Sunrise Mayor Mike Ryan thinks Gov. Ron DeSantis and lawmakers should go back to work soon to address reforms for condo associations.
Ryan calls the looming deadline for reforms "priority one." He's explicit in what he worries the rules could lead to if they aren't changed.
"Our economy is facing a catastrophe or a calamity if we don't take action now," he told WLRN in an interview Tuesday.
After the collapse of the Champlain Towers South Tower in Surfside in the early morning hours of June 24, 2021, Florida lawmakers passed a series of laws aimed to shore up the governance of condominium associations, require older buildings to be inspected and mandate owners to have money set aside for necessary and important repairs.
The deadline is Dec. 31 for two of the most significant reforms: a milestone structural inspection for all buildings over three stories and at least 30 years old, and associations must have money set aside for structural repairs and maintenance.
The result is many associations are hitting owners with two price hikes: monthly fees are going up and units are slapped with a special assessment.
Research by real estate firm Redfin found monthly association fees were climbing across Florida, including up almost 6% in Miami, almost 13% in West Palm Beach and up more than 16% in Fort Lauderdale compared to a year ago.
These monthly fees may not capture any special fees assessed by associations to make up for years of low charges and deferred repairs.
DeSantis heard from association board members and a South Florida condo owner Monday in Miami Lakes during a roundtable discussion of the condo crisis. He said lawmakers should take action before the next regular legislative session which starts in March.
“We do need to do something this year,” DeSantis said. “I don't think this is something that you can just put off until next March or April.”
The governor stopped short of taking the official step of calling lawmakers back to Tallahassee for a special session.
Outgoing Senate Pres. Kathleen Passidomo in August rejected calls for a special session. "The legislative process best serves Floridians when there is analysis, collaboration, and input from all stakeholders," she wrote in a letter to senators.
Ryan said he doesn't know what "Tallahassee is missing" but expressed support to find solutions. "Doing nothing is simply not an option," he said.
On the edge of the Everglades
Despite its name, Sunrise is miles from a place where it would have unobstructed views of the first rays of sunshine over the Atlantic Ocean each morning. It has about 100,000 residents stretched along its diagonal borders with Weston, Tamarac, Plantation and the Everglades. It is probably best known as the home of the Amerant Bank Arena, where the Florida Panthers won the NHL championship in June. Sawgrass Mills shopping mall is a major economic draw.
It is a suburban community not known for condo high rises. Yet, housing data reflects the growing concerns of trouble brewing with older condos due to the reforms.
READ MORE: Why condo values, sales are dropping in South Florida
According to Realtor.com, the median price of a home sold in Sunrise, which includes both single family homes and condos, was $230,000 in July. That is down 30% from a year earlier.
"All of this is interlocking when we start losing condo sales and our seniors can't save their homes or they're being sold at a loss or they just stop paying their maintenance fee. Then you start to have this cascade downward where associations get in worse trouble," Ryan said. "None of us are beyond the reach of what's coming."
The pace of condo sales has been slowing. More condos are up for sale and they've been taking longer to find buyers. A year ago a Broward County condo owner could expect to wait about two months to sell their property. In July, that had grown to almost three months, according to data from the Miami Association of Realtors.
Prices are coming down, but slowly. The median price of a condo in Broward hit $290,000 in February. By July, it had fallen to $272,500.
Perhaps a better gauge of the price pressure sellers are feeling is the gap between asking prices and selling prices. That gap has widened. Sellers are taking about 94 cents of every dollar in their original listing price. They were getting almost 97 cents on the dollar last July. It signals buyers are more willing to negotiate as more condos hit the market. Listings have jumped more than 20% year-to-date through July.
Reform the reforms
Ryan said lawmakers should consider giving condo associations more time to come into compliance with the reforms, especially the financial requirements. "They need to maybe spread this out and ramp it up at a slower trajectory," he said.
He also thinks lawmakers can rework the law to make it more reflective of the complexities of the condo market, specifically revisiting the three-story requirement.
READ MORE: Old condos crowd the market for sellers in South Florida as post-Surfside reforms loom
"There needs to be a more precise way of handling this rather than the large net that was cast from the seagrass to the sawgrass capturing every one of these buildings," he said.
“Let's just be nimble with this. Let's listen to people,” DeSantis said on Monday. “Let's make sure they're able to stay in their home.” The governor suggested low cost loans could help condo owners facing hefty charges.
Sunrise has not offered financial assistance to condo residents facing financial challenges from higher fees and assessments. Ryan said the problem is too big for any one city.
South Florida communities have enjoyed rising property values for many years. Those higher values have helped fund local governments without having to resort to property tax increases.
The taxable value of all properties in Sunrise rose 8.1% last year, according to data from the Broward County Property Appraiser's Office. That was on top of an 8% increase the year before. A drop in sales prices may eventually threaten municipal budgets.
As Ryan waits to see if Florida lawmakers will return for a special session or not, he warned against complacency in local government. "I've already begun those discussions with staff saying we really need to start tightening our belts now because I am deeply concerned," he said. "I've talked to my colleague mayors around the county. We're preparing for what is, we feel, a potential Category 5 economic storm."
