Last May, Florida Governor Ron DeSantis introduced legislation mandating emergency reserve funds for apartments statewide following the tragic collapse of the 12-story Champlain Towers South in Surfside.
While lawmakers hope the housing code overhaul will protect residents from similar events, some market experts warn that mandatory reserves could wreak havoc on Florida residents’ wallets.
“Those costs get passed on to the consumer one way or another,” Pinion Enterprises founder and CEO Joe Pinion said on “Morning with Mary” Monday. “The budget budget has arrived: this provision [was] put in place by Governor DeSantis to secure lives, but it will end up bankrupting many people who didn’t see this 50% hit coming.”
Florida Senate Bill SB 4-D includes requirements for preventive maintenance and building inspections on buildings of three stories or more, and for condo associations to collect and maintain structural integrity studies and reserve funds.
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Associations are required to perform a reserve cost analysis every 10 years for repair costs that reach or exceed $10,000. Associations must then mail their structural integrity studies to the condo owners, who will jointly contribute to the reserve through a payment plan approved by the association.
In order to finance the reserve fund of money, 50% or more of the total costs for repairs of the apartment must be maintained.
Pinion explained that this could financially hurt landlords and Airbnb hosts, who could now pay additional housing costs under the new law.
“You’re talking about people who have Airbnb that they thought, ‘Oh, all these people with their Airbnb business, this would be great, I was going to rent this property or I’m going to own this property, and then the actual income is going to overshadow what I have to pay for that monthly rent or that monthly mortgage,’ the CEO explained.
Macro Trends Advisors founding partner Mitch Roschelle also warned that the reservation bill will “create a dichotomy” between high-rise condos and single-family homes in Florida.
“It will make single-family homes potentially more desirable because you can control your own destiny,” Roschelle said. “The other thing we’re seeing in Florida … after the Surfside disaster, people don’t want to be on condo boards anymore because it’s a huge amount of responsibility.”
“You’re volunteering to give back to your community, basically, and you’re potentially liable if you chose not to fix the levee when it should have been fixed,” he continued. “So there’s going to be a lot of earthquakes down in Florida.”
Champlain Towers was 40 years old and in need of major repairs when it collapsed on June 24, 2021. That led officials to consider the need to ensure other old structures were safe as 98 people died in the tragedy.
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At the time, the Real Estate, Probate and Probate Division of the Florida Bar Task Force said that 912,376 Florida housing units housing more than 2 million people are at least 30 years old, including more than 105,000 over 50 and nearly 328,000 built between 40 and 50 years ago.
All told, Florida is reportedly home to more than 1.5 million housing units operated by 27,599 apartment associations, according to an Associated Press report.
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The Associated Press contributed to this report.