Building in Turmoil: With Several Safety Violations and No Money to Fix them, Tensions Rise Among Neighbors in Miami Beach Building
The Harding Hall condominium in Miami Beach’s North Beach community is more than three years overdue on its 50-year recertification process. Since April 2019 the City has issued violation notices related to the lack of progress on the recertification and, more recently, with regard to structural and electrical issues. This week, the Building Department ordered Harding Hall’s balconies sealed off.
A look at City notices, engineers’ reports, Association records, and individual emails paints a portrait of a building dynamic that is very similar to that within the Champlain Towers South which collapsed on June 24, leaving 97 dead.
To be clear, no one has said Harding Hall is in danger but what is emerging is another case of owner infighting, frequent board and management company turnover, nearly $3M in estimated repairs and, with zero reserves, the inability to finance them. Meanwhile, conditions in the building continue to deteriorate.
While this account is of one building, it is a scenario that is likely to play out in varying degrees with condo associations across South Florida.
Harding Hall, photo courtesy Epic Forensics & Engineering
Harding Hall which was built in 1967 is located at 8233 Harding Avenue, less than a half mile from Champlain Towers South just over the line in Surfside. It is a seven-story building with parking on the ground level, 51 residential units from the second through seventh floor, and an amenity deck with pool on the roof level.
Many residents are on fixed incomes, some lost jobs due to COVID. Unit values are modest. According to a Zillow search, five condos in the building sold within the past seven months ranging in price from $185,000 to $212,000.
Board President Lana Katz says she’s lived at Harding Hall for 38 years and, in that time, residents have always voted to completely waive reserves, funding operations and minor repairs out of the annual operating budget. When it came time for the 40-year recertification in 2006, her share of the special assessment was $42,000 which included installation of new windows. But soon after, the windows leaked. Despite a settlement agreement in 2008 with ROC Property Developers and Ready Window Sales and Service to fix the windows, the Association filed suit in 2018 claiming “Ready Window materially breached the Agreement by defectively installing the glass and glazing at the Condominium, which has resulted in leaks and damages to other property.”
The large special assessment and the leaky windows which still allow water intrusion that residents say leaves a mildew smell in some apartments was the beginning of a level of mistrust that colors discussions around the 50-year recertification, Katz and property manager Maryin Vargas say.
The 50-Year Recertification Process
According to annual and amended reports filed with Sunbiz, at the time the 50-year recertification was due in 2017, the Association began to experience significant board turnover and vacancies until no one wanted to run last year.
In 2017, the Association’s annual report lists five Board members. For the first six months of 2018, the Board was down to four members, three for the remaining six months of the year. Then in 2019, the Board went from five to seven members with all seats filled.
During the 2019 Board’s tenure, engineer Alfredo Carbonell was hired to begin the 50-year recertification process. His March 7 observations indicated the “building is structurally safe for its intended use and occupancy at time of inspection” but, he noted, due to spalling and rebar corrosion, “significant structural repairs” are required on the pool deck.
“The pool & pool deck shall be closed until all spalling and deficiencies are addressed.” (The pool was not drained until a year later.) The remaining “deficiencies” noted included “minor spalling concrete” in some areas of the building which “shall also be addressed accordingly” such as “some fine cracks” on staircase enclosures.
There was no rebar corrosion visible on masonry bearing walls and the roof was in fair condition at the time. Carbonell also characterized the window sealant as “poor in some apartments with water intrusion.” The report noted some electrical deficiencies including the need to improve illumination for the building’s egress and open or undercover parking areas to bring them up to minimum standards. While also flagging some junction boxes in the pump, pool, and laundry rooms, he certified the building “electrically safe for its use and occupancy after all deficiencies are addressed.”
While Carbonell’s assessment was completed in March, it was not yet filed with the City and, in April, Harding Hall received its first violation notice for being overdue on its 50-year recertification followed by a second notice in May.
In June, Carbonell filled out a checklist to start the process, but the City noted repairs needed to be made in order to receive certification, though the filing seemed to stop the successive months of violation notices – for a while. Without progress, the City issued a third violation on December 27, 2019 followed by a fourth on February 24, 2020 but, by that time, none of the seven-member board remained.
Mario Juarez bought his first unit in Harding Hall in December 2019. He bought an adjacent unit a year later. He says neither the Board president nor management company at the time of his 2019 purchase disclosed the overdue recertification or violations, even telling him “no major repairs were planned.”
Early in 2020, Juarez said only one owner submitted his name for the Board. That owner recruited two others including Juarez who served as treasurer for one year. Though new to the building, Juarez said that after having learned of the deferred work, he was “worried,” so he volunteered to help.
The new Board brought on Becker & Poliakoff in Feb 2020, the Association’s third law firm since 2018. The following month, Miami Powerhouse Management became the Association’s third management company in three years. In August, the Board appointed three new members, leaving five after one resignation.
Trying to get the 50-year recertification process moving, Juarez said the Board reached out to Carbonell who, he said, “wouldn’t take our calls” until the former Board president who hired him reached out. But after speaking with Carbonell and asking him to prepare a bid package, Juarez said the Board became frustrated when they were unable to get the documents they repeatedly requested.
The Board then hired Epic Forensics & Engineering to get the process back on track. Epic conducted two days of observations in September 2020, 19 months after Carbonell’s first assessment. In an October 30 report, Epic noted “general cracks in stucco, debonded stucco, and peeling paint,” but the pool deck area which Carbonell recommended be closed also raised concerns for Epic.
“From the maintenance office, the pool equipment room, and the interstitial space located at the 7th level, Epic observed structural related cracks and severe structural signs of distress at the underside of the slabs and the concrete walls supporting the swimming pool.” Referencing accompanying photos, the report details “cracks and spalled concrete, with exposed reinforcing bars that exhibit severe deterioration of the metal, observed in the walls and ceiling slab above the pool equipment room.”
Images courtesy Epic Forensics & Engineering
In addition, the report states, “Cracks were observed along the exterior slab, exterior masonry walls, and baluster railing system posts, cap, and intermediate members of several of the units inspected during Epic’s site evaluation. Water intrusion is also evident in some of the units… Areas of debonded stucco and concrete were also detected along the balcony slabs and masonry walls of several of the units inspected.”
Epic indicated that more than 25% of the roof area does not drain properly and it has “reached its design limit.” Like Carbonell, Epic’s engineer noted the inadequate lighting in the parking garage but, following inspections of each unit, also flagged issues with several individual electrical panels that need to be fixed.
In its conclusion, Epic said, “Given that the building is 50 years old or more, many structural components (concrete slabs, exterior masonry walls, concrete railing system, roof mounted equipment support and hurricane straps, and exterior stucco) are showing signs of distress and must be corrected. Failure to correct those deficiencies will lead to further damage and costlier repairs. Failure to correct those deficiencies will prevent securing a 40/50 year recertification as mandated by the COMB.” [Emphasis in report.]
Epic recommended the concrete and stucco work be completed before the roof to prevent damage from the concrete restoration.
The engineer’s estimate of the work came in at $2.95M pending contractor bids. Responding to a request from the Board to break the project into phases to make the costs more manageable, Epic suggested two or three phases with Phase 1 consisting of concrete restoration and repairs, balconies including replacing concrete rails with glass balustrades, window sealants, and electrical work totaling $1.775M and Phase 2 consisting of pool restoration and roof. Epic indicated the roof could be done as part of a third phase but noted the pool would need to remain closed until the roof was completed. The Phase 2 estimate totaled $1.178M.
In the meantime, a chunk of concrete from one of the balcony railings fell into the parking lot prompting a notice from Miami Powerhouse Management on November 12 that “we are warning all owners of use of the balcony. We are requesting that you do not use the balcony area until they are properly repaired… Any use of the balcony will be done at your own risk and the Association will not be liable for damages or injuries.” The letter also notes “the building has been long overdue for repairs” and that further information would be coming on plans to move forward with them.
A piece of this balcony railing fell onto the parking lot below. Photo posted by Harding Hall resident on social media.
On December 4, the Board approved an overall assessment of $2.95M based on the engineer’s estimates with Phase 1 collections ($1.775M) beginning in January. Individual assessments for Phase 1 ranged from $25,314 ($2,109 monthly) to $46,066 ($3,839 monthly). Juarez said the Board had tried to get a bank loan to ease the payments for owners over a longer period of time but was repeatedly denied because the Association had no reserves. The hope, he said, was that once 30% of the assessment was collected, the Association could secure bank financing.
The notice that went to owners of the special assessment budget to be approved detailed costs of roof replacement, concrete and stucco repairs, balcony balustrade related items, painting, electrical, window sealants, and pool repair but one line stuck out: Project Incidentals which usually means costs not directly attributable to the repair work such as permitting fees, performance bonds, site supervision, on-site infrastructure, etc. In this case the number was very high, $873,558 without further explanation.
Four bids came in ranging from $2.5M to $4.278M including the standard 20% contingency. There was wild fluctuation in the incidental line items, ranging from $117,000 to $505,783.
Helping association boards and their members understand bids and “leveling” them to ensure the items being compared are based on the same assumptions is what professional owners’ reps do. Adam Mopsick is co-founder and CEO of Amicon which offers general contracting, design build, inspection, and owners’ representation services.
Since the Surfside tragedy, Mopsick says many questions are being asked but “a lot of them are not getting to the heart” of the issue which is “Are condo boards capable of managing these types of projects?” Acknowledging his firm is in the business of selling these services, he added, “My answer is absolutely not.”
Even with the right people and the right skills, Mopsick said these are volunteer boards that are not dedicating one hundred percent of their time to managing multi-million dollar projects. Often, Board members have different, competing interests which “creates complications” whereas an independent third party “has no skin in the game other than to provide the best service,” he said. Without that kind of guidance, projects are likely to take longer and cost more, he added.
Having a professional working with an association and communicating with owners to help them understand the costs is critical, Mopsick says. Overall, he noted, “Typically hard costs are 60% of the entire assessment” with “soft costs, contingencies and all of the other costs it takes to manage a project” making up the rest. Contingencies protect the association when unexpected costs arise. In the case of concrete remediation there’s a lot you can’t see until work begins on the affected areas which is why there’s usually a 20-25% contingency built in.
In the case of the initial estimate from Epic, it is not clear if the Project Incidentals includes the critical contingency piece (or not). And it’s unclear what each bidder included in their bids. Without a professional reviewing them, the Harding Hall Association has no way of knowing if it’s comparing apples to apples and what the actual costs are.
Asked what the options are for a small building like Harding Hall to manage the process, Mopsick was candid. “I don’t know how you do it,” he said. “I’m not going to do surgery or fly a plane” without that expertise. Similarly, asking people without experience to manage a multi-million construction project, is “typically not going to go well,” he said.
Distrust Boils Over
Whether it was a lack of understanding, a lack of communication, or fear over the large number, anger and mistrust reached a high point in the community after the assessment was passed.
Galina Joutchenia sent a letter to the other owners in the building seeking support for a Board recall and a formal complaint to be filed with the Florida Department of Business and Professional Regulation (DBPR) which governs condo boards.
“All of these individuals are governing not in the best interest of unit owners, they work with low integrity, their competence is questionable, and there is a conflict of interest that is becoming PAINFULLY CLEAR. Right now, our Board of Directors, management company, I believe are attempting to SCAM all Unit Owners.”
Using what she calls the “overinflated assessment of almost 3,000,000$ (with almost 1,000,000$ of project incidentals, this is where I believe your money will likely be stolen from),” she objected to an assessment being based on the engineer’s estimates versus actual bids.
“Those who will not be able to pay will have to go into foreclosure,” she wrote. “The board refused to take a loan, to finance the repairs. Why? That makes me think that their intent is to lean [sic] and foreclose our apartments as soon as possible instead of fixing what is needed by law for the 50-year recertification at reasonable price!”
Joutchenia noted she would be seeking a spot on the Board.
Several owners objected to the process, saying the Association’s bylaws require a 75% vote of the membership to pass a special assessment.
The Board called a January 4 meeting with their attorney, Michael Góngora of Becker & Poliakoff in an attempt “to clarify for the owners that we were not doing anything illegal. We were following procedure, following the law,” Juarez said. Góngora, an expert in condo law, is also a sitting Miami Beach City Commissioner.
The meeting did little to allay fears. Complaints were filed with the DBPR, “none of which resulted in a violation,” Juarez said.
Tempers continued to flare in emails questioning the Board’s intentions with heightened fears of developers swooping in after residents who couldn’t pay their assessments would be forced into foreclosure – one email suspects “Russian billionaires” of being in the wings. Some of the emails took on a vicious tone with one owner calling another a “white supremacist” and another saying a resident exhibits “clear signs of mental instability.”
In the midst of the rancor, the Board tried to pass a 2021 budget that included full reserves ($107,000) to begin putting money away for future repairs and to help show banks the Association was creditworthy. Without reserves, monthly fees range from $128 to $232. With full reserves, the new range would be $430 to $782 per month but the proposal was voted down. “They were already in the mindset of us trying to steal and rob and scam and whatnot,” Juarez said. Without a loan, “we said we need to move forward” with the assessment and bids.
Nine unit owners including two who are now members of the Board of Directors hired an attorney to fight the assessment. In a letter on January 22, Alexis Gonzalez wrote the Association’s bylaws call for 3/4th vote of unit owners to approve a special assessment and asserted that “Unit Owners have already been in contact with various prospective commercial lenders who have confirmed that financing is, in fact, available to Harding Hall regardless of whether is has any reserves. Despite the vote for a two-phased assessment, Gonzalez said, “To add insult to injury, the Board has unilaterally adopted one massive special assessment in lieu of pursing the recertification work in multiple stages as is customary within other condominiums of like size and age so as to allow for imposition (and unit owner approval) of more ‘manageable’ special assessment amounts to pay for the work as it progresses.” [Emphasis in letter.]
Accordingly, Demand is hereby made to the Board that it (a) suspend all enforcement and payment deadlines imposed upon Harding Hall’s unit owners with respect to the Special Assessment, (b) file all necessary documentation with the City of Miami Beach by April 22, 2021 to request and obtain an extension of completion deadlines for the required 40-50 year recertification, (c) revise the scope of the 40-50 year recertification project to a more customary multiphase approach that will allow for smaller and more ‘manageable’ special assessment amounts to pay for the work as it progresses (d) conduct actual due diligence into and pursue financing alternatives for the costs of the 40-50 year recertification project and, (e) to the extent that such financing is truly not a viable option, present all unit owners a set of viable alternatives which the unit owners can choose[,] timely consider and vote upon after consultation with the City as to what is actually necessary under the 40-50 year recertifications. This demand is not meant to unreasonably delay compliance with the 40-50 year recertification, but solely to allow the process to be more conducive, comfortable, and humane for all owners of Harding Hall. [Emphasis in letter.]
On February 20, Juarez wrote in an email that included a number of owners, “Regarding the high amount of the monthly payments for the special assessment, I agree that is excessively high, we didn’t wanted [sic] this and that’s why we have recordings available of the meetings where we explained that we needed a reserve in the budget for 2020 so we could be eligible for a loan and avoid high monthly fees for the assessment, but what happened? Door to door campaigns and collecting signatures to waive the reserves again sharing lies that we wanted to steal the money and what not, conspiracy theories… now we face the consequences.”
“We are now 3 years late and there was no pandemic in 2018 and 2019 so what was the excuse back then?” he asked.
Four Bidders, Two Recalls
As noted previously, four bidders responded to the bid package prepared by Epic, three recommended by Epic and one suggested by Harding Hall’s property management firm at the time, Miami Powerhouse Management.
At the end of January, the Board met to review the bids which ranged from $2.5M to $4.278M including the standard 20% contingency. When the bidder recommended by Miami Powerhouse Management – PG Restoration – was the lowest, residents accused the management firm and Board of being “in cahoots.”
The community mounted the first recall vote shortly after the January meeting with Góngora. Despite it succeeding, Juarez said, at a meeting on February 15th, “following the recommendation of our legal counsel, the recall was not accepted given that the forms used to gather signatures were prefilled and that invalidates them.”
On March 12, the Board voted on a modified assessment – reducing Phase 1 from $1.775M to $788,756 based on further negotiations with PG Restoration and elimination of the glass balustrades for the balconies. There is no contingency spelled out in the budget to cover unexpected remediation.
Under the modified assessment, individual shares ranged from $11,248 or $937 monthly to $20,468 or $1,706 per month, a more than 50% reduction from the engineer’s estimates and the original assessment.
That was too much for Epic which said it could not support the reduced bid. Rene Portieles, CEO of Epic Forensics & Engineering, told RE:MiamiBeach, “PG Restoration sat with the Board and bid a bid based on our recommended repairs” which was “around to the tune of $3M to get that building in order.”
“They sat with the board without us,” he said, “and whittled down the bid to $800,000.” Whether to reduce the costs or push them off, “regardless, Epic did not agree with that. [We said] ‘No, I’m sorry you can’t whittle this down to that low. You can’t do that. We don’t agree with that at all.”
Meanwhile, opponents mounted a second recall attempt which also succeeded. This time, when the Board met to discuss the vote on March 18, “following the recommendation of our legal counsel and the fact recall petitions are not valid within 60 days of an election, the recall was not accepted,” Juarez said.
That meeting ended up being the last for the 2020 Board. “By that time, the members of the Board, we were just disappointed the repairs were not going to happen. We knew these people had the support of the majority of the building and we decided not to run,” Juarez said.
On April 12 a new Board was installed. Because there were seven slots with only five applicants, an election was not needed.
On April 27, the Board met to suspend the special assessment and, in May, to refund the money collected to date minus project incidentals such as engineering fees.
By that time more than $150,000 had been collected, money Juarez was hoping would help persuade a bank to give the Association a loan so they could start the work, something they could not do without a 20% down payment to the contractor.
Following the cancellation of the assessment, two Board members resigned, leaving three to carry on with the 50-year recertification.
The Association’s property manager, Betsy Morales, and company, Miami Powerhouse Management, also resigned. Morales said the work environment was untenable.
“As you can imagine, a few owners were not happy to have to pay a special assessment, despite the urgent need to repair the building,” Morales wrote in an email. “Before their tenancy, two of the current board members, harassed and attacked me through emails and on social media. I was accused of forcing a special assessment that they felt was not needed. They threatened to sue me and belittled me at all opportunities. Before the Annual Meeting took place, the current Board members advised that they would be cancelling said special assessment and refunding all the monies collected. These funds were to be used to start construction and/or qualify for a bank loan. These actions went against the best interest of the community and in my opinion jeopardized the safety of the residents. At that point I advised the board of my resignation.”
Unsafe Structures Violation
On May 10, 2021, shortly after the Board and management turnover, the City issued a building violation under the Unsafe Structures section of the City Code citing unpermitted work, a “roof system that is bucking in different areas, stucco cracks at pool, evidence of spalling concrete exposing rebars through out building and balconies” among other issues noted.
In an email to the community a week later, the new Board said it had re-hired its previous engineer, Alfredo Carbonell, “to do a walk-thru of the noticed areas… and appeal/remedy the notice of violation with the City of Miami Beach. Additionally, Carbonell and Associates will also do an assessment walk for our 50-year recertification, as they did previously.” The email also indicated the Board was “in process” of making inquiries regarding bank loans.
Champlain Towers South in Surfside following partial collapse. Photo: Felix Mizioznikov / Shutterstock.com
Surfside Collapse Generates Intense Reviews
On June 24, the Champlain Towers South building partially collapsed. Reports indicated the building which was going through its 40-year recertification process was mired in “toxic” arguments over repairs and costs.
Four days after the collapse, Harding Hall’s new Board brought a contractor to the table who had been referred by one of Galina Joutchenia’s clients. Joutchenia, now Vice President of the Board, was attempting to find a way for the Association to bite off smaller pieces of the pie to make the repairs more affordable. The contractor, Jorge Gutman of FOF Investments, believed he could do a first phase of work on the exterior for $291,023.
At the meeting which was recorded on zoom, Gutman said, “What I recommend is the very first thing, which is the most critical, would be the concrete restoration work anyway. Get that corrected and repaint the entire building which will waterproof it and prevent any further structural damage to the building. Once the City sees there’s a general contractor involved and work is getting done correctly, inspected by your engineer, the City’s going to back off on the violations and give you the freedom to do everything the right way within a timeframe that’s reasonable.”
His comment generated loud yelling by members of the audience who accused him of doing nothing more than a patch and paint job. Gutman replied that was not the case, saying his bid included concrete restoration work as noted in the Epic report, “breaking open the cracked area” and requiring inspection by the Association’s engineer.
Upon further questioning from the audience, Gutman said his estimate did not include balconies but he would go back and price them. It also does not include contingencies. Any additional work needed will cost more. His estimate also leaves the permitting and engineering costs to the Association.
One owner said, “We need to know the real costs,” which Gutman promised he would follow up on.
“One thing I would like to recommend to everyone,” Gutman emphasized, “whomever you choose to do your repairs, whether it’s my company or anyone else, I would suggest you start quickly with engaging somebody and letting somebody start the permitting process” while waiting to get financing in place. That way, he said, “the repairs start immediately. That’s my recommendation to you guys.”
Seeking to allay fears which he said were understandable in light of the recent tragedy, he said, “I’m not a structural engineer. I don’t see anything that would scare me or immediately collapse but the building needs to be fixed… These open cracks allow water to get in and water continues to work up against the structure. I’ve seen it get progressively worse. It needs to be repaired.”
“Safety, that’s number one… I just want you to know, only for a few weeks I’ve been involved in this building and the Board has been talking to me non-stop about safety so they hear what you’re saying and they believe it because they’re telling me the same thing,” he said.
The following day, the City of Miami Beach begins visual inspections of the 507 buildings in their 40 and 50-year recertification processes. The buildings were given 21 days to provide professional reports “signed and sealed by a Florida licensed design professional” detailing conditions of the structural and electrical systems.
On July 1, Maryin Vargas and CHOAC Property Management take over as the Association’s fourth property manager in as many years.
The next day, Harding Hall was on a list of nine buildings flagged by the City as being of concern. Harding Hall was still pending submission of its conditions report.
Four days later on July 6, the City posts notice that Harding Hall has 48 hours to submit the report outlining the conditions of the structure and if it is safe for occupancy. It is unclear what was filed and by whom. A City spokeswoman says the documents are “under review” and they have not been provided yet under a public records from RE:MiamiBeach.
Epic filed its October report with the City in January of this year, but Portieles said that the Association chose not to continue with his firm so they have done no further work.
Despite the notices and violations piling up, Vargas, sent a note to Harding Hall owners on July 7 thanking them for their patience “as we make major leaps of progress in the 50 Year Certification Process. The board since we were retained July 1st made it our priority to focus on the 50 Year Certification. We are working with the engineer and general contractor and in communication with the City of Miami Beach to open the permit.”
“Time has been well invested in negotiations regarding the financial aspect of this project with engineers and contractors. We understand the concern of the community in terms of balancing the urgent need to start the project with the financial burden that the cost of this project will impose on unit owners. We know that the valuable cost savings we have negotiated will be a breath of fresh air to all members.” She promises further updates soon.
Two days later, Vargas touted the progress. “The cost savings that we have negotiated over the last week are in the millions of dollars. The structure of the building according to two different engineers is sound and we are in contact with officials at the City of Miami Beach from different departments to make sure that the message is coherent across the Board.” She does not indicate what the savings are or how they were obtained.
On July 12, the City orders all balconies at Harding Hall “sealed within 48 hours” and warns the Association it has 30 days to “submit for electrical repairs.”
City of Miami Beach notice to close balconies. Image posted by Harding Hall resident on social media.
City Spokeswoman Melissa Berthier said a building inspector observed “railings were cracked in several places and the reinforcement was exposed. Balcony slabs and exterior walls have areas of delaminated stucco” leading to the balcony closure order.
The next day, a permit application was filed for concrete restoration at Harding Hall. The valuation of the work is listed as $291,023 which matches FOF Investments’ initial estimates, though the City’s portal does not list a contractor and a public records request for that information is still pending.
The next day, after having suspended the initial special assessment and refunding the first payments, the new Board meets to discuss a new assessment of up to $1.8M to fund the concrete repairs and an emergency $15,000 assessment (about $500 per unit) to complete the electrical repairs to meet the City’s deadline.
In an interview with RE:MiamiBeach, Property Manager Maryin Vargas said the Board is now working with two bidders who are following Epic’s scope of work for the items “required to get the 50-year” certification including concrete restoration and the glass balustrades for the balcony. Any work not required for the certification will be pushed off into later phases with timing to be determined. At this point, there isn’t enough information to compare the up to $1.8M new Phase 1 assessment to the $1.775M Phase 1 assessment passed in December by the previous Board and rescinded by the current Board. The new assessment is expected to be voted on next week followed by a full membership vote fourteen days later.
Despite objections to the first assessment, Vargas said following the Surfside collapse and with the City’s pressure to get it done, “the threat of being vacated, I think it’s making owners realize you have to pay. We have to get this done.”
The fluctuating numbers at Harding Hall resulting from the push to lower or spread out costs is “one of the biggest mistakes” Boards make according to Amicon’s Adam Mopsick. You have to have the appropriate contingencies to manage a project to budget, otherwise you’re missetting expectations.
“We see that all the time. It’s a very common problem,” he said. Without professionals to review and advise on bids and contracts, Associations “assess too low, negotiate bad contracts, and have to assess over and over again. There’s nothing more frustrating to a resident.” They often are left feeling that their funds are mismanaged, Mopsick said.
Frustrated with the cancellation of the assessment and refunding of the money paid to date, Juarez lashed out in email exchanges with other residents. To those seeking leniency from the City, he wrote, “Safety has become their top priority (as it should be, it only took a tragedy), people being forced to sell because they cannot afford the recertification is not going to be a valid excuse for the City anymore, certainly not after 3 years being late.”
Despite one plea for unity after the Surfside tragedy, both sides continued to point fingers over who was at fault for the building’s predicament. Vargas said the new Board hasn’t even had time to make progress, yet is getting blamed. The process, she said, was delayed when the previous Board chose PG Restoration and negotiated the scope of work down to a point that Epic was not comfortable with.
While things plod along on the 50-year recertification, residents report AC and hot water outages. One side faults the current Board for limping along, paying high repair costs rather than incurring a larger replacement expense to solve the problem. Katz, the Board president, blames sabotage. “As soon as we became a Board, the AC broke. Sabotage of somebody? I don’t know,” she said.
“We’re trying to fix [things], it’s only three months on,” Katz said. “Some people just sabotage us, let’s say. They’re calling every day, calling the City, complaining about everything, noise. It’s impossible. We volunteer our time and we’re working 24/7.”
“The new Boards get blamed or there’s no mercy or no consideration for the new people that are inheriting these messes,” Vargas interjected.
Some of the calls to the City, Katz said, resulted in violations being issued. Vargas blames a small group for instigating problems, people that she claims don’t want the Association to be successful.
In mid-July, Alexis Gonzalez who previously represented the individual unit owners in fighting the assessment and was now the Association’s attorney, sent a cease and desist letter to one resident demanding they “stop levying any further harassing and threatening communications towards Board of Directors and Property Management Personnel” and “cease and desist from any further defamatory actions and remarks against the Directors and Property Management Personnel.” The letter alleged, the owner’s “actions are interfering with Harding Hall’s management and the Board’s efforts to maintain Harding Hall and advance its efforts through the 50 Year Certification process.” Though there are numerous emails between a number of owners with what could be considered defamatory and harassing language, only one cease and desist letter was sent.
The tensions are on full display in communications with City officials. In one, Juarez, who was not the recipient of the cease and desist letter, wrote, “I’m not going to deny it, someone [sic] owners like me have lost it and have said things that should not be, specially after realizing that the tragedy is not going to change the current board’s plan of finding a way to extend the repairs long enough to fit their budgets, while putting the residents safety at risk.”
Vargas wrote, “The infighting has to stop, everybody should be rooting for Harding Hall to be successful and for them to be able to get 50 year recertification.”
The Bottom Line
Financing the assessment is still a question mark.
The Association has some cleaning up of its balance sheet to do. Vargas claims, “We found a lot of mismanagement from the previous [management] company. We don’t know if it was an oversight.” The only example she could provide was an uncollected $54,000 from companies with equipment on the roof including AT&T and Verizon. Vargas said those funds have now been paid and are in the Association’s bank account.
Collections on monthly assessments fell behind when some owners expressed concern about the lack of a management company for two months saying they didn’t want the funds co-mingled into a general bank account not knowing if the fees would be assigned to the appropriate operational account or if their individual accounts would be credited appropriately. With a new management company on board, that issue should be resolved.
Board president Lana Katz says she has spoken with one bank that indicated it would make a loan to the Association of $1.5M after the new assessment is passed but the formal financing process has not yet begun.
While Vargas said some owners have indicated a willingness to pay a portion or all of the assessment up front allowing work to get started, some owners are looking for help from the City or from State and Federal government entities that they hope might step forward in the wake of the Surfside tragedy.
Vargas who previously worked as a banker changed career course after an unsuccessful run for a County Commission seat. Getting into property management, she said, allows her to help people more. At the June 28 Board meeting where she was introduced, Vargas emphasized to owners that the most important focus is on making the building safe and that “anything I can do with my connections with the County, with the City of Miami Beach to ask them to help us… that’s what I’m here for.”
One owner implored her to explain that most of the owners in the building are people on fixed incomes. He also suggested that any “Federal and State funds that are being made available, we need to ask for and we your help in asking.”
“I’ve been thinking about regulatory things,” since Surfside, Vargas responded, “and not having the funds shouldn’t be an impediment or not qualifying to get a loan shouldn’t be an impediment to making sure that your building is safe, and the government should definitely step in because it’s matters of life and death.”
One idea she said is to ask “what the government can do to help condominiums finance these situations.”
If bank financing cannot be obtained to cover Harding Hall’s repairs, she said, “People may have to take out a line of credit or borrow money from family” though one owner reported not being able to get a line of credit for the December assessment citing the pending window litigation which Vargas said she hopes to have resolved within 30 days.
“We’re between a rock and a hard place,” she said.
“Somehow,” Vargas said, “We have to find a way to plan for the future. The right thing to do would be to start budgeting reserves” and create a two-year plan. “That was why [the community] felt they needed to get rid of this past board… Everything was always going to be reactive, not taking time to plan. It was very reactive and very short-term,” she claimed.
When it was pointed out that the previous board proposed reserves but was voted down, Vargas insisted, “There was a lot of suspicion… People don’t want to pay for reserves if they think ‘Oh, they’re going to steal the reserves.’”
“There needs to be some type of confidence in the management company and Board,” she said. “If people don’t trust… [they’ll say] ‘You’re passing a special assessment, now you want reserves.’”
Back to the current funding issue, Vargas said, “It’s sad. Not only is it a tragedy [what happened in Surfside], all these condominiums in this predicament. These people are living in fear of being vacated.”
Galina Joutchenia said, “Due to what happened, everyone is understanding how important it is to get together and finish the project.” She remains focused on breaking the larger project into smaller ones and only doing what is required.
“The former Board didn’t realize a lot of items [in the bid package] are cosmetic [and] not required” such as “changing tiles on balcony, for example,” though often tiles have to be removed to get at damaged concrete below.
While she understands “why the City is taking the position they are,” Joutchenia said, “I wish we could have more time, definitely, because I think the timeframe the City puts [on the work] is very critical and we would like to have more help from the City.”
“The timeframe is critical for us,” she reiterated. “It is very stressful… I do understand the City but if there’s any help with the Association… if the City has some offers to help us get it faster and, of course in the critical time… We have to do it. We have to do it quick… but if we could get some break,” she said, her voice trailing off.
Vargas added, “The City can’t just turn a blind eye… they’re terrorizing these people, hanging it over their heads that they’re going to get vacated,” if they don’t do the work.
It is important to note that the City has not issued any evacuation orders for the building though it has set a deadline of 30 days for electrical repairs and has scheduled another Unsafe Structures inspection for September 30, all for a building that is more than three years overdue on its 50-year recertification.
Since 2018, Harding Hall has paid a total of $5,000 in fees toward the 50-year recertification, an initial application fee followed by four six-month extensions at $600 each.
City Spokeswoman Melissa Berthier said, in the past, the City granted extensions due to requests for more time from an engineer, due to the timing of the permit application process, and, most recently COVID.
The Surfside collapse, however, put the buildings going through the process and, especially those that are behind, in the spotlight. The June 29 letters to the 507 buildings in the 40/50-year process indicates “During the COVID-19 pandemic extensions were allowed due to the Governor’s state of emergency, thanks to the amazing vaccination efforts this is no longer an impediment towards the recertification of the above referenced multifamily and/or commercial building” and states the Association needs to “recertify your building expeditiously.”
The clock is ticking on the immediate requirement to make the electrical repairs by August 12 and the Unsafe Structures inspection scheduled for September 30.
Meanwhile, Vargas said the Association will continue to try to obtain bank financing “but, if not, then we have to get that money in a period of time that is going to be whatever the City of Miami Beach is going to give us.”
The issues, she said, are not so bad that people can’t live at Harding Hall. “It’s things we just need to fix because of the weathering… normal deterioration and the water intrusion that caused things to deteriorate faster.”
Rene Portieles of Epic Engineering, however, said based on what Epic’s engineer observed with the balconies and the piece of the balcony that fell onto the ground below, “They have to fix this. This is a safety violation. As of today, we have no idea where the Board is with that” and, he added, “A lot has happened from September” when they did their observations “until this year.”
Balcony conditions posted by Harding Hall resident on social media
Asked about the “severe structural signs of distress” under the swimming pool, Portieles said, “Just like the balconies” even if it’s just a crack, “what we saw last year, if that hasn’t been addressed, it’s definitely getting worse… there’s a significant amount of time later.”
“Every single line item in the report is now seven months older which means there’s seven months of additional deterioration that may occurring,” he said. The terms “severe distress” and “severe deterioration,” he explained, “means it should be a priority and should be repaired… That needs to be on the front line of the repair.”
Amicon’s Adam Mopsick said the costs of those repairs are going up. “The market was going up before Surfside. Now what we’re seeing is, obviously, not enough professionals in the market to do all the work that needs to get done.” As a result, he said, “These budgets are going to go up and these projects are going to take a little bit longer.”
With less units to distribute the costs of the assessments, some buildings “are not going to be able to afford what’s required” and with the likelihood of additional requirements, Mopsick said, “I can imagine situations where people are going to be forced to sell because they’re not going to be able to afford the assessments.”
At the same time, “Reports are becoming more thorough, engineers are being more careful. We’re going to see costs go up,” Mopsick predicted. “It’s a complicated time… There will be a long-term effect on the condo and real estate market in South Florida.”
Harding Hall, between a rock and a hard place, indeed.
Oceanfront Miami Beach condo ordered evacuated following bulk buyout deal, from The Real Deal
North Beach apartment building deemed unsafe, ordered evacuated, from The Real Deal
Safe or unsafe? Residents worry at Miami Beach condo facing unsafe structure violation, from Miami Herald
Photo at top courtesy Epic Forensics & Engineering