07.04.24

ISSUE # 94

CIC Info Bytes 07/04/24

CIC Info Bytes are frequent, succinct updates providing educational and engagement opportunities that help your community thrive!  Please forward and share this newsletter with your peers, neighbors and colleagues so they can connect and join.  Our goal is to curate content that provides a robust basis for contextual understanding to support practical takeaways for you and your association.  Please consider following us on Twitter and Reddit. 

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🎗️🎗️🎗️ REMEMBERING SURFSIDE 🎗️🎗️🎗️

• In the wake of the tragic collapse of Champlain Towers South just over 3 years ago that claimed 98 lives and resulted in an historic $1 billion settlement, Florida is undergoing a condominium crisis.  Will the middle-class survive it?

Our Infrastructure page offers more on Surfside, including how the industry actively opposed legislation to require infrastructure-related requirements for preexisting condominiums. 

Deborah Acosta: People are distraught. Some people are holding out hope that perhaps these costs are somehow inflated. And so a lot of people have come together sharing documentation about different aspects of things that have already been done in the building to try to find ways that they might be wrong. Maybe we can bring the cost down. Maybe we can find other vendors that could do this for cheaper. They're really grasping, trying to figure out ways that they might be able to stay in their units because they cannot afford this assessment…

… It's clear from what we are seeing in the market that buyers are turning away from these older units because once they figure out that, okay, there's a six figure special assessment potentially coming next year and lots of other question marks as they start opening up the building and seeing other potential issues. The prices could continue to balloon from there. And so yes, most people are going to balk at that. So I think the main thing here is, and it's happening in so many different kinds of ways in Florida and in South Florida in particular, is that the middle class is getting pushed out. This is a huge issue here. All the new construction, the majority of it is luxury. It's a lot of luxury buildings getting built. When these condominiums, if they ultimately fail, they're unable to make these fixes or they go bankrupt and a developer comes, swoops in and buys it, they're not going to build affordable housing in its place, especially if it's waterfront.

This can has been kicked down the road decade after decade, year after year, and suddenly the bill has come due. It's almost like a game of musical chairs, right?  People have been living in these buildings, enjoying these buildings year after year. And if you sold before this piece of legislation was passed, you got out, right?  But now everyone else is left holding the bag.

LISTEN: Years After Surfside Collapse, Florida Condos Are In Crisis — Kate Linebaugh | WSJ Podcasts | May 22, 2024

LISTEN: Three years after condo collapsed in Surfside, what do we know? — Jimena Romero and Sergio R. Bustos | WUSF NPR | June 24, 2024

Surfside Condo collapse investigative reports — Miami Herald | June 20, 2024

…Three years later, federal investigators with the National Institute of Standards and Technology, tasked with finding out why the building partially collapsed, have yet to complete their probe. They have identified possible points of failure in the building and have narrowed down about two dozen hypotheses about what could have triggered the collapse…

No cause for Surfside collapse yet, but condo life in Florida has been transformed — Editorial Board | Miami Herald | June 26, 2024

Surfside condo collapse: Victims remembered 3 years after tragedy — Ari Odzer, Tony Pipitone and Staff | NBC Miami | June 24, 2024

A look at Florida condo reforms, three years after the Surfside collapse — Gabriella Pinos | WUWF 88.1 | July 1, 2024

Big changes are coming to Florida's condo market.  Developer Ian Bruce Eichner calls it "the most significant impact on waterfront real estate that you've ever seen in your professional lifetime."

The reason is that Florida's first generation of condominiums — buildings 50 and 60 years old — are ripe for termination. In real estate parlance, that means they'll be torn down.

"These buildings, they have two things. They're 60 years old, they're on the water and they're in "A" locations. And they're crappy old buildings," says Eichner, CEO of the Continuum Co. He currently has some condo projects under construction in South Florida and says more are coming…

After the Surfside collapse, Florida is seeing a new condo boom — Greg Allen | NPR | January 4, 2024

Surfside Leads to Six-Figure Assessments Per Unit

• Florida’s decision to address its broken system of condominium infrastructure by requiring structural reserve inspections and “full funding” of reserves by the end of this year is colliding with the savings accounts of unit owners in properties with decades of deferred maintenance and chronic under-funding.

The tragedy was a huge wake up call for the condo community statewide — from legislators and code enforcement to homeowners, engineers, property managers and condo board members.   

Laws passed in 2022 and 2023 aim to ensure another collapse of that magnitude never happens again. The legislation requires milestone inspections for condo and co-op buildings, structural integrity reserve studies (SIRS) every decade, and the full funding of financial reserves, among other things. As a result, it makes condo living much more expensive.

Those deadlines are quickly approaching, starting at the end of this year. Some associations are working to meet those deadlines. Many have not.

Unit owners at Mediterranean Village, a condo community in Aventura’s Williams Island, are on the hook for special assessments as high as $400,000 per owner…

The Weekly Dirt: Condo crisis worsens three years after deadly Surfside collapse — Katherine Kallergis | The RealDeal | June 30, 2024

Florida Condo Safety Reforms Kicking In

• Listen to Rep. Vicki Lopez and Rebecca Liebson discuss this topic.  The $134,000 per unit assessment below is the Cricket Club.  40 of 220 units are listed for sale.

…”I know of one condominium where the the assessment for just the structural integrity reserve study (SIRS) was $134,000 per unit…” 

“...I’m telling people not to buy a condominium now.  Wait for things to settle down.  Wait for the assessments to be clarified.  Wait till you have more information.  And I believe by 2026, everyone will know what they’re buying…”  

“...I would want to wait until the building has its SIRS done so that 1) I know the health of the building and 2) I know what it’s going to cost me if I move into the building.” — Rep. Lopez

AUDIO: Condo safety reforms; Florida’s swing state status; slashed arts funding — WJCT New 89.9 | June 28, 2024

Florida Special Assessments Kick in for Kicking the Can

• Aventura, Florida: This is one of many condominiums in Florida with owners facing special assessments to “fully fund” their reserves.  Assessment figures are PER UNIT. Property-wide assessments are 7 and 8 figures…  Real estate listings for this condominium add some perspective.

…Howard Konetz and his wife Sheila Konetz have lived in their two-bedroom, two-bathroom condo for 10 years.  The retired couple had their financial future all planned out until they were recently hit with a special assessment.  “The total assessment from the apartment we are sitting on is what?” asked Weinsier.  “Approximately $224,000,” said Howard Konetz.

“When you say that number, can you believe it?” asked Weinsier.  “No. Not at all,” Howard Konetz replied.  That’s on top of monthly maintenance that’s gone from $1,500 to $3,000.  “We never anticipated this escalation,” said Konetz. “Someone also told me, ‘If you’re not able to pay, you shouldn’t be living here.’”

According to condo documents obtained by Local 10 News, assessments in Mediterranean Village, where Konetz lives, are as high as $400,000.

Projects budgeted for Konetz’s building include everything from consultants, roofing, concrete restoration, elevator modernization, termite treatment and $700,000 alone for landscaping.  The assessments at Williams Island can’t be passed onto a potential buyer.  Howard and Sheila Konetz have had their condo on the market and dropped the price several times...

‘Going to go broke’: Condo owner hit with $224K assessment — Jeff Weinsier | Local10 News | June 20, 2024

Board Recall Can’t Fix This (But Owners Don’t Care)

• Orange County, Florida: Regency Gardens Condominiums.  Recalling the Board isn’t going to make the SIRS and reserve funding requirements disappear.

Residents at Regency Gardens Condominiums in Orange County were in fear of losing their homes after learning they need to fill a gap of more than $17 million in the condominium association’s reserves by the year’s end.  But after Tuesday’s meeting with the condo board, residents have a glimmer of hope.  Bryan Pricher, who owns a condo in the subdivision, said the community voted to recall the current board…

…“Everybody feels happy, feel like I can breathe,” a resident said…

…Previously, residents’ dues were set to increase by $900, and they were to be charged a flat assessment based on condo size— for smaller homes, more than $11,000, and more than $22,000 for larger homes. All payments were due in full by July 31.  Owners told News 6 they were worried they would have to sell their condos for a lower price or face foreclosure.

Pricher said that although new board members are taking over, he doesn’t want residents to think they can make a miracle happen.  “I would caution the homeowners to temper their hopes a little; the community does need quite a bit of work,” he added…

VIDEO: Residents at troubled Orange County condos vote to recall board members — Treasure Roberts | WKMG News 6 | May 15, 2024

Board Resignations

• Feather Sound, Florida: Villas of Carillon HOA.  A BIG misunderstanding?

10 Tampa Bay has confirmed residents of the Villas of Carillon townhome community got an email Friday informing them the entire homeowners association board has resigned, effective immediately. 

This comes after owners successfully postponed a board vote on how they would be allowed to pay a $60,000 special assessment stemming from a structural integrity reserve study. 

Confusion over recent state reforms intended to prevent another tragedy like the 2021 Champlain Towers collapse in Surfside may have contributed to the management company's recommendation and the board's action to require its reserves to be "fully funded."

Those reforms require reserve and milestone studies and required yearly contributions to reserves but they only apply to units that are three stories or higher. All of the townhomes at the Villas are two stories. 

The board also contended insurance companies would not insure the complex in a few years if funds weren't in reserves to pay for new roofs. However, a reserve study would have required the time equivalent cost of the project to be in a fund ahead of any renovation, if the association would want to avoid special assessments, according to Patricia Staebler, a certified reserve specialist based in Sarasota…

…But again, in this case, the Villas of Carillon has a homeowners association, which is a different chapter of Florida code, and not subject to the condo association requirements for buildings three stories and higher. 

VIDEO: Entire homeowners association board resigns after $60K special assessment dispute — Chris Hurst | WTSP | June 21, 2024

 Eye of the Beholder

• Tulsa, Oklahoma: This association is clearly better situated than most (all?) condominiums in Florida.

...According to a letter sent out to residents at the beginning of the year, the HOA is more than $5,000 in debt.  “About 50% of the homes in the neighborhood don’t pay the fee,” Werner said.

…“I think a lot of people don’t even know there’s an HOA fee,” Werner said. “My mom has owned this house for 32 years and just found out last year there’s an HOA fee.”

Since the neighborhood was built back in the 70s, there’s only been one form of communication between the HOA and its residents.  “All I got is a P.O. box,” Rowe said. “I have tried reaching the HOA, the City of Owasso has given them my phone number, but I haven’t heard a word.”  

…However, Werner said there’s a bigger issue.  “The biggest problem is the fee is too small,” Werner said. “The fee is $50 a year.”  Like their form of communication, that fee was set back in the 70s.  Now 50 years later, Werner says that’s not enough to maintain the park...

VIDEO: 'Hold the homeowners accountable'; Owasso neighborhood HOA is thousands of dollars in debt — Mckenzie Richmond | KTUL | April 22, 2024

Grand Theft Midwest

• Warren, Ohio: $140,000 stolen over 7 years.  Incredibly similar to this story from Issue# 93.

Trumbull County Sheriff’s Deputies arrested 62-year-old Randy Rule of Surrey Point Circle SE last week… According to an indictment handed up by the county grand jury, Rule allegedly used deception to steal $140,218 from the Surrey Point II Homeowners Association when he was the organization's president.

A court document claims Rule got the money by submitting falsified invoices to management from work that was never performed. Some of the invoices were from non-existent companies, according to investigators.  The indictment alleges the theft took place over seven years beginning in 2015…

Former president of Warren condo association accused of stealing $140K — Mike Gauntner | WFMJ | June 27, 2024

HOA Origins in Orange County

• The origin story of homeowners associations (HOAs) in the United States:

Before the 1960s, if a developer built a community amenity such as a swimming pool, golf course or park, they usually turned it over to a municipal government to administer. In the early 1960s, when Black and Latinx people gained access to public swimming pools and public parks through the Civil Rights movement, developers designed a new privatized form of shared ownership. They called it a planned-unit development or common-interest development with automatic membership in a homes association. We now call it a homeowners association or HOA.

The company Kaufman & Broad pioneered this new HOA idea in the 74 townhomes they built here in 1963, after personally lobbying the Federal Housing Association to insure their novel "townhouse-on-the-green" plan. They wanted the efficiency of shared amenities without the burden of integration in public spaces. Their solution sold so well that the U.S. Department of Housing and Urban Development published a how-to booklet with sample legal documents, illustrated with the College Green development in Fullerton and Treehaven West in Tustin. Two of the largest HOAs are now in Aliso Viejo and Irvine…

Giving Up Your Rights to Live in a Planned Community? Yes, It Started in Orange County — Elaine Lewinnek, Thuy Vo Dang and Gustavo Arellano | PBS SoCal | May 04, 2022

AI Property Mis-Management

• Remember Outsourced and Offshored from our last newsletter?  AI is the obvious next step.

…Chatbots — as well as other A.I. tools that can track the use of common areas and monitor energy use, aid construction management and perform other tasks — are becoming more commonplace in property management. The money and time saved by the new technologies could generate $110 billion or more in value for the real estate industry, according to a report released in 2023 by McKinsey Global Institute. But A.I.’s advances and its catapult into public consciousness have also stirred up questions about whether tenants should be informed when they’re interacting with an A.I. bot…

When Your Building Super Is an A.I. Bot

— Julie Weed | NYT | June 26, 2024

In Ashes

•  Brookfield, Connecticut: Fire destroyed 12 units at the Ledgewood Condominium.

Brookfield resident recalls escaping from 3-alarm fire: 'All I had was the clothes on my back' — Sandra Diamond Fox | NewsTimes | April 26, 2024

Foreign Interest

• An increase to condominium foreign ownership caps in Thailand…

The Interior Ministry has been assigned by the Cabinet to amend the Condominium Act, to increase the foreign ownership limit in a development from 49% to 75%, and to amend the Land Act, to allow foreigners to lease land in Thailand for 99 years, up from the current 50…

Foreigners to be allowed to own 75% of units in condominium projects — Thai PBS World | June , 2024

A caretaker senator has warned that the government's plan to allow up to 75% foreign ownership of condominium building units, up from 49%, may involve conflict of interest and shake the seat of the prime minister.

Somchai Swangkarn wrote on Facebook on Tuesday that the government's policy to raise the proportion of foreign ownership of condominiums and extend the length of foreign leaseholds on a property from 50 years to 99 years involved a possible conflict of interest.

It would benefit property businesses connected to cabinet ministers, including Prime Minister Srettha Thavisin…

Foreign condo ownership policy "conflict of interest" — Staff | Bangkok Post | June 25, 2024

Environment

• Pyrolysis isn’t what it’s cracked up to be.

Plastic doesn’t break down in nature. If you turned all of what’s been made into cling wrap, it would cover every inch of the globe. It’s piling up, leaching into our water and poisoning our bodies.

Scientists say the key to fixing this is to make less of it; the world churns out 430 million metric tons each year.

But businesses that rely on plastic production, like fossil fuel and chemical companies, have worked since the 1980s to spin the pollution as a failure of waste management — one that can be solved with recycling.

Industry leaders knew then what we know now: Traditional recycling would barely put a dent in the trash heap. It’s hard to transform flimsy candy wrappers into sandwich bags, or to make containers that once held motor oil clean enough for milk.

Now, the industry is heralding nothing short of a miracle: an “advanced”type of recycling known as pyrolysis — “pyro” means fire and “lysis” means separation. It uses heat to break plastic all the way down to its molecular building blocks.

The Delusion of Advanced Plastic Recycling Using Pyrolysis — Lila Song| ProPublica | June 20, 2024

Costco + low-income housing = success?!

An approved upcoming Costco location in South Los Angeles (the Baldwin Village/Crenshaw area specifically) is slated to open in the coming years, and it combines the company’s more-is-more brand with a novel new approach to residential construction. The project, to be built by developer Thrive Living and architects AO, was first announced early last year in a press release that revealed renderings of a mixed-use model with multiple floors, open courtyard spaces and other amenities. All told, the build would encompass not only the Costco store (and necessary parking) but a whopping 800 residential units, including 184 set aside specifically for low-income tenants.

What the renderings don’t show, though, is the complicated — and ingenious — way that Thrive Living is actually putting the Costco development together.

According to real estate analysts CoStar, this entirely new mixed-use model isn’t just something novel for Los Angeles, it “may have national retail implications for Costco.” That could mean smaller footprints, more transit-oriented openings, or Costco itself getting even further into the housing market.

Costco's bold new plan for the California housing crisis — Farley Elliott | SFGate | June 26, 2024

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Should land owners be able to erect tiny homes of 450sqft despite zoning laws requiring 1,500sqft?  THAT is the question.

Policy-makers worried about affordable housing sometimes announce ambitious projects but fail to deliver. Resources are limited. Yet a simpler fix is available that would not cost taxpayers anything.

Zoning police could get out of the way and let people build on their own land with their own money…

Big Government Is Going After Tiny Homes — Erica Smith Ewing and Daryl James Elliott | National Review | June 27, 2024

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The city's Mandatory Housing Affordability program, which requires developers to build or pay for new affordable housing, saw a 15% dip in revenues in 2023.

Big drop in money for Seattle affordable housing as construction slows — David Kroman | The Seattle Times | June 28, 2024

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Utilities, like everything else, are getting more expensive.

Seattle Public Utilities is contending with escalating construction costs and asking the City Council to approve rate increases for residents and businesses.

Building a pump station for Seattle’s massive new sewage and stormwater storage tunnel will suck up more money than expected and contribute to higher utility rates for residents in the coming years, [BUT] the Ballard pump station’s new price tag of nearly $190 million isn’t the main reason why Seattle Public Utilities needs to raise the city’s water, sewage, solid waste and drainage rates by 4.7% per year through 2030…

Pending approval by the council, a new multiyear business plan proposed by Public Utilities would set rates on a path to $325 per month for a typical house and $187 for a typical apartment by 2030, up from $245 for a house and $142 for an apartment today. Seattle City Light provides electricity separately.

Seattle proposes higher utility rates while moving forward huge tunnel — Daniel Beekman | The Seattle Times | June 27, 2024

• Property insurance pain in Puerto Rico.

According to Vélez, who is also a resident of the condominium, the master insurance payment for a three-bedroom apartment increased from $600 to more than $1,200 annually, which is divided and added to the mortgage payment. Those numbers do not take into account the private insurance, which has also increased.

“It is very difficult, and since 2020 it has been worse, because many things have changed and nobody wants condominiums anymore, honestly,” said Vélez, referring to the insurance companies that are not willing to insure condominiums.

“They are drowning us”: the cost to insure a property in condominiums doubles — Periodista de Negocios | El Nuevo Día | June 22, 2024

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About 400 condominiums carry less than 100% insurance coverage. The shortfall means that many potential buyers can’t get mortgages.

It’s been a bad year for Hawai‘i Condominium Associations, with many seeing the price of their master insurance policies increasing 300% or more in one year. A few buildings saw those premiums increase by an extraordinary 900% to 1,300%.

It’s unlikely to get better any time soon.

And a growing number of condos are now carrying master insurance policies that provide less than 100% replacement coverage, which means if there’s a hurricane or other disaster, there may not be enough funds to rebuild. It’s driving some buildings to seek coverage on the pricey secondary market…

Insurance Crisis Worsens in Hawai‘i’s “Condoland” — Janis Magin Meierdiercks | Hawaii Business Magazine | June 21, 2024

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COLORADO: Toolkit for Homeowners and HOAs on Insurance 

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Property Insurance and Disaster Risk: New Evidence from Mortgage Escrow Data

NBER Working Paper Series: Property Insurance and Disaster Risk — Benjamin J. Keys and Philip Mulder | NBER | June, 2024

While saying Florida’s insurance market is improving, the Citizens Property Insurance Corp. Board of Governors on Wednesday backed a proposal that would lead to customers across the state seeing double-digit rate increases in 2025.

The proposal, in part, would lead to an average 13.5% rate increase for the most common type of Citizens policy, known as homeowners’ “multi-peril” coverage. Condominium unit owners would see an average 14.2 percent increase.

Across all personal lines of insurance — a category that includes policies for homeowners, condominium unit owners, renters and mobile homes — the average increase would be 14 percent…

State board backs 13.5% average Citizens Insurance rate hikes for 2025 — Jim Saunders | Palm Beach Post | June 19, 2024

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…California Senate President pro-Tempore Mike McGuire announced the creation of the Senate Insurance Working Group which is tasked with finding legislative solutions to the state's fractured property insurance market…

California Senate creates policy group to stabilize state's property insurance market Friday — Andrew Gillies | KEYT | June 17, 2024

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State Farm requested massive increases to its California residential insurance rates, which calls its financial stability into doubt amid an ongoing crisis in the state’s insurance market.

The company’s California subsidiary, State Farm General, the state’s largest writer of homeowners insurance, according to the Insurance Information Institute, submitted a request on Thursday to the California Department of Insurance for the following rate hikes:

• 30% increase in homeowners insurance

• 36% increase in condominium owners insurance

• 52% increase in renters insurance

State Farm Seeks Enormous Rate Increases in California to Prevent Insolvency — Danielle Venton | KQED | June 28, 2024

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...While there may be fewer blue tarps on the roofs of single-family homes, condo complexes remain a different story.

At the Dolphin Way of Hickory Point condo complex on Little Hickory Island, Jim Boehme says residents have paid more than $50,000 a piece in assessments to get the complex back open....

...In Cape Coral, the neighbors who live at the Somerville at Sandoval condo complex told Fox 4 they’re currently in a legal battle with their insurance provider.

“It’s been a hardship on a lot of residents here,” Anthony Marchese told Fox 4….

Is condo living becoming a thing of the past? Insurance costs, HOA fees taking a toll — Ryan Kruger | FOX 4 | June 18, 2024

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Washington is the sixth-worst state for climate disasters and King is its least prepared county, a recent study finds….

By the numbers: King County ranked 12th among the 50 least prepared places, according to homeowners insurance resource ClaimGuide's risk assessment of over 3,000 U.S. counties.

Study: Seattle area is unprepared for climate disasters — Christine Clarridge | Axios | June 14, 2024

• In 2023, there were 28 separate billion-dollar weather and climate disasters that collectively caused $92.9 billion in damage.

• From 2014 to 2024, there have been 180 separate billion-dollar climate disasters, costing the U.S. $1.25 trillion.

• States with the most billion-dollar disasters in the last 10 years: Texas (96), Louisiana (44), Florida (41), and California (19).

Disaster Preparedness: Riskiest Places for Severe Weather — ClaimGuide

• This is an interesting article, but it fails to identify two key facts:

  • Condominiums are the only type of residential real property in Downtown.  The article does not mention the word "condo" or "condominium."

  • The expansion of residential real property available outside of Downtown materially exceeds the expansion of condominium units Downtown.

Ten years ago, the median home price in downtown Seattle was higher than the citywide median. Now downtown is cheaper than the city as a whole, writes FYI Guy.

Downtown Seattle home prices now cheaper than city as a whole — Gene Balk | The Seattle Times | June 21, 2024

Built Environment

• Ugly houses!

Thanks to dumb rules and greedy builders, we're suddenly mired in an architectural nightmare.

These days it seems like every freshly built house comes with a standard feature: a whole bunch of haters. In Reddit forums and Facebook groups, many Americans grumble about the stifling blandness of the cookie-cutter home, the shameless excess of the suburban McMansion, the clunkiness of the modern box. And that's just the view from the front lawn. Step inside, and you'll likely encounter a mix of white walls, gray countertops, and faux-hardwood floors, copied and pasted from an episode of "Property Brothers." Most people agree that America needs more houses, but nobody seems all that thrilled with the ones being built…

…"It's not necessarily about creating a house that is for somebody's particular taste but for it to be seamless as an asset," Wagner told me. "People become more and more self-conscious about the way that their houses are viewed. We're all kind of temporarily embarrassed real-estate investors, in a way."

This kind of thinking extends up and down the value chain. Builders need to finish homes quickly while targeting the broadest demographic possible. In an effort to keep up with demand, they're increasingly building on spec, which means they're pulling home plans off the shelf and constructing the final product without any input from the eventual buyer. Homeowners, meanwhile, want to emulate the looks they see on HGTV shows and inside the homes around their neighborhoods, which they can browse with ease online…

America has a serious ugly home problem — James Rodriguez | Business Insider | July 02, 2024

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• Winding journey from an elementary school to condos.

Former West Hurley Elementary School will be developed into condominiums — Nick Henderson | Hudson Valley One | July 01, 2024

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• Wild skyscrapers!  7 wild concepts from the 2024 Skyscraper Competition — Andrew Paul | Popular Science | June 28, 2024

• Government debt is spiraling across the globe.

Governments owe an unprecedented $91 trillion, an amount almost equal to the size of the global economy and one that will ultimately exact a heavy toll on their populations.

Debt burdens have grown so large — in part because of the cost of the pandemic — that they now pose a growing threat to living standards even in rich economies, including the United States.

Yet, in a year of elections around the world, politicians are largely ignoring the problem, unwilling to level with voters about the tax increases and spending cuts needed to tackle the deluge of borrowing. In some cases, they’re even making profligate promises that could at the very least jack up inflation again and could even trigger a new financial crisis.

The International Monetary Fund last week reiterated its warning that “chronic fiscal deficits” in the US must be “urgently addressed.” Investors have long shared that disquiet about the long-term trajectory of the US government’s finances…

The world is sitting on a $91 trillion problem. ‘Hard choices’ are coming — Hanna Ziady | CNN | June 26, 2024

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• Even high earners are feeling pinched.

Making ends meet in the coming year is a rising concern for US consumers, including among those who make $100,000 or more a year, according to a survey from the Federal Reserve Bank of Philadelphia.

More than a third of consumers in the survey said they were concerned about making ends meet in the next six months, compared to 28.7% from a year ago. The share of those reporting concern over the next seven to 12 months also climbed.

Among those able to pay their bills in full in April, more than a quarter said they worry about the next six months, up from a fifth the year before. Higher earners were the most likely of the income groups to be in that category: about 30% of those making at least $150,000 reported being concerned about their finances in the next six months…

Even High Earners Worry About Making Ends Meet, US Poll Finds — Alexandre Tanzi | Bloomberg | June 26, 2024

Cashing In

• Is your association clinging to a cash trap?

…Deciding when and how to rebalance a portfolio is challenging even for pros, and depends on factors including a person’s age, savings and expected needs. But staying on the sidelines risks missing out on years of potential gains from holding a broad portfolio of stocks, bonds and other riskier investments.

J.P. Morgan Asset Management calls it the “cash trap.” 

“If you’ve owned cash for the last year and a half, that view in the rearview mirror is pretty attractive and you feel good about yourself,” said John Croke, head of actively managed bond products at Vanguard. “But you have to remind yourself that that’s the rearview mirror.”...

Americans Chasing High Interest Rates Risk Falling Into a ‘Cash Trap’ — Vicky Ge Huang | WSJ | June 25, 2024

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• Synthetic risk transfers.

…Regional banks around the U.S. are striking complex and costly bargains with hedge funds, hoping to insulate themselves from a replay of the turmoil that followed Silicon Valley Bank’s failure last year. Wall Street smells a payday.

Ohio-based Huntington Bancshares recently entered into an arrangement to sell investors some of the risk that its borrowers won’t repay their loans. That helps the bank meet new proposed standards meant to make lenders look healthy to regulators…

…U.S. banks are preparing for new regulations announced last year after the regional-bank failures. They are expected to force midsize banks to meet capital requirements previously only applied to large financial institutions. 

“We expect we will be in capital-preservation mode as we kind of see how all of that unfolds,” Ally Chief Financial Officer Russ Hutchinson said at a recent investor conference. Risk transfer “becomes a very attractive way for us to reduce risk-weighted assets and effectively preserve capital,” he said…

Regional Banks Want to Slim Down. Hedge Funds Smell a Bargain. — Matt Wirz | WSJ | June 19, 2024

Cashing Out

• Multifamily real estate investing gone awry:

Lynn Nathe was growing tired of the meager gains from her family’s retirement account. In late 2021, she invested $200,000 with a company that was making 30% returns by buying the hottest ticket in global real estate: US apartments.

Now, she says, most of that money is gone….

…Much of the worry over US commercial property has legitimately centered on the office market, where more than $38 billion in buildings were in distress as of March, compared with about $10 billion for apartments, according to MSCI. But multifamily buildings make up the biggest share of properties with potential distress — exceeding even offices — with more than $56 billion worth of real estate at risk of financial trouble, the firm’s data show….

Real Estate Investors Face Crisis as Big Wall Street Deals Unravel — Prashant Gopal, Patrick Clark, and Scott Carpenter | Bloomberg | June 07, 2024

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Let this sink in: Not long from now, almost one-quarter of all US office space may be vacant. And if work-from-home—the key culprit—persists, commercial-property values will be further decimated by up to $250 billion, Moody’s warns. 

When combined with the impact of lower rents and lease turnovers, the vicious post-pandemic cycle will reduce revenue for office landlords by as much as $10 billion. That in turn could translate into a quarter-trillion dollars of “property value destruction,” Moody’s officials said. 

The figures illustrate the gloomy prospects faced by property owners and lenders as employers continue to jettison square footage or shift from multiyear leases to shorter-term and more flexible co-working arrangements. A full 85% of North American organizations polled by brokerage Jones Lang LaSalle have implemented hybrid work, and occupancy across offices in major US cities is stuck at about 50% of pre-pandemic levels. Wavering demand and increased borrowing costs have slammed office valuations, especially among older buildings. 

“The argument for maintaining or even increasing remote work practices remains compelling for many businesses,” Moody’s said. “If productivity remains stable and costs can be reduced by forgoing physical office spaces, the rationale for mandating in-office attendance diminishes.”

Bloomberg Evening Briefing: The Great Emptying of the American Office — David E. Rovella | Bloomberg | June 27, 2024

Fowl Euthanasia

• Homeowners associations face all kinds of challenges.

Some residents upset after Lake Tansi property owners association decides to euthanize geese — Staff | WBIR | July 01, 2024

Religious Aversion to Keypad Entry on the Sabbath

• Fair housing concern?  Possibly.  This article cites a case we included in our Issue #93 Decision for the Christmas Lawyer.

…“The co-op could be held liable for its neutral policies if they have a disparate impact on a religious group — as its keypad-only policy appears to have”...

I Can’t Use My Co-op’s Keypad Entry on the Sabbath. Am I Entitled to a Side Door Key? — Jill Terreri Ramos | NYT | June 29, 2024

Misdeeds Lead to Court-Ordered Sale

• Courts can order owners to sell their homes in rare circumstances.

Court Orders Owner to Sell and Vacate Unit — Christy Allen and James Davidson | Davidson Houle Allen | June 26, 2024

TSCC vs. Devlin - 2024 ONSC 2063 - CV-23-00704048-0000

Removing & Replacing Improvements

• Homeowners are usually on the hook for costs related to improvements and betterments, up to and including when those improvements need to be removed and replaced due to infrastructure.

Shutters removed for condo concrete restoration, but some no longer meet code. Now what? — Ryan Poliakoff | Palm Beach Post | June 23, 2024

The Industry Perspective

• As someone who has dedicated an inordinate amount of time researching free speech, signs, flags and symbols within community associations, I found the article below [paywall warning] to be a brutal, one-sided take on CAI's implicit mission to delay, deny and dilute reasonable community association legislative reform across the United States.  An appropriate disclosure would have included mention that your firm, Vial Fotheringham, is a member of CAI.  The author wrote:

Colorado, as in many other jurisdictions, continues to erode associations’ ability to regulate and control the aesthetics of a community association. This trend toward greater homeowner freedom, while extremely beneficial for displaying the American flag, also opens the door for more nefarious and concerning actions by owners—and subjects residents, guests, and their children to potential unintended consequences.

Condo Connection’s Free Speech page is the most expansive collection of information about freedom of expression in community associations that’s available to the general public.  State legislatures continue to increase statutory precision to limit the authority of quasi-governmental community associations because thousands of homeowners have for decades been subject to misfeasance and malfeasance by directors, officers, attorneys, managers and management companies all of whom profit from an industry that puts profit over the people who pay assessments.  In short, state governments are simply reigning in the unintended consequences of hundreds of thousands of covenanted communities acting as their own judge, jury and executioner as modern journalism exposes concerns and empowers a relatively small number of dedicated advocates to work with their legislators to create meaningful change.

Right to Fly American Flag … May Lead to Other Unwanted Displays — Damien Bielli | Daily Business Review | June 27, 2024

• Have some legislation for us to share?  Please let us know!

• GEORGIA: More stories following on prior coverage.  This is intended to build on the momentum of the arguably beneficial, yet timid HB220 which took effect July 1, 2024.

Georgia lawmakers plan to refile bill that would bar HOAs from foreclosing on members' homes for unpaid fees…

Lawmakers in Georgia are taking aim at homeowners associations after hearing horror stories from residents who have been fined, sued and threatened with foreclosure…

"It's not just here in Georgia. It's all over, and it's a national problem right now," state Sen. Donzella James told Fox News Digital. "It's just Georgia is one that people are furious over some of the things that's happening."

One woman told lawmakers she faced a $25,000 lien after installing a rock garden in her yard, The Atlanta Journal-Constitution reported late last year. A realtor said a client was threatened with $84,000 in arbitrary fines, which dropped to just $600 after they got a lawyer.

"Most people don’t have that extra $5,000 for an attorney," the realtor testified…

'Stop the nonsense': Lawmakers in GA move to give homeowners more rights in HOA disputes

— Megan Myers and Hannah Ray Lambert | FOX News | June 30, 2024

• FLORIDA - I: DID YOU KNOW that you can easily search for lobbying efforts in the Florida legislature?  Example: lobbying for HB1021.

• FLORIDA - II: News coverage keeps coming!  View prior coverage of HB1021 + HB1203 which became effective July 1, 2024 (certain provisions effective later).  

HB1203’s pandora’s box: prohibiting vehicle restrictions will open a flood of litigation?

The bulk of the condo 3.0 law is aimed at cracking down on corrupt condo boards and increasing transparency for unit owners.

“Condo owners have provided evidence of real malfeasance on the part of board members and property managers who have just gone awry,” said Rep. Vicki Lopez, the Miami Republican who sponsored the legislation. “The goal is to provide proper governance.”  

SUMMARY OF HB1021 (“AKA Condo 3.0”) — Sun Sentinel

• Criminal penalties for board members who accept kickbacks; engage in voting fraud related to board elections; or fail to maintain or provide access to public records.

• Additional authority and resources (funding) to enforce the law and investigate condo boards accused of wrongdoing via DBPR (Florida Department of Business and Professional Regulation)

• Prohibit associations from retaliating against unit owners by suing them for defamation or increasing assessments

• Require associations with 25 units or more to make records available to condo owners through an online webpage by Jan. 1, 2026

• Require new board directors to undergo four hours of mandatory training on inspections, recordkeeping, financial literacy and more. All directors must undergo an hour of continuing education annually

• Mandate that condo boards hold four meetings a year with dedicated time for unit owners to ask questions

• Increased disclosure requirements for condo unit resales

  1. Effective Oct. 1, owners must provide prospective buyers with the condo association’s annual financial statement and annual financial report.

• Condo + hotel master associations have a new balance of power for the commercial owner over shared common elements.

Florida’s condo laws are changing. Here’s everything you need to know. — Rebecca Liebson | South Florida Sun Sentinel | July 01, 2024

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SUMMARY OF HB1203 — Palm Beach Post

HOAs CANNOT:

• Enforce rules on some residents but not others

• Ban homeowners or their invited guests from parking personal, business or first responder vehicles (including pickup trucks) that are not commercial vehicles in their driveways or any other area where they have a right to park per state, county and municipal regulations

• Ban contractors or workers from the homeowner's property

• Fine residents for leaving garbage cans at the curb or the end of their driveway within 24 hours of a scheduled trash collection

• Fine residents for leaving up holiday lights or decorations past the HOA's rules without prior notice, after which the homeowner will have one week to take them down

• Limit or create rules for the inside of a structure that isn't visible from the street, a neighbor's property, an adjacent common area or a community golf course

• Ban vegetable gardens or clotheslines, if they can't be seen from the street, a neighbor's property, an adjacent common area or a community golf course

• Require review and approval of plans for central air conditioning, refrigeration, heating or ventilation system that isn't visible from the street, a neighbor's property, an adjacent common area or a community golf course and is similar to previously approved systems. If a construction or improvement request is denied, the HOA also must provide written notice "stating with specificity" exactly why and under which rule or covenant.

• + MORE

New Florida HOA laws 2024 explained for Palm Beach County — Laura Lordi and C.A. Bridges | Palm Beach Post | July 01, 2024

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With more than 1.5 million condominium units in Florida – 37% of those in Broward and Miami-Dade counties — you would think that legislation to create more accountability for condo associations and managers would be a huge deal after the collapse of Champlain Towers in Surfside almost three years ago. Yet Gov. Ron DeSantis signed the condo legislation into law on June 14 without any fanfare. 

He may have been trying to duck and cover from condo owners’ ire. What began as an effort to ensure the safety of condominium buildings with required inspections and money reserved to do necessary repairs got hijacked by lawyers for mixed-use condo buildings like the Miami Beach hotel and spa Carillon, which was slapped last year with a $16.3 million judgment that the condo association there won.

The new law turns out to be a darn good deal for Carillon. It’s retroactive, which would mean the Carillon can drop its court appeal of that judgment and — presto — the hotel pays nothing; problem solved. But for thousands of people who live in condo-hotels, where residential units and a hotel share space, the problems of keeping sufficient reserves and making repairs on time may just have gotten worse…

South Florida condo-hotel owners have good reason to be angry. Legislature must fix new law — Editorial Board | Miami Herald | June 18, 2024

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A new state law going into effect July 1 says an HOA can no longer pass regulations preventing pickup trucks and work trucks from parking in driveways.  But the I-Team has learned it’s unclear how the law will be applied.

With more than 42,000 residents, Lakewood Ranch is one of the fastest-growing planned communities in the United States...But commercial trucks aren’t allowed to park overnight in Lakewood Ranch…  Currently, even pickup trucks are prohibited under the association’s rules...

...“We’ve had a number of calls with this,” said attorney Jonathan Ellis, who specializes in HOA law.  Ellis says the wording of the new law is vague, and it’s not clear whether it applies to existing HOA rules.  “The general consensus from the lawyers that I've spoken to is it’s very questionable whether you could actually apply this retroactive,” Ellis said. “And even if they did want to make it apply retroactive, it’s a question of whether the Florida constitution would allow it to apply retroactive.”...

New Florida law prohibiting HOAs from passing parking restrictions could affect millions — Adam Walser | ABC News | June 21, 2024