Century Village West Palm Beach – going the way of other Condo Complexes?
Stew Richland
I have attended the last two UCO/WPRF budget meetings, I have read the budget proposals and listened to the committee members comments on each of the items proposed for the 2016-2017 budget. Most of the items were approved as submitted, others were removed or trimmed. In my opinion, the Budget Committee members responded to the budget items in a very responsible way. The bottom line is that our fees will be going up and it is vital that funds must be allocated to the reserve accounts to pay for an infrastructure that is old, antiquated, costly to repair and expensive to maintain.
No Condo community is an “island entire of itself.” We here in Century Village are not alone when it comes to raising the funds to keep our heads above water and to maintain the way of life that we came to expect when we chose to live in Century Village.
A few days ago, a writer for the Washington Post, Bill Turque, wrote a rather extensive and thought provoking article titled: “Condominiums in crisis: Financial troubles put many communities at risk.” Reading Mr. Turque’s article, gave me chills because he could be describing the issues that we are currently facing here in Century Village. Below are some of the critical issues that he targets in his article along with my own observations.
“For five summers, a tarp has covered the swimming pool at Grand Bel II, a condominium community in Silver Spring that has no money for lifeguards, chemicals or insurance. The Vistas at Washingtonian Woods in Gaithersburg faces $600,000 in repairs but has just $400,000 in cash reserves.” Does this not mimic the problems we are having at the Club House and also with many individual CV associations that are poorly run?
“At Saxony Square in Alexandria, an unemployed man nine months behind on his mortgage negotiates with lenders to keep his two-bedroom condo. His neighbors struggle to pay their monthly fees; since 2010, Saxony’s board of directors has filed more than 80 court actions to try to collect such assessments.” How often have we listened to the woes of CV Associations or individuals trying to keep their heads above water.
“Even as posh condos rise in trendy neighborhoods around the nation’s capital, many older complexes are mired in a recession that never ended. A cycle of aging infrastructure, limited resources and foreclosure is putting these communities in a deep financial hole, threatening what traditionally has been an affordable path to homeownership for the working class.”
Monthly fees, the financial lifeblood of condo developments, have risen sharply as boards try to generate cash for long-deferred maintenance and to cover basic expenses. As a result, more owners can’t make their payments, and fewer prospective owners cannot afford to buy in.” These issues are constantly being discussed at UCO meetings, the Delegate Assembly and individual Condo Associations. Yes, we are not alone on this island!
“At the same time, tightened lending rules, and a reluctance among banks to foreclose on units that will be hard to resell, have boosted the number of long-vacant condos in many complexes, further depleting the flow of fees that pay for utilities, trash collection, upkeep and repairs.” How true! Look at our roads, club house and tennis courts.
“The problem is the condo economic model, in which your neighbors are also your business partners, obligated to pay their share of common expenses.” Mr. Turque points out that even before new owners moved into their new units there were signs of distress. “As the economy deteriorated, more Grand Bel II owners had trouble paying their bills. To forestall mortgage default, many opted to stop paying monthly assessments. Routine maintenance was put on hold. The pool stayed empty; weeds poked through cracks in the tennis court.” Sounds familiar does it not.
Fees began to tick up Mr. Turque observes, when the infrastructure began to fall apart. Just like here in Century Village.
“At 44-year-old Kimberly Place in Aspen Hill, Md., about a dozen households are at least 30 days late on monthly fees. “You can’t continue to raise assessments,” property manager Eugenia Mays said. “You reach that magic tipping point, and then five more people can’t pay and become delinquent.”’
“But the bills are piling up. County inspectors ordered many of the development’s 76 balconies removed last year because of rotting supports that created an “imminent danger” of collapse. Pressure from groundwater caused basement foundation walls to fail in at least seven units, and the $750,000 repair was not covered by insurance.”
For a minute I thought he was talking about the air condition system in our Club House, our roads and lakes. Our bills are growing, our fees are slowly going up and will there be a time when living in Century Village will become unaffordable to many?
“Condo owners say some of the financial problems are the result of poor decisions made by the elected boards that run condominium corporations and that often lack experience or are reluctant to displease neighbors.”
“Alyson Meiselman, board president of the Vistas at Washingtonian Woods, said previous leaders didn’t raise monthly fees for 20 years after the 152-unit development opened in 1992.”
“A 2012 engineering study estimated that $600,000 was needed to repair poor grading, tripping hazards, retaining walls and crumbling parking lots. Past boards had set aside only two-thirds of that amount. To try to bridge the gap, the current board has hiked fees 33 percent on average, to between $325 and $600 a month.”
Mr. Turque tells about another Condo Association in Maryland that kept on raising the fees without putting aside money for repairs. Eventually the residents told him the money just disappeared. “The 43-year-old building has been without a working elevator for at least eight months. Segments of the outside walkways are off-limits because of rusting supports. A roofing contractor who was paid tens of thousands of dollars went out of business before finishing the repair.
The board has increased monthly fees to finance the elevator repair, which residents hope will begin soon.” For those of us that have followed the endless repairs to our Club House ( roof repairs, air conditioning, floods, indoor and outdoor pools etc ) and the Hastings fitness center the installation and repairs and now replacing much of the lift and the costs to our residents with no end in sight is very disheartening and discouraging to say the least.
Towards the end of his article, Turque outlines the problems that people are having with getting loans to buy Condos. He observes: The torrent of defaults that accompanied the housing bust led the FHA to tighten its guidelines for issuing loan insurance. Those changes, too, have affected the financial health of condo communities.
“Before 2008, the FHA approved prospective condo buyers based on their individual financial stability. The new rules required that an entire community meet a minimum level of solvency.”
“The agency will not provide loans for condo communities if at least 15 percent of current owners are 60 days or more behind on their monthly fees. The FHA also requires that a community’s cash reserves be equal to at least 10 percent of its annual budget.” Housing advocates and condo board members say lenders also hurt condo complexes by failing to quickly process foreclosures and offer units for resale. Such “zombie foreclosures” are especially prevalent in cases where the value of the property is less than the balance on the loan, critics say.”
“Some of these units have dropped more than 50 percent in value, so [banks] sit on them and hope that the markets come back,” said Jackie Simon, a Montgomery County real estate agent and housing activist.” Every day we hear about unit owners walking away from their investment because they cannot afford to deal with the fees. In addition we are constantly being told about the cut throat manipulations that are engineered by some of our residents when they acquire multiple units and then use their ownership strength to drive the weak out of their units or at the very least control the Associations they live in.
Are there solutions to these problems? “In January, the Montgomery County Council approved a measure requiring members of condo boards to complete an online course detailing financial and administrative responsibilities.” “Some experts say better oversight and tighter restrictions are not enough, predicting that some complexes could deteriorate to the point where government agencies will have to intervene.” With significant changes to the way we do things here in the Village, our land of “milk and honey,” could suffer irreparable fiscal decay.
I recently posted on the blogs a comprehensive plan that outlines Condo ownership responsibility along with some very constructive guidelines on how to deal with some of the critical issues that I have addressed in this column. Remember we are only “as strong as our weakest link.” To paraphrase this idea, we are only as strong as the leadership we elect. The quality and strength of our community is limited by the weakest links in UCO/WPRF and the limitations of Condo Associations Board of Directors. Our journey to solvency cannot be made with weak links. We must build our chain by strengthening team members and developing teamwork. This includes those who run UCO and the individual Condo Associations.
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