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Condo boards can be notoriously secretive. Will the Surfside collapse change that?

As efforts in Surfside, Florida shift from rescue to recovery, more attention will turn to events leading up to the Champlain Towers' collapse. Part of the inquiry will focus on the actions and inactions of the condominium's homeowner's board. Stephanie Sy reports with Evan McKenzie of the University of Illinois in Chicago. McKenzie is the author of two books on condo and homeowner associations.

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  • Judy Woodruff:

    Now that workers searching the rubble of the fallen Surfside condominium have shifted from rescue to recovery, more attention is turning to decisions made before the building's collapse.

    As Stephanie Sy tells us, part of the inquiries to come will focus on decisions made by the people who owned units there.

  • Stephanie Sy:

    Judy, a 2018 engineer's report found major structural damage to the concrete in a number of areas of the complex, requiring an estimated $9 million in upgrades and repairs.

    But efforts to raise that money stalled, as homeowners and their board disagreed over how it might be done. When the building collapsed last month, the price tag had risen to $15 million and repairs had yet to begin.

    Evan McKenzie teaches political science and law at the University of Illinois at Chicago. He is author of two books on condominium and homeowner associations.

    Mr. McKenzie, thank you for joining the "NewsHour."

    Based on your area of expertise, what is the larger problem that you think this condo collapse highlights?

  • Evan McKenzie:

    I think the larger problem is that we have probably 150,000 condo associations in the country, with tens of millions of people living in them, and their finances are not really sufficiently regulated.

    Nobody really knows what their financial needs are. Nobody knows how many of them are in financial distress. And nobody really knows how many of them will probably need millions more dollars than they actually have access to.

  • Stephanie Sy:

    So, are you saying there should have been or there should be state-mandated requirements for these condo boards, in other words, requirements for keeping enough money in preserve for repairs, because that is what is believed partly led to the delay in repairs in this building?

  • Evan McKenzie:

    Yes, definitely.

    I mean, the state of Florida does not even require condo owners, condo associations and HOAs to obtain professional advice on what their reserve funds can be. They can just assess it, decide what it should be themselves, without even have a professional review the situation in their building.

    And, unfortunately, that is the case in almost all states around the country. These boards and their financial decisions are largely unregulated and are almost entirely secret. In other words, we don't even get access to the information. The public doesn't even know what the situation is in these condos as they go shopping for housing.

  • Stephanie Sy:

    And I know that one of the former board members had said to the media that he did not believe anyone believed there was an imminent danger.

    For what it is worth, the governor of Florida, Ron DeSantis, has said that he doesn't see state action playing a role at this point to look at these older buildings.

    Beyond that, you point out that condo boards, which are voluntary, are not qualified or experienced enough to make some of the decisions on the maintenance and repair of older buildings. So who do you put the onus on?

  • Evan McKenzie:

    Well, the most basic functions of state and local government in our system since the founding of the country have been public safety and control over land use, such as buildings and streets and roads and this sort of thing.

    And the intersection of that is right here, where buildings are unsafe and collapse and fall down and kill people. That is a fundamental function of state and local government, to make sure that things like that never happen.

    And so I don't know what Governor DeSantis thinks local government is for and state government is for, if it is not for protecting people against this risk. And these volunteer directors, they have no qualification that is required by law, other than just being a unit owner. That's it. And they don't have any support or very little support from anyone, except whatever property managers and lawyers they can hire, afford to hire.

    And so, no, there needs to be a great deal more oversight from government. It doesn't have to be intrusive, but it should be supportive and regulatory. And it should keep them on the — a path that will safeguard all the owners against catastrophes like this.

  • Stephanie Sy:

    You wrote an opinion piece recently, Mr. McKenzie, for The Washington Post.

    It framed the problem of building safety as a climate change problem, because structures like this one in Surfside, for example, may face rising sea levels. How can these condo boards prepare better for those impacts?

  • Evan McKenzie:

    Well, the core problem here is that, just in taking care of routine maintenance issues, we know that a huge percentage of associations aren't even up to speed on that, on knowing about what wear and tear is going to do to their building and how much it will cost to fix and when they will need to have the money.

    So, add to that that there are costs due to climate changes that no one anticipated, rising seas and landslide risks from heavy rains and wildfires and other things, that are much higher risk than before. And it does require professional opinions.

    So, what they have to do initially is, they have to get experts in buildings to conduct what we call reserve studies to tell them what they need and to take into account the impact of climate change on their community.

    But I also think that they need external help. They are going to need funding from other levels of government to get them the funds they need, because I don't think they have it themselves or really have access to it.

  • Stephanie Sy:

    Well, we are talking about thousands and thousands of buildings just on that coastline there.

    And we know that some of the delay in repairs in this case came down to cost. Some people don't necessarily want to pay for repairs until it's too late. And some people can't afford to. And this board is basically a democracy. So what is the solution?

  • Evan McKenzie:

    Well, that's the core problem right there.

    Condo boards and their officers, the members control their own assessment levels. And they can decide to not set enough money aside. And I think the way to do it is to first mandate that reserve studies be done every three years and then to publicize the outcome.

    I think that these reserve studies should be public. They should be available to the public to see. And I think that we should know what percentage of the proper reserves that each association has, so that, when we go shopping for condos, there is some market pressure and sort of a reward on condo boards and their owners to have the proper reserves.

    When people see they are in good financial shape, they won't be worried about buying there. But if another building is underfunded, then people will know in advance. And I think we could do that relatively easily.

  • Stephanie Sy:

    Evan McKenzie of the University of Illinois at Chicago, thank you.

  • Evan McKenzie:

    Thank you very much.

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