Daniel Fiorda moved out of his
800-square-foot condo in Miami Beach last month, more than
two decades after he bought it.
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An overhead view of the four-unit building located at 8125 Crespi Blvd. in Miami Beach, where Sipiwe Anderson owns a condo and has lived with her family since 2001. |
But the substantial,
sudden cost increases at 2033 Calais Drive also reflect the
tactic of investors taking over condo boards and making
spending decisions with limited input from other owners who
must also foot the bills.
Condo associations in Florida have broad latitude to make
financial decisions under a “business judgment rule” that
protects directors from liability, as long as they can show
a reasonable basis for their spending, said Roberto Blanch,
a South Florida condo lawyer.
“There is this gray area, I think — let’s call it this
wiggle room — that might be enough to let them get away with
some unsubstantiated or some uncorroborated increases,”
Blanch said. “The board can always get away with saying,
‘We’re just spitballing here.’ ”
At Fiorda’s building, a new board controlled by Stonemason
and its leader, Gustaf Arnoldsson, passed a 2023 operating
budget of more than $271,000, up from about $66,000 in 2022,
according to a document Fiorda provided to the Herald.
The proposed spending includes increases in legal fees from
around $800 to $20,000, management fees from $4,800 to
$9,600 and, most significantly, reserve fund contributions
from $5,800 to $150,000.
The resulting owners’ monthly fees of $2,000 or more are
unusually high. Across Florida, average homeowners
association fees are less than $400 a month, according to
data from the Foundation for Community Association Research.
‘They came to kill us’
Arnoldsson, who has bought several properties in North Beach
over the past few years, says the budget increases are long
overdue. The property has been neglected, he said in an
interview, and needs to build up a healthy reserve fund to
address costly repairs including a new seawall and roof.
Entities tied to Arnoldsson and Stonemason bought six units
from a single owner there for $1.2 million in late 2021. At
a new board election, Arnoldsson and an associate won two of
the three seats. Fiorda was appointed to the third. (Fiorda
said he’s not sure who nominated him. After he asked for
meeting minutes, a property manager replied that no minutes
were taken, despite a Florida law that requires minutes to
be kept.)
“When we came in and saw the state of disrepair of this
building, we were shocked,” Arnoldsson said. “Now they’re
saying we’re pushing them out. I just find it to be a little
bit disingenuous.”
But Fiorda says the sudden fee increases are not a
good-faith effort to spruce up an aging building. Arnoldsson,
he claims, is jacking up costs to put Fiorda and the other
remaining owners in a bind — unable to sell their units to
outside buyers due to the steep fees attached, and at risk
of facing liens and even foreclosure if they don’t pay up.
Ultimately, Fiorda said, he may be forced to sell to
Arnoldsson for well below market value.
“They’re doing all this because they want to pay us less on
the market,” Fiorda said. “They came to kill us.”
Brian Trevisa, who owns two units in the building with his
wife, Lissy La Paix, echoed that sentiment and said
Arnoldsson has failed to justify the big jump in spending.
“None of this has been in writing or formalized in any way
at all,” said Trevisa, who proposed an alternative to
Arnoldsson’s budget with more modest increases that was
rebuffed.
Trevisa and La Paix, who is pregnant with the couple’s
second child, also moved out of the building recently
because of the fee hikes, Trevisa said. Maintenance fees for
their two units will top $60,000 this year.
Some of those costs are being passed on to renters. Trevisa
and La Paix are now charging $3,000 per month for the
two-bedroom unit they lived in, and they raised the rent
from $1,400 to $2,000 in their other unit, a one-bedroom.
Like Fiorda, Trevisa believes Arnoldsson wants to buy his
units at a bargain.
“That seems like bullying to me,” he said. “They’ve put a
crazy HOA budget fee in there, knowing that I can’t sell my
apartment with that fee tied to it.”
Arnoldsson said he would entertain offers to buy the
remaining units, but that his intention is to fix up the
building rather than knock it down and build something new.
Collecting maintenance fees of more than $2,000 per month,
he added, is more humane than imposing a large special
assessment all at once.
“How come, in the last 10 years, they never looked at what
needed to be done at the property?” he said. “Now it’s our
fault that we’re pointing out the things that need to be
done?”
Fiorda admits the association could use more in reserves,
which he said were depleted due to recent increases in
insurance costs. And he acknowledged the building has issues
that ought to be resolved in the coming years.
Still, he noted that a 2019 engineer report, prepared as
part of the building’s 60-year recertification, found the
building to be in good structural condition with no
significant cracking or deterioration.
And he says Arnoldsson’s approach is inconsiderate to
long-time residents. “Knock on our doors. Let’s have a
meeting, let’s discuss these issues. We can build up our
reserves slowly,” Fiorda said. “He forgot that there were
families living there.”
‘This is a family’
Other condo owners in North Beach are facing similar
pressures.
At 8125 Crespi Boulevard, Sipiwe Anderson, a fashion model
and member of Miami Beach’s Black Affairs Advisory
Committee, was removed as president of her four-unit
building’s condo board and hit with a series of special
assessments after a Texas man purchased the three units
above hers early last year.
Anderson, who lives in the canal-front property with her
husband and two children, is now being told to pay $169,000
for her share of repairs between 2022 and 2024, including a
total of $100,000 made in quarterly payments this year,
records show. The assessments are for upgrades including
$150,000 for concrete restoration, $150,000 for seawall
repairs, $50,000 for balcony and railing improvements and
$50,000 for the dock.
Meanwhile, monthly maintenance fees have doubled from $700
to $1,400, Anderson said.
This week, a lawyer for the condo association told
Anderson’s attorney that a collection agency would soon be
pursuing the money she owes.
“How many people can pay $25,000 every quarter?” Anderson
said. “I’m happy to make this place look beautiful, but it
has to be done over time to understand this is a family.”
The building’s new majority owner, Tim Hill, did not respond
to several requests for comment. Carla Jones, a lawyer
representing the condo association, declined to comment.
Like her North Beach neighbors on Calais Drive, Anderson
said she believes the new owner is hoping she will sell him
her unit for less than it’s worth, or else face foreclosure
under the weight of the assessment costs.
The first assessment, passed late last year, was for $16,000
per unit.
The next was for approximately $100,000 per unit owed in
$25,000 quarterly payments this year. Another
$53,000-per-unit assessment is planned for 2024.
Each was approved by a new board led by Hill.
Anderson says she can understand the concrete repair cost
estimates, which are based on an engineer’s assessment. City
records show the five-story building, constructed in 1971,
has yet to pass its 50-year recertification.
But she said she doesn’t see the urgency of the other
repairs, including the seawall and dock, nor how those costs
were determined.
Anderson said Hill made her an offer for
her unit that she believes was well below market value.
“Last time I talked to him, he said, ‘I’m not trying to
squeeze anybody out of their home,’ ” Anderson said. “I just
don’t know what the truth is anymore.”
‘We don’t want predatory developers’
Blanch, the condo lawyer, said he’s heard his share of
allegations of investors buying up units in condo buildings,
then raising costs for the remaining owners “with the
objective of either getting them out or having them agree to
sell their units to the bulk owner.”
But those motives are hard to prove, he said.
“Did it go up drastically because it was woefully
under-budgeted before, or did it go up drastically because
there are some ulterior motives?” Blanch said. “That’s
probably the million-dollar question.”
Condo owners in North Beach are trying to fight back,
working with attorneys and filing detailed information
requests to their associations. The Calais Drive owners
recently filed complaints with the state’s Department of
Business and Professional Regulation. And owners at both
buildings have flagged their concerns to Miami Beach
Commissioner Kristen Rosen Gonzalez, who said she was
troubled.
“We don’t want predatory developers in our city,” she said.
“At least buy these people out at their fair market value.”
Condo owners need to be vigilant, Rosen Gonzalez added,
especially in smaller buildings that may be more susceptible
to investor takeovers.
“I’m going to do whatever I can to inform people this is
happening on Miami Beach,” she said.