Gulag is an acronym for the former
Soviet Union
's penal system. Since then, it has come into common use to describe any
repressive system. I named my column the “Tales From The Galt Gulag,”
because I write about the repression of condominium Owners on the Galt Ocean
Mile. As publisher Steve Kelly wrote, “the Galt Ocean Mile is the biggest
crime scene in
Broward
County
.”
To
paraphrase Will Rogers, everybody talks about the economy, but nobody does
anything about it – except the Florida Legislature.
Florida
passed a tax relief law that was happily signed into law by Governor Crist.
Local governments are complaining that services will be cut because of the tax
cut and spending caps. Why is
Fort Lauderdale
refusing to cut the bloated salaries of our “public servants.”
For
example, the Fort Lauderdale City Attorney makes $348,016, City Manager
Gretsas makes $315,210, and his “assistants” make almost $250,000 a year. According
to the Sun Sentinel, “Other than top officials and people with
"manager," "director" or "chief" next to their
name, the Top 300 list is almost completely filled by police and fire
officials, as in prior years. ... The lowest compensation of the Top
300 was Police Officer Gino Ferri's $133,050.”
Let
me put these numbers into perspective. The President of the
United States
makes $400,000, and the Vice President, Speaker of the House, and Chief
Justice of the Supreme Court each make $208,100. Our Senators and
Representatives each make $162,100. A Florida Supreme Court Justice makes
$161,000 and a Circuit Court Judge $145,000.
Only
the President of the United States makes more than
Fort Lauderdale
’s attorney, city manager, or the assistants. Is it possible that Mayor
Naugle, Commissioner Teel, and the others believe we can afford – or should
pay these people more than a Circuit Court Judge, a Supreme Court Justice, a
Senator, the Chief Justice of the Supreme Court, or the Vice President of the
United States
? It appears that Naugle, Teel, and the others have no concept of scale. They
spend our tax dollars as if they were monopoly money.
The
Florida
real estate market began a dizzying spiral upward. One year, property values
increased by a factor of four. Nobody could lose money on real estate.
Speculators poured into the condominium market. The combination of speculation
and population growth drove the market to unrealistically high levels. This
economic phenomenon is called a bubble. The funny thing about bubbles is that
they pop. When they pop, the market crashes.
A
major hurricane struck
South Florida
, the bubble burst, and the market began crashing. There were massive waves of
foreclosures. There were many who simply walked away from their condominiums,
leaving the Condominium Association to declare bankruptcy.
I
know this sounds like today, but this is what happened in 1925. The arrival of
the September 1926 hurricane triggered the bursting of the bubble and the real
estate market crash. By the time the stock market crashed in 1929,
Florida
’s economy was so bad that the great depression had little effect upon
Florida
.
"Those
who cannot remember the past are condemned to repeat it." (George
Santayana, Life of Reason, Reason in Common Sense, Scribner's, 1905, page 284)
It seems that
Florida
did not heed Santayana’s warning, for the crash of 2005 was the duplicate of
1925. Will the pattern be repeated? Will we see a depression in 2009?
The
real estate market peaked in late 2005, and has been falling since then. We
have seen a loss of about fifteen-percent per year since the peak. It is
likely that the bottom of the market will not be reached until 2010. There
have been record levels of foreclosure and short sales, with record-breaking
levels coming in the next two years. Medical technology means that people are
living longer. This is wonderful. However, living longer in a spendthrift
condominium association means that octogenarians are outliving their money.
What
is your Condominium Association doing in response to the burst bubble and the
crash of 2005? What is your Condominium Association doing to prepare for the
possibility of waves of foreclosures and the risk that your Association would
have to declare bankruptcy? What would happen to your home if your Condominium
Association declared bankruptcy? Where would you go if your Board spends your
Association into bankruptcy? Remember the words of Santayana.
Pay
attention to your Board and Management, and their plans to spend your money.
Your Association should be reducing expenses, renegotiating contracts, and
postponing all but the most essential maintenance. This is a time to tighten
your belt, not renovate your lobby. Is your Condominium Association Manager
earning a six-figure salary? Is your Association paying huge retainers to big
law firms, or are they being as careful with your money as you are? Is your
Board spending your money on political events? Is your Board paying tribute to
the CAI?
Your
Board and Management should be coming up with creative ways to save money and
reduce your maintenance assessments. If you do not see your costs dropping,
your Board and Management are not doing their job, and should be replaced.
Perhaps it is time for condominium spending caps that are based upon assessed
value. Remember the words of the Condominium Owner’s champion, Julio
Robaina. “You may live in paradise now, but you're one election away from
hell." (Representative Julio Robaina, February 2008) Please – do not
put me in the position of having to say, “I told you so.”