May 20, 2024
Out with the Old

Photo: Nick Garcia

Developer Edgardo Defortuna is among those who attempt complex bulk buyouts of old condos to score prime sites for future towers, such as this site where he will build the future The St. Regis Residences.

Condos

Out with the Old

Robyn A. Friedman | 10/12/2023

Coming in 2027: The St. Regis Residences, Sunny Isles Beach, Miami, a two-tower luxury condominium on Collins Avenue. Under development by Fortune International Group and Chateau Group, the project will rise just 5.4 miles from the Surfside site where Champlain Towers collapsed.

With prices starting at $5.1 million, the St. Regis is situated on 4.7 acres, with 435 linear feet of ocean frontage — a prime location in a market where buildable land is scarce. It will be constructed on land previously occupied by La Playa de Varadero, a condominium built in 1954. The developers were able to acquire the site in 2014 by reaching agreements with the owners of all 347 units to buy them out at a total cost of $112.5 million. They then terminated the condominium and demolished the building.

“When a buyer says they will pay you one and a half or two times what your unit is worth because they want to knock it down and build a newer building, it’s in many cases very appealing,” says Edgardo Defortuna, president and chief executive officer of Fortune International Group in Miami.

Of course, not all owners want to move. Many residents of aging condos are older adults who don’t want to be uprooted, and that may present a challenge to a developer seeking a 100% buy-in by the unit owners.

“There are a lot more variables in the equation for some people,” Defortuna says. “Also, greed becomes a huge obstacle. You have to dedicate money and legal fees to all these obstacles. So, it has a lot of potential, but it’s not as easy as it sounds.”

Designed by Arquitectonica, with interiors by Sao Paulo, Brazil-based Patricia Anastassiadis, the units at the St. Regis Residences will have two to five bedrooms and range from 2,000 to over 10,000 square feet. Residences will have private elevators, Molteni&C | Dada kitchens, top-of-the-line appliances, including a wine cooler, and unobstructed ocean, city or Intracoastal views.

Relief for Miami-Dade Condo Owners

Miami-Dade County condo owners making less than 140% of the area median income can apply for assistance to pay for special assessments for rehabilitation or repairs due to applicable building integrity recertification requirements. That means that an individual condo owner earning less than $95,620 is eligible.

The county’s Condominium Special Assessment Program is limited to those who reside in the unit as their primary residence. Approved applicants can receive up to $50,000 as an interest-free loan payable over 40 years.

The program’s initial pilot phase was funded with $9 million. As of mid-August, $5.5 million is committed to 350 applications, according to the Office of Miami-Dade County Mayor Daniella Levine Cava. The mayor plans to seek additional funds to continue and expand the program.

“After the tragedy in Surfside, assuring building safety has become more important than ever,” said Levine Cava in a written statement provided to FLORIDA TREND. “Miami-Dade County already had one of the strongest building codes in the country, which included a 40-year recertification process. We launched the Condominium Special Assessment Program last year to support condo owners who cannot afford the special assessments required for life-safety repairs identified in the recertification process. Unfortunately, the prior lack of oversight of condo and homeowners’ associations has led to an increase of properties facing unsafe conditions and/or fraud accusations, which in turn led to very high assessments that many property owners can’t afford. The Condominium Special Assessment Program plays an important role in tackling the housing affordability crisis, as many condo owners and homeowners are forced to move out of their properties or lose them because they can’t afford the increasing maintenance costs that sometimes come after special assessments.”

Healthy History

Panama City engineer Michael Weber can tell when a building has been well maintained by what he doesn’t see. He doesn’t see “spalls,” or chunks of concrete that have broken off a building after years of expanding during hot months and contracting in cold.

Weber, owner of MK Weber Structural Engineering, has done a half-dozen milestone inspections in the past year. Most buildings have been well maintained, he says, minimizing the assessments unit owners will face to repair any deficiencies brought on by age and the elements.

Many of the area’s waterfront condos are used for vacation rentals, and that helped make owners more willing to pay for inspections and maintenance over the years. Condos with mostly permanent residents tend to have older populations, less able or interested in spending their limited incomes on assessments to stave off structural defects they usually can’t see.

“They’re looking at it as saying ‘If this building can last another 10 years, I’ll be gone by then,’” Weber says. State law now eliminates that kind of gamble.

— By Michael Fechter

Remaining Gaps

Legislators amended the Building Safety Act last spring to grant local enforcement agencies the discretionary authority to give condo associations more time to complete their initial milestone inspection. But some of those changes could have dangerous unintended consequences, says Jordan Isrow, an attorney with the Government Law Group in Fort Lauderdale.

One change lets local authorities extend the milestone inspection deadline “upon a showing of good cause by the owner or owners of the building” that it can’t be completed in a timely manner. But good cause is undefined, and there is no maximum extension time.

Local government staff “only has so much bandwidth and resources” to deal with incoming requests, says Isrow, who also serves on the Parkland City Commission. The law’s ambiguity can create “a Russian doll of responsibility” for enforcement and compliance in which no one knows where the buck stops.

— By Michael Fechter

Tags: Around Florida, Real Estate, Feature

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