WEST PALM BEACH, Fla. – The specter of Champlain Towers South came in an email alert this month for residents of a West Palm Beach waterside condominium. Insurance on the 12-story building across from the Lake Worth Lagoon increased 82%, requiring a special meeting to hike the budget and jack up dues. It was a blow for the association, which had planned for just a 25% rate jump on top of a 25% increase the previous year.
“Everyone is shocked,” said Mary McSwain, who bought her one-bedroom unit in the 51-year-old Portofino South Condominium in January. “I’m just getting near retirement and I thought this was going to be my dream place but I’m getting priced out.”
McSwain, 67, said her dues are going from $914 a month to $1,347 – a monetary burden that means she will work more and longer instead of scaling back her job as an attorney.
While it’s impossible to tease out exactly how much of the insurance increase was a reaction to the collapse in Surfside, Portofino property manager Robert Gardner said “of course” some of it is a consequence of the tragedy that killed 98 people in the early morning darkness of June 24, 2021.
Insurers in general statewide were already on the ropes before the tower fell, the collapse was a knock-down punch.
Gardner had just three companies willing to give him a quote after the association got notices its insurance would not be renewed under the same terms. The reasons for denials ran the gamut – the building’s too old, it has cast iron pipes, there’s no sprinkler system, the roof is 21 years old.
“It goes on and on,” Gardner said. “It’s just nuts right now.”
And it’s likely to get more expensive for owners under the new condo law approved during a special legislative session. The new law took effect when Gov. Ron DeSantis signed it May 26, but most safety provisions do not kick in until late 2024. It requires maintenance accountability measures on older condos three stories or higher, such as engineering inspections and dedicated reserves to pay for fixes.
For the 140-unit Portofino South, the insurance pinch is first.
And it comes as the Portofino owners are looking at another hit, too. Unrelated to the Champlain Towers collapse, Portofino also must by law install a sprinkler system by Jan. 1, 2024 – an expense that will cost at least $7 million.
The new, post-Champlain law requires a structural integrity reserve study to determine how much money is needed for future major repairs to be completed by Dec. 31, 2024. Following completion of the report, condo boards must reserve funds for projects identified in the report and cannot use those reserves for other purposes.
West Palm Beach attorney Michael Gelfand, who served on the Condominium Law and Policy Life Safety Advisory Task Force set up after the Surfside collapse, said there is a concern people will not be able to afford what is coming.
Years of lax state oversight, weak regulations, and volunteer condo boards reluctant to levy heavy dues on their friends and neighbors have allowed buildings to deteriorate, he said. Champlain Towers South had about $706,000 in its reserves as of January 2021, according to a review the year before by the company Association Reserves. But it needed more than $10 million for projected repairs.
“After decades, the real cost of housing will be recognized for those who actually own and occupy condominiums,” Gelfand said. “If people can’t afford it, they will have to move. That is not an easy thing to say, but that is what it comes down to.”
SOURCE: Copyright 2022 Palm Beach Newspapers, Inc. Kimberly Miller is a veteran journalist for The Palm Beach Post, part of the USA Today Network of Florida.https://www.floridarealtors.org/news-media/news-articles/2022/07/fla-condos-start-see-impact-surfside-collapse