Soon after the catastrophic collapse of
Champlain Towers South in Surfside in 2021, board officers
at an aging condo in neighboring Bay Harbor Islands realized
they had better get their act together.
Their far more modest building, the three-story Golden Key,
was in OK shape. Luckily, it had been solidly built, in
1964, but president Andre Williams and fellow board members
knew the concrete balconies badly needed reinforcing, the
roof was at the end of its life span, and that sickly, faded
pale-yellow color the exterior had sported for the previous
20 years just had to go.
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Manager Heri Kletzenbuer, left, and board president Andre Williams stand outside the Golden Key Condominiums in Bay Harbor Islands. |
Keeping down costs
The Golden Key is not unique. Many if not most condos are
navigating the new regulatory environment, experts say. But
the story the condo board and their longtime manager tell
shows how, with due diligence, even owners who are not
wealthy can preserve an affordable older condo of the kind
that made Florida living widely available without breaking
anyone’s bank.
The 24-unit condo building, in a simple
Miami Modern architectural style, sparkles in a new
white-and-periwinkle color scheme. The balconies’ rebuilt
structural supports are solid. The new roof will last at
least another 15 years.
The building received its recertification, and by the Jan. 1
state deadline had filed its required milestone inspection
reports and created a reserve fund.
Better yet, Williams and his board managed it all without
socking owners with big assessments, even as construction
costs soared and insurance rates for condos in South Florida
doubled and even tripled.
That means the building — near the water, walking distance
to first-rate shopping, dining, schools and the beach — has
remained a safe, attractive and eminently affordable place
to live for its owners and residents, who include retirees
and young couples and families.
Most units are occupied by owners. Some — including a second
apartment that Williams owns besides the one he has lived in
for 20 years — are held as investments and rented out. The
market value of the units, all of them one-bedrooms, is
assessed at $218,813 by the Miami-Dade County property
appraiser’s office.
Williams, Rosenblatt and a key collaborator, their longtime
property manager, Heri Kletzenbauer, said theirs was not a
magic formula. It requires planning and keeping abreast of
repairs and maintenance, which ends up saving a lot of
money. Costs at Golden Key have still risen, but at a
manageable pace.
One reward for their diligence, for instance, was that their
insurer gave them a discount at a time when sharp increases
are financially crippling some condos. Their insurance still
more than doubled compared to where it stood in 2020, before
Champlain Towers, but even so the maintenance fee for each
unit stands at a moderate $641 a month, which includes
assessments both for work completed and to come.
“The maintenance has increased from $300 in 2019, but at
least they’re not looking at $50,000 a year like some,”
Kletzenbauer said.
‘Get ahead of the curve’
Anticipating repairs means they were able to stagger
assessments and spread out payments over a greater number of
years, they said.
“We wanted to get ahead of the curve , but we didn’t want to
financially cripple anyone,” Williams, a real estate
attorney, advisor and investor, said.
To be sure, the Golden Key’s small size and simple
construction — a concrete three-story shell with a concrete
roof — are an advantage. It means it likely wouldn’t face
complex structural or other repairs that could cost more
than the building’s worth, for one thing. And its builders
didn’t cut corners, as developers later started doing during
the local condo boom of the 1970s, Kletzenbauer said.
“The building had good bones,” said Kletzenbauer, whose
Little Havana-based European American Property Services
manages some 25 buildings across Miami and the beaches. “It
had a really good structure to start.”
But even with just a small group of owners, Williams said,
there was initially some resistance to tackling repairs when
he first was elected to the board a decade ago.
Williams, who first bought at the Golden Key as a young
attorney in 2002, in part to be near his mother in Miami
Gardens, said he wasn’t interested in joining the board
during his first decade there, until he realized a failing
electrical system posed a potential reckoning for the condo.
After some persuasion, owners agreed to an assessment to
replace the entire system.
The board and Kletzenbauer then tackled maintenance and
repairs as needs arose. When the elevator needed repairs,
they fixed it. Soon after the Surfside collapse, after
cracks appeared on balcony railings, they hired a contractor
before they got worse and the cost rose. Ditto with the
roof.
Special assessments, one in 2022 and another in 2023,
were each $2,800 per unit.
The regular maintenance projects provided another benefit.
Since Kletzenbauer has been in business in Miami for
decades, he could refer reliable contractors and inspectors
to the board. That proved especially valuable as condos
faced with the new state requirements encountered stiff
competition for good contractors and trustworthy, capable
inspectors.
“One advantage of being around forever is you will be able
to find somebody who can do that work for you,” Kletzenbauer
said.
Because the work and planning had been done, recertification
and meeting new state requirements went smoothly.
“They were already ahead of the game with that,”
Kletzenbauer said. “Every time there is a little crack, we
deal with it right away. So we didn’t have a huge problem
when this last round of structural inspections came around.
We had a small problem we needed to address. We fixed the
cracks and painted the building, and we’re fine.”
Having been on top of things — rather than allowing issues
to fester — then meant it was easier and cheaper to make
repairs and stretch out assessments to lessen the burden on
unit owners, which in turn made it all easier to manage for
the board.
“The prudent board has listened to my suggestions and had
the foresight to deal with these issues early enough that it
didn’t become a bomb coming at us,” Kletzenbauer said. “At
the end, since it wasn’t huge numbers, it’s a whole lot
easier and they were able to stretch it out over years,
because it was not an emergency.
“It was less pushback from the owners, and it was much more
manageable.”
The required state inspection, meanwhile, has given them a
road map for the future. They’re looking ahead at updating
the plumbing, and are working with a contractor on estimates
and a plan.
“We know we need to paint again in 10 years, to do the roof
again in 15 years,” Kletzenbauer said.
That’s not always the case in condos in Miami, even among
some of his clients, he ruefully notes: “There are certainly
some that are less cooperative.”
And those condo buildings that skimped on maintenance and
repairs are now paying a much stiffer price, he said.
Financing has been difficult to get when buildings face a
large assessment to tackle backlogged repairs. That’s
because banks don’t consider them safe investments, Williams
said. And the blacklist maintained by federal mortgage
backer Fannie Mae makes it virtually impossible to get
conventional loans.
“At the end they all lose. That is unfortunately the way it
goes now,” Kletzenbauer said.
The good condition of the building and its finances also
translates into an improved investment for owners, Williams
notes. He has bought a second unit in the building to add to
a portfolio of condos he holds.
Developers may still move in
But he doesn’t know how much longer he or his neighbors will
be in the building. Ironically, all the improvements they
have undertaken leave the building well positioned for a
bulk purchase by developers who would tear it down.
That’s because Bay Harbor has become a massive magnet for
redevelopment. The easternmost Bay Harbor island, zoned for
apartments and condos, bristles with construction cranes as
its trove of MiMo buildings from the 1950s and 1960s
gradually disappears, replaced with glitzy new buildings
where condos go for multiple millions.
Williams says the board has already been approached by
developers interested in buying everyone out. They’re not
quite ready to sell just yet, he said, but they may not hold
out for much longer, he said.
And when that happens, the higher values for the units
ensured by the building’s excellent condition mean the
owners can get a better deal than if they were forced to
sell because of unaffordable repair bills and financial
desperation.
“Buying here was the best financial decision of my life,”
Williams said. “I don’t think any of us expected Bay Harbor
to explode like it has. The price would have to be right,
but I don’t expect to bring my grandchildren here.
“At some point, some developer will make us an offer we
can’t refuse.”