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Inside the Palm Bay Feuds

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It’s a tale as old as time, with several chapters unfolding in recent months in the Biscayne Times. February 2023’s “$46 Million Condo Shock” cover story and “Palm Bay’s Triple Trouble” in March have collectively told the story of three Palm Bay condominium buildings that have become battlegrounds over high repair costs or disagreements in management choices.

We now bring you “Condo Wars,” with an update on the seemingly never-ending saga that we’ve discovered is not so unusual – and likely to repeat itself with equal fervor.

Palm Bay Yacht Club

The residents of Palm Bay Yacht Club began making payments April 1 toward repairs for the property’s 40-year recertification, the costs of which some owners have maintained are largely and artificially inflated.

The $46 million price tag that was originally reported by the Times in February was reduced after the majority of residents approved requesting a loan of $33 million Feb. 11. That amount is expected to cover the cost of repairs that include the remediation or replacement of expansion joints, cracks, spalling and delaminated stucco; concrete restoration and repairs; waterproofing and drainage; and window repairs, in addition to amenity improvements like a new tennis court and pool, and spa and jacuzzi repairs.

Residents did not vote, however, to upgrade the condominium building’s windows with hurricane impact glass, which the condo association said would have cost an extra $15.65 million.

According to the association, residents are choosing to pay their share of the repair costs – roughly $130,000 for each unit – in one of two ways. They have the option to pay the amount over the course of one year through four quarterly installments of $30,000 to $35,000, or pay it off over the course of 20 years with interest. The latter is contingent upon the closing of the loan, which is expected to happen by May 1. Numerous residents have expressed their inability to pay either way.

Palm Bay Yacht Club Condo Association President testified on April 3 that the association had received more than $7 million in residents’ loan payments thus far. Miami-Dade Circuit Court Judge Thomas Rebull shortly after denied residents’ injunction to halt further collection of loan payments.

Those same residents who filed the lawsuit for fraud, negligence and breach of fiduciary duty in October 2022 have also emailed the Office of the Miami-Dade State Attorney March 11 requesting an investigation. To date, they nor the Times have heard back regarding whether that investigation will be pursued.

Just days before on March 3, State Attorney Katherine Fernandez Rundle and other elected officials held a press conference to introduce state legislation that would criminalize corruption affecting homeowners associations and condo owners.

The Community Association Bill of Rights, if passed, would reduce association election fraud, give owners greater access to records and outlaw the acceptance of kickbacks. The bill also proposes that any complaint to local police or the Department of Business and Professional Regulation (DBPR) be automatically forwarded to the Florida Department of Law Enforcement as well.

Residents at Palm Bay Yacht Club claim they have more than 20 unanswered complaints with the DBPR.

The bill, SB 1114, was introduced to the Florida Senate March 7 and hasn’t moved forward as of this writing.

In the meantime, the condo association at Palm Bay Yacht Club vehemently denies all accusations of malfeasance they’re accused of by plaintiffs.

Board members refused to speak to the Times when it was gathering interviews for the original February cover story about the ongoing lawsuit. It was only after four days of evidentiary hearings and the publication of the March follow-up story that the association’s lawyer surfaced to express the board’s discontent with the way residents’ allegations were reported.

In particular, the association’s attorneys pointed out that nearly all of the plaintiffs have run for election to the board of directors and lost. The defendants further deny the allegation made against them that elections may have been rigged, citing the board’s decision to hire Susan Russo, a state-registered ombudsman, to monitor the Jan. 12 election.

But residents’ qualms are not with Russo or the verification of paper votes. Rather, the dissenting unit owners have shared with the Times what they believe to be election irregularities with those votes that had been cast online, particularly through a third-party software developed by online voting company ONR.

ONR came under scrutiny because of a landing page on the company’s website titled “AKAM ONR Premier Support,” which some residents interpreted as a partnership that warranted suspicion. AKAM On-Site Inc. is the property management company at Palm Bay Yacht Club, according to AKAM legal counsel, and not AKAM Services Inc., although the latter is a named defendant in the lawsuit filed by dissenting residents.

Alan Guvovschi, co-founder of ONR, told the Times that the website page is common practice and just one of many that they share with several of their clients.

“We understand that there may be some confusion about our relationship with AKAM,” said Guvovschi. “We want to reiterate that we have no affiliation with them and do not share any ownership or control. We operate as an independent entity, and our focus is solely on supporting and serving the community associations we work with.”

The connection between AKAM and Project Management Group (PMG) – the owners’ representative overseeing the 40-year recertification construction project – is Doug Weinstein. He is a shareholder of AKAM as well as the vice president of operations at PMG. While attorneys for each party insist that this connection was at all times disclosed, and that Weinstein has not received any compensation by the association, plaintiffs have said that the “link” was confirmed only after a confrontation took place.

Meanwhile, attorney Jonathan Bloom at Bloom & Freeling on behalf of AKAM and PMG asserted in a March 20 letter to the Times that none of the property management companies owned by AKAM have any role in imposing condominium assessments or benefitting from them, and that their only role is to present proposals to association boards for them to consider. He calls any further inferences by anyone “misleading at best and patently false at worst.”

The fuel behind the lawsuit and accusations of fraud against the board are reports from independently hired engineers who claim that much of the scope of work originally enlisted by the condo association is either unnecessary for a 40-year recertification or could be completed for only a fraction of the cost.

Palm Bay Yacht Club condo association attorney Steven Davis with Haber Law P.A. is denying the validity of those claims, insisting that the evaluations and analysis conducted by EPIC Engineering on behalf of the association were far more comprehensive than those sought by residents who have filed suit. Further, Davis also stated that EPIC’s numbers were simply estimates that will have to be verified once the work is to be completed.

“The necessary repairs [for recertification] are expensive but necessary and mandated by the City of Miami,” wrote Davis in an emailed letter to the Times. “The Board of Directors because of undertaking this unpopular but necessary process have each had to endure false statements, lies, and unjustified attacks on their actions which at all times have been carried out in good faith.”

That independent engineers often tell concerned residents “what they want to hear” after conducting subpar walk-throughs of old buildings is not rare, according to Bob de la Fuente, a founding shareholder of Lehtinen Schultz and the head of the firm’s Land Use, Zoning & Local Government Group.

“It’s easy for someone to stand on the sidelines if you’re not on the board and just challenging and questioning everything that your volunteer board is doing,” said de la Fuente, referring to objectors as oftentimes representing a “disgruntled minority” whose “accusations are usually without basis.”

De la Fuente often represents and defends associations in these increasingly frequent condo wars.

Palm Bay Towers

If there ever was a question as to just how frequent these disputes are, look no further than right next door from the Palm Bay Yacht Club. Both the Palm Bay Towers and Palm Bay Condominium buildings are experiencing conflicts between their associations and select residents, as we’ve previously reported.

Palm Bay Towers, due for its 50-year recertification, is in the midst of paying off a $21.5 million assessment approved by the board in 2021 that will cover concrete restoration, spalling and sea wall repairs, upgrades of life safety engineering systems, a new generator and geothermal system, elevator improvements, impact glass installations and aesthetic lobby upgrades.

Again in this case, some individual unit owners maintain that the costs are largely inflated or unnecessary, but the Palm Bay Towers condo association has defended its decisions and attributed higher assessment fees to external factors, such as a change in laws, an uptick in demand for engineering work, supply issues and higher interest rates.

“Why is no one criticizing prior boards or owners that did little to maintain their buildings? Or criticizing the State of Florida for allowing associations to waive reserves and not develop comprehensive maintenance plans?” read a letter to the Times signed by Palm Bay Towers president John Friedman, treasurer Migdalia Lagoa, secretary Don Sadler, director John Walbridge and legal committee chair Lyndall Lambert.

“Dealing with the consequences of 40 or 50 years of deferred maintenance takes time and costs money,” the letter continued. “There is no corruption, or kickbacks, or misappropriation of funds, or personal vendettas, or frivolous lawsuits, or ulterior motives.”

Lagoa, speaking on behalf of the entire board, declined to be interviewed by the Times unless in a group setting.

Palm Bay Condominium

High assessments are not always the cause of these internal conflicts, as shown by the neighboring Palm Bay Condominium. Annabella Bucheli, who lives in that building, joined the Palm Bay Towers lawsuit filed in 2021 to oppose the way both associations had been dealing with a condemned marina of which they share ownership.

As mentioned by Palm Bay Condominium’s board secretary, Andrew Sherry, in his letter to the editor published last month on BiscayneTimes.com, both buildings’ boards voted in August 2022 to partner with Yacht Management of South Florida to restore and operate the marina, denying any allegations of neglect or malfeasance.

Bucheli scoffed at that decision in a written response: “A 75-year lease with SUNTEX first, and now a 30-year lease with a rookie company, Yacht Management, for a meager income.

“The lack of vision and financial savvy of the Board members behind these actions will haunt generations of owners at our community … Suffice to say, they disregarded hiring the most experienced marina builder in South Florida, Kearns Construction, who had offered a 15-year lease deal.”

More of her response is published in the commentary section of this April edition.

Bucheli and some litigants in the other Palm Bay buildings have told the Times that they suspect higher maintenance fees and inadequate deals are all part of a ploy to lower property values and increase foreclosures until a buyout by hungry developers becomes imminent. But according to de la Fuente, the opposite is usually true.

“Once these kinds of lawsuits get filed or these accusations are thrown around, it makes it a lot harder to get a loan, so what happens? The immediate effect is that that’s what depresses property values,” he said.

Condo Feuds Escalating

Despite a long history of condominium feuds, de la Fuente says their frequency only grew once vigilance increased following the Champlain Towers South collapse in Surfside. The Palm Bay Towers association’s letter also referenced the 2021 tragedy, insisting it was proof of “kicking the can down the road.”

Whether higher costs are the cause of years of deferred maintenance or the fault of fraudulent board members will ultimately be up to a judge to decide. As for the chaos that transpires on the road to the truth, de la Fuente makes just one remark: “That’s condo life.”

“With condo living, this is always an issue,” he said. “People start paying attention if they think they’re going to spend more money. It’s just part of condo living. You’re stuck with your neighbors.”

This story updated 4/5/23 to reflect hearings that took place this week.

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