DeSantis touts condo bill that would allow delays of required inspections and reserve funding

By Ron Hurtibise South Florida Sun Sentinel

Gov. Ron DeSantis on Thursday urged the state Senate to move forward on a condo reform bill that would extend deadlines for completing reserve studies and funding repairs identified by the studies.

After praising the Senate version of the bill, DeSantis then criticized its House companion as “something that favors developers.”

DeSantis last fall urged legislative leaders to find ways to allow hard-hit elderly residents to stay in their condominiums. But leaders balked at crafting bills during a special session in January, saying there would be plenty of time to discuss condo issues during the spring session.

Now the spring session is winding to an end and the Senate bill that DeSantis promoted on Thursday has been approved only by the Senate’s Regulated Industries committee. It is next scheduled to be considered by the Appropriations Committee on Agriculture, Environment, and General Government.

The bill, sponsored by Sen. Jennifer Bradley, a North Florida Republican, would extend the deadline for condominium boards to complete required Structural Integrity Reserve Studies (SIRS) from Dec. 31, 2024, to Dec. 31, 2025.

It also would enable boards to reduce or pause reserve contributions, if a majority of owners approve, for no more than “two consecutive annual budgets” following a milestone inspection “in order to fund needed repairs recommended by the milestone inspection.”

Milestone inspections identify structural repairs needed immediately while Strategic Integrity Reserve Studies assess the overall condition of a building to determine how much money must be set aside for future repairs.

Current law requires reserves to be “fully funded” in the first budget after a SIRS report is submitted. Payments to the reserve fund can be spread across 10 years as long as repairs are funded according to the study’s timetable.

Milestone inspections and SIRS studies are both required for condo buildings more than three stories high that are at least 30 years old or 25 years old if within three miles of the coastline.

After the 2021 collapse of the 12-story Champlain Towers South condominium in Surfside that killed 98 people, the Legislature prohibited condo boards from waiving reserves and instead directed reserves to be fully funded by 2026.

DeSantis said the deadline extensions are necessary to help condo owners, particularly elderly owners on fixed incomes in South Florida, stay in their homes. Many likely own their units free and clear and, after coping with high inflation in recent years, are told, “‘Oh, by the way, pony up a hundred thousand dollars for an assessment,’” DeSantis said. “Where are they going to get that money?”

Months of town hall meetings in South Florida led to the conclusion that “we need to address it,” he said. “We’ve got to provide relief for people. We do have a responsibility to do this.”

The bill would allow reserves to be funded by “alternative funding methods” or, if a majority of unit owners approves, a line of credit.

Travis Moore, a lobbyist with the interest group Community Associations Institute (CAI), said his group has been providing input on the bill and expects more progress by the time it is heard by its next committee, likely next week.

But Moore said that CAI does not want to see the SIRS deadline extended. The organization would rather see reserve funding spread out over 15 to 20 years while enabling condos to get loans to help finance immediate repairs identified by milestone inspections, he said.

Dawn Munera, owner of Essential Realty Solutions in Pembroke Pines, called the bill “a significant step forward in addressing the financial challenges faced by these condo associations.”

More than half of condo associations in South Florida failed to complete their reserve studies by the Dec. 31 deadline, according to a report issued in February by the Miami Association of Realtors. Munera said condos that haven’t completed their studies are deemed ineligible for conventional financing by mortgage lenders.

Unit owners who want to escape increases in assessments and maintenance fees are only finding offers from cash-only buyers at sharply depressed prices, she said.

Ken Reid, a condo owner in Boca Raton, said the condo proposals “don’t sound too bad” but would prefer that the bill exempt smaller condos under six stores with fewer than 150 units from the SIRS requirements altogether, cap reserve requirements to 10% of annual operating revenues, and allow a seven- to 10-year build-up period.

His association’s study is forcing condo owners to raise $1.5 million over five years, which raised monthly dues from $650 to $820. “It’s unbelievably burdensome,” Reid said.

He also objected to “complex requirements” for investing reserve funds. He would prefer that the state establish a fund managed by a “reputable licensed firm” and limit investments to low-risk securities, bonds and mutual funds.

The 134-page Senate bill favored by DeSantis proposes far more reforms than just the inspection and repair funding delays, however.

According to a legislative analysis of a version submitted by the Regulated Industries committee, the bill would:

Tighten state oversight of community association managers, including by requiring state regulators to alert firms and condo associations that employ managers when their licenses are suspended or revoked.

Require associations to maintain records of videoconference meetings, bank statements and ledgers, and all affidavits required by state law. Board meeting minutes would have to be available on associations’ websites for the preceding 12 months.

Require annual financial statements to be provided to all unit owners via mail, hand delivery or via the Internet.

Enable participation in association board meetings by videoconference.

Strengthen voting integrity laws to ensure secure elections.

Require county commissions to adopt ordinances requiring condo associations to commence repairs within 365 days after receiving a phase two milestone inspection report. A phase two inspection is a deeper probe that’s conducted if the phase one inspection determines it’s necessary.

Require condo associations to submit information to the state Division of Condominiums, Timeshares, and Mobile Homes that includes the number of units, ages of buildings, assessments and their purpose.

DeSantis, continuing his criticism of the House’s sponsorship of bills during the current session, asserted that the companion bill introduced by Rep. Vicki Lopez, a Miami-Dade County Republican, falls short of offering the same protections.

Among other shortcomings, DeSantis said the bill “allows condo boards to approve assessments and loans without voter approval.”

It “doesn’t include any reforms to increase accountability of condo association managers,” he said. “It creates a more costly and burdensome process for removing board members.

It actually weakens electronic voting system requirements, thereby inviting more opportunities for fraud.”

In addition, DeSantis said, the House bill “does not add increased transparency or comprehensive data evaluation regarding the milestone inspection reports, and it does not provide more flexibility for associations to phase funding (in) for certain components of the structural integrity reserve study, but rather allows a board to approve assessments and loans without owner approval.”

He added that “if associations can’t make improvements and the buildings are clearly obsolete, the value of the real estate they are built upon may outweigh the investment.”

The House’s condo bill, he said, “seems to be something that favors developers and puts the interests of developers over the interests of Florida residents. That is unacceptable.”

Lopez did not immediately respond to a text message seeking comment about DeSantis’ assertions.

For bills to become law, members of the House and Senate must compromise on their wording in a conference committee.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at rhurtibise@sunsentinel.com.