Article Courtesy of The Palm Beach Post
By Editorial Board
Published February 21, 2017
With no income tax and low business taxes, Florida has
earned its reputation as one of the lowest-taxed states in the nation. Or
There’s a dirty little secret about the cost of living here that doesn’t
show up on those “Top-10 Lowest Tax State” lists: New residential
developments usually require association dues — sometimes very large,
unpredictable dues that can make it difficult for people on fixed incomes to
plan for long-term housing expenses.
Unfortunately, corruption and lack of transparency too often add to the
State oversight over condo association funds in Florida has historically
been weak. Likewise, consequences for mismanagement or misspending have been
A Miami-Dade grand jury report issued earlier this month found as much:
“Because the condo laws and regulations lack ‘teeth,’ board directors,
management companies and associations have become emboldened in their
willful refusal to abide by and honor existing laws in this area.”
Recent action by Florida’s Department of Business and Professional
Regulation here in Palm Beach County shows that the state is capable of
providing teeth, when and if it dedicates the resources. But those resources
haven’t kept up with housing growth, the grand jury found.
In the case of the 20-building Whitehall condominiums on Village Boulevard
in West Palm Beach, the state’s action was many years in coming.
Irregularities began in 2010 and continued unabated until 2015. By then more
than $1 million in association funds had vanished or been misspent,
according to documents obtained by The Palm Beach Post’s Tony Doris.
State regulators found board members during those years had spent a great
deal of the money on themselves and committed multiple civil violations of
state condo law, Doris reported.
Inquiries, subpoenas and depositions revealed that association money had
been withdrawn from casino ATMs, while other withdrawals couldn’t be
accounted for at all. Meanwhile, three supposedly unpaid condo directors
were on the payroll as security and property management staff. Two denied
wrongdoing when contacted by Doris. A third could not be reached.
The Florida Department of Law Enforcement has investigated the circumstances
around the depleted funds and referred its findings to the Office of the
Statewide Prosecutor, Doris wrote. If criminal charges are filed, there’s a
possibility insurance may kick in and cover the missing money, giving
residents some relief, current board members said.
Meantime, Whitehall residents now find themselves forced to pay an estimated
$1,200 a year over and above standard dues to replenish the depleted
Call it what it is: a corruption tax.
As condo law expert Jeffrey A. Rembaum notes, every condo owner in the state
is taxed $4. That money is collected by associations and sent to the state.
More of it needs to be used to ensure good governance. “It gets usurped by
the Legislature and applied to projects other than the Division of
Condominiums,” Rembaum said. “If we had more resources at the division
level, maybe we would have less Whitehalls.”
Residential associations ideally offer communities a mechanism to beautify
and maintain their neighborhood, and in that way preserve value. But abuses
abound. Association boards have tremendous power, free from most of the
constraints of openness and good government that municipalities and other
taxing bodies must follow.
How many other Whitehalls are out there? How much do bad boards add to the
cost and stress of living in Florida?
Taxation without proper oversight is a recipe for trouble. Homeowners
shouldn’t have to sue to oust a corrupt board.