comment on reports and
recommendations that his company submitted to any client.
However, he said the Champlain Towers South Board "was
struggling and struggling and struggling" for years to gain
approval from unit owners to fund costly repair work, and
"finally got it over the line" shortly before the collapse.
Only 11 states require condos and homeowner associations to
fund reserves for major costs, said Dawn Bauman, senior vice
president for government and public affairs of the Community
Associations Institute. They are Connecticut, Delaware,
Florida, Hawaii, Illinois, Massachusetts, Michigan,
Minnesota, Nevada, Ohio and Oregon.
Florida and Illinois allow associations to waive the funding
requirement based on the outcome of a quorum of voters at an
owners' meeting, Bauman said.
The investigation of the Champlain Towers South condo
collapse is likely to examine whether infighting-related
delays in budgeting and funding structural work played any
role in the tragedy.
In official reports as of Friday, the collapse had killed 78
and left 62 unaccounted for while searching of the rubble
continued.
Housing association experts said they could not recall a
collapse with as many deaths and as much damage as the one
in Florida, one of the worst residential housing disasters
in U.S. history.
"It's an incredible outlier. We don't see that," Nordlund
said.
Many types of residential associations have experienced some
version of the squabbling and delayed planning that deviled
Champlain Towers South.
Battling over dry rot
The Champlain Towers South tragedy triggered bad memories
for Debra Corazzelli, former president of the Island J
Condominium Association, a complex of 174 homes in 29
buildings in Foster City, California.
She and other association leaders went through a similar
battle with homeowners over efforts in 2012-2014 to repair
extensive dry rotting found in the wood beneath the concrete
that covered the condo balconies and stairs.
The association fired the first contractor hired for the job
because the work wasn't getting done, Corazzelli said.
A new contractor estimated that completing the job would
cost $7 million, or $40,000 for each unit in the complex.
Many homeowners got angry.
"It was condo wars. I said you should make a reality TV show
about it," recalled Corazzelli, who said her role was a lost
cause – trying to keep peace among battling neighbors.
During a homeowners meeting that required private security,
a majority of the condo owners voted the proposed assessment
down.
Foster City officials declared the structural problems a
life and safety risk. An attorney for the association
successfully petitioned a court to impose an assessment for
roughly half the required $7 million, equivalent to $20,000
from each homeowner. Corazzelli said homeowners were able to
pay the assessment over 10 years with their monthly common
charges.
The repair work turned the tide. The complex was no longer
structurally unsafe. Home values increased. And homeowners
agreed to new payments to repaint the complex, remodel the
community's clubhouse and other improvement projects. Inside
the clubhouse is a large piece of dry rot, in plastic, "as a
reminder," Corazzelli said.
"It worked out for us in the end. I can't even imagine what
the people (in Champlain Towers South) are going through,"
Corazzelli said. "My heart goes out to them."
A near-miss collapse
In May 2005, part of a 65-foot-high stone retaining wall
north of the George Washington Bridge in northern Manhattan
collapsed atop Riverside Drive and the Henry Hudson Parkway
below.
Miraculously, no one was killed or injured.
A board of inquiry report by the city Department of
Buildings concluded that the wall had shifted, dropped
stones and bulged for years, despite repair efforts by the
Castle Village Owner's Corp., a five-building, 575-unit
co-op atop the bluff behind the wall. The repairs were
insufficient to deal with a buildup of groundwater behind
the wall, the city inquiry concluded.
Although the co-op obtained 15 reports from engineering
companies over the years, it did not do any substantial work
after a repair in 1985 except for installing a failed
drainage system, the board concluded. Those efforts "do not
constitute effective repair and maintenance," the board
said.
Instead of notifying the Department of Buildings as the
wall's condition worsened, the co-op and an engineering firm
it hired "appeared to treat the situation as an ordinary
problem, one that could be dealt with in the ordinary course
of business," the board concluded.
Shareholders in the co-op had to pay for a massive repair of
the retaining wall, along with the monthly maintenance bills
for their units and the cost of litigation with an
engineering firm.
Responding to the near tragedy, the city enacted a law that
required property owners to file inspection reports with the
Department of Buildings every five years for any retaining
wall on their holdings that are more than 10 feet high and
face a public right of way.
Planning a better way
Shocked by the Champlain Towers South tragedy, board members
and residents of condos, homeowner associations and co-ops
are looking at their buildings and making sure their homes
are protected. There are alternatives to bickering and
questionable planning decisions.
The Community Associations Institute recommends that
homeowners check whether their communities have conducted a
reserve study to plan for repair and replacement of major
items such as a roof or a building exterior surfaces. The
advisory organization urges owners to check whether their
association has a sufficient reserve fund for emergencies
and big-ticket costs.
Does the complex need a professional engineer to evaluate
the building's structural integrity, along with critical
areas such as balconies and stairwells? Homeowners should
read communication from association boards and attend board
meetings where they can discuss financial reserves and
financial planning.
For board members, the institute recommends determining
whether any structural components might need repair or
replacement, as well as whether an expert inspection is
needed. Board members should also have regular communication
with owners about structural issues, reserves and financial
plans, the organization said.
Additionally, board members should be transparent with
association members about estimated repair costs and whether
a special assessment might be needed to pay for the job.
The Foundation for Community Association Research cited the
Island J Condominium Association as a successful recovery
from troubled condo status. "Get to know and understand your
audience so you can educate them on the realities of their
situation," the organization advised. "Homeowners need a lot
of data and information before trusting an outsider" such as
an engineer or contractor.