Every year, we send an assortment of well-educated men and women to Florida’s State Capitol to represent us. They speak for us, act on our behalf, educate themselves about importatnt issues, learn how to work together and try to execute productive resolutions. If they like the job, they run for re-election. Sometimes, their reasons for being there differ from those given to their constituents prior to Election Day; their actions become inconsistent with their promises while questions about their legislative intentions are buried in a blizzard of platitudes. When this occurs, its usually a good time to consider “changing the guard”.
To be effective, politicians must master a spectrum of communication skills. The art of defining an issue and exhorting the need for a piece of palliative legislation in the same breath is known as “spin”. Depending on how its utilized, “spin” can be either a tool or a weapon; it can rally support for a good cause or create just enough confusion to allow a fox into the henhouse.
|STATE OF FLORIDA|
In order to determine whether or not your representatives still speak for you, you must examine their work product. To properly diagnose or “unspin” an issue, simply read the actual legislation. If you don’t have the time or patience to peruse the dry legislative text, review an authoritative summary. Corresponding with your representatives is another alternative to directly examining legislative content. Every year, legislation affecting Galt Mile residents oozes out of Tallahassee, often unnoticed. The issues surrounding that legislation will be explained in this section. Before next year’s legislative session, the articles will be relegated to the site’s Tallahassee Archives, setting the stage for the new session. Email, write, FAX or telephone your Statehouse Representative and your Senator with the specific obstacles that any issue or legislative effort hold for you. To find all the contact information for the Galt Mile’s political representatives in Tallahassee or elsewhere, go to the Report Card.
|REP. CHIP LaMARCA|
|SENATOR GARY FARMER|
Galt Mile Residents are currently represented by George Moraitis in the Florida Statehouse and Gary Farmer in the Florida Senate. Notwithstanding their official “party” affiliations, their primary responsibility is to YOU. They are obligated to exercise their voting power and influence the outcomes of certain issues based upon the feedback they recieve from their constituents - US. If they don't - as exclaimed by Georgetown University Professor Carroll Quigley while considering the virtues of Democracy - we can “Throw the rascals out.”
After familiarizing ourselves with the legislative land mines planted during the annual session and unifying behind issues that benefit the entire neighborhood, we can send our political representatives in Tallahassee a clear and unconflicted wish list. Furthering their constituents' agenda will have a far greater impact on their future political ascendency than their party affiliations - or ours. This pro-active formula also shields our community from the paralysis of partisan gridlock that might otherwise belabor efforts to enact favorable legislation. By sending a few strategically timed emails, we can thwart bills conceived to abridge our rights, erode home rule and drain association budgets. Not a bad day's work!
|DOLPHIN SCULPTURE AT ENTRANCE TO THE STATE CAPITOL COMPLEX|
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2011 Legislative Session
A Tale of Two
December 30, 2011 - While association bills abound at the outset of every legislative session, the committee vetting process soon reveals each bill’s intent, beneficiaries, supporters and opponents. The wide range of filings are sorted into categories and identified as productive for or damaging to associations and/or their members.
Anti-association bills are generally propelled by one of three motivations; money, politics or ignorance. Individual businesses or entire industries that envision an opportunity to financially exploit common interest communities will call in a meticulously cultivated marker in order to lay some statutory groundwork for their agenda. The lawmakers that carry their water seek to repay past or future campaign funding largesse by relieving associations (and/or their members) of whatever rights or protections that their clients perceive as obstacles to an anticipated windfall.
In 2012, Bradenton Senator Michael Bennett and Miami Statehouse Representative Frank Artiles volunteered as waterboys for some extremely generous construction industry trade organizations. This comes as no great surprise, since Bennett is an electrical contractor and Artiles is a State of Florida licensed general contractor, real estate agent and public adjuster (what conflict?).
|SENATOR MICHAEL BENNETT|
After hearing the case “Lakeview Reserve Homeowners v. Maronda Homes, Inc., No. 5D09-1146 (Fla. 5th DCA)” on October 29, 2010, Florida’s Fifth District Court of Appeal ruled that home buyers and homeowners’ associations are entitled to recover damages for Breach of Common Law Implied Warranties from the builder or developer who saddles them with defective roadways, drainage systems, retention ponds and underground pipes. The developer asserted that since these elements aren’t physically part of the home’s structure, marketing materials indicating that homes were in “move-in” condition and available for immediate occupancy weren’t fraudulent or misleading. The court disagreed, stating that certain types of common element improvements were necessary to live in a home, and that a home buyer is forced to “rely on the expertise of the builder/developer for proper construction of these complex structures”. The case went to the Florida Supreme Court.
While community association advocates supported the lower court’s decision, construction industry associations filed amicus briefs in opposition to implied warranties. When the court first ruled against them, the Florida Home Builders Association (FHBA) and National Association of Home Builders (NAHB) paid a call on Bennett and Artiles to hedge their bets. Despite its pendency before the Supreme Court of Florida (which heard oral arguments on December 6th), on December 7th they decided to buy some insurance in the legislature.
In his Senate Bill 1196, Senator Michael Bennett seeks to protect developers who sell properties afflicted with critical common element construction defects by squelching their common law exposure to implied warranties. Artiles filed an identical companion bill, HB 1013, in the Statehouse. Their legislation would undermine homeowner rights and remedies for common area construction defects.
|REP. FRANK ARTILES|
Exclaiming that he is a friend to the struggling Real Estate market, the Senator believes that thousands of hoodwinked homeowners are a small price to pay for the confidence his bill would give to developers, thereby stimulating the housing economy. In short, more developers would risk entering the shaky market if they could avoid legal entanglements for performing substandard or defective construction. After all, using scotch tape instead of nails appreciably improves the bottom line. Then again, why should we care about the fate of homeowners’ associations or their members?
Bennett’s bill doesn’t only apply to HOAs. Since it targets anyone buying a home, the limitations would victimize homeowner associations, condominiums, co-ops, timeshares and mobile home parks. The legislation infers that condo and co-op owners in new developments who discover that the building’s defective drainage system spits sewage into the master bath or that their roof is made of sponge should “suck it up”. Bennett refers to these construction disasters as “off-site improvements” and disputes that they diminish a home’s habitability.
The Fifth District Court set this simple test to ascertain whether any residential construction element is eligible for implied warranty protection, “In the absence of the service, is the home habitable?” Construction Law Specialist Sanjay Kurian (Becker & Poliakoff, P.A.) holds that since these common area improvements are necessary in order to utilize the residential dwellings for their intended purpose, they are part and parcel of the sale and purchase of a residential dwelling in Florida. In fact, a developer couldn’t even qualify for a Certificate of Occupancy absent these improvements. Since association members are assessable for repairing or correcting defective common elements, the bill shifts liability for a developer’s negligence to associations and their members. With our support, association advocates hope to euthanize Bennett’s bill, thereby depriving the FHBA and the NAHB of the elephantine negligence loophole they helped finance.
While most anti-association bills thinly veil a mercenary game plan to sell out homeowners, some are filed by misguided lawmakers trying to fix complex problems they don’t fully understand. It’s no secret that associations appeal to career-minded politicians in search of a sizable statewide constituency. Often more concerned with cultivating a politically productive relationship with the State’s two million association members, their proposed bills suffer from a superficial knowledge of association issues. Their legislation’s simplistic resolutions would wreak havoc on the same people they aspire to befriend.
In an action that appeared out of character for some ordinarily progressive local legislators with laudable records, Fort Lauderdale Senator Chris Smith filed Senate Bill 706 on October 26th. A friend and Broward Legislative Delegation colleague, Representative Hazelle Rogers filed companion bill HB 713 in the Statehouse. The bills threatened to catapult associations plagued with foreclosures into fiscal limbo. In his handiwork, Smith proposed adding the following language to Section 718.115 of the Condominium Act: “The share of the common expenses of a unit in the condominium which is in foreclosure may not be assessed against other units in the condominium.”
|SENATOR CHRISTOPHER SMITH|
When a unit no longer contributes to the association, every other unit owner is forced to make up the shortfall to address association expenses. While nobody likes it, the alternative - losing employees, utility cut-offs, neglecting pressing maintenance or repairs, or otherwise sacrificing critical services - is a recipe for disaster. An association with 30% of its units in foreclosure would be consigned to paying 70% of its bills or beg reluctant lenders for high-interest bridge financing. This enigmatic time bomb is a clumsy, short-sighted attempt to address the foreclosure Catch-22 that currently burdens associations and their members.
|REP. HAZELLE ROGERS|
Since Senator Smith and Representative Rogers have reputations for integrity, association officials presumed that they were simply unaware of the catastrophic consequences threatened by their “solution”. Surmising that the bills inadvertently exemplified those good intentions that pave the road to hell, after association advocates met with Smith and Rogers on December 8th, the cooperative lawmakers agreed to pull the plug and send the bills to the cornfield.
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2012 Omnibus Association Bill
Bogdanoff and Moraitis Help Condos and Co-ops
|REPRESENTATIVE GEORGE MORAITIS|
December 13, 2011 - The Omnibus Association bill in 2012 is House Bill 319 (HB 319) – filed by District 91 Statehouse Representative George R. Moraitis. Building on the legislative momentum initiated by then Representative (now Senator) Ellyn Bogdanoff in 2010 (SB 1196) and Representative Moraitis last year (HB 1195), this year’s incarnation impacts Condominiums, Cooperatives and Homeowner Associations. Its sister bill in the Senate was filed by our District 25 Senator Ellyn Bogdanoff. Although Senate Bill 680 (SB 680) began as an identical twin to HB 319, vetting committees will selectively purge each bill’s provisions that conflict with the interests of their key members.
|BOGDANOFF EXPLAINS SB 1196|
A majority of the legislative content was provided by two powerful Florida law firms via corporate appendages created to cultivate client relations in the flourishing field of “Community Association Law.” A longtime friend to the Galt Mile community, association attorney Donna Berger directs the Community Advocacy Network (CAN) for Katzmann Garfinkel & Berger (KG&B) while former Department of Business and Professional Regulation (DBPR) Senior Attorney Yeline Goin directs the Community Association Leadership Lobby (CALL) for Becker & Poliakoff (B&P). The economic symbiosis that fuels these two organizations offers Florida associations efficient communication networks and viable lobbying vehicles while providing the two legal powerhouses with a client supermarket.
Actually, this protocol provides Becker & Poliakoff with a second income stream. Casual scrutiny of Moraitis’ 2011 and 2012 association bills reveals some provisions that only benefit management companies, such as B&P client Continental Management (one for you, one for me, one for you, two for me, etc.). Although Moraitis objected to the law firm’s adulteration of his bill, he needed the combined political capital of both firms to guarantee its survival. Moraitis enhanced his bill’s stability by incorporating provisions drafted by the DBPR and the Florida Bar.
While these advocacy groups helped Florida associations realize legislative progress for three consecutive years, equally responsible for this productive window are the players that carry the water in Tallahassee. Were it not for Jeffrey Atwater, Ellyn Bogdanoff and George R. Moraitis, South Florida would still be the State’s legislative laughingstock – as partisan bickering and self-serving agendas splintered Palm Beach, Broward and Miami lawmakers for two decades.
Although their efforts responded to a statewide outcry by associations, members of Galt Mile associations live in the districts that sent them to the Statehouse and Senate in Tallahassee. After bringing a high profile association bill to fruition during his rookie year, Moraitis met with constituents on the GMCA Advisory Board to solicit their legislative agenda. Along with a list of statutory glitch repairs, the retrofit deadline for elevators and foreclosure issues, GMCA officials pointed out the longstanding legislative tendency to neglect cooperatives while addressing association obstacles. Moraitis and Bogdanoff included the GMCA recommendations in their legislation. As the bills embark on their journey through House and Senate committee gauntlets, the following is a summary of the provisions that impact Condominiums and Cooperatives (Hat tips to Donna Berger, Yeline Goin, Lisa Magill and Michael Bender).
Section 1 – Elevator Retrofit (F.S. 399.02 – Condominiums & Cooperatives)
- Elevator Retrofit - The bill opens with a provision that eliminates the 2015 compliance deadline for retrofitting association elevators with Phase II Firefighter Service, an adaptation that enables Firefighters to control all of an association's elevators with a single master key instead of several keys that respectively control each cab. While the retrofit could conceivably save the couple of minutes it might take to sort out the few keys that control the elevators, there has never been a single case in Florida history wherein a death or injury was attributed to non-compliance with this mandate. The bill postpones the retrofit until an association opts to modernize its elevators, at which point the installation costs for Phase II service would drop to nearly nothing.
Section 2 – CAM Home Addresses (F.S. 468.433 – Condominiums & Cooperatives)
- CAM Home Addresses on DBPR’s Website - Inexplicably, lawmakers reserve their most brazenly besotted legislative blunders for community association bills. Some raving genius felt the public interest would best be served by publishing the names and addresses of association managers on a state website. Since managers issue board-mandated warnings or fines to unit owners for violating association rules, it is not uncommon for irate, tenuously balanced scofflaws to threaten a manager’s grizzly demise. Providing borderline sociopaths with the manager’s home address is tantamount to painting a target on their perceived nemesis. Enabling screwballs to harass an association employee at home is malicious, if not dangerous. Since the home address of every Florida licensed community association manager (CAM) is also available through the formal public records request system (which at least leaves a paper trail if abused), the bill amends Section 468.433(5), F.S., ordering the DBPR to yank them from their website.
Section 3 – Bylaw Glitch Repairs and Clarifications (F.S. 718.112 – Condominiums)
- Unit Owner Meetings – By inadvertently fumbling the phrases “in lieu of” and “in addition to”, last year’s Omnibus Association Bill (HB 1195) mandated associations to broadcast notices 4 times every hour notwithstanding the notices physically posted on association property. The bill fixes this “notice overkill” glitch.
- Board Member Certification Records – Amends Section 718.112(2)(d)4.b., F.S., providing that an association must keep board members’ certification records for the duration of their uninterrupted tenure or five (5) years (whichever is longer).
- Election Challenges – Creates Section 718.112(2)(d)4.c., F.S., providing that condominium election challenges must commence within 60 days after the announced election results.
- Recall of Board Members - Amends Section 718.112(2)(j), F.S., providing that:
- Recall Arbitration Deadlines – Under this change, the Division would not accept recall arbitration petitions if there are 60 or fewer days until the member being recalled is up for reelection; or 60 or fewer days have passed since the board member being recalled has been elected.
- Unit Owners – This language would permit unit owners to file a petition challenging the board’s failure to duly notice and hold a board meeting to certify the recall or the board’s failure to file a petition for arbitration if it refuses to certify the recall. The DBPR is limited to determining if the recall petition was properly served on the board and whether the written agreements or ballots are valid.
- Board Members – This measure would enable recalled board members to challenge the validity of the recall by filing a petition within 60 days following the recall certification.
Section 4 – Hurricane Protection (F.S. 718.113 – Condominiums)
- In addition to hurricane shutters, impact glass, or other code-compliant windows, this measure allows a majority of the total voting interests to approve installation of “code-compliant doors” and “other types of hurricane protection.” No upgrade vote is required if the association maintains, repairs and replaces any of these code-compliant hurricane mitigations. A board may not prohibit a unit owner from installing these protections if they conform to board-approved specifications.
Section 5 – Hurricane Protection (F.S. 718.115 – Condominiums)
- This measure provides that a unit owner who installs code-compliant protections must be credited with a pro-rata share of the assessed installation cost for protections that are subsequently approved by the association.
Section 6 – Joint and Several Liability for Assessments (F.S. 718.116 – Condominiums)
- Liability for Fees Associated with Delinquent Units – When a third party purchaser (other than a bank) takes title to a property at a foreclosure sale, this provision amends Section 718.116(1)(a), F.S., thereby requiring any third party purchasers and the previous owners to share in the liability for all late fees, interest, costs and reasonable attorneys’ fees associated with collection efforts against the delinquent property.
- Master and Sub Association Liability – Under this proposal, whether the master association or the sub association acquires title, one would not be liable to the other for unpaid assessments, fees, interest or attorney’s fees and costs that came due prior to taking title. This measure will relieve the reluctance of master and sub associations in large communities to foreclose delinquent properties for fear of triggering liability for past due assessments. By amending Section 718.116(1)(b)2., F.S., it corrects a drafting glitch in last year’s bill that restricted this protection to sub associations.
Section 7 – Suspension of Rights (F.S. 718.303 – Condominiums)
- Governing Document Violations – Intended to address another technical glitch in last year’s bill, this provision amends Section 718.303(3)(a), F.S., clarifying exceptions to suspended common area and facilities use rights for unit owners (and/or a unit owner’s tenant, guest or invitee) due to violations of the association’s governing documents (the declaration, bylaws or reasonable rules and regulations of the association).
Like common area use rights suspended for delinquency, the suspensions don’t include access to limited common elements that uniquely service that unit (i.e. balconies), common elements needed to access the unit (i.e. entry and egress), utility services provided to the unit, parking spaces or elevators.
- Suspension of Voting Rights – This measure amends Section 718.303(5), F.S., clarifying how the suspended voting rights of delinquent members impacts the constitution of a quorum. Subtracting the number of unit owners whose voting rights were suspended from the number of unit owners ordinarily required for a quorum yields the new number of unit owners required to constitute a quorum. For example, if 50 unit owners are ordinarily required to constitute a quorum and the voting rights of 10 delinquent unit owners were suspended, the revised requirement for a quorum is 40 (50 - 10 = 40).
Section 8 – Phase Condominiums (F.S. 718.403 – Condominiums)
Section 9 – Condominiums within Condominiums (F.S. 718.406 – Condominiums)
- Frequently referred to as “hotel condominiums” or “condos in a condo”, although Florida Statutes provide for a single commercial structure comprised of a master or “primary” condominium and one or more sub-condominiums or “secondary” condominiums, various legal and operational aspects of these entities were neglected when originally enacted.
The bill creates Section 718.406, F.S., providing guidance in authorizing owners of the primary condominium to exercise rights on behalf of subdivided unit owners, establishes the relationship between the board representing the primary condominium and its counterpart for the secondary condominiums, provides for the collection of assessments by the primary and secondary associations, provides that the owners of secondary units are subject to the provisions of both the primary and secondary condominium declarations, provides when owner and mortgagee consents are required to create a secondary condominium, establishes that the primary association can dictate specifications for hurricane or other building protections and establishes insurance requirements and obligations of the associations managing and operating both primary and secondary condominiums (consistent with Section 718.111(11), F.S., of the Condominium Act).
Section 10 – Condominium Ombudsman Staff Employment (F.S. 718.5011 – Condominiums)
- This provision amends Section 718.5011, F.S., removing a prohibition from “actively engaging in any other business or profession” for full-time Condominium Ombudsman staffers, as long as a secondary position does not directly or indirectly relate or conflict with their responsibilities in the State’s Condominium Ombudsman’s office.
Section 11 – Bulk Buyers & Bulk Assignees (F.S. 718.707 – Condominiums)
- By shielding purchasers of 7 or more condominium units (bulk buyers) from the tough standards and liabilities enacted for developers, the “Distressed Condominium Relief Act” was passed in 2010 to expedite sales of the glut of unsold condominium units in newly built and recently converted communities. While the Act spurred sales, its July 1, 2012 expiration date deprived lenders, bulk purchasers, unit owners and associations of adequate time to realize the anticipated benefits. To remedy this unrealistic time constraint, the Florida Bar drafted this provision that amends Section 718.707, F.S., which extends the Act’s sunset date from July 1, 2012 to July 1, 2015.
Section 12 – Official Records (F.S. 719.104 – Cooperatives)
- Personal Information – This measure amends Section 719.104(2)(c), F.S., providing cooperative owners with the same personal privacy safeguards that currently protect members of condo and homeowner associations when the association responds to a records request.
Unless a cooperative owner consents to waive this right in writing, a records request would exclude any Social Security Number, Driver License Number, credit card numbers, e-mail addresses, telephone numbers, emergency contact information and any address other than the addresses required for the association’s notice obligations. In short, the only personal identifying information that will be made available is the owner’s name, unit designation, mailing address and property address.
- Personnel Records – Already provided for in condominiums, this measure would prohibit member access to the personnel records of association or management company employees, including but not limited to, disciplinary, payroll, health, and insurance records. Since they aren’t considered “personnel records,” written employment agreements with an association employee or management company will remain accessible to unit owners, as will budgetary or financial records indicating the compensation paid to an association employee.
Section 13 – Lender/Mortgagee Consent Requirements (F.S. 719.1055 – Cooperatives)
- The bill creates Section 719.1055(7), F.S., duplicating a 2007 provision adopted in the Condominium Act. After the legislation’s effective date, cooperative association documents would be precluded from requiring a lender’s consent for amendments that don’t affect the lender’s rights or interests. For mortgages entered into prior to this date, the bill proposes clear protocols for boards to obtain lender consent and provides that any lender who fails to respond to an association‘s request for approval within 60 days after the date mailed shall be deemed to have consented to the amendment.
Section 14 – Bylaw Glitch Repairs and Clarifications (F.S. 719.106 – Cooperatives)
- Election Challenges – Amending Section 719.106(1)(d)1.a., F.S., it provides that cooperative election challenges must commence within 60 days after the announced election results.
- Board Member Certification – As currently applied to Condominium board members, this measure creates Section 719.106(1)(d)1.b., F.S., providing two options for certifying cooperative association board members. A Cooperative director can either 1) sign a statement certifying that he or she has read the association’s governing documents and policies and agrees to uphold them to the best of his or her ability or 2) complete an educational course approved by the State and submit the certificate of completion to the Board Secretary within 90 days of election or appointment to the board. Certificates earned up to one year before they are submitted are still valid.
- Board Member Certification Records – This provides that an association must keep board members’ certification records for the duration of their service or five (5) years (whichever is longer).
- Recall of Board Members – Amends Section 719.106(1)(f), F.S., providing that:
- Recall Arbitration Deadlines – Under this change, the Division would not accept recall arbitration petitions if there are 60 or fewer days until the member being recalled is up for reelection; or 60 or fewer days have passed since the board member being recalled has been elected.
- Unit Owners – This language would permit unit owners to file a petition challenging the board’s failure to duly notice and hold a board meeting to certify the recall or the board’s failure to file a petition for arbitration if it refuses to certify the recall. The DBPR is limited to determining if the recall petition was properly served on the board and whether the written agreements or ballots are valid.
- Board Members – This measure would enable recalled board members to challenge the validity of the recall by filing a petition within 60 days following the recall certification.
Section 15 – Suspension of Rights (F.S. 719.303 – Cooperatives)
- Governing Document Violations – Intended to address another technical glitch in last year’s bill, this provision amends Section 719.303(3)(a), F.S., clarifying exceptions to suspended common area and facilities use rights for unit owners (and/or a unit owner’s tenant, guest or invitee) due to violations of the association’s governing documents (the declaration, bylaws or reasonable rules and regulations of the association).
Like common area use rights suspended for delinquency, the suspensions don't include access to limited common elements that uniquely service that unit (i.e. balconies), common elements needed to access the unit (i.e. entry and egress), utility services provided to the unit, parking spaces or elevators.
- Suspension of Voting Rights – This measure amends Section 719.303(3), F.S., clarifying how the suspended voting rights of delinquent members impacts the constitution of a quorum. Subtracting the number of unit owners whose voting rights were suspended from the number of unit owners ordinarily required for a quorum yields the new number of unit owners required to constitute a quorum. For example, if 50 unit owners are ordinarily required to constitute a quorum and the voting rights of 10 delinquent unit owners were suspended, the revised requirement for a quorum is 40 (50 - 10 = 40).
Section 20 – Effective Date (Condominiums & Cooperatives) – If passed by both the Senate and the House and signed by the Governor, the provisions in HB 319 will become effective July 1, 2012.
On December 7, 2011, the House Civil Justice Subcommittee added 5 amendments to HB 319. One amendment clarified that condo election procedures do not apply to timeshare condominium associations while another provided for how a majority of condominium unit owners can approve creating a “condo within a condo.” A third amendment related to HOAs.
Catering to extremely lucrative client relationships with Florida banks, a Becker & Poliakoff attorney and a contracted lobbyist supported the inclusion of an amendment that openly benefits lenders at the expense of associations. Existing law states that mortgagees only have to pay 12 months of accrued base assessments prior to acquiring title or 1% of the original mortgage – whichever is less (aptly termed a “safe harbor” provision), other purchasers must share in the prior owner’s debts (collection costs, attorney's fees, etc.).
The amendment extends the bank’s “safe harbor” protection to successors in title, despite the fact that they aren’t party to the defaulted mortgage. The provision also expands the safe harbor lender protections by additionally shielding them from paying “interest, administrative late fees, reasonable costs and attorney fees and any other fee, cost or expense incurred in the collection process.” If the association takes a foot-dragging lender to court to push a deliberately stalled foreclosure to fruition and enable a sale (thereby recycling the unit into a productive contributor), this pro-lender provision would stop the court from forcing the lender to reimburse court costs and fees to the association.
When asked why B&P inserted this pro-lender measure into an association bill, CALL Executive Director Yeline Goin answered “It would go a long way toward assisting in clearing out the backlog of distressed inventory.” By insuring that banks don’t have to pay court costs for intentionally delaying foreclosures, it will somehow speed things along??? In short, this Voodoo provision should precede a requirement to click your heels together three times and whisper “There’s no place like home!”
The Committee also approved an amendment conforming laws governing cooperative associations more closely to those governing condominiums. The bill provides for co-ops to hold closed board meetings to discuss personnel matters, to impose a deadline for challenging elections, to require board member education or self-certification and otherwise mirror portions of the Condominium Act.
Moraitis’ HB 319 has yet to navigate the Judiciary Committee and the Business & Consumer Affairs Subcommittee in the Statehouse before it’s out of the woods. In the Senate, Bogdanoff’s companion bill, SB 680, must wade through the Regulated Industries, Judiciary and Budget committees. When the bills make it past the home stretch, they will become law… if the Governor can find his pen.
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The Monster in
October 30, 2011 - Florida association members living in high rise buildings spent the eight years from 2002 to 2010 anxiously awaiting an assessment that would have exploded family budgets and pushed marginally solvent associations off a cliff. The 2002 mandate to retrofit existing structures with a sprinkler system was drafted by lobbyists for Sprinkler Associations representing international conglomerates like Tyco and Allied Signal-Honeywell that engineer, manufacture, distribute and install the equipment required for compliance with the statute. Nice work if you can get it.
When Florida lawmakers twice passed bills (unanimously) meant to relieve cash-strapped association members from coughing up a $million plus assessment, they were subsequently vetoed by two distracted Governors. Despite these disappointing reversals, common interest communities from all over Florida banded behind then Statehouse Gatekeeper Ellyn Bogdanoff to support a third relief bill in 2010. Drawing on resources provided by legal sledgehammers Katzman, Garfinkel Berger and Becker & Poliafkoff, association officials drove Bogdanoff’s relief legislation through a hostile gauntlet of Tallahassee’s most powerful vested interests - right to the Governor’s desk. When Charlie Crist signed the bill into law, two million association members breathed easy.
|FORMER GOVERNOR CRIST SIGNS ASSOCIATION BILL|
Bogdanoff’s 2010 bill acquired statewide prominence for allowing associations to forego the onerous sprinkler retrofit, doubling the financial obligation of foreclosing association lenders and curing a litany of statutory insurance conflicts. It provided long awaited relief from several other ill-conceived mandated expenses. Associations three stories or less with two means of ground level egress were excused from installing a manual fire safety system that the NFPA previously characterized as unnecessary. Actualizing recommendations from Interim Report 2009-125 by the Senate Committee on Regulated Industries, the bill repealed s. 553.509(2), F.S., a statutory obligation to install double redundant power sources for elevators in high rise buildings. Bogdanoff’s bill saved us a bundle. Since then, thousands of associations voted to forego the sprinkler retrofit. No longer threatened with the huge attendant assessment, finance committees all over the state turned their attention to addressing the economic downturn’s budgetary pitfalls.
|BOGDANOFF EXPLAINS SB 1196|
At the October 3, 2011 GMCA Presidents Council meeting in the Commodore Condominium, Bogdanoff’s District 91 successor in the Statehouse – George Moraitis – informed attendees that due to lawmaker preoccupation with redistricting issues and Florida’s controversial role in the upcoming Presidential election, the 2012 legislative session will be productively barren. Moraitis is correct. Only the most high profile, politically remunerative bills will make it past the first vetting committee. Until legislators are no longer focused on engineering districts prepackaged with ideologically sympathetic voters, the mundane business of making laws will remain consigned to the back burner.
|REPRESENTATIVE GEORGE MORAITIS|
Later in the meeting, association attorney Donna Berger confirmed Moraitis’ evaluation of the upcoming legislative session, adding that associations will have to postpone all but the most critical elements of their legislative agenda until 2013. The lost year in Tallahassee concerned Berger for another, more ominous reason. Berger repeated a warning she wrote about in her Condo and HOA Law blog a few days earlier. In three years, members of associations with elevators will face another budget busting assessment.
One of the lesser known provisions in Senator Bogdanoff’s 2010 legislation amended a law requiring associations to upgrade their existing elevators by adding “Phase II Firefighters’ Service”, an improvement that was more the product of dysfunctional bureaucratic tap dancing than the lawmakers who usually take a bad idea and make it worse. The “upgrade” was considered so fiscally egregious that similar provisions in three different 2010 bills postponing its implementation until 2015 were simultaneously enacted into law. Measuring the toll that the funding assessment would place on unit owners, Berger said, “estimates run from hundreds of thousands of dollars into the millions.” A majority of the attending association officials were understandably shaken by her reference to the fiscal monster lurking in their elevators.
The Elevator Safety Act, chapter 399, Florida Statutes, provides minimum safety standards for elevators and minimum training and/or required experience for elevator personnel working under the Florida Building Code. The Act is enforced by the Bureau of Elevator Safety (bureau) of the Division of Hotels and Restaurants within the Department of Business and Professional Regulation (DBPR).
The Elevator Safety Code contained within the Florida Building Code (FBC) is based on the minimum model standards of the American Society of Mechanical Engineers (ASME). Instead of specifically referencing the ASME standards, the department has adopted chapter 30 of the FBC – pursuant to its rules.
ASME A17 serves as the basis for the Florida Elevator Safety Act and the Florida Elevator Safety Code. ASME A17.1 provides requirements applicable to the installation, alteration, maintenance, repair, inspection and safety testing of new and existing elevators. ASME A17.3 guides retroactive requirements for existing elevators.
By amending s. 399.02, F.S., Bogdanoff’s bill forestalls enforcement of the statutory requirement to update code modifications for Phase II Firefighters’ Service on existing elevators (as required by ASME A17.1 and A17.3). Applicable to condominiums, cooperatives or multifamily residential buildings that were issued a certificate of occupancy as of July 1, 2008, the bill postpones compliance for a five-year period ending on July 1, 2015 or until the elevator is either replaced or undergoes major modification (whichever comes first).
|REP. GARY AUBUCHON|
Bogdanoff was not alone in her concern about the elevator retrofit. Similar relief was also provided by Cape Coral Representative Gary Aubuchon in his Building Safety bill, HB 663 (Ch. 2010-176) and Elevator Safety bill HB 1035 (Ch. 2010-110) filed by St. Petersburg Representative and Majority Whip Jim Frishe.
|REP. JIM FRISHE|
What does this Lego-babble mean? Elevator systems are designed with safety features for use by firefighters during an emergency. Phase I emergency recall systems are designed to automatically or manually recall the elevator to a designated level of a high rise building. This prevents riders from using the elevator and becoming trapped during a fire. If a heat sensitive or smoke detecting initiating device is located at or near the default recall level, the cab automatically proceeds to an alternate designated level.
Phase II emergency in-call operation systems are designed to allow a firefighter exclusive operation and control of the elevator(s) during a fire. In an emergency, firefighters must monopolize operational control to evacuate the physically disabled, move firefighters from floor to floor and transport equipment.
The elevator safety code requires that any alteration, relocation or reclassification of an existing elevator comply with the edition of the Florida Building Code that’s in effect when the construction permit application is received. As the code evolves, ASME A17.3 requires owners to retrofit existing elevators in compliance with Building Code revisions or updates. Catch-22 – like matter and antimatter, these two incompatible requirements cannot survive in the same place at the same time.
Translation: Even if the elevator is built in strict compliance with the current code, if that code changes, the elevator is no longer compliant. The eerie blend of codes and the governing statute insure that elevators remain a perpetual work in progress. Condominium associations expressed concern over the expense of requiring elevator owners to repeatedly retrofit or modify elevators to meet code revisions. When the Phase II Firefighters’ Service update was added to the code, the City of Miami Beach joined its myriad condominiums in challenging the mandate (City of Miami Beach v. Dept. of Business and Professional Regulation, DOAH Case No. 08-5188RU).
Framing its case, Miami Beach city officials pointed out a conflict between the Florida Building Code and the Florida Statutes. ASME A17.1 (part 8) and A17.3 state “...all existing elevators, regardless of the date of installation, be retrofitted to comply with the current Florida Building Code, rather than the code at the time of installation.” Conversely, section 399.03(7), Florida Statutes, mandates “Each elevator shall comply with the edition of the Florida Building Code or Elevator Safety Code that was in effect at the time of receipt of application for the construction permit for the elevator.”
Citing bureau statistics demonstrating virtually no statewide enforcement of the firefighter recall provision before 2008 and irregular subsequent enforcement, Miami Beach officials concluded that this “strongly suggests” that compliance with fire recall provision is not a critical life-safety issue. While the condominiums conceded that proven safety-based updates should be built into their elevator systems, City of Miami Beach officials agreed with their condo constituents that protocol changes shouldn’t trigger an expensive retrofit.
In its final order issued on February 27, 2009, the Division of Administrative Hearings (DOAH) held that the Bureau of Elevator Safety (which enforces the Elevator Safety Act) could require elevator owners to retrofit their elevators to meet the Building Code revisions for Phase II firefighter service, despite a bureau admission that no injuries or deaths have ever been attributed to the lack of these systems. After refusing to compromise its right to require the adaptation of elevators to virtually any code modification, to quell blowback from outraged condominiums, it granted several owner requests for variances and waivers related to the expense of complying with code revisions.
In 2004, the Legislature provided for regional emergency elevator access. Public-access elevators (including service and freight elevators) in buildings six-stories or taller that were constructed or substantially improved after June 2004 had to be keyed, or retrofitted, with a master key to allow firefighters emergency access. A master key for each of the Department of Law Enforcement’s seven emergency response regions would allow emergency access to all elevators within that region. The act (s. 399.15, F.S.) also required that all existing buildings come into compliance by July 1, 2007.
In 2006, the Legislature limited the requirement to buildings that were issued a building permit after September 2006, and extended the compliance deadline to October 1, 2009.
This actually gets screwier. The Phase II firefighter service requirement restricts sole possession of a regional master access key (a universal key that allows all elevators within each of the seven state emergency response regions to operate in fire emergencies) to the local fire department. Elevators constructed to accommodate Phase I emergency recall systems (like most of those on the Galt Mile) are already fitted with access keys. As provided for in s. 399.15(3), F.S., copies may be held by the owner and distributed to the licensed servicer, state-certified inspectors, the local Fire Department and DBPR officials (the parent agency of the Bureau of Elevator Safety).
The act is enforced by Division of State Fire Marshal within the Department of Financial Services (DFS). Noncompliance subjected a property owner to administrative penalties. If it was technically, financially or physically impossible to bring a building into compliance, the local fire marshal could allow alternative measures to provide emergency access. The local fire marshal’s decision could be appealed to the State Fire Marshal. As per rule 69A-47.019, F.A.C., the State Fire Marshal determined that a lock box loaded with all the elevator keys that could be opened by the regional key was an acceptable alternative. The 2010 legislation enshrined the State Fire Marshal’s rule into law, confirming that placement of all the elevator keys into a lock box accessible by the master key for the relevant emergency response region could satisfy the emergency public access requirements.
The degree of difficulty facing each non-compliant Galt Mile association is largely a function of when their elevators were installed or last modernized and the fire safety controls that were integrated into the system. Elevators built or last modernized prior to passage of the 2004 Elevator Safety Act may necessitate the retrofitting of both Phase I and Phase II firefighter service requirements, which will affect the cabs, the main and remote control panels, the in-car and mechanical room fire safety elements, the alarm initiating system, internal and external emergency communications and the elevator lobby stations. While modernizations performed after 2004 should have addressed the Phase I mandate, it is likely that the shifting Phase II requirements remain neglected. In short, the cost of compliance for each association will depend primarily on the inherent flexibility of its existing system.
Associations that are unable to comply by the July 1, 2015 deadline can apply to the Bureau of Elevator Safety for a variance. In accord with the requirements of Section 120.542, Florida Statutes, the application must include the statute or code from which relief is requested, the motivating hardship and an explanation of how the petitioner plans to otherwise meet the intent of the code. Associations can alternatively ask Fort Lauderdale Fire Marshal David Raines for a variance or waiver. In turn, Raines’ decision can be appealed to Florida CFO and State Fire Marshal Jeffrey Atwater, our former District 25 State Senator.
On Tuesday, October 11, 2011 at 9:30 a.m., Statehouse Representative George Moraitis filed House Bill 319 (HB 319), which houses a Chinese menu of relief provisions for Associations and their members. The opening section of Moraitis’ bill amends the enforcement suspension for retrofitting elevators with Phase II Firefighter Service currently mandated in s. 399.02(9), F.S. Our District 91 voice in the Statehouse seeks to remove the July 1, 2015 deadline, thereby leaving the suspension intact “until the elevator is replaced or requires major modification”. Since an elevator modernization upgrades the system’s access capabilities, it inclusively cures Phase I and Phase II Firefighter Service issues. If Moraitis’ bill is successful, the budgetary impact of compliance will become a function of attrition rather than an assessment time bomb.
In compliance with s. 399.15(8), F.S., the Department of Financial Services adopted rules to determine the master key to be used in each of the emergency response regions. Galt Mile elevators must be retrofitted with the master key indicated for Emergency Response Region 7, which includes Monroe, Miami-Dade, Broward, Palm Beach, Martin, St. Lucie and Indian River Counties. As provided by rule 69A-47.015, F.A.C., the master key prescribed for region 7 is Yale Key No. R-80833-2006-7. If the reprieve in Moraits’ HB 319 fails to survive the 2012 legislative gauntlet, Galt Mile associations will have until July 1, 2015 to retrofit their elevators, plead out to the bureau or cut a deal with the Fire Marshal. Tick Tock.
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Florida Precipitates Primaries Meltdown
October 5, 2011 - In 2008, Florida lawmakers implemented a political strategy to heighten their state’s influence over the Presidential election. In an effort to temporarily monopolize the national spotlight, Republican lawmakers enacted legislation that moved the State’s Presidential Primary from March 6th to January 29, 2008.
This was done in defiance of a National Republican Party rule against state primaries or caucuses convened before February. Furthermore, the National GOP strictly limited February delegate events to the Iowa caucuses and presidential primaries in New Hampshire, Nevada and South Carolina. If Florida lawmakers adhere to the State’s currently mandated January 31, 2012 Presidential primary date, Florida stands to lose half of its 99 delegates, a prospect that would enrage grass-roots Republican activists. The penalty was prescribed by the Republican National Committee (RNC) to enforce a balanced and non-contentious series of State elections.
Largely in response to the rogue primaries held by Florida and Michigan in 2008, the RNC adopted a formal set of rules last year. After the early voting states hold their caucuses and primary elections in February, the RNC formal rules provides for states to hold contests in March in which delegates are allocated under various methods of proportional representation. States that schedule primaries during or after April are allowed to use a “winner-take-all” format. RNC officials claim that the structure is intended to increase nationwide participation and debunk a perception of Super Tuesday as the nation’s de facto Presidential Primary.
Intimidation by the national party leadership wasn’t limited to Florida Republicans. Breaking faith with the Democrat National Committee (DNC) 2008 election calendar also cost Florida Democrats dearly. Democrat presidential candidates boycotted Florida events and denied their coattails to struggling campaigns for local office.
Ironically, the 2012 Republican National Convention will be held in Tampa from August 27th through the 30th. A heated controversy has exploded among State and local Republican leaders over Florida’s refusal to comply with the National party’s election calendar. This national media event at the St. Pete Times Forum will provide despondent GOP diehards with a high profile backdrop for airing their conflict with intransigent lawmakers. Hoping to avoid comparable DNC penalties that could cost precious delegates, Florida Democrats are quietly supporting efforts to push the date back. Despite objections from their partisan core, Republican lawmakers have held fast to the 2008 PR strategy that has since evolved into a double-edged sword.
Lawmakers who are staunchly committed to holding the nation’s opening presidential primary also believe that if they close their eyes and hold their breath long enough, the National GOP would whip up an eleventh hour exemption for the embattled host of their national convention. Aware that such an undeserved reprieve for impenitent rule-breakers would constitute a slap in the face to Iowa, New Hampshire, South Carolina and Nevada and precipitate a coast to coast series of leapfrogging primaries, Republican National Committee persons repeatedly announced the absence of any mechanism in their rules to shield Florida Republicans from nationwide ostracism for their unsanctioned election.
Unwilling to concede Florida’s self-proclaimed Devine Right to the nation’s first presidential primary, House Speaker Dean Cannon commented “My big goal is that Florida belongs early in that dialogue and we have a default setting and that is at the end of January. So unless there’s a valid reason to change it and a specific plan for that, I think it belongs right where it is.” Duck, Duck, Goose!
|FLA HOUSE SPEAKER|
Evidently, the legislative leadership doesn’t consider getting whipsawed for half the state’s delegates while hosting the Republican National Convention to be a “valid reason” for negotiating a compromise with either their national or state party leaders. To further muddy the waters, the State’s nonpresidential primary for local, state and federal office is scheduled for August 28th, day 2 of the 4-day Republican National Convention in Tampa. This conflict should thin the ranks of State and local Republicans available to attend the main event. Instead, prospective Republican candidates will be forced to remain in their home districts and slug it out for a spot on the ballot.
As if caught in a tar pit of political pipedreams, Republican and Democrat state party leaders have expressed a belief that State lawmakers will postpone their rebellion against the national leadership and heal the rift. Shortly before his untimely passing on September 13th, Florida Republican Party Chair David Bitner voiced an expectation that legislators will reschedule the August primary until after both the GOP convention in Tampa and the Democratic convention scheduled for September 3 - 6 in Charlotte, North Carolina. Don’t hold your breath.
|FORMER FLORIDA G.O.P. CHAIR DAVID BITNER|
The key to this systemic scheduling breakdown was the Republican National Committee. The traditional early voting states grew increasingly angry while futilely waiting for the RNC to intensify its castigation of Florida. A suggested presidential boycott of media events in the Sunshine State was largely ignored. Considering the boost Florida gave to Republican candidate John McCain in 2008, the RNC thought better of throwing Florida under a bus.
|FORMER GOVERNOR CHARLIE CRIST|
WITH CANDIDATE JOHN MCCAIN
In a last ditch effort to maintain the early voting states’ historically significant primary pecking order and preserve the RNC’s credibility, on September 29, 2011 – two days before the October 1st RNC deadline for scheduling elections – Nevada GOP leaders suggested some compromise measures to address Florida’s scheduling indiscretions. Instead of punishing non-compliance, their proposals would reward compliance. For instance, they suggested that the RNC offer Florida preferential treatment on the convention floor or invitations to special VIP events if they would agree to follow the rules. When the RNC balked, the early voting states realized that the national committee planned to impotently tolerate Florida attempts to usurp their election standing.
Having measured the extent of RNC resolve (or lack thereof), Nevada decided to sacrifice half of its 28 delegates and move its election from February 18 to January, monkey wrenching Florida’s plan to corner the politically potent first presidential primary. Not to be outdone by their fellow early voting state, Iowa, New Hampshire and South Carolina followed Nevada GOP Chair Amy Tarkanian’s lead and mirrored Nevada’s move to January. While half of New Hampshire’s 27 delegates, South Carolina’s 50 delegates and Florida’s 99 delegates are headed for the dumpster, Iowa will preserve its 28 delegates since its caucuses are non-binding. The RNC violation only applies to states that actually elect delegates during their rogue elections. Also defying a joint RNC-DNC scheduling rule are Michigan and Arizona. Arizona decided to forego soliciting the RNC’s blessing before moving its presidential primary from March 6th to February 28, 2012. In 2008, Michigan joined Florida in flouting the national party leadership and unilaterally opted to move forward its nominating contest. Its state lawmakers have since enacted a statute setting their unsanctioned primary on the 4th Tuesday in February.
|NEVADA REPUBLICAN PARTY|
CHAIR AMY TARKANIAN
When Florida and Michigan broke the RNC and DNC rules in 2008 with their unauthorized January primaries, the DNC initially threatened to void their pro-Hillary Clinton election results and later agreed to a 50% vote penalty (however, when Obama ultimately locked up the nomination and the DNC was no longer concerned about a rule-breaker determining an important electoral outcome, Democrat Party leaders agreed to fully reinstate their vote totals). Alternatively, the RNC responded with a partial carrot and stick approach. After penalizing the non-compliant Florida and Michigan presidential primaries by ousting half their delegates, the RNC actually rewarded Florida with a political plum – the 2012 Republican National Convention. The mixed signals sent by the RNC evidently emboldened Florida’s legislative leaders, who thereafter decided to ignore RNC attempts to prevent their elbowing their way past the early voting states.
|2012 GOP NATIONAL CONVENTION AT ST. PETE TIMES FORUM|
The stepped up flouting of RNC and DNC rules will force party leaders on both sides of the aisle to closely scrutinize the delegate system and decide whether it is an arcane, largely ceremonial holdover that begs wholesale replacement or a salvageable process that can be revitalized. When Nevada Republicans decided to surrender half their delegates by leapfrogging Florida and moving their election to January, former Nevada Governor and Executive Board member Robert List explained, “We think the convention has become a bit of a formality. Our nominee will be decided by then. Forfeiting a few delegates is not nearly as important as preserving the very important role Nevada has now as an early voting state.”
GOVERNOR ROBERT LIST
There is no reason to believe that the States have finished leapfrogging their primaries. When the RNC passed the rule imposing a 50% delegate penalty on states that go out of their allotted turn, it left them no discretion to either reverse or strengthen the penalty. Any State willing to sacrifice half its delegates will suffer no incremental punishment for changing its primary date after the October 1st deadline.
In a testament to irony, for all of Florida’s maneuvers to bulk up its electoral influence by staging an early primary, our lawmakers’ strategy could easily backfire. Since states holding elections before April must award delegates proportionally, the 48 delegates left to Florida after the RNC penalty will be distributed by congressional district, further diluting the state’s diminished delegate impact. In 2008, the momentum provided by Florida’s January 29th Primary influenced the huge delegate allocation from the February 5th, 24-State Super Tuesday event a week later. In 2012 – because of Florida’s unilateral decision to move up its election – the early voting states sacrificed half their delegates, a handful of primaries remain in February and only ten states are planning to participate in Super Tuesday on March 6th – more than a month after Florida’s rogue primary. By the end of February in 2008, 1400 delegates were bound to candidates. Since ten times fewer delegates will be committed by late February in 2012, the 48 delegates that Florida must divide among the surviving candidates should generate little more than a predictive ripple, not the kind of decisive outcome that drives public opinion and sweeps candidates into office.
After the sanctioned move of their nominating events, California’s 172 delegates will be allocated in June and New York’s 95 delegates will be doled out in April, allowing both mega-states to award all their delegates to the popular winner of each election. Since it is unlikely that the 2012 contest will be decided by February, the spotlight coveted by Florida legislators will probably illuminate either California or New York’s winner-take-all primary.
Unless the RNC and DNC can agree on effective enforcement for rules governing State elections, the message that States will take from these rogue primaries is that it’s better to ask for forgiveness than to ask for permission. If the national committees continue to sit on their thumbs, we may soon see half the nation’s primaries before the ball drops in Times Square.
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September 20, 2011 - In his September 2011 Newsletter, District 91 Statehouse Representative George Moraitis brings focus to a critically important financial opportunity that, if managed properly, will inject $billions into the local economy, funnel truckloads of tax revenue into state and regional coffers, and pluck thousands of local residents from the unemployment rolls. When the Panama Canal is reconfigured to accommodate supersized transports, tankers and cruise ships in less than three years, plummeting shipping costs will significantly pump up international patterns of commerce. Port Everglades will have to compete with other East Coast and Gulf ports for an impending trade windfall that could amp up a steroidal jerk to the State and local economic recovery. Moraitis intends to bag the financing required for implementing a County “Master Plan” to prepare the Port for this bonanza.
|REP MORAITIS ON PORT UPGRADE|
The Panama Canal Authority has operated the Panama Canal since the 1977 Torrijos–Carter Treaties ceded sovereignty from the United States to Panama on December 31, 1999 - following a twenty year interim period of joint U.S. – Panamanian administration. An autonomous agency of the Panamanian government, the canal authority is managing a $5.25 billion expansion project that will double the annual volume of cargo through the century-old 51-mile shortcut connecting the Atlantic and Pacific oceans. Although far from the world’s largest infrastructure project, the Authority’s Executive Vice President Jorge L. Quijano noted, “but this is the one that has the most foreign impact. And I think it has the most impact on the United States.”
The canal’s two lanes, which are each bookended by sets of three locks on both coasts, can currently accommodate ships up to 965 feet long and 106 feet wide — a configuration called “Panamax”. Despite operating at peak throughput of about 35 to 40 ships per day, dozens of ships are perpetually moored off the Atlantic and Pacific coasts, each awaiting its turn to enter the canal. In addition to handling another 15 ships a day, an enlarged third lane and surrounding locks planned in the expansion will handle ships that are 25% longer, 50% wider and with a deeper draft. To differentiate the new supersized configuration from its Panamax predecessor, oceangoing monsters dimensionally designated as “post-Panamax” or “New Panamax” will carry twice to three times the cargo of more modest Panamax vessels.
|PANAMAX VESSEL ENTERS LOCK|
Although it’s impossible to accurately predict the overall economic impact of this project, by providing faster and cheaper shipping of goods between the United States and Asia, it will allow American farmers and manufacturers to better compete with South American and European counterparts, including providers that currently benefit from cheap labor and primitive, low-maintenance infrastructure. However, before the United States can actualize this trade advantage, U.S. ports in the Gulf and along the east coast that hope to compete must first deepen their harbors and expand their cargo handling facilities.
|PORT OF CHARLESTON|
In preparation for the projected August, 2014 completion of the canal’s expansion, Savannah, Georgia plans to deepen the Savannah River from 42 feet to 48 feet; New Orleans is in the second phase of a three-part $500 million improvement project, the Virginia Port of Norfolk and the port city of Baltimore, Maryland are currently the only East Coast ports that offer a 50 to 55 foot channel depth. Brownsville, Texas has a $90 million upgrade in the works. The Port of Charleston in South Carolina has allocated $1.3 billion to fund the structural and operational improvements required to berth and offload mega-vessels. The Port of South Louisiana, the tonnage king of U.S. ports, is at ground zero for deepwater access to the Mississippi River, 4 interstate highways, 4 Class I Railroads and two airports. In the coastal marathon between South Florida’s most promising entries, although Miami nosed out Port Everglades in cruise passengers and containers (TEUs), Port Everglades handled three times as much cargo.
|PORT OF NEW ORLEANS|
One of the three busiest cruise ports worldwide, Port Everglades is an invaluable regional economic powerhouse. With more than 4,200 ship calls annually, it is also one of Florida’s leading container ports. A self-supporting Enterprise Fund of Broward County government with operating revenues of approximately $117 million in Fiscal Year 2008, the total value of economic activity at Port Everglades is nearly $18 billion annually. The 200,000 Florida jobs supported by the Port provide $7 billion in yearly wages and ply local and State treasuries with $623 million in annual tax revenues.
Despite its world class assets, unless a Master Plan approved by the Broward Board of County Commissioners adapts Port Everglades’ infrastructure to process post-Panamax shipping, it will never realize its potential. When the Army Corps of Engineers reviewed and enumerated the port’s competitive shortcomings, Port Everglades Director Phil Allen summarized the regional goal, stating “This is a two-pronged plan to expand berth capacity and increase operating depths that points to the comprehensive strategy to meet future service demands. We are pleased with the Army Corps’ recent findings because they justify the need for a deeper harbor at Port Everglades to handle the increase of ship traffic that we expect to see as a result of the Panama Canal expansion and the anticipated growth of the market in South Florida.” In the following letter to constituents, Representative George Moraitis fleshes out the plan’s priority objectives. - [editor]
Your Florida Legislature is committed to doing what is necessary to stimulate job growth and improve the prosperity of our great State.
|REPRESENTATIVE GEORGE MORAITIS|
We have a great opportunity to take advantage of the expansion of the Panama Canal, which Panama has undertaken so that larger and heavier ships will be able to use the canal. With the widening of the Panama Canal, many ships which now unload their cargos on the west coast of the United States will instead be able to pass through the Panama Canal and unload their cargos in ports along the east coast, including Port Everglades.
In anticipation of the opportunities that this expansion will create for increased business in and around Port Everglades, the Broward County Board of Commissioners approved the Port Everglades 20 Year Master/Vision Plan. The information about the projects below comes from the Office of the Port Everglades Director Phillip Allen, who has done an outstanding job with his team planning for this great opportunity. Funding these projects outlined below will require a combination of state and federal dollars. Providing this funding will be my highest priority as we begin our next legislative session in January.
One of the plan’s critical projects is the Southport Turning Notch Expansion, which will lengthen the existing deepwater turn-around area for cargo ships from 900 feet to 2,400 feet. This will allow five new cargo berths to be built. This project alone would be expected to increase the economic activity in our area by $10.7 billion annually. This expansion would be expected to create approximately 2,220 construction jobs in the short term and an additional 5,529 regional jobs by 2027 if completed according to the Master Plan.
A second project is the U.S. Army Corps of Engineers Deepening and Widening Program. This project will deepen the channel to meet the needs of the larger ships with heavier loads that will be able to transit the Panama Canal. This will allow our port to reap the full benefits of the increased shipping traffic which will result from the expansion of the Panama Canal. Widening and deepening the channel at Port Everglades would be expected to create 4,659 construction jobs now and 1,491 regional jobs by 2027 if completed according to the Master Plan.
The third project is the development of an Intermodal Container Transfer Facility, which will be used to transfer international containers directly between ship and rail, instead of having the containers hauled to and from off-port rail terminals. This project is expected to create 767 construction jobs and should be completed by late 2013.
Port Everglades, with an approximate value of economic activity of $14 billion, is already a powerful economic engine for this region. The expansion of the Panama Canal together with implementation of the Port Everglades 20 Year Master/Vision Plan will help ensure that this figure will only increase through the years. As stated, these projects will require a substantial commitment from our limited state and federal resources during these challenging times.
I am honored to represent you in Tallahassee as we fight to stimulate job growth and to strengthen our economy for a better future.
State Representative - District 91
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Senator Ellyn Bogdanoff on
July 26, 2011 - In keeping with her longstanding policy of notifying constituents about projects and decisions that directly impact their lives, Florida Senator Ellyn Bogdanoff launched a campaign to engage her District 25 residents in a redistricting process that will heavily influence how political power is distributed both locally and across the state. Redistricting is the redrawing of district boundaries of congressional and state legislative electoral districts to adjust for various growth rates in different parts of the state. Districts determine which voters participate in which elections for choosing representatives in the U.S. House, State Senate, and State House.
|SEN. BOGDANOFF ON REDISTRICTING|
Bogdanoff celebrates new technology that enables every Florida citizen to move from the audience to the playing field. The Florida Senate and Statehouse uploaded user friendly redistricting software to their web sites. District Builder is a full-featured Internet application for modeling and analyzing Florida congressional, senatorial, and house districts. Using District Builder, legislators and citizens can navigate interactive maps, explore population characteristics, and build districts. District Builder continuously updates population characteristics when districts change, and it simplifies creating maps and statistical reports in PDF format. Focused solely on redistricting, it provides all the functions and information necessary for building representative districts. Florida is the first state that could be redistricted by its citizens. Anyone living on the Galt Mile can now author a plan that provides the basis for our electoral clout. The following is Senator Bogdanoff's entreaty to constituents: - [editor]
What a long way we have come!
|HOLDING A COMPUTER PRINTOUT IS HOUSE SPEAKER E.C. ROWELL WITH SENATE|
PRESIDENT JAMES D. CONNOR AT HIS SIDE. OTHERS SHOWN ARE (l-r) J. ED STRAUGHN,
DIRECTOR OF THE FLORIDA REVENUE COMMISSION; E.G. FRAISER, SECRETARY
OF THE SENATE; REPRESENTATIVE GEORGE STONE, HOUSE FLOOR LEADER;
AND MRS. LAMAR BLEDSOE, CLERK OF THE HOUSE OF REPRESENTATIVES (1965)
This picture is in the hallway of the House office building. I used to walk past it every day and think about how far we have come to encourage public participation and involvement in government.
Your input is especially important during this once-a-decade redistricting process, and I am proud that we have invested in the technology that allows Florida to lead the nation in public involvement.
Anyone with internet access and a computer can get full use of the same District Builder web application that Senators and our professional staff use, complete with block-by-block census data from the U.S. Census Bureau.
To get started, register for a secure District Builder account at: http://www.flsenate.gov/Session/Redistricting/sign_up.cfm
To learn more about District Builder before registering, view the online Help Manual: https://db10.flsenate.gov/db1/help/
This powerful, easy-to-use web application allows you to explore demographics, model districts, and evaluate plans for our area. The concrete proposals that you build and submit, in addition to your participation at the hearings listed below, will directly influence how I shape my proposal for Florida’s new congressional, senatorial, and representative districts.
The Legislature’s Redistricting Committee set up a series of public hearings to listen and learn how you want the laws and standards governing redistricting to be implemented, and how you think districts should be drawn in your area to advance the community’s shared interest.
Submitting your plan is one of the best ways to show what you feel works for our community, and it will be part of the public record of the Senate and House committees, and available for public review on the Legislative Redistricting webpage.
The hearings in our area are:
- Monday, August 15, 2011 (6:00 - 9:00 PM)
- Tuesday, August 16, 2011 (10:00 AM – 1:00 PM)
- Tuesday, August 16, 2011 (6:00 - 9:00 PM)
Following the joint hearings, there will be meetings of the Senate and House committees for Senators and Representatives to reflect on what we have learned and pose questions or offer viewpoints and proposals. My staff and I will be reviewing the proposals from our area in the interim, so make sure you sign up for District Builder and submit your plans.
If you cannot make it a meeting, you can also email comments or suggestions to me at Bogdanoff.Ellyn.Web@flsenate.gov, to the Redistricting Committee at RedistrictFlorida@flsenate.gov, or feel free to call my office at 954-467-4205 with any additional questions or concerns.
I look forward to working with you during this exciting process.
All the best,
Ellyn Setnor Bogdanoff
State Senator - District 25
There is no reason why you can't do this. We've all watched our elected officials in Tallahassee and Washington perform - with varying degrees of competence - the tasks with which we charged them. With all due respect, some of them are challenged by simultaneously walking and chewing gum. If they can learn to use this software, you can as well. By registering for an account, creating your own plans, and bringing concrete recommendations to public hearings, you can usurp a process that was previously the fiercely defended turf of lawmakers and legislative staffers.
|PLACE CURSOR OVER COUNTY TO VIEW LOCAL 2010 CENSUS DATA|
The District Builder Help Manual opens in your browser. It is a lengthy document, but the interactive Table of Contents provides easy links to topics you choose. You can use your browser's back and forward buttons to navigate the document and search feature (Ctrl + F) to search for key words. A handy Back to top link appears after many topics.
The best way to get started is to read the District Builder Overview and work through all lessons in the Quick Start Tutorial. Most users will learn best if they actually practice the exercises on their own computers. After completing all the lessons, you will have good basic knowledge about using District Builder to model districts. At that point you may want to jump in to the application. Once you are familiar with how this document is organized, you can return whenever you need information about a specific topic simply by clicking the Help icon beneath your username. Piece of cake!
Who Rewrote our Redistricting Rights?
In early 2010, a redistricting reform advocacy group called “Fair Districts Florida” (AKA “Fair Districts Now”) populated petitions with more than a million signatures to insure that Constitutional Amendments 5 and 6 were placed on the November 2010 Florida ballot. Subsequent approval by at least 60% of the electorate would amend the State Constitution and change the way state legislative districts (Amendment 5) and congressional districts (Amendment 6) were drawn. In short, the amendments would require that districts be contiguous, compact, roughly equal in population size and use existing city/country boundaries when possible.
The Republican controlled legislature went ballistic. Legislative leaders stitched together HJR 7231, a third amendment which they planned to group with the other two on the November 2010 ballot. Unlike the two grass roots reforms that were approved by more than a million Florida voters, HJR 7231 (Amendment 7) was engineered by a few openly conflicted lawmakers despite objections from peers on both sides of the aisle. Although their smoke and mirrors alternative contained many of the same provisions, the eleventh hour ringer was distinguished by what it omitted.
Two days before the September 2nd deadline for placing issues on the November ballot, the Florida Supreme Court voted to boot Amendment 7 from the ballot, declaring its ballot summary “confusing and lacking critical information” since it neglected to inform voters that, if passed, lawmakers would no longer be required to craft districts that are contiguous. The Galt Mile could have conceivably been pasted into a district in downtown Hollywood... or Gainesville... or the Krome detention center. The court also rejected a last ditch Statehouse maneuver to excise Amendments 5 and 6 from the ballot.
Despite legislator attempts to subvert the citizens’ ballot initiative, 63% of the voters in the November 2010 election successfully fitted the Florida Constitution with new redistricting standards that replaced nearly two centuries of cultural reassignment, racial gerrymandering and partisan vote dilution with district lines based on factors unrelated to party and incumbency.
Before the new Amendments were approved, the Florida Constitution viewed gerrymandering as a legal enterprise, not unlike bungee jumping, paintball or racial profiling (see Patriot Act). In 2002, the fact that newly drawn districts were not compact or community based formed the basis of a political gerrymandering challenge to the redistricting plan. It was rejected by the Florida Supreme Court because compactness and adherence to community boundaries “are not constitutionally required.” [In Re: Constitutionality of House Joint Resolution 1987, 817 So. 2d 819, 832 (Fla. 2002).] Thanks to the citizens of Florida, these criteria are now ensconced in the Florida Constitution (while minority voting rights were previously guaranteed by federal statute, they are now redundant in the State Constitution).
Since many Florida Legislators have historically treated constitutional dictums as irrelevant decorative accessories ranked somewhere between dreamcatchers and doormats, the reforms in Amendments 5 and 6 that mandate equal opportunity for minority communities and the formation of contiguous and compact districts that are roughly equal in population were accompanied by a novel enforcement strategy. A principal author of the amendments, Jon Mills [Dean Emeritus, University of Florida Levin College of Law; Florida House of Representatives (1978-1988); Speaker (1987-88); Professor of Florida Constitutional Law; Style and Drafting Chair of the 1998 Florida Constitution Revision Commission] sought to preclude backsliding lawmakers from circumventing the new criteria in an effort to manipulate district boundaries for personal and/or political purposes.
In the past, the official redistricting public record only included comments about that part of the process that preceded creation of the new district maps. Therefore, nothing in the redistricting paper trail indicated when lawmakers failed to correct deficiencies about which they were unquestionably aware (and often helped to create). To help clarify the amendment’s enforcement mechanism, Mills offered a description of how the official record would be maintained going forward, stating “The public, the press and non-governmental organizations will have the opportunity to comment before and after the Legislature draws the initial maps...”
By allowing the process watchdogs a chance to give input after the Legislature draws the initial district maps, the amendment provides them with an opportunity to place into the public record any evidence of a district’s constitutional inadequacy. In other words, any failure by the Legislature to comply with constitutional standards will become part of the public record. Within 15 days of a plan’s legislative approval (by joint resolution), the Attorney General must petition the Florida Supreme Court for a declaratory judgment confirming the plan’s validity. This is where it gets interesting.
If the legislature corrects shortcomings identified in the public record, the amendment’s purpose is served. However, if the legislature ignores the warnings and creates districts that are constitutionally deficient, the public record would contain evidence that the non-compliant districts were created by lawmakers who were fully aware of their deficiencies, thereby demonstrating intent to favor a party or incumbent.
The Supreme Court kicks the tainted plan to the Governor who gives the legislature a 15-day extraordinary apportionment session to address judicial concerns and straighten out the bogus boundaries. The AG once again petitions the Court for a validating declaratory statement. If the legislative revision still resembles a nest of boa constrictors and reeks of political patronage, the Court has sixty days to file an order with the custodian of state records to make the apportionment.
Mills’ strategy kills two birds with one stone. When redistricting deficiencies that are not cured by public debate are challenged in court - where constitutional standards are enforced - in addition to requiring a redraft, the court can establish intent to manipulate electoral outcomes. Since no public official with a functional survival instinct will risk complicity in such a politically fatal endgame, lawmakers grudgingly released their death-grip on the redistricting process.
Citizens and public officials are already using the new redistricting software available on the Statehouse website to create plans eligible for legislative approval. Constituent input is being harvested at 26 Public Hearings around the state between June 20th and September 1, 2011. Beginning in the fall, redistricting Committees from the Statehouse and Senate will cogitate and digest the hearing data through December. The final maps will be voted on during the 60-day 2012 legislative session which opens on January 10, 2012. After legal reviews held from February through June, candidates will qualify for State and Federal offices between June 4 and 8, 2012. Following the August 14, 2012 Primaries, the General Election will take place on November 6, 2012.
|FL SEN. ELLYN BOGDANOFF|
While some politicians mourned their lost monopoly, others - like Bogdanoff - decided to make the most of the open redistricting process by enlisting participation of constituents. After all, one of the adages that helped fuel our talented District 25 Senator’s meteoric career is, “If you can’t beat them, lead them.” – [editor]
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CAN Convenes Legislative Round Table
South Florida Pols meet Association Officials
June 24, 2011 - On June 16, 2011, the three name partners of Katzman Garfinkel Berger came to work early. With offices in Miami, Orlando (Maitland), Naples and Fort Lauderdale (Margate), the three principals in one of the State’s top firms practicing association law cleared their schedules and met at their sprawling Fort Lauderdale campus in Margate.
|KATZMAN GARFINKEL BERGER FORT LAUDERDALE CAMPUS|
A few years ago, Founding Partner Leigh Katzman decided to take advantage of the real estate crash. While scouting properties for a new headquarters, he saw an embarrassingly large former claims processing center previously occupied by Allstate. The huge 33,000 sq ft building set on a 6 acre campus was a steal. Katzman grabbed it. He had plans for the extra space.
Katzman had just scored a corporate staffing coup. For years, he watched one of rival Gary Poliakoff’s associate lawyers develop a concept unique to his field of practice. A high-powered legal speedball named Donna Berger created an association advocacy organization for Poliakoff. The new network, which she called the “Community Association Legislative Lobby” or CALL, was built on the personal relationships Berger cultivated with association leaders in Naples, the Galt Mile in Fort Lauderdale, Tampa, Miami, Miramar, Orlando and Tallahassee.
Unlike other association attorneys in Poliakoff’s fold, Berger met regularly with neighborhood, civic and community associations notwithstanding their status as clients. Upon hearing first hand their problems and concerns, Berger realized that many of the supposed experts on association issues were either “out of touch” or based their opinions on self-serving assumptions.
Over the next few years, Berger worked closely with the Galt Mile Community Association (GMCA), the Gulf Shore Association of Condominiums (GSAC), the Alliance of Delray, Century Village, the Broward Coalition, Wynmoor Village, Coalition of Boynton West Residential Associations (COBWRA), and a host of other politically active neighborhood and community associations. When Miami Representative Julio Robaina filed a series of poorly conceived association bills, Berger chartered a flight to Tallahassee, providing hundreds of angry association officials with an opportunity to personally voice their objections. Working with the firm’s lobbyists, she provided House and Senate vetting committees with testimony exposing the adverse impacts of bills that were disingenuously promoted as pro-association legislation.
|DONNA BERGER CHARTERS JET TO TALLAHASSEE|
Since Gary Poliakoff wrote the book on Florida Association law, Berger thought that her boss would undoubtedly see the intrinsic value of her unique new enterprise. Poliakoff dropped the ball. Mistakenly believing that he - not Berger - was the secret ingredient in CALL’s success, Poliakoff offered Berger promises instead of a partnership. Always the opportunist, Katzman struck while the iron was hot. Overnight, Berger was duplicating an association advocacy network for her new law firm Katzman Garfinkel Rosenbaum. With access to her new firm’s outreach and resources, the Community Advocacy Network (CAN) would soon bypass CALL in credibly representing association interests.
Among the reasons she transferred her flag from Becker & Poliakoff to Katzman was her new firm's client policy. Unlike her former employer, Katzman limited his firm’s focus to practice areas that impact associations. Conversely, they don’t represent developers, banks, etc whose interests are often diametrically opposed to those of their association clients. Despite vehement claims to the contrary, law firms that represent clients on both sides of an issue generally resolve their conflict of interest in favor of the more lucrative client relationship.
Having lost Berger, Poliakoff handed CALL (now renamed the “Community Association Leadership Lobby”) to two other firm lawyers, David Muller of Sarasota and Yeline Goin of Tallahassee. While Muller and Goin are good lawyers, they lacked Berger’s personal credibility with Community Association leaders. Now a name and managing partner at Katzman Garfinkel Berger (KG&B), Donna soon built CAN into the vehicle she envisioned while creating CALL for her former firm.
|YELINE GOIN AND DAVID MULLER|
In short order, she implemented a Board Member Boot Camp to teach new board members how to fulfill their responsibilities, organized Community Forums, provided monthly board member certification courses, joined or displaced Poliakoff as the community association correspondent for prominent Florida media outlets (like the Sun Sentinel) and teamed closely with popular Florida lawmakers on both sides of the aisle. To strengthen credibility with community associations, she created a policy-making Advisory Council comprised of activist association officials from across South Florida.
In 2010, CAN was instrumental in bringing then Representative Ellyn Bogdanoff’s Omnibus Association bill (SB 1196) – widely known for its sprinkler retrofit relief provision – to fruition. The November 2010 elections elevated Bogdanoff into the Florida Senate as her vacated District 91 Statehouse seat went to political neophyte George Moraitis. In 2011, CAN assisted rookie Representative Moraitis with his Omnibus Association bill (HB 1195), which corrected glitches in his predecessor’s landmark legislation and addressed other long-neglected statutory missteps. Having hit home runs in Tallahassee two years running, CAN Executive Director Donna Berger scheduled a Legislative Round Table for June 16, 2011, ostensibly to compile a wish list in preparation for the 2012 session in Tallahassee.
|FL SEN. ELLYN BOGDANOFF|
The Round Table had other less publicized objectives. In addition to celebrating past CAN successes, it provided local legislators with a platform for explaining their positions on controversial issues and created a networking opportunity for KG&B clients - all in a somewhat self-congratulatory atmosphere designed by and for the CAN Advisory Council. Following a buffet luncheon, roughly 200 association officials and lawmakers were shepherded into the law firm’s Law and Learning Center auditorium.
|MORAITIS, ADVISORY COUNCIL MEMBERS, PIO IERACI|
After introducing Advisory Council members and CAN sponsors in the audience, Berger presented Representative Moraitis with a plaque recognizing him as CAN’s “Legislator of the Year”. Berger announced “The Community Advocacy Network is proud to present this first-annual CAN Legislator of the Year Award to Rep. Moraitis, who managed to marshal key community association legislation through the lawmaking process in Tallahassee like a veteran, even though this was his first year serving in the State Legislature.” After returning the compliment to CAN members for their support, Moraitis modestly reviewed some of the association benefits in his legislation.
|BERGER NAMES REP. MORAITIS LEGISLATOR OF THE YEAR|
The bill Moraitis ultimately nursed through the Legislature was originally four bills. Senator Jeremy Ring and Moraitis filed sister bills in the House and Senate that built on Bogdanoff’s 2010 legislation. Since Berger assisted with drafting the legislation, the bills were supported by the Community Advocacy Network (CAN) and drew on resources provided by Katzman Garfinkel Berger. Another set of sister bills filed by Senator Mike Fasano and Rep. James Grant sought to correct glitches and otherwise clarify Bogdanoff’s earlier legislation. Since Becker & Poliakoff contributed heavily to their content, the legislation was backed by the firm’s Community Association Leadership Lobby (CALL).
|SEN. JEREMY RING|
As the session progressed, it became evident that neither set of bills could survive on their own. The two legal powerhouses decided to join forces and merged the key provisions of their respective bills into one vehicle guided by Fasano and Moraitis. Suddenly, CALL lobbyists began pressuring Moraitis to replace productive CAN provisions with regulations that benefitted their employer’s non-association clients. While CALL lobbyist Travis Moore addressed the House Economic Affairs Committee about HB 1195, 3 amendments were proposed to allow condominium, cooperative and homeowner associations to charge delinquent owners for collection services by community association management companies. As the past due remittances were collected, the funds would first be applied to pay the management firm, legal fees next and lastly the association. Although bounced for lack of support, it’s no coincidence that Moore also represents the Continental Group, Inc, a subsidiary of the giant Canadian First Services conglomerate and the parent company of Continental Management, the state’s largest community association management firm.
|SEN. MIKE FASANO|
Moore, along with lobbyist and bill supporter Peter Dunbar, pushed Moraitis to eliminate a CAN provision requiring insurance companies to notify unit owners when their condominium’s master insurance policy is cancelled by unilateral board action, affording them the opportunity to reverse its potentially ruinous impact. Not surprisingly, Dunbar and Moore also represent insurance interests. Earlier, they squelched a provision that would have replaced the hopelessly skewed HOA election process with the more equitable format mandated in the Condominium Act. Also stripped from the bill was a requirement that third party purchasers at a judicial foreclosure sale pay all costs due on the property, not only the past due assessments. Moraitis was moderately successful in foiling the CALL lobbyists’ repeated attempts to leverage their assistance with the bill in exchange for covert gifts to the law firm’s non-association clients.
To his credit, Moraitis told the audience that potentially contentious collections should remain the business of associations and their legal representation, not an income vehicle for management companies. While the reason for Moraitis’ seemingly impromptu statement was lost on some of the attendees, those familiar with the lobbyists’ conflicted manipulation of Moraitis’ bill nodded in agreement.
Joining Moraitis on the Berger’s panel of lawmakers was Westin Rep. Franklin Sands, Coral Springs Rep. Ari Porth, Naples Rep. Matt Hudson and Deerfield Beach Rep. Gwyndolen Clarke-Reed. Also invited were Representatives John Julien, Daphne Campbell, Hazel Rogers and Lori Berman. Florida Governor Rick Scott and CFO Jeff Atwater, along with lawmakers unable to attend, were represented by staffers from their respective offices. When Berger opened the Q & A period, Moraitis was asked for his take on the conflict between banks and associations.
|SANDS, CLARKE-REED, PORTH, KATZMAN, BERGER, MORAITIS, HUDSON, GARFINKEL|
The first year representative framed the clash in terms of perspective. From an association’s standpoint, when banks drag out foreclosure proceedings, Moraitis asserted “They enable deadbeats to continue living off their neighbors’ contributions.” Much of the animosity heaped on lenders results from unit owner anger over having to carry neighbors who stopped paying their fair share of the common expenses. Since a prospective association lien is inferior to one held by the bank, dues-paying owners want the lender to foreclose and recycle the defaulted property into a productive contributor. Moraitis said “In many cases, not only are the unit owners’ property values at stake, but the very survival of the association.” When facing this kind of sustained anxiety over what is often their primary asset – their home – unit owners will commonly “blame the bank instead of the deadbeat”.
|AUDIENCE OF ASSOCIATION OFFICIALS|
Moraitis added “Banks view this issue from a strictly financial perspective.” Once the bank forecloses, they must take title to the property and record any loss from the defaulted mortgage. Acquiring title also triggers a statutory financial obligation to the association. “Once they take title under current law, lenders must begin paying the lesser of 12 months of assessments or 1% of the mortgage obligation,” commented Moraitis. Lenders naturally seek to delay that event for as long as possible, thereby postponing the requirement to write down the loss while paying assessments to the association.
The panel was then questioned about the expected increase in insurance rates. Announcing that he will be term limited out after next term, Rep. Franklin Sands opened by admitting that he has “nothing to lose by giving a non-partisan response to a complicated question.” Sands said that after the 2004 - 2005 serial hurricanes, many insurance companies went broke; others left the state and the few that remained threatened to leave unless they were permitted to significantly raise premium rates to keep pace with skyrocketing reinsurance costs. To protect themselves, national carriers created shell corporations (i.e. Allstate Floridian and State Farm Florida) to transact Florida business. If their Florida dummies went belly up, the liability wouldn’t savage their national namesakes’ fiscal health.
|REP. FRANKLIN SANDS DISCUSSES INSURANCE|
Sands said “Insurance is based on the Law of Large Numbers.” In probability theory, the law of large numbers is a theorem that describes the result of performing the same experiment a large number of times. According to the law, the average of the results obtained from a large number of trials should be close to the expected value, and will tend to become closer as more trials are performed. It is relevant to insurance because it “guarantees” stable long-term results for random events such as automobile collisions and hurricanes.
Since windstorm events in Florida are primarily covered by the state operated Citizens Property Insurance Corporation, the state insurance industry as currently configured can’t take advantage of the risk mitigating benefits of the law. If a sizable hurricane hits, Citizens will not provide a safety net. Instead, it will simply serve as the vehicle through which every Florida insurance customer will pay for the total damage costs.
Sands asked audience members to imagine themselves as out of state carriers considering entry into the current Florida market. In addition to an intolerable tangle of regulations that prohibit carriers from adjusting rates to changing costs, the main competition - Citizens - can use taxpayer subsidies to undercharge for identical coverage. Sands concluded that no responsible business would risk competing in such an environment.
|SEN. GARRETT RICHTER|
Representative Ari Porth - who repeated Sands exhortation about being term limited out of office – explained that the recently passed Senate Bill 408 filed by Senator Garrett Richter addressed some of the State’s largely misunderstood insurance problems. Porth was pleased by the new law’s protections against the rampant fraud perpetrated by policyholders claiming sinkhole damage and public adjusters that thrive on bleeding carriers. He was less enthusiastic about the abbreviated filing deadlines for hurricane and sinkhole claims. Porth asserted that SB 408 blended some regulatory improvements with unjustified gifts to the insurance industry. However, both Porth and Sands admonished that Florida policyholders should expect a world of pain before competition brings real relief to the State’s broken insurance market.
|REP. ARI PORTH|
Making a stab at partisan humor, Republican Matt Hudson told Democrat Sands that he’s not used to agreeing with him. Hudson confirmed his colleagues’ fears about the difficulties Floridians will have to endure to revive a competitive insurance market. He insisted that unless Citizens is returned to its original mandate, the insurer of last resort, Floridians would continue to remain at risk for any substantial disaster.
|REP. MATT HUDSON - CHANGE CITIZENS INSURANCE|
For the balance of the hour devoted to Q & A, lawmakers addressed hurricane preparedness, the $100 statutory maximum allotted for background checks and the Legislature’s Committee Review process. Additionally, they tried to explain why the numerous association bills filed each year eventually morph into a single omnibus vehicle that lawmakers vote up or down. While the CAN event provided participants with a productive exchange of information, little consideration was given to next year’s legislative goals.
Prior to the lawmaker Q & A, Representative Moraitis met with several members of the GMCA Advisory Board. After speaking with Galt Ocean Club’s Mary Short, Regency Tower’s Eileen Bendis, Commodore’s Richard Bazerghi and Ocean Club’s Ron Bibace, Moraitis met with GMCA President Pio Ieraci and Vice President Eric Berkowitz. When Moraitis attended the June 6th GMCA Presidents Council meeting with Senator Ellyn Bogdanoff, City Commissioner Bruce Roberts and County Commissioner Chip LaMarca, he learned that a representative Advisory Board sets policy for the neighborhood association.
|MARY SHORT AND ERIC BERKOWITZ|
Within weeks of winning the District 91 seat in November, Moraitis was catapulted into legislative preparations for the January session. With the session now behind him, he took a page from his predecessor’s playbook and decided to solicit constituent input. Of the CAN Advisory Council members with organizations that provided support for his bill, only Pio Ieraci’s Galt Mile Community Association is wholly comprised of District 91 constituents. To extend his tenure in the Statehouse beyond next year, Moraitis would need the Galt Mile.
When informed that the Advisory Board would be recessed for the summer, Moraitis asked the two association officials if he could participate in the meetings when they resume. They would address the legislative wish list overlooked during the CAN event. Through their Advisory Board representatives, each Galt Mile association will have an opportunity to recommend improvements to Chapters 718 and 719 – the Condominium and Cooperative Acts. After all, Moraitis has already demonstrated that he can deliver the goods. Think of it as a homework assignment due by autumn.
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Richter Rocks Rates
Tallahassee Passes Mixed Bag Insurance Bill
|GOVERNOR CRIST VETOES INSURANCE BILL|
June 7, 2011 - Senator Garrett Richter, a Naples banker elected in 2008, was the Florida Insurance Council’s Legislator of the Year in 2009. He snagged the Florida Insurance Council’s Special Leadership Award in 2010. That same year, he successfully steered Senate Bill 2044 through the Florida Legislature before former Governor Charlie Crist signed its death warrant. Watching the demise of his luxury-laden gift to the insurance industry, Richter’s subsequently sullen and moody outlook ended suddenly after the November elections bathed his brain in serotonin, dopamine and melatonin. With Rick Scott in the Governor’s mansion, the insurance industry’s personal legislator whispered under his breath “Let’s do it again!” When the 2011 session opened, he filed Senate Bill 408, a clone of last year’s failed enterprise. This year would be different. Richter was not alone.
|SEN. GARRETT RICHTER|
After convincing voters that his promised economic measures would somehow differ from the colorful business tactics that nearly landed him in a cell, newly elected Governor Rick Scott initiated an aggressive campaign to increase the cost of living in Florida. Having failed to assure befuddled Floridians that pill mills were a contributing part of Florida’s economy and disappointed by the legislature’s refusal to deregulate the State’s“top ten most notorious” industries, Scott sought to place his horses behind some alternative economic initiative – preferably one without direct links to organized crime. Compared to his enigmatic struggle to protect the privacy rights of drug mules, a legislative gift to the insurance industry would appear downright patriotic. Additionally, the insurance bill came pre-packaged with support from the legislative leadership. Richter knew that Scott had his back. He also knew that the 2011 political climate presented lawmakers with a rare opportunity to repay their pet special interests for past expressions of generosity.
|GOVERNOR GOLLUM SCOTT|
The insurance industry was drowning in cash. The $27 billion profit realized by American insurance companies in the first nine months of 2010 bettered the previous year’s windfall by a whopping 63-percent. No longer threatened by a prospective gubernatorial veto, dozens of lobbyists retained by property insurance trade associations plied key lawmakers with nearly $800,000 to help launch Senator Richter’s insurance piñata (State Farm – Florida’s 2nd largest property insurer behind Citizens – spent about $150,000 and regional commercial insurer FCCI contributed $250,000).
The Property Casualty Insurers Association of America (PCI) helped guide the bill’s field strategy and mapped out how the industry’s deep pockets could best actualize Richter’s handiwork. PCI assistant vice president and regional manager William Stander announced “This new law will address the concerns of consumers and policyholders about the cost of property insurance in Florida and help stabilize the state’s insurance marketplace. It is an excellent example of how government, industry and the people of Florida can work together to stabilize and improve the state’s insurance market. It is a common-sense, long-term solutions that utilizes market-based solutions and means stronger homes and safer families.” Among the trade groups drafted to either pump in funding or provide expert testimony were the Florida Association of Insurance Agents (FAIA) and the National Association of Mutual Insurance Companies (NAMIC).
|PCI V.P. WILLIAM STANDER|
The bill itself was a mixed bag, blending provisions that limited sinkhole losses, revised a holdback formula for dwelling and contents coverage, shortened the statute of limitations for hurricane and sinkhole claims, capped compensation and marketing tactics for public adjusters, laid the groundwork to relieve Citizens Insurance of its huge liability burden and removed a number of obsolete, questionable and counterproductive regulations. Unfortunately, the bill also facilitated a carrier’s ability to hike rates while minimizing or foregoing accountability. Claiming that carriers will only return to Florida if regulations are softened or removed, insurance lobbyists crafted provisions allowing insurers to step over regulators and squeeze ratepayers at their discretion.
To help the bill navigate bumpy committee reviews, insurance lobbyists that comprised two-thirds of the Hearing audience nursed it through each stage of the vetting process. Despite close calls like the April 27th Senate vote wherein a single Senator enabled a favorable outcome, the bill passed both houses and was bundled off to the Governor’s office on May 11th. A week later, Governor Scott enacted the bill into law at a well attended May 17th bill signing ceremony.
|GOVERNOR SCOTT SIGNS INSURANCE BILL|
The new law allows insurers to raise premiums by up to 15 percent a year for reinsurance costs or financing products used as a replacement for reinsurance (including a healthy profit margin on those costs), without the normal oversight required for rate hikes. Instead, the Office of Insurance Regulation has 45 days to either approve the rate increase or disapprove and reject the filing as excessive, inadequate, or unfairly discriminatory. This provision was one of the main battlefields for Consumer groups and industry lobbyists. Similar to the manner in which compound interest explodes savings, compounding the 15% annual increases could conceivably double insurance rates in less than 5 years.
Since 2009 legislation enabled expedited rate filings for up to 10% per policy, insurance spokespersons sought to diffuse concerns by pointing out that the new law only raises the ceiling by another 5%. However, when compounded over eight years, that seemingly small increase is the difference between doubling and trebling our premiums. Also, the increase can only be applied to that portion of the premium used to pay for reinsurance. For instance, if 30% of your premium goes to buy reinsurance and that cost jumps by 15%, your rate would increase by 4.5%. Another provision prevents regulators from interfering with insurer attempts to charge customers for advertising costs and agent commissions.
The law sets time limits for bringing a hurricane or sinkhole claim and also creates a statute of limitations for bringing a breach of contract property insurance action in court. It shortens the five year span that policyholders currently have to file claims to two years for sinkhole claims and three years for hurricane claims. Although industry lobbyists insisted that homeowners should know whether their property is damaged within a few years of a disaster, thousands of homeowners filed claims for Hurricane Wilma three or four years after the storm for several good reasons. When a building is slammed by a hurricane, it is common for structural damage to surface years later. Secondarily, beneficiaries underpaid or denied payment are often misinformed by their carrier about their right to challenge the settlement.
The abbreviated submission deadlines will allow carriers to exploit a common homeowner behavior when facing sinkhole damage. The small cracks that are initially discovered in a home’s walls and foundation are seldom indicative of the total damage a property sustains when destabilized by a sinkhole. Since an insurer must notify County officials upon receipt of a sinkhole damage claim, policyholders hesitant to risk the subsequent devaluation of their property will often notify County officials to their carrier. By the time the ground settles and the full extent of the damage manifests itself over the next few years, the shortened deadline will have passed, making it too late to submit a claim.
Unless a home is completely destroyed, insurers can now withhold full payment for home damage claims until work is performed and expenses incurred. In committee reviews, the insurance lobbyists who drafted this provision testified that it was necessary to prevent homeowners from pocketing insurance proceeds instead of paying for repairs to their property.
The law functionally vitiates the prompt payment requirement for carriers. A carrier is only required to pay “actual cash value” less the deductible, regardless of whether or not the homeowner purchased “replacement cost” coverage. The carrier is only obligated to pay the balance of “replacement cost” funds after the insured has replaced or repaired the property.
This provision forces the policyholder to somehow finance a significant portion of the reconstruction and/or replacement of personal property without insurance proceeds (along with all the non-insured items) and patiently await reimbursement. Individual or association policyholders unable to self-finance the remaining reconstruction costs of their covered property will be precluded from collecting their replacement cost benefit, notwithstanding having paid the significantly higher premiums.
This supposedly “new” policy was actually in effect until 2005, when the legislature determined that carriers were using this tactic as a strategy to lower their payouts for replacement cost policies to the less expensive actual cash value - functionally cheating the clients. In the insurance industry’s twisted universe, when carriers are forced to pay claims on replacement cost policies for which they collected higher premiums, they actually believe that they are being defrauded. By turning back the clock, the new law will allow them to resume paying actual claims cash value to settle claims filed by replacement cost policyholders who lack the resources to complete damage repairs.
The provision will create another obstacle. Many contractors already decline insurance jobs because of the payment delays. The new law will further thin the field of vendors willing to undertake the repairs. Homeowners will have to prepay or bond the projected shortfall or postpone repairs until they have amassed the required funds. As the homeowner searches for the money and a flexible contractor, the property continues to deteriorate, further heightening damage costs. To pacify lawmakers that raised hell over industry attempts to revive the pre-2005 scam, the law created a two tier pricing formula for replacement cost coverage, allowing insurers to charge more for up front full pay policies and apply a discount for policies requiring outlays that will be reimbursed.
Following the 2004 and 2005 serial hurricanes, insurers took the opportunity to triple and quadruple premiums. The huge increases were based on proprietary hurricane models that promised a decade of annually worsening storms. After six years of uneventful Hurricane Seasons, industry spokespersons seeking a new straw dog turned their attention to sinkholes. Like Hurricanes, Sinkholes are capable of enormous damage and provide lobbyists with the elemental unpredictability useful for justifying irrationally large and regular rate hikes. Conversely, public adjusters have built sinkhole damage into a cottage industry that thrives by fraudulently bleeding insurers. Not surprisingly, much of the new law is devoted to curbing claims abuses perpetrated by both sinkhole insurers and their clients.
|HOME DAMAGED FROM SINKHOLE|
The first part of a one-two punch sinkhole strategy allows insurers to require an inspection of a property before issuing sinkhole coverage. If the inspection provides convincing evidence of a sinkhole, the insurer can limit its exposure by dropping sinkhole coverage for anything other than the main building on a property. For years, sinkhole policyholders have exploited the current statute’s vague language to rip off their carriers. By adding unrelated cracks in a nearby driveway or cosmetic cracks on an adjacent structure’s wall to a sinkhole claim, scamming policyholders can bang their carriers for an incremental windfall.
Although aware of the scam, insurers paid the inflated claims. A sinkhole insurance report by the Florida Senate explained that two other statutes related to attorney fees and “bad faith” laws made it more cost effective to pay the claim than risk a lawsuit. To help close the long abused loophole, the revised statute now defines “structural damage” as “foundation movement outside an acceptable variance under the applicable building code” that “prevents the primary structural members or primary structural systems from supporting the loads and forces they were designed to support.” Paint cracks on appurtenant structures and cosmetic damage to sidewalks, decks, or patios will no longer be used to pad settlements.
If the owner of a covered property submits a claim for sinkhole damage, a carrier can send an engineer to ascertain whether or not the sinkhole exists. If the insurer denies the claim based on its engineer’s determination that there is no sinkhole, policyholders must assume up to half of the maximum $2500 cost for sinkhole testing to prove their claims. The additional expense is a double edged sword. While deterring capricious claims, it could also preclude insolvent property owners from proving legitimate claims.
Fiddling with Citizens
The law makes a series of eclectic changes to Citizens Property Insurance Corporation. It repealed required reductions to the high-risk Coastal accounts scheduled for December 1, 2010 and February 1, 2015. The Citizens policyholder surcharge, which must be paid upon cancellation, termination or renewal, must be fully levied before the company can levy regular assessments. Starting on January 1, 2012, coverage applicants must provide agents with a signed Acknowledgment of Potential Surcharge and Assessment Liability form that details their liability for a potential Citizens policyholder surcharge of up to 45% of premium and emergency assessments. The amount of notice required when the company cancels or fails to renew a property insurance policy dropped from 180 to 120 days.
Citizens’ sinkhole loss policies issued or renewed on or after January 1, 2012, will not cover damages to appurtenant structures, sidewalks, decks, or patios. Such renewals will contain a mandated notice of coverage change. Citizens Property Insurance must hire an outside consultant to examine whether the state-run insurer could save money and do a better job if it shifted some work done by full-time employees to independent contractors. Members of the Citizens Board of Governors must disclose conflicts of interest and not vote on any measure that would inure to the gain or loss of the board member or any of his or her personal or business relations.
The new law increases the surplus requirements for new home insurance companies from $5 million to $15 million. An existing insurer (whose Certificate of Authority pre-dates July 1, 2011) must increase their currently mandated $5 million in reserves to $10 million on July 1, 2016 and $15 million by July 1, 2021. These changes apply to all carriers that aren’t wholly owned subsidiaries of insurers domiciled in other states.
According to Florida Insurance Commissioner Kevin McCarty, seven Florida insurers are currently operating with reserves of less than $6 million. McCarty said “The new minimum of $15 million, as well as other factors, will likely spur some merger and acquisition activity.”
In the years following the 2004 and 2005 Hurricane Seasons, some Galt Mile associations were worn down by carriers whose numerous requests for additional information were separated by an equal number of long, frustrating delays. After years of little or no progress, cash-strapped associations reluctantly agreed to accept settlements worth far less than their covered damage costs. Other Galt Mile associations hired public adjusters to help make their case. While a few legitimate adjusters won modest incremental benefits, others convinced naïve and angry association officials that they were entitled to insane damage benefit sums, in some cases exceeding the replacement cost of the entire building. As starry-eyed association directors drooled over their expected windfalls, carrier attorneys closed ranks. After receiving a steady diet of fees for a variety of obscure services, the grateful adjusters hit the road.
This scenario played out all over the state. The new law takes some swipes at unscrupulous insurance adjusters. It bars them from using advertising with logos that resemble those of a government agency or guaranteeing results when filing a claim. It slaps a 20% maximum on fees for reopened or supplemental claims or insurer payments made one year after an emergency declared by the Governor. For claims against Citizens Insurance, it prohibits public adjusters from charging more than 10 percent of the amount paid by Citizens in excess of the amount originally offered to settle the claim. By requiring public adjusters to provide a copy of their contracts with policyholders to insurers, they help flag adjusters incentivized to inflate claims.
|ILLEGAL PUBLIC ADJUSTER ADVERTISEMENT|
Evidently, Bill sponsor Senator Garrett Richter admitted to negotiating unilaterally with some unnamed nationwide carrier and added an eleventh hour gateway perk to the bill. Inserted to attract the secret carrier back to Florida, the law allows insurers that offer home and vehicle policies to drop coverage if they warn policyholders at least 90 days in advance. Senator Ellyn Bogdanoff explained that another of the bill’s provisions had already cut the drop notice for homeowner policies from the existing 100 - 180 days to 90 days, and the existing drop notice for auto policies was only 45 days. Therefore, the provision’s only real impact was to extend the 45 day drop notice for vehicles to 90 days.
It could be Worse
Richter’s original bill was a bald-faced insurance industry wish list. As it navigated reviewing committees in the House and Senate, lawmakers continuously amended the bill, modifying a laundry list of automatic and self-directed rate increases with reasonable regulatory oversight. The bill’s primary critic in the legislature, Conservative Republican Senator Mike Fasano, worked to beat back the army of lobbyists assigned to each of the hearings. As the heavily amended bill headed for final passage, Fasano diagnosed the bill’s impact, “Big business has triumphed over the needs of the consumer. Insurance companies will only get richer because of this legislation while policyholders will have to pay more of their hard earned money for what will amount to less coverage.”
|SEN. MIKE FASANO|
Although displeased that the bill “virtually guarantees a 15% hike in premiums for many Floridians,” Fasano commented “lawmakers made many changes that benefited consumers.” Describing the motivation for his peers to fix many of the bill’s shortcomings as election jitters, Fasano said “In the end my colleagues realized how detrimental some of these provisions would have been to their constituents back home.”
Florida Insurance Commissioner Kevin McCarty, who chaired the 2008 insurance hearings that exposed industry attempts to doctor evidence in support of unjustified rate hikes, was more optimistic about the bill’s final incarnation. McCarty explained “This bill focuses on addressing cost drivers in the system and will yield long-term benefits for Florida by stabilizing the property insurance market and attracting new capital investment to our state.”
Lobbyists, actuaries and economists professing support for the bill to vetting committees used complex economic theory to describe its importance to reestablishing a competitive insurance market in Florida. A local associate in one of the firms that provided vetting testimony simplified the new law’s rationale “If we offer a lot of free money to insurance companies, they will return to Florida in order to collect it.” Just below the surface of the convoluted econobabble was an explanation worthy of Mr. Rogers!
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The 2011 Legislative Session
Omnibus Association Bill
May 21, 2011 - During her final year as a Statehouse Representative, our District 25 Senator Ellyn Bogdanoff sponsored a bill that shielded thousands of local association members from an impending $million plus assessment for a fire sprinkler retrofit. That celebrated provision was a small part of an Omnibus Association bill that clarified a litany of grey areas in association law while correcting dozens of expensive, pointless and/or damaging regulations (glitches). Calling corrective legislation a “Glitch Bill” implies that some faulty regulation was an unintended byproduct of human error. In fact, when controversial provisions threaten to weaken support for an important bill, they are often intentionally left open to broad interpretation to protect the bill’s survivability. By deciding against removing the threat and leaving it in an unfinished state, the bill sponsor provides impetus to resolve the “glitch” in the future. Association advocates planned to address the “glitches” in Bogdanoff’s bill during this year’s legislative session.
|SENATOR ELLYN BOGDANOFF|
At the onset of the 2011 session, Senator Mike Fasano filed Senate Bill 530 (SB 530) and Rep. James Grant filed an identical House Bill 1035 (HB 1035) as companion legislation. The bills were supported by Becker & Poliakoff’s Community Association Leadership Lobby (CALL), an association advocacy organization seeking to correct glitches in Bogdanoff's landmark legislation. At the same time, Senator Jeremy Ring filed Senate Bill 1516 (SB 1516) and Rep. George R. Moraitis filed House Bill 1195 (HB 1195), a sister bill in the Statehouse. These bills were supported by Katzmann Garfinkel Berger’s Community Advocacy Network (CAN), another association advocacy coalition anxious to build on Bogdanoff's 2010 bill.
|SEN. MIKE FASANO|
Although the two sets of legislation addressed different aspects of Bogdanoff’s bill, neither could survive on its own. While Fasano’s CALL-supported Senate bill zipped through review committees, Grant’s sister House bill was catatonic. Similarly, as Moraitis’ CAN-supported House bill bounced right along, Ring’s Senate counterpart rotted in place. Halfway through the session, the two legal powerhouses decided to work together. They would support Fasano’s bill in the Senate and Moraitis’ bill in the Statehouse.
|REP. JAMES W. GRANT|
Two adverse repercussions surfaced when the bills were redrafted to achieve compatibility. Bottom-feeders plied the bills with provisions beneficial to the supporting law firms and their non-association clients. On April 12th, as CALL lobbyist Travis Moore addressed the House Economic Affairs Committee while it was vetting HB 1195, 3 amendments were proposed to allow condominium, cooperative and homeowners’ associations to charge delinquent owners for collection services by community association management firms. As the late remittances rolled in, the funds would first be applied to pay the management firm, legal fees next and lastly the association would be made whole. Although the enigmatic amendments were withdrawn for lack of support, it’s no coincidence that Moore also represents the Continental Group, Inc, the parent company of Continental Management, the state’s largest association management firm.
|SEN. JEREMY RING|
They also eliminated some of the bills’ most useful tools. For instance, suddenly eviscerated was a CAN provision that would have required insurance companies to notify condominium owners when the building’s master insurance policy was canceled by unilateral board action. Responding to a recent catastrophic event that took place in Fort Lauderdale, CAN Executive Director Donna Berger placed this protection for unit owners into Moraitis’ original bill.
|REP. GEORGE R. MORAITIS|
When the Park South Six condominium in Lauderhill was barbecued last May, stunned unit owners learned that board president Consywelia Howard cancelled their master insurance policy to save money, despite having collected the assessed premiums from members. When such a policy is cancelled, current Florida law only requires the insurer to notify lenders holding mortgages on the property. Although not required by Florida Law, lenders usually notify mortgaged unit owners that coverage will be force placed unless or until they provide a replacement insurance certificate. However, since this isn’t viewed as a high priority by many lenders, the notices may not be sent for months, if at all. By mandating a direct warning to the unit owners, Donna Berger’s excised provision would have provided suddenly unprotected unit owners with an opportunity to reverse an ill-advised and potentially ruinous policy cancellation. The South Park Six unit owners lost everything. Bill supporter and attorney-author-lobbyist Peter Dunbar and Moore, who also represent insurance interests, were instrumental in washing out the provision.
|PARK SOUTH SIX CONDOMINIUM BEFORE FIRE|
Earlier, Moore and Dunbar double teamed Moraitis to excise a provision that would have replaced the hopelessly skewed HOA election process with the more equitable format mandated in the Condominium Act. Also stripped from the bill was a requirement that third party purchasers at a judicial foreclosure sale pay all costs due on the property, not only the past due assessments. By their conflicted actions, this two-headed “man behind the curtain” transformed originally productive legislation into a double edged sword.
Prior to its placement on the Consent Calendar for May 3, 2011, Senate committees that vetted Fasano’s SB 530 were Regulated Industries (12 Yeas vs. 0 Nays), Community Affairs (9 Yeas vs. 0 Nays), Judiciary (7 Yeas vs. 0 Nays) and Budget (19 Yeas vs. 0 Nays). In the Statehouse, Moraitis’ HB 1195 was reviewed favorably by the Civil Justice Subcommittee (13 Yeas vs. 0 Nays), the Economic Affairs Committee (16 Yeas vs. 0 Nays), the Judiciary Committee (18 Yeas vs. 0 Nays) before being placed on the Special Order Calendar for April 29, 2011, where it passed a full House vote by 113 Yeas vs. 1 Nay. On May 3rd, Fasano’s Senate bill was replaced by Moraitis’ HB 1195 which then passed a full Senate vote by 38 Yeas vs. 0 Nays.
While the final bills address a variety of moderately important problems, they aren’t the kind of legislative imperatives that ordinarily draw overwhelming support. By working together, CALL and CAN were able to combine the associations represented by their respective parent law firms, creating an intimidating political force that included thousands of associations or several million association members. With that degree of lobbying firepower, any support eroded by the insertion of questionable self-serving provisions would hardly be missed. Despite the bill’s neutering, it still features more productive provisions than pork byproducts.
After clearing the Legislature, HB 1195 was sent to Governor Rick Scott. As a parting shot, our light-fingered lawmakers sacked $5.8 million from the $13 million we contributed to the Division of Florida Condominiums, Timeshares and Mobile Homes. Given his ongoing refusal to communicate with Floridians, unit owners would have to wait 3 to 4 weeks before learning how Scott reacted to the bill. In summary, the bill addresses the following issues:
|GOVERNOR RICKRUEGER SCOTT|
Official Records (Condominiums and HOAs)
- Owners will be allowed to consent in writing to the disclosure of their protected contact information.
- While personnel records will remain unavailable for inspection, owners will be permitted to inspect employment agreements as well as budgetary and financial records that indicate compensation paid to employees.
Open Meetings (Condominiums)
- To address “personnel” issues, condominium boards may hold closed meetings (not open to unit owner observation). Legal counsel need not be present. (This already applies to homeowners’ associations.)
Attachment of Rents (Condominiums, Cooperatives and HOAs)
- Clarifies that “future monetary obligations” includes all rent due from the tenant to the unit or parcel owner and must be paid to the association until all delinquent accounts are paid in full.
Director Certification (Condominiums)
- In lieu of signing the certification form, condominium association directors may submit proof of having completed an approved educational curriculum 1 year before or 90 days after the date of their election or appointment.
- The written certification or educational certificate is valid as long as the director serves on the board without interruption.
Suspensions (Condominiums, Cooperatives, HOAs)
- Will allow suspension of common element use rights for non-payment (no hearing is required) and for violating any provision of the association’s declaration, bylaws or rules by a unit owner, tenant, guest or invitee (hearing is required).
- If voting rights are suspended, the suspended vote will not count towards the total voting interests required to constitute a quorum, conduct an election or approve an action.
- Although suspensions for non-payment will not require a hearing, they will require board approval at a properly noticed meeting.
Collection of Rent from Tenants (Condominiums, Cooperatives, HOAs)
- As suggested by Florida Legal Aid to diminish litigation prospects, a form letter created to explain a tenant’s obligation to pay rent to the association will be sent to tenants of delinquent unit owners.
- Tenant would be immunized to any claim by the landlord related to the rent timely paid to the association after the association makes written demand.
Elections and Staggered Terms (Condominiums)
- Board member terms will not expire at the annual meeting in the absence of any candidates.
- In those cases where the board member terms expire at the annual meeting, the board members may stand for reelection unless prohibited by the bylaws. (This allows associations to establish term limits by providing for them in the bylaws).
- A candidate must be eligible to serve on the board at the time of the deadline for submitting a notice of intent (i.e., 40 days before the election) in order for his or her name to be listed as a proper candidate on the election ballot or to serve on the board.
- It provides for “partial” termination of condominiums and that amendments providing for same are not subject to s. 718.110(4).
- Plan of termination in a partial termination must reflect the remaining interests in the non-terminated portion of the condominium.
- It modifies distribution protocol and mortgagee participation to reflect partial termination.
- It allows for termination because of economic waste or impossibility if a condominium includes units and timeshare estates where the improvements have been totally destroyed or demolished. It requires that a plan of termination be filed in court by a unit owner seeking equitable relief. If uncontested by the managing entity, any unit owner, any timeshare estate owner, or any holder of a recorded mortgage lien for 45 days, petitioner may move the court to enter a final judgment to authorize plan.
Membership Agreements (Condominiums)
- It will allow associations to acquire membership agreements by vote of a majority of entire voting interests instead of reference to declaration and s. 718.113(2).
Management Fee Collection (Cooperatives)
- It removes provision from 2010 statute allowing cooperative associations to lien for collection services for which the association has contracted.
Homeowners’ Associations/Bulk Television/Internet/Information (HOAs)
- Create s. 720.309(2) to basically mirror condominium statute, as amended in 2010, regarding bulk purchase of communication, information or internet services.
- Prohibits homeowners’ associations from denying individual service to any resident from certificated or franchised provider.
Bulk Buyers/Bulk Assignees (Condominiums)
- Definition of “bulk assignee” and “bulk buyer” will be amended to mean a person who acquires more than 7 condominium parcels in “a single condominium.”
- The bulk assignee will not be liable for warranties under s. 718.203(1) or s. 718.618, except “as expressly provided by the bulk assignee in a prospectus or offering circular, or the contract for purchase and sale executed with a purchaser,” or for design, construction, development or repair work performed by or on behalf of the bulk assignee.
- When the bulk assignee acquires title to the units and receives an assignment of developer rights, if the developer has not relinquished control of the board, for purposes of determining the timing of transfer of control, a condominium parcel acquired by the bulk assignee is not deemed to be conveyed to a purchaser, or owned by an owner other than the developer, until the condominium parcel is conveyed to an owner who is not a bulk assignee.
- Filing with the division and certain disclosures to purchasers and lessees will be required if bulk assignee or bulk buyer is offering “more than seven units in a single condominium” for sale or for lease for a term exceeding 5 years.
- The bulk assignee or bulk buyer are not required to comply with the filing or disclosure requirements if all of the units owned by the bulk assignee or bulk buyer are offered and conveyed to a single purchaser in a single transaction.
- A person acquiring condominium parcels may not be classified as a bulk assignee or bulk buyer unless the condominium parcels were acquired on or after July 1, 2010, but before July 1, 2012.
Homeowners’ Association Board of Directors Eligibility and Meetings (HOAs)
As provided for in the Condominium Act, persons delinquent in the payment of any monetary obligation to the association for more than ninety (90) days and convicted felons whose civil rights haven’t been restored for at least 5 years will not be eligible to serve on the HOA board.
Members of a homeowners’ association will no longer be required to petition the voting interests to speak at a board meeting about designated agenda items.
Manual Fire Alarms (Condominiums and Cooperatives)
The bill will finally clarify that a condominium, cooperative or multi-family residential building less than four stories in height with an exterior corridor providing a means of egress is exempt from installing a manual fire alarm system. This corrects the glitch from last year when two different bills adopted conflicting language. One bill referred to buildings less than four stories in height, and another bill referred to condominiums one or two stories in height.
Hurricane Protection (Condominiums)
Joint and Several Liability (Condominiums and HOAs)
An association that acquires title to a unit or parcel through foreclosure will not be liable for unpaid assessments that came due before the association’s acquisition of title in favor of any other condominium association or homeowners’ association which holds a superior lien interest on the unit or parcel. Referred to as “Master/Sub” language, it removes the financial hurdles for sub associations reluctant to foreclose on delinquent property for fear of being jointly and severally liable to a master association for debts associated with that property.
For those of you with a message for the Governor, his contact information is as follows:
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Overmedicated or Certifiable?
Hey... It's Only Business!
April 3, 2011 - For more than a year, City Commissioner Bruce Roberts has been issuing newsletters following the progress of Fort Lauderdale’s effort to clamp down on the weed-like growth of disreputable local pain clinics. Roberts first lamented the explosive proliferation of these pill mills at the February 18, 2010 GMCA Advisory Board meeting, noting that within a few years, their numbers jumped from 4 to 176. Drawing on his long experience as the City’s top cop, Roberts knew that the vast majority of drugs dispensed at these clinics wind up on the street.
|CITY COMMISSIONER BRUCE ROBERTS|
In the spring of 2009, State Attorney Michael J. Satz of the Seventeenth Judicial Circuit convened a Grand Jury to study the “Proliferation of Pain Clinics in South Florida”. On November 19, 2009, the “Broward County Florida Grand Jury Report on Pain Clinics” was released. It confirmed facts that were essentially old news to the local drug world and the DEA - that South Florida anchored the State’s reputation as the nation’s “Painkiller Capital”.
MICHAEL J. SATZ
Referring to DEA statistics, the report confirmed that in 2006, more oxycodone was distributed in Florida than in any other state - 40 percent more than in second-ranked California. In 2008, Florida was home to the nation’s top 25 pain clinic dispensers of prescription drugs as well as the top 50 physicians who dispensed the most oxycodone in the United States.
The DEA described how the pain clinics supplied product to “mules” from Eastern Kentucky who would keep a portion of the haul and bring the rest to distribution sites controlled by the “James Marsillet II” drug ring in Kentucky. South Florida pill mills similarly supplied statewide networks in Ohio, South Carolina and Tennessee. Not to be outdone by competing drug rings in other states, local dealers replenished their Miami, Fort Lauderdale and Palm Beach inventories at these one stop shops. Market exchange rates are remarkably seductive, as pills picked up by mules for $5 each bring $30 from dealers who sell them on the street for $80 apiece.
Despite a mountain of Federal evidence that Florida supplies neighboring states with most of their illegal prescription drugs through this network of pill mills, state lawmakers ignored the problem. Fed up with his peers’ quiet neglect, Senator Mike Fasano filed Senate Bill 2272 in 2010. His “Pill Mill Bill” prohibited clinics from dispensing more than a 72-hour supply of a controlled substance to patients who pay by check, cash or credit card. Since third party carriers maintain current provider and client utilization databases, clinics billing insurance coverage or worker compensation can dispense larger amounts of the regulated medications. His bill required physicians practicing in a pain clinic to complete a pain medicine fellowship or residency, or be recognized as a pain management specialist by the appropriate licensing board. Additionally, Pill Mills must register with the Department of Healthcare and cannot advertize their products and services.
|SEN. MIKE FASANO|
With a prescription drug database capable of tracking the illegal distribution of narcotic drugs authorized by the Legislature in 2008 and the new statutes regulating pain clinics, the last piece of the puzzle was left to the Department of Healthcare. Having campaigned on reversing Florida’s reputation for coddling drug dealers, the new Governor charged the State’s medical board with drafting rules governing pain clinic operations.
Until the State provided them with the statutory tools to effectively address this fast-growing threat in their own back yard, on March 2, 2010, Commissioner Roberts and Fort Lauderdale Mayor Jack Seiler prompted the City Commission to pass a stopgap measure – Ordinance No. C-10-07 – establishing a 180-day moratorium on licensing pain management clinics. Working with state health authorities, D.E.A., F.B.I., and the Broward Sheriff, Fort Lauderdale police initiated a campaign to cripple the South Florida supply chain of legal drugs that fuel the street market.
Reassured that statutory help was on the way, our City cops participated in multi-jurisdictional raids to close pain clinics on a weekly basis. On April 5th, the Florida Department of Health shut down the Fort Lauderdale Pain Relief Center at 201 W. Oakland Park Boulevard. Two weeks after suspending the clinic’s main physician, 85 year-old Dr. Michael Lazzopina, for over-prescribing thousands of painkillers, the Health Department closed the clinic for operating without a “designated physician” responsible for ensuring medical standards. The Fort Lauderdale Pain Relief Center is owned by Integra Health Services, a company run by chiropractors Michael Rechter and David Romano, who operate similar clinics in Dania Beach, West Palm Beach and Jacksonville. Not surprisingly, they also run an MRI facility in Louisville as well as pain clinics in Louisville and Elizabethtown, Kentucky - one of several states flooded by South Florida prescription drugs.
On May 4, 2010, the Health Department closed the Broward Chronic Pain and Recovery Center on Powerline Road after suspending the medical license of Dr. Alfred E. Boyce on April 28th for prescribing 10,800 tablets to six patients over a six month period. The pills were predominantly oxycodone and Xanax, two highly addictive drugs that are Mother’s milk on the Black Market. The 80-year old Dr. Boyce is a local medical “Hall of Famer”. His license was also suspended in 2004 and 2005 when the chiropractor running an Oakland Park cosmetic medicine clinic left four people comatose from overdoses of botulinum toxin shots ordered in Boyce’s name. The Pill Mill is owned by businessman William D. Benton.
Five days earlier, on April 30th, Fort Lauderdale police and state agents raided the Mercy Wellness and Recovery Center on Northeast 48th Street, another of Benton’s cash cows. Benton also owns the Fort Lauderdale Pain and Rehabilitation Clinic in a strip plaza on Commercial Boulevard around the corner from his Broward Chronic Pain operation. Doctors working in these clinics are paid between $800,000 and a $1,200,000 a year, based primarily on the number of people they’d plied with pills. Each clinic nets about $50,000 daily.
|HEALTH DEPT, FBI, DEA, BSO AND FORT LAUDERDALE|
POLICE LOAD IMPOUNDED DOCUMENTS DURING RAID
On May 24, 2010, Fort Lauderdale police and Florida Department of Health officials raided the Broward Urgent Care clinic at 1409 SE First Ave. The clinic’s medical director, Dr. Bernard Cantor, is an obstetrician and faculty member at Florida International University medical school. The clinic’s president is Alan Daley.
|DR. BERNARD CANTOR|
At the same time, Federal agents arrested Boca Raton internist Dr. Michael Roy Shook, owner and supervising doctor of the Lauderhill Medical Clinic at 2762 W. Oakland Park Boulevard. Although state health authorities filed a disciplinary case against the 52-year-old Shook on February 10, 2010 and barred him from prescribing narcotic drugs, he and the clinic’s listed president, ultrasound technician Gary Adams, continued hawking up to 700 pills a month to carriers employed by the Eastern Kentucky Drug ring.
After an intensive 14-month investigation, the U.S. Drug Enforcement Administration and local police agencies served search warrants on three dispensing pain clinics in Lake Worth and West Palm Beach, two of which are less than a mile apart. Although the 29-year-old twin brothers who own the pill mills – Jeff and Chris George - have no medical training, they do have criminal records.
Following his swearing in ceremony, Governor Rick Scott’s first Executive Order (11-01) froze all new regulations. He then eliminated the state Office of Drug Control, which had been coordinating the war on pill mills. When Governor Scott ordered the Florida Department of Health (DOH) to submit new rules for monitoring prescription drugs and pain clinics, as mandated in Senator Fasano’s “Pill Mill Bill”, local efforts to close pain clinics were placed on hold. City officials in Fort Lauderdale, Miami and Palm Beach anticipated that the new State rules would provide a more effective legal platform for closing the clinics.
On January 7, 2011, when the DOH delivered to Scott the regulations he requested, agency officials and Medical Board physicians stressed their urgency and requested implementation within 7 days. Instead, the Governor authorized an economic study to determine how much these rules would cost the private sector. Most of the estimated $69 million was for urinalysis, enabling clinics to distinguish between addicts and real patients. Although the $15 cost is paid by the patient, Scott’s new “Office of Fiscal Accountability and Regulatory Reform” is still debating the potential financial impact of urinalysis.
As weeks passed, newly elected Attorney General Pam Bondi, whose campaign was anchored by repeated promises to close pill mills, said she would talk to the Governor about approving the rules he requested from DOH. A week later, she called a press conference to describe a nightmare she had in which someone died from a new party drug known as MDPV. Sold in head shops as “bath salts”, Bondi wants to ban the drug for its linkage to several deaths and suicides. She failed to mention the pain clinics that dispense Vicodin like chicklets and kill thousands of Floridians every year.
|ATTORNEY GENERAL PAM BONDI|
More weeks passed. Although approved by the DEA, every police group and medical association, Governor Scott blocked implementation of a privately funded prescription drug database that the 2008 Republican Legislature created to track over-dispensing physicians and drug dealers that go “doctor-shopping.” Thirty-eight states use similar databases to track oxycodone and other painkillers that are now the most widely abused (and lethal) drugs in the country. Scott commented “I don’t support the database. I believe it’s an invasion of privacy.” When top law enforcement officials, legislators and Kentucky Governor Steve Beshear (since drugs from Florida annually kill thousands of his constituents), pleaded with Scott to reconsider, he refused.
Unable to convince the Governor to stop protecting the pill mills and approve the State Medical Board’s pain clinic rules, Attorney General Bondi appointed former State Senator Dave Aronberg to spearhead her statewide campaign against the pill mills. When asked about his progress, Aronberg announced that he is still waiting for Scott’s regulation squad to determine whether urine tests create an unfair financial burden on drug mules.
|PILL MILL BOSS DAVE ARONBERG|
Initially perplexed by the Governor’s refusal to inconvenience drug dealers, many Tallahassee lawmakers don’t agree with his inexplicable decision to treat criminal enterprises as if they were legitimate businesses worthy of State protection. New Port Richey Republican Senator Mike Fasano, who’s “Pill Mill Bill” finally provided the statutory wherewithal to stifle the growth of Florida’s street drug trade, vowed to actualize the prescription drug database. Since every law enforcement agency in the State declared it an indispensible tool in the war on drugs, Senate President Mike Haridopolis says public funding will be used if necessary.
Scott is able to thwart State and local efforts against the pill mills but has no control over Federal authorities, who raided pain clinics from Miami to West Palm Beach in February. Operating seven clinics in Broward and Miami-Dade, convicted heroin dealer Vincent Colangelo allegedly distributed more than 660,000 oxycodone pills over a two-year period, netting $150,000 a day. The raids revealed clinic techniques used to assist pill brokers trying to avoid detection. An undercover agent witnessed a clinic nurse coach a roomful of mules to avoid filling prescriptions at pharmacies that use a computerized database such as Walgreens. She sternly warned, “Do not go to Walgreens. I can’t say this enough. They are not your friend; they are the enemy.”
Calling the crackdown “Operation Snake Oil,” administrator Michele Leonhart of the U.S. Drug Enforcement Administration said “Prescription drug abuse is our country's fastest growing drug problem, and pill mills such as those in Florida are fueling much of that growth.” U.S. Attorney Wifredo Ferrer added “According to recent estimates, Florida prescribes ten times more oxycodone pills than all other states combined.”
|DEA ADMINISTRATOR MICHELE LEONHART|
Forced to the sidelines by Governor Scott, State and local law enforcement is fuming. Intimating that Scott’s pro-pill mill maneuvers aren’t unintentional missteps, Palm Beach County State Attorney Michael McAuliffe commented “I hope and expect that the new governor’s office, when they say they want the most favorable climate in the world for business, that they’re talking about legitimate businesses. These aren’t legitimate businesses, and that’s the heart of the matter. They haven’t been regulated, and they’ve mushroomed in our communities.”
Early on, the public rationalized the new Governor's dissolution of the state Office of Drug Control as a political preview of his intended deregulation policy. Since he openly began shielding an illegal “business” that kills 7 people in his state every day, Floridians have been desperately seeking a viable reason for his actions. It’s been suggested that he pops pills and shares a bond with the overmedicated. Others believe that he is an ideological extremist who sees no role for government in people’s lives. Some think that Scott never recovered from his tarnished leadership role at Columbia/HCA, where the Department of Justice successfully prosecuted the largest case of healthcare fraud in U.S. history. Law enforcement officials and lawmakers have suggested that the Governor’s vision of a pro-business agenda fails to distinguish between legitimate and criminal enterprises. Of all the conjecture about his motivation, the prospect most feared by Floridians is that their elected Governor is certifiable.
On February 7th, he significantly heightened those fears. After proposing to abolish the narcotics database in documents he submitted to the Legislature along with his budget proposal, he faced a roomful of reporters and announced “The program has not been working.” Stunned reporters looked at one another as Scott’s staffers cringed. Evidently, Scott was the only one in the room – possibly the state – who didn’t know that the database had never been implemented.
|WILL THE REAL SCOTT PLEASE WAKE UP?|
Like local jurisdictions across the State, the Fort Lauderdale City Commission’s reaction is a blend of anger and confusion. The eerie events in Tallahassee placed their plans to close down more pain clinics on ice. When asked for his take on the Governor’s enigmatic behavior, Commissioner Bruce Roberts restrained himself, stating “It doesn’t make any sense, maybe he’s a Libertarian.”
Maybe it’s not that complicated. Scott’s single largest financial holding is his $62,034,298 interest in Solantic, Florida’s fastest-growing urgent care provider with 32 clinics statewide. Since the clinics both write for and fill prescription drugs (except at their Walmart locations) it would be prominently featured in the prescription drug database – bad news for the stock price. What about the conflict of interest provision [112.313(7) FS] that “public officials can’t own stock in companies regulated by the state or work as employees of companies they regulate?” Exploiting the Swiss cheese texture of Florida’s ethics laws, Scott transferred his number one asset to the “Frances Annette Scott Revocable Trust” – his wife.
Whether overmedicated, not playing with a full deck, a secret fan of organized crime or “a Libertarian,” there is no getting around the fact that each day our Governor dawdles, seven more bodies can be laid at his feet.
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March 20, 2011 - The 2011 Legislative Session kicked off on March 8, 2011. Hoping to build on last year’s landmark gains, two community association advocacy organizations helped pro-association lawmakers draft updated glitch legislation for the new session. Glitch bills supported by the Community Association Leadership Lobby (CALL) and the Community Advocacy Network (CAN) were formulated to correct or eliminate regulations that either failed to adequately address the problems for which they were originally designed or actually exacerbated them. About two dozen other association bills are the handiwork of individual lawmakers seeking to address constituent complaints or hometown issues. Since they are often superficially conceived and carelessly drafted, many inadvertently mask unintended consequences. If these residual legislative land mines aren’t uncovered and diffused during the committee review process, they become fodder for future glitch bills.
|2011 OPENING DAY|
Screaming “It’s the economy, stupid,” voters closed their eyes last November and clicked their heels three times before replacing public officials with anyone who promised a brighter future. When the electorate falls on its sword and hopes for the best, Tallahassee temporarily resembles Oz. That’s why association advocates are also monitoring bills that exploit everyone under the banner of breathing new life into the sagging economy.
Of specific concern are bills drafted by lobbyists that promise a fairy tale recovery as soon as we repeal consumer protections, allow unlimited rate hikes and either close the courts or kill the trial lawyers. By opening day, four such bills were filed by the insurance industry, design professionals, the energy industry and the Bankers Association – with more on the way. Of the roughly 40 bills already filed that impact associations, 4 or 5 may survive Sine Die. While most of the association bills will be surgically substituted, repeatedly merged or suffer a lonely death on the calendar, some will probably make it to the final week. Since legislative survival requires approval by the Statehouse and the Senate, the following list depicts similar or identical “sister bills” in both houses. Have a gander at this year’s opening day lineup:
SB 328 by Senator Gwen Margolis and HB 59 by Rep. John Patrick Julien (identical):
|SEN. GWEN MARGOLIS|
- Grants authorized process servers unannounced access to the common areas, both general and limited, of condominiums, gated communities and any other secured residential areas where a defendant or witness may live. (WHOOPS! Since private and semi-private elevators are classified as limited common areas, the bill could provide a process server with direct access to an owner’s unit in certain buildings unless the language is corrected).
SB 530 by Senator Mike Fasano and HB 1035 by Rep. James W. “JW” Grant (identical): Supported by CALL (Becker & Poliakoff’s Community Association Leadership Lobby), this community association glitch bill contains the following provisions (among others):
|SEN. MIKE FASANO|
- Although personnel records are not available for inspection by owners, employment agreements and budgetary and financial records that indicate the compensation paid to employees will be available.
- Owners may consent to the disclosure of their protected contact information.
- Will allow condominium association boards the right to hold closed meetings to discuss personnel matters, without an attorney being present (note: homeowners’ association boards already have this right).
- Provides to condominiums and HOAs the ability to lien for management fees related to delinquencies, a right provided to cooperatives in last year’s SB 1196. The CALL proposal will clarify the rights and responsibilities of the management company providing these services and will allow the association to insure that the additional expense is passed on to the delinquent owner.
When a condominium, cooperative or homeowners’ association unit owner is delinquent in the payment of monetary obligations to the association, any unpaid rent due related to the unit/share/parcel must be paid to the association until such time as all the “monetary obligations” of the owner, including unpaid assessments and obligations that accrued before the demand for rent is made, have been paid in full to the association.
|REP. JAMES W. GRANT|
- Clarifies procedural steps for condominiums, cooperatives, and homeowners’ associations when suspending use rights and/or voting rights for owners delinquent in the payment of assessments.
- SB 530 includes other provisions regarding condominium termination; condominium bulk-buyers; condominium association authority to enter into agreements to acquire leaseholds, memberships, and other possessory and use interests in country clubs, golf courses, marinas, and other recreational facilities; and bulk communication, internet and information services for homeowners’ associations.
SB 738 by Senator Eleanor Sobel and HB 127 by Rep. Hazelle P. Rogers (identical):
|SEN. ELEANOR SOBEL|
- Requires any party taking title to real property via foreclosure where a “bona fide tenant” is in residence to give ninety (90) days’ notice for that tenant to vacate. (WHOOPS! This will impact an association’s ability to remove a nuisance tenant after taking title to the unit/lot).
SB 1112 by Senator Nancy C. Detert:
|SEN. NANCY C. DETERT|
- Offers a reward for people who rat out homestead violators to the local property appraiser’s office. If the info proves correct and the tax collector recovers assessed penalties, the rat scores a reward of up to 20% of the amount recovered in back taxes, interest and penalties not to exceed $500. It also requires condominium and cooperative associations to annually provide the property appraiser with a list of units rented during the previous year, enabling the property appraiser to identify units improperly receiving Homestead Exemptions.
SB 1516 by Senator Jeremy Ring and HB 1195 by Rep George R. Moraitis, Jr. (identical): Supported by CAN (Katzmann Garfinkel Berger’s Community Advocacy Network), this community association glitch bill contains the following provisions (among others):
|SEN. JEREMY RING|
- Insurance companies would have to notify all unit owners by certified and regular mail if an association having 50 or fewer units cancels or fails to renew its required insurance coverage. A majority of the voting interests may agree in writing to direct the board to obtain substitute coverage. (Last year, after a Broward condominium president unilaterally cancelled the association’s insurance coverage, a subsequent fire left the association’s 30 families homeless.)
- Provides that associations may install impact glass or other code-compliant windows in the same manner in which they can currently require the board to install hurricane shutters.
Provides that if a condominium unit is occupied by a tenant and the unit owner is delinquent in paying any monetary obligation due to the association, the tenant must pay the outstanding and future monetary obligations related to the condominium unit. (The current law refers to “future monetary obligations” only).
|REP. GEORGE R. MORAITIS|
- Provides that a condominium association or a homeowners’ association may not be deemed the previous owner for purposes of joint and several liability for assessments which came due while the association owned the unit or units on which it has foreclosed or taken title via deed in lieu of foreclosure.
- Members of a homeowners’ association would have the right to speak for at least 3 minutes on any matter placed on the agenda. It eliminates the requirement that members petition the board in order to be able to speak at a homeowners’ association board meeting.
- Provides that homeowners’ association elections must be conducted in accordance with the election procedures in s. 718.112(2)(d)3., Florida Statutes. In other words, HOA elections would adhere to the same procedures that govern condominium elections including a 60-day first notice, self-nominations 40 days in advance of the annual meeting, second notice, two-envelopes, secret ballots, etc.
- Co-owners of a parcel in a homeowners’ association may not simultaneously serve as board members unless they own more than one parcel or unless there are not enough eligible candidates to fill the vacancies on the board.
- A person who is delinquent in the payment of any fee, fine or other obligation to the association by more than 90 days would not be eligible for board membership.
- A person who has been convicted of any felony would not be eligible for board membership unless such felon’s civil rights had been restored for at least 5 years as of the date on which such person seeks election to the board.
SB 288 by Senator Joe Negron and HB 605 by Rep. W. Gregory Steube (similar):
|SENATOR JOE NEGRON|
- The 2011 version of last year’s SB 1964, a bill vetoed by Governor Crist because it literally deified Design Professionals. SB 288 immunizes architects, interior designers, landscape architects, engineers, & surveyors to legal redress. It contains an intriguing Catch-22 provision specifically designed to eliminate both liability and the cost of malpractice insurance for these professions.
- The legislation allows recovery of economic damages up to the amount of the design professional’s existing liability insurance coverage. Since current Florida law doesn’t actually require this insurance and the bill would otherwise render them judgment-proof, Design professionals will have little incentive to purchase malpractice insurance. In effect, by cancelling their insurance, they also cancel their exposure. Unless an association’s engineer, interior designer and/or architect feels morally compelled to pay premiums for a malpractice policy, the association cannot recover damage costs for negligence, defective designs and/or other professional foul-ups. If an engineer designs, oversees construction for and signs off on a structurally defective roof that collapses later that day or a landscape architect turns the entire association grounds into crispy brown mulch overnight, the association would not even be legally entitled to an apology.
No other class of professional has ever been so completely financially insulated from damages stemming from negligence or professional mistakes. As doctors, lawyers, and accountants cannot limit exposure for their own negligence, extending this all-encompassing immunity to engineers, architects and Interior Designers conjures a universe shaped by the conceptual progeny of Lewis Carroll and Ayn Rand. They rationalize this clearly inappropriate legal invulnerability by asserting that if they wouldn’t have to worry about paying for their screw-ups, they could cut us a break on the cost of their services. However, the potential savings is a joke when compared to the financial damage that results from defective design.
|REP W. GREGORY STEUBE|
SB 646 by Senator Nancy C. Detert:
|SEN. DENNIS L. JONES|
- Requires a mobile home park owner who receives a bona fide offer for purchase of the park to provide certain notice to the homeowners’ association.
SB 832 by Senator Mike Fasano and HB 583 by Rep. Kenneth L. Roberson (similar):
|REP. KENNETH L. ROBERSON|
- Provides that the Division must give notice to the homeowners’ association of any proposed amendments to a prospectus or offering circular. Defines the “market area” or “competitive area” for comparable mobile home parks as the county in which the subject park is located along with any contiguous counties.
The Mother of all Deregulation Bills
The session’s lollapalooza surfaced on March 15th, when the House Business and Consumer Affairs Subcommittee filed their 281-page PCB BCAS 11-01. Packaged as a “Partial Committee Bill”, it arbitrarily eviscerates a disparate cross section of State Departments and Divisions. After three hours of debate, it was recommended as a committee bill by a vote of 10 Yeas vs. 5 Nays. The next day it was assigned a number – HB 5005. The bill’s light speed progress was no coincidence. House Speaker Dean Cannon [R], a Winter Park attorney, provided it with wings in the Statehouse. Unfortunately, It wholly eliminates the provisions that established the Division of Florida Condominiums, Timeshares and Mobile Homes in the Department of Business and Professional Regulation (DBPR).
The Division has a history of intermittent controversy and has often been slow to respond when confronted by conflict. Nevertheless, prior to its creation, thousands of condominiums were run like Dodge City. Developers refused to relinquish control of association boards long after a majority of the units were sold. Rogue association boards openly colluded with contractors and vendors to bleed association budgets, regularly awarding lucrative association contracts to friends or family. Elections were a joke, as “strongarm” candidates would isolate unit owners, hand them a ballot and extort a signature. In many associations, ballot signatures weren’t those of the members. Despite its shortcomings, the Division is the only authority empowered to enforce the statutes that protect associations and their unit owners. If disbanded, there will be no agency equipped to enforce statutory prohibitions against managers or directors looting the reserves, taking payoffs from vendors, failing to provide financial reports, etc. Repeatedly scammed unit owners will have to file a lawsuit against an association that can assess them to defend the suit – not exactly a level playing field.
Currently, a vast number of condominium disputes are sent to the Division Arbitration Section, where 80 – 90% are settled without the need for a lawsuit. If the Division is voided, every dispute winds up in court, where years pass before verdicts are systematically awarded to the party with superior resources.
The bill also repeals Part VIII of Chapter 468 of the Florida Statutes, which licenses and regulates Community Associations Managers (CAM), Management Companies and the Regulatory Council of Community Association Managers. Before the State mandated competence standards for Community Association Managers, thousands of associations were fiscally molested by the individuals and companies they hired to operate their home and safeguard its value. Despite a four-page yellow sheet or having recently flunked rehab, career criminals would be adequately credentialed to manage your condominium and control its assets. Management companies would revive the currently illegal practice of contracting condo services to affiliates and subsidiaries, squeezing multiple income streams from association clients. For unit owners, this deregulation horse race means increased maintenance costs and functionally unenforceable rights.
Association unit owners aren’t the only Florida residents stripped of their statutory protections by this mega-bill. Among the dozens of Florida businesses it deregulates are a rogue’s gallery of industries with nationwide reputations for fraud, theft and abuse. Some of the professions that would no longer be accountable to their customers are home inspectors, intrastate movers, mold-related services, motor vehicle repair shops, charitable organizations, telemarketers and dozens of other businesses that predominate consumer fraud warnings and Attorney General Watch Lists.
Businesses targeted for deregulation belong to one of two categories; industries with a verifiable history of fraud and abuse that were regulated to protect the general public or industries that were regulated to offer similar protections to a large population segment – such as the elderly, association members, homebuyers etc. When initially reviewed by the Business and Consumer Affairs Subcommittee, many of the committee’s members tried removing some of the businesses from the deregulation list. Representative Mia Jones offered an amendment that would have preserved regulations governing Community Association Managers and Management firms. Given the committee’s political mindset, it was rejected. Ironically, the only businesses that were extricated from the bill were barbers and Cosmetology Specialists, including Hair Braiders, Hair Wrappers, Body Wrappers, Manicurists, Pedicurists and Nail Extensions. In their headlong rush to rack up deregulation points with the new administration, pandering lawmakers overlooked the direct physical contact with customers required of these professions. Since deregulating them could present an imminent health hazard, lawmakers expunged them from the list to avoid implicit liability.
|REPRESENTATIVE MIA JONES|
When Florida voters indicated their support for deregulation, they weren’t prepared to be stripped of laws that protect them from crimes like fraud and theft. Unfortunately, that’s irrelevant to many of our lawmakers. Certain legislators intend to exploit the Governor’s deregulation mandate by clearing the way for businesses in which they hold an interest. Others are collecting chips from Speaker Cannon, Senate President Haridopolos or Governor Scott that they will cash in when their own pet bills are threatened. For association members, that means increased maintenance costs and fewer rights.
Since the well-publicized purpose of this bill is to revitalize Florida’s economy, the House Staff Analysis measures how eliminating the Division will contribute to this objective. Condominium and cooperative unit owners will keep the $4 annual fee they currently pay to support Division functions. That’s all – nothing else. Allowing association members to hang on to $4 each year is how this provision benefits the State’s economy. While acknowledging that inexpensive association arbitrations will be replaced by extremely expensive lawsuits, the Staff Analysis omits that factor from its benefit calculation. Similarly meaningless economic benefits accrue to every one of the “deregulation” provisions. It’s not surprising that the bill is a fraud since its chief architect in the Governor’s mansion has unique expertise in that area. Since the Division is fiscally independent and has no impact on the State budget, why was it marked for execution? In a nutshell, this deregulation dog and pony show rips off the $7.3 million contributed by unit owners to the Division fund and dumps it into the General Fund.
Ordinarily, the bill would be referred to several relevant house committees for review while co-legislation in the Senate would undergo a similar vetting. While in committee, lawmakers are given an opportunity to offer evidence of unintended consequences as well as add, delete or amend provisions. Input is taken from parties impacted by the legislation. Only after the selected committees in both houses sift through their respective bills’ ramifications will the full House and Senate vote on the legislation.
Apparently, this bill will only be referred to several House committees. It will avoid the committee process in the Senate, depriving parties with an interest in the legislation of a viable chance to correct or amend the bill’s shortcomings. The unusual bill number, HB 5005, indicates that the legislation is what’s called an “implementing bill.” Implementing bills hold the statutory changes needed by lawmakers to meet budget objectives. After hashing out a spending plan, Senate and House members send identical draft budgets and implementing bills to their respective bodies. Once approved at a bicameral appropriations conference, the bill heads to the full Senate for a vote, bypassing the checks and balances of the Senate committee process. In addition to explaining its lack of credibly beneficial economic provisions, it’s appurtenance to the budget process clarifies why our $7 million in the Division fund mystically falls prey to this bill. By whacking the bill over to the budget side of the process, the legislative leadership is also able to shield the bill’s underlying rationale and consequences from public scrutiny until after its approval by the legislature.
When Floridians realize that they are once again at the mercy of crooked mold remediators, movers that hold their furniture hostage until they kick up the contract price, and auto repair shops that charge for a new starter after replacing the cigarette lighter, these lawmakers will have to explain to their constituents how reviving these scams and rip-offs benefitted the state’s economy.
The Galt Mile Community Association and similar organizations across the state are working with association advocates in Tallahassee to fight legislation designed to pick the pockets of unit owners. Since trying to overturn bills blessed by the House Speaker and the Senate President is ordinarily an exercise in futility, these pro-association groups and their advocates decided to concentrate their efforts on removing the two legislative elements that impact associations. They opted to use the abbreviated committee reviews to extract the provisions that eliminate the Division and the regulation of Community Association Managers.
To enhance their effectiveness, the committee presentations made by our pro-association advocates in Tallahassee must be backed up by supportive correspondences (email, telephone, fax, etc.) from unit owners. Since there are dozens of other deregulation targets in the bill, receiving thousands of emails from disconsolate association members would convince these lawmakers to carefully weigh whether deregulating associations and their managers is worth the political price of alienating 3.5 million Florida constituents, most of whom are registered voters.
The bill was scheduled for vetting by the House Economic Affairs Committee on March 24th at 8:30 AM, the second of its three planned House Committee stops. Earlier, a substitute bill that removed the two association-related provisions was filed with the committee. Following a heated debate, the panel approved the Committee Substitute by a vote of 12 Yeas vs. 6 Nays, salvaging the Division and the licensing requirements for CAM managers. Thousands of emails, letters, faxes and phone calls from frothing association members across the state worked their magic.
HB 5005 is still filled with provisions that literally invite rip-off artists to molest vulnerable Floridians. You have to admire the raw panache of its supporters in disguising the legislation as an economic recovery measure. While purporting to cut the fat from bloated bureaucracies, it actually rolls out a welcome mat to thousands of incompetent and/or thieving deadbeats that honest members of their respective professions were delighted to be rid of. While the public ponders the bill’s mysterious benefits, dedicated funds become budget fodder. As illustrated in the bill’s House Staff Analysis, in exchange for eliminating the laws that cleaned up dozens of disreputable professions, the state’s economy gets a goose egg.
That’s not all these tricky doggies have up their sleeves. On March 26th, the House released its first draft budget. Buried on page 360 is a planned transfer of $6.2 million from the Division of Condominiums, Time Shares and Mobile Homes Trust Fund to the State School Trust Fund. Instead of deregulating the Division, they intend to digest its funding. In summary, the funds we contributed to inexpensively resolve association conflicts were magically transformed into a school tax. The flimflam isn’t etched in stone until the Senate rings in with its spending plan.
As the session progresses, bills harmful to associations and unit owners will be discussed on the Galt Mile web site (www.galtmile.com) where links will be provided to both the bills and the lawmakers controlling their fate. In fact, HB 5005 is still filled with provisions that literally invite scam artists to have at vulnerable Floridians. Visit the Community Advocacy Network web site (www.canfl.com) for a comprehensive explanation of the session’s most threatening bills, a breakdown of their consequences and a response system that is extremely convenient and user friendly. You can also check the Community Association Leadership Lobby web site (www.callbp.com) to keep pace with session events. The deal is simple. If everyone leaves this task to their neighbors, by next year, we will all be paying for these antics in Tallahassee. Is it worth a few minutes to hang on to your rights... and your wallet?
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West & Bogdanoff: Something different?
Fair Play for Big Oil and Big Insurance?
|ELLYN BOGDANOFF AND ALLEN WEST|
February 26, 2011 - On February 3, 2011, the Galt Mile Community Association sponsored a Town Hall meeting at the Beach Community Center. The event was conceived to introduce the neighborhood’s newly elected representatives in the Florida Senate and the U.S. Congress. The neighborhood association’s Advisory Board works with the Galt Mile’s elected officials to address association and/or community issues. With the exception of City Commissioner Bruce Roberts, Mayor Jack Seiler, U.S. Senator Bill Nelson and President Barack Obama, the November elections heralded the wholesale replacement of the entire Galt Mile political voice box. Having traded her District 91 Statehouse responsibilities for those of a Florida State Senator, Town Hall guest Ellyn Bogdanoff is no stranger to the Galt Mile Community. In contrast, Congressman Allen West’s credentials as a largely unknown “war hero” whose political achievements were limited to deposing incumbent opponent Ron Klein fueled an abiding curiosity in both supporters and opponents of his successful campaign.
|BEACH COMMUNITY CENTER|
Although the 4 PM start time (3:30 PM for registration) precluded participation by most clock punching 9 to 5ers, roughly 150 Galt Mile retirees, public officials and political ideologues found their way to the Thursday afternoon event. En route to the Community Center’s auditorium, attendees penetrated a squad of sign-wielding demonstrators from a local Democratic Club. The protest targeted Congressman West for supporting offshore drilling in Florida waters.
President Ivan Itkin of the “Galt Ocean Grassroots Organization Democrats” (AKA - the GOGO Democrats) summarized his group’s concerns. A political activist from L’Hermitage, Itkin exclaimed “We’re here because we’re concerned about our beaches. We continue to have this potential problem with oil spilling off our coast. West is talking about how we ought to have offshore drilling because we need it for the country. What do the people of Florida need? We don’t want to end up like Louisiana. He has a responsibility to protect our interests. Our beaches are very important to us. Our beaches are our lifeblood. If we lose them, we lose a hell of a lot.” The short version was delivered by Democratic committeewoman Estee Pavlica of Playa del Sol “Turning the State’s beaches into oil fields is an incredibly bad idea.”
Also joining Itkin was Linda Eidinger, a Playa del Mar resident who played an integral role in the campaign to derail construction of the Calypso gasworks off the Galt Mile beach. Eidinger expanded the criticism to include Ellyn Bogdanoff, impugning her support for the controversial drilling policy. Reminded that Bogdanoff was a key ally in aligning political opposition to Calypso, Eidinger turned to Matthew Schwartz, Conservation Chair of the Broward Sierra Club, and asked if he could verify whether or not Bogdanoff had publicly advocated offshore drilling. When Schwartz answered “I don’t think so,” Eidinger smiled and accompanied the GOGOs into the auditorium.
Meet Congressman Allen West
After informally greeting a host of public officials from Fort Lauderdale, Broward County, Lauderdale-by-the-Sea, Oakland Park and Pompano, GMCA President Pio Ieraci introduced Florida Senator Ellyn Bogdanoff and Congressman Allen West. Drawing on a time-tested military strategy, Retired Colonel West commandeered the floor and issued a polite challenge to the demonstrators. The rookie Congressman opened by classifying energy independence as a national security issue, arguing for the aggressive exploitation of any and all domestic energy sources - both on and off-shore.
|DRILLING PATRIOT WEST|
Several residents confronted West about his outspoken support for eliminating Florida’s moratorium on offshore drilling. West responded by questioning the patriotism of anyone opposed to OCS (outer continental shelf) energy exploration. When one resident asked West why he would place the Galt Mile at risk for a British Petroleum (Deepwater Horizon) style environmental disaster, instead of answering, the tea party favorite from Plantation begged the question “Do you prefer buying gas from people that want to kill us?” Seemingly miffed by West’s inflammatory deflection, another resident repeated the question, asserting that an oil spill off the Fort Lauderdale beach would eradicate the local economy for years. West answered “Since what happened in the Gulf was an isolated glitch, a reoccurrence is statistically impossible.” He added, “If we don't drill offshore, China and Cuba will use slant drilling techniques to steal our oil and gas. I can guarantee that if they do it, it will pose a far greater danger to the environment than if we did it ourselves.”
|PIO IERACI INTRODUCES CONGRESSMAN ALLEN WEST|
Handed the microphone, Matthew Schwartz of the Sierra Club echoed the fears of previous speakers and questioned the wisdom of gambling with the City’s most valuable asset. He wondered why West didn’t prefer investing in sustainable low-impact energy resources like solar, bio-fuels and wind. West retorted “While I also support developing these alternatives, can you tell us exactly how long it will be before these technologies are commercially viable? Because while we wait, buying oil from our enemies continues to fund terrorism abroad and at home.”
|MATTHEW SCHWARTZ OF|
THE SIERRA CLUB
When several vocal West supporters also questioned the logic of risking the long-term tourist economy for a few years of pulling oil from the beach - if there is any - it seemed to dawn on West that he was facing a NIMBY crisis (Not in my Back Yard). While most of his supporters are intrigued by his gung ho, “damn the torpedoes” vision for a full frontal economic blitzkrieg, if these same residents woke up to oil wells on their beaches - much less tar balls - they would soon be calling for public executions of those responsible. Suddenly, West softened his stance, clarifying that he supports “limited exploration for oil and natural gas - not on the beach but past the horizon - where no one can see.”
|GALT QUESTIONER CONFRONTS WEST|
|DEEPWATER HORIZON EXPLOSION|
One week earlier, in a January 27th interview conducted by Sun Sentinel Washington correspondent Bill Gibson, West insisted on bringing oil rigs close to shore, stating, “We need to make sure it’s close enough so we don’t have what happened in the Gulf, where [the leaking well] was so deep we couldn’t get out there and take the emergency procedures to rectify that type of spill.” Given his predisposition to shoot from the hip, West’s supporters have become somewhat accepting of his tendency to spin recent history. Anyone who followed the Deepwater Horizon fiasco knows that there were no viable emergency procedures in the BP response plan.
The Offshore Drilling Dogma
The complications that plagued the BP cleanup had little to do with the platform’s deep ocean placement. Following passage of the Energy Policy Act of 2005 and a Bush White House executive order to “short cut” oil & gas exploration licensing procedures, the U.S. Minerals Management Service (MMS) rubber stamped license applications at an unprecedented pace, violating State laws and ignoring their own in-house reports warning about the compromised credibility of corporate safety representations by oil companies.
In September 2008, Department of the Interior Inspector General Earl E. Devaney reported that MMS officials took drugs and had sex with energy company representatives while accepting gifts, hunting and fishing excursions, executive boxes at the Peach Bowl and other perqs that made the “Payola” disk jockeys look like choir boys. In 2009, MMS regional supervisor Don Howard - in charge of oil exploration and drilling in the Gulf of Mexico region - pled guilty to a conflict of interest in New Orleans federal court when he lied about receiving gifts from an offshore-drilling contractor and was sentenced to a year’s probation (a slap on the wrist plea deal with Federal prosecutors).
|INTERIOR DEPT I.G. EARL DEVANEY|
In July of 2009, before BP even submitted a drilling plan, the U.S. Minerals Management Service pre-approved BP’s oil spill clean-up plan without first getting required environmental impact permits from the National Oceanic and Atmospheric Administration (NOAA). NOAA assesses threats to endangered species and the environmental impact that drilling would have on Gulf ecosystems. On September 9, 2009, NOAA released evidence that MMS understated the likelihood and potential consequences of a major spill in the gulf and knowingly understated the frequency of spills that had already occurred there. MMS scientists that were charged with reviewing Environmental Impact Statements submitted by drilling applicants confirmed that their reports were doctored to indicate “no environmental impact” and their calculations of spill risks were similarly downgraded by MMS agency managers with cozy industry relationships.
Since the emergency response measures included in BP’s environmental impact statement were admittedly cobbled together to circumvent MMS regulatory licensing requirements and expedite the application, they were never tested - primarily because the actual drilling plan didn’t exist when the cleanup measures were approved. For instance, BP’s response plan claimed it could contain any possible spill by vacuuming up over 20 million gallons of oil per day. BP's actual recovery rate following the Deepwater Horizon explosion was about 350,000 gallons per day - roughly two percent of their claimed capabilities. When chapters of the response plan mitigated damages to communities of walruses, sea lions and seals, investigators realized that BP simply transplanted sections of an impact statement used to secure a previous drilling license in Alaskan waters. The walrus, sea lion and seal populations in the Gulf of Mexico are limited to nearby inland marine parks.
After watching BP jump from containment domes to golf balls to human hair in a frenzied series of “Hail Mary” fixes devised and implemented on the fly, the State of Florida and the Interior Department confirmed that the bogus BP response plan was window dressing. Blaming the Deepwater Horizon disaster on malfunctioning well shut-off equipment on the seafloor known as a blowout preventer (BOP), BP senior vice president Bob Fryar admitted that they may have been overconfident in marginalizing the need for a realistic fail-safe mechanism that could have remotely engaged the BOP. Against the advice of their own scientists, MMS granted BP’s request to waive the fail-safe measures, saving the company roughly $500,000.
|BP V.P BOB FRYAR|
Demands to reevaluate the risks of offshore drilling weren’t limited to pin-headed, pencil-necked, alarmist tree huggers from the Eastern liberal establishment. Rep. Joe Barton, top Republican on the House Energy and Commerce Committee and a strong supporter of offshore drilling, criticized BP’s “attention to safety, their attention to maintenance, their attention to using best available control technology and best monitoring practices.” Senator John Cornyn of Texas, another pro-industry Republican, declared, “This is one of those incidents that, when it occurs, of course, it changes everything in terms of our perception about the risk and the consequences of failure.”
|SENATOR JOHN CORNYN OF TEXAS|
On May 19, 2010 Secretary of the Interior Ken Salazar announced the breakup of MMS into three separate divisions, the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement, and the Office of Natural Resources Revenue, which will respectively oversee energy leasing, safety enforcement, and revenue collection. When Director S. Elizabeth (Liz) Birnbaum of the Minerals Management Service resigned following the Deepwater Horizon debacle, Salazar rechristened the MMS as the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). On June 21, 2010, former federal prosecutor and inspector general for the Justice Department Michael R. Bromwich was sworn in as BOEMRE’s new director. By installing a legal pit bull, the Administration hopes to convince agency bureaucrats to think twice before bartering access for lucrative industry consultancy deals or free tickets to the hometown rodeo. Needless to say, intimidation has rarely stopped vulnerable mid-level agency managers from banging away at the oil industry’s $billion piñata.
|INTERIOR DEPT DIRECTOR KEN SALAZAR SWEARS IN|
MICHAEL R. BROMWICH AS BOEMRE’S NEW DIRECTOR
When the Transocean rig exploded and BP’s sole recovery strategy (the BOP) went south, its deep ocean placement allowed the oil to dissipate into a huge body of water. Since oil spills are zero sum events, if the spill occurred at a location closer to shore, as endorsed by Mr. West in his interview, the coastal environment would have taken the full brunt of the devastation, sealing its reputation as a “former vacation destination” for the foreseeable future.
What about gas prices? As admitted by Suez officials when asked if the Calypso gas rig would lower prices, NOT A CHANCE! About one third of the pump price goes to taxes, distribution & marketing and refinery costs. The other two thirds pay for the different flavors of crude oil. Those prices are set by the world’s oil-exporting nations, primarily OPEC, which bases the cost on current and future world-wide demand.
Mr. West’s domestic energy theory is a hard sell for Florida residents. It doesn’t matter how many oil wells the energy industry manages to plant along the Florida coast. Not one drop of crude will be reserved for the Floridians who sacrificed their beaches. Instead, the oil will go to fill open contracts held by whatever company purchases the rights. Ordinarily, that means the highest bidder. In view of the current world debt balance, it is far more likely that oil pulled from Florida’s beaches will power Chinese factories, not Florida homes.
Observing that his “Drill, Baby, Drill” hard line mantra was stirring concern as the initially friendly audience began envisioning the beach covered with oil-soaked seabird carcasses, West retreated to a perspective that that targets Florida’s sizable unemployment burden, stating “Oil exploration would produce jobs and boost the Florida economy.” Dissatisfied with the tepid response, West reached again for his big gun. “If the Muslim Brotherhood takes control of Egypt, they will probably close the Suez Canal, jeopardizing oil shipments to the United States. Anyone who opposes offshore oil exploration is keeping us from energy independence and placing us at the mercy of terrorists.”
|CONGRESSMAN ALLEN WEST|
|WEST ON MUSLIM BROTHERHOOD|
Following the prolonged exchange of sound bites over offshore drilling, the Congressman summarized his platform for immigration, social security and taxes. In a nutshell, West considers anyone who is here illegally unworthy of any form of legal status - including children. Recognizing that Social Security is unsustainable if not adapted, West wants Congress to raise the eligibility age and means test recipients. In his drive to cut the deficit, West favors tax cuts for Florida businesses - including lowering the cap on the corporate tax rate - which will increase the deficit. He believes that its money well spent if it stimulates the economy and promotes job growth.
|SUEZ CANAL OIL ROUTE|
Jack Seiler Chimes in
While West was wading through the list of registered speakers, Fort Lauderdale Mayor Jack Seiler sought out the Sierra Club’s Matt Schwartz. In their earlier confrontation, West dismissed Schwartz’s preference for environmentally safe solar, bio-fuels and wind energy resources by arguing that their developmental immaturity disqualifies them as alternatives to drilling off Florida’s beaches. The exchange triggered Seiler’s political radar. With Schwartz in tow, Seiler headed to the Community Center office.
|MAYOR JACK SEILER ADDRESSES GUESTS|
At Seiler’s request, Community Center Manager Susan Riestra pulled up a picture on the office computer. The monitor featured a full screen shot of solar panels on the Community Center roof. Seiler said, “We installed them on Tuesday. They will substantially cut future energy costs.” When an excited Schwartz asked if he could climb on the roof to see the apparatus first hand, Seiler declined, concerned about the danger. Finally, it dawned on Schwartz that Seiler was demonstrating an example of a commercially viable solar energy system. When Schwartz asked for a breakdown of the related costs, Seiler consented to make them available.
Senator Ellyn Bogdanoff at Bat
|FL SEN. ELLYN BOGDANOFF|
On returning to the auditorium, Senator Bogdanoff was answering questions from local residents. In her six years as the Galt Mile’s voice in the Florida Statehouse, Bogdanoff rose to a legislative leadership position by walking the difficult political tightrope of a “socially conscientious conservative.” Selected by former House Speaker Marco Rubio as his Majority Whip, Bogdanoff served as the legislative gatekeeper in the Statehouse, where she killed budget-busting programs “based on voodoo economics or experimental social theory.” Known as “The Angel of Death” by both Republican and Democrat lawmakers whose bills she eviscerated, many of Bogdanoff’s views evolved with experience. Initially opposed to State sanctioned gambling as an immoral pursuit, she currently supports attracting high end casino resorts to South Florida to build tourism and create jobs.
|U.S. SEN. MARCO RUBIO|
After defeating fellow Republican Carl Domino in a heated primary for the Senate seat vacated by newly elected Florida Chief Financial Officer Jeffrey Atwater, District 25 voters handed her a convincing victory over Democrat Kelly Skidmore and nonaffiliated Miranda Rosenberg. Unlike her paper thin, 12-vote margin of victory over Former Lauderdale-by-the-Sea Mayor Oliver Parker for the District 91 House seat 6 years ago, Bogdanoff entered the State Senate with a strong voter mandate.
Applauding the neighborhood association’s statewide reputation for activism, Bogdanoff said that she appreciates representing a community whose constituents are willing to fight for issues they consider important. While toeing the Republican line in Tallahassee, Bogdanoff worked with local Democrats and Republicans to address neighborhood issues. She teamed with Democrats Ken Keechl and Dean Trantalis and Republicans Jeff Atwater and Roseann Minnet (L-B-T-S Mayor) to defeat the threatened Calypso gasworks. Her sprinkler retrofit relief bill, which rescued association unit owners from huge assessments, was supported by Keechl in a Broward County resolution. To provide a statutory basis for Broward County’s new Ethics Code, Bogdanoff was selected by the bi-partisan Broward Legislative Delegation to sponsor a bill creating the Office of Broward Inspector General. Unfortunately, the bill was killed by Tampa Senator Dennis Jones, who took revenge on Bogdanoff for squelching a pork-laden Tampa water management bill that Jones supported.
Characterizing some of his association’s board members as incompetent (they didn’t rule in his favor), a disgruntled unit owner asked Bogdanoff why the police refused to act on his behalf when he tried to make a complaint against those board members. He also asked why the State allows people to serve on an association board without verifying their qualifications. She told him that unless the board members were breaking the law, association affairs are outside the jurisdiction of local law enforcement. Adding that she sponsored last year’s omnibus association bill, she said “My bill requires board members to familiarize themselves with the association’s governing documents and rules.” Bogdanoff added, “I’ve also found that 99.9% of elected board members are honest hard-working volunteers who try their best to do what’s right for their members and the association.”
|SENATOR BOGDANOFF ANSWERS RESIDENT|
Contending that the State’s economic recovery efforts weren’t working, Bogdanoff advocated “trying something different” and admitted to sharing many of the views espoused by Congressman West. When asked about exorbitant property insurance premiums, Bogdanoff said, “Prior to serving you in the Statehouse, I owned an Insurance Agency. Unlike most of my colleagues, I have firsthand knowledge about the paralyzing effect that overregulation has on the insurance industry.” Aware that wholesale deregulation will invite unprecedented insurance rate increases, she issued an ominous warning to the audience. “Although many of the steps being considered in Tallahassee will likely be extremely painful to Florida residents, they should help rebuild a competitive Florida insurance market.”
|WEST AND BOGDANOFF AGREE ON ISSUES|
The Insurance Scam
When former Senator Jeffrey Atwater, a career banker intimately familiar with the Florida Insurance Industry, adopted a similar position during a special legislative session on insurance a few years ago, he was authorized by the Governor and then Senate President Ken Pruitt to negotiate a loosening of insurance regulations in exchange for industry commitments to pass realized savings to ratepayers. Despite saving $billions in reinsurance costs, the virtual absence of subsequent hurricanes and consecutive years of record carrier profits (check out QBE); one third of the State’s admitted carriers (including Allstate) applied to the Office of Insurance Regulation (OIR) for explosive rate increases.
|CFO JEFFREY ATWATER|
When Senate Insurance Chair Atwater, Democrat counterpart former Hollywood Senator Steve Geller and Florida Insurance Commissioner Kevin McCarty asked the carriers to produce financial documentation justifying the huge rate hikes, Allstate refused. In subsequent Senate hearings, insurance executives admitted that the reinsurance savings mandated to abate premium costs were instead redirected into stock buybacks, windfall profits and buying unnecessary layers of excess reinsurance from related or parent companies at inflated prices. The hearings also revealed that carriers used illegal hurricane risk models to justify higher premiums.
On a Saturday in October 2005, a hurricane modeling company called Risk Management Solutions (RMS) brought 4 scientists together in the Fairmont Princess Hotel in Bermuda. They dismissed 120 years of storm history and created a computer model predicting 11 annual major Florida hurricanes through 2010. The new crystal ball foresaw an $82 billion shortfall in insurer reserves, which carriers tried to plug by raising rates and cancelling policies. After 5 years of driving Florida Property Insurance bills to record highs, two of the four scientists withdrew their support from the 4-man “scientific consensus”. Another scientist involved in later revisions said that monkeys could do as well.
The model contributed by Jim Elsner, one of the four scientists, was previously used for selling catastrophe bonds to investors. Another hand-picked scientist, Mark Saunders, ran an industry funded center charged with increasing industry profits by 30%. The theories used by Tom Knutson were ridiculed by the scientific community and censored by the Bush White House. Ignoring contradictory evidence and quashing dissent, the industry flouted regulators who called the work biased, the methods ungrounded and self-serving, and the computer model illegal.
|FAIRMONT PRINCESS HOTEL IN BERMUDA|
Bogdanoff is reminiscing about the insurance industry of yore, when company executives put on their Sunday best, checked their cash balance and went window shopping for competitive reinsurance products. As confirmed by Atwater and McCarty, today’s vertically integrated insurance conglomerates buy overpriced reinsurance from their offshore reinsurance partners and contract with their risk modeling affiliates to engineer rate increases.
The key elements in this scam are the offshore reinsurance subsidiaries or parents, whose corporate status frees them from regulation or oversight. Since 71% of Florida properties are covered by paper-thin carriers with nearly no reserves, their survival depends on passing risk to offshore reinsurance vampires that play by Wall Street rules. Following the 2004 and 2005 hurricane seasons, the insurance industry blamed the overnight quadrupling of premiums on these unregulated reinsurance giants and promised that a few hurricane-free years would quell their overreaction and bring down rates. After six hurricane-free years, we can safely assume that their explicit faith in market forces was an industry-spun fairy tale. Not sure? Ask Jeffrey Atwater.
This is a critical turning point for Bogdanoff. A savvy politician, she is keenly aware of the electorate’s disgust with the State’s failure to magically correct the economic downturn. However, she is currently standing on a precipice overlooking a dangerous political abyss. If she supports a successful push for offshore drilling, when the next oil spill devastates the Florida coast and kills the local economy, she’ll have a tough time convincing constituents that they are better off.
Removing scores of regulations created to micromanage insurance industry behavior is widely considered to be a productive step to retrenching free market competition. If Bogdanoff’s plan targets the myriad regulations that impair competition while preserving consumer protections, it could work. However, that is a far cry from the kind of wholesale deregulation that relies on the industry’s “corporate conscience” to place the needs of policyholders over the needs of shareholders. While Florida residents are scared and angry, they are neither naïve nor gullible.
Nor are they patient. In the past, she has carefully avoided the pitfalls that turn politicians and bureaucrats into “industry consultants”. Hopefully, she will stick with the strategies that proved successful throughout her political ascendancy and take direction from her constituents.
On departing the meeting, Linda Eidinger commented, “I told you she supported offshore drilling!”
Pictures of the event were contributed by Art Seitz.
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Activist Attorney Lays Out Legislative Land Mines
February 7, 2011 - Last year, powerful special interests racked up significant financial losses when lawmakers passed long-awaited relief bills. Highly paid lobbyists, hoping to rehabilitate their credibility, promised angry clients a measure of recovery. Also, after the 2010 session, the Governor vetoed an unusually large number of bills designed to financially soak residents of common interest communities. Given significant changes to the political landscape, pro-association legislative advocates are concerned about the upcoming session in Tallahassee regressing into a forum for payback.
Most association members know that the Sprinkler Associations lost $billions when Senate Bill 1196 made sprinkler installations optional. Fewer know that the Fire Services Industry also lost a sweetheart deal to install manual fire alarm systems in association buildings that are less than four stories with units serviced by an exterior means of egress (the National Fire Protection Association (NFPA) declared them “unnecessary”). Sprinkler Associations weren’t the only trade organizations burned by the Omnibus Association bill.
Doubling the assessment outlay from 6 to 12 months for foreclosing lenders left the Banking Industry with an expensive scar. The hefty list of insurance fixes contained in the bill lost a bundle for the Insurance Industry (The bill relieved associations of the responsibility to force-place HO-6 policies for every unit owner). The elevator industry took a double hit. Not only did the bill spoil plans to install tens of thousands of elevator back-up generators (in buildings that already had back-up generators), it postponed a mandate to retrofit condo elevators with special access keys (as required for Phase II Firefighters’ Service) until the elevators needed modernization (and access key installation costs nearly disappear). All told, the $billions that the Omnibus Association bill saved unit owners were lost to some of Tallahassee’s most powerful players.
On November 1, 2010, Community Advocacy Network (CAN) Executive Director Donna Berger - an activist Association Attorney and Managing Partner at Katzman Garfinkel and Berger (ironically burdened with the double-edged acronym “KGB”) - addressed about 70 association officials attending a Presidents Council meeting at the Fountainhead. After reviewing how laws enacted during the 2010 legislative session impacted associations, Berger fielded questions; primarily about the sprinkler retrofit relief provisions in Senate Bill 1196. When asked for an opinion about when associations should hold the full membership vote to forego the cash-intensive retrofit, Berger said “Now that the relief bill has been signed into law, I think that associations should conduct the opt-out vote as soon as possible.” She explained that two factors prompted her to passionately recommend quick action.
|SEN. ELLYN BOGDANOFF|
Berger warned “There’s just too much money at stake for Fire Services industry lobbyists to quietly walk away.” With a virtually bottomless war chest continually replenished by corporate fire services giants such as Motorola, Allied Signal-Honeywell, Fireman’s Fund Insurance Company and Tyco, industry lobbyists plan to pressure lawmakers at the 2011 legislative session to rescind the opt-out provision. Introducing her second cause for concern, Berger said “In 2011, the political environment in Tallahassee will become significantly less sympathetic to association concerns.” Former Statehouse legislative gatekeeper (and relief bill sponsor) Ellyn Bogdanoff is now a first-term District 25 Florida Senator and former Senate President (and Galt Mile association supporter) Jeffrey Atwater is now the Florida CFO (Chief Financial Officer) and State Fire Marshal. These two staunch association proponents no longer occupy the key legislative leadership positions that helped unit owners prevail last year. Moreover, the Governor’s mansion is occupied by Rick Scott, whose moral compass even provided his supporters with comic relief.
|CFO JEFFREY ATWATER|
Berger asserted that once the major races were decided; constituent concerns in Tallahassee would drop like a rock. She anticipated resubmission of several screwball insurance bills ghosted by industry lobbyists, a banking bill that would replace foreclosure courts with lender-appointed puppet committees, a Chinese menu of regressive construction legislation and other damaging bills either outlined or wholly drafted by lobbyists. Of particular concern to Berger were some of last year’s exploitive bills that would have become law without the Governor’s veto pen. She warned that they are likely to resurface this year.
Berger’s exhortation proved prophetic. Some of the bills she described have already been pre-filed by their sponsors. On December 17, 2010, Senator Joe Negron (Palm City - R) filed Senate Bill 288, which navigated last year’s session as Senate Bill 1964. The bill enigmatically deifies Design Professionals, immunizing architects, interior designers, landscape architects, engineers, & surveyors to legal redress. It contains an intriguing Catch-22 provision specifically designed to eliminate both liability and the cost of malpractice insurance for these professions.
|SENATOR JOE NEGRON|
The legislation allows recovery of economic damages up to the amount of the design professional’s existing liability insurance coverage. Since current Florida law doesn’t actually require this insurance and the bill would otherwise render them judgment-proof, Design professionals will have little incentive to purchase malpractice insurance. In effect, by cancelling their insurance, they also cancel their exposure. Unless an association’s engineer, interior designer and/or architect feels morally compelled to pay premiums for a malpractice policy, the association cannot recover damage costs for negligence, defective designs and/or other professional foul-ups. If an engineer designs, oversees construction for and signs off on a structurally defective roof that collapses later that day or a landscape architect turns the entire association grounds into crispy brown mulch overnight, the association would not even be legally entitled to an apology.
No other class of professional has ever been so completely financially insulated from damages stemming from negligence or professional mistakes. As doctors, lawyers, and accountants cannot limit exposure for their own negligence, extending this all-encompassing immunity to engineers, architects and Interior Designers conjures a universe shaped by the conceptual progeny of Lewis Carroll and Ayn Rand.
Last year’s companion legislation in the Statehouse - House Bill 701 - was filed by Orlando Representative Stephen Precourt, a professional Transportation Engineer. The legislation was approved in both legislative bodies and presented to the Governor on May 17, 2010. When Florida residents raised hell about the ludicrous protections it provided to Design Professionals, Governor Crist responded with a veto on June 1, 2010.
|REP STEPHEN PRECOURT|
In a comment posted on the Florida Construction Law Authority blog, Board Certified Construction attorney Lee Weintraub of Becker & Poliakoff explained that, at best, a claimant would be limited to suing for breach of contract. Weintraub added “most design contracts limit the design professional’s liability to some paltry amount that pales in comparison to the harm that comes from defective design.” In summary, the few bucks awarded for a contract breach will barely cover the postage costs of the recovery action, much less the actual damage costs.
|ATTORNEY LEE WEINTRAUB|
Another fiasco approved by last year’s Legislature was Senate Bill 2044, filed by Banking and Insurance Chair Senator Garrett S. Richter (Florida Insurance Council 2009 Legislator of the Year). If the Governor hadn’t vetoed the bill, insurance carriers could bypass current Office of Insurance Regulation (OIR) petition procedures when raising their rates by more than 10%. The bill would have permitted an insurance carrier to imperceptibly yet radically change the terms of any policy upon renewal by slipping in the language “Notice of Change in Policy Terms” anywhere in the renewal agreement. Since a subsequent payment of the renewal premium would have constituted acceptance of the new terms, this stealth “bait and switch” tactic would have allowed carriers to covertly lace policies with a host of unreasonable preconditions and unacceptable benefit exemptions without the knowledge of the policyholder.
|SEN. GARRETT RICHTER|
Of greatest importance to associations, the bill would have removed the prompt payment requirements for carriers. A carrier would have only been required to pay “actual cash value” less the deductible, regardless of whether or not the policyholder purchased “replacement cost” coverage. The balance would not be paid until AFTER the homeowner somehow financed the reconstruction and/or replacement of personal property WITHOUT insurance proceeds (along with all the non-insured items). The 110-page “manifesto” contained dozens of other customer-funded cash piñatas for carriers. While associations were concentrating on supporting their relief bill, this and a dozen other special interest scams came within a hair of enactment.
This year’s incarnation is Senate Bill 408 by – you guessed it – Garrett Richter. The 113-page carrier’s dream bill allows insurers to hike rates to offset discounts to homeowners for hurricane mitigation measures such as impact windows and hurricane shutters. The bill reduces the notice required for cancellation or non-renewal of a customer’s policy from 6 to 3 months and allows carriers to spontaneously change amounts paid to policyholders for damages. Like last year’s bill, SB 408 is chock full of other “goodies” that will appeal to shareholders, not policyholders.
Berger concluded that unless associations frustrate industry attempts to take back last year’s gains, unit owners could soon find themselves fighting the same battles they won in 2010. To insure that association officials statewide were provided with an opportunity to familiarize themselves with 2011’s legislative objectives and obstacles, Berger organized training sessions themed like a military-style Boot Camp. Her “Tallahassee” strategy emulated General George S. Patton, who described the rationale for his rescue campaign during the Battle of the Bulge, “I don’t like paying for the same real estate twice.”
|ATTORNEYS LEIGH KATZMAN AND DONNA BERGER|
STRAP UP FOR CAN'S BOARD MEMBER BOOT CAMP
Although associations lost irreplaceable legislative assets when Bogdanoff and Atwater moved up the political food chain, Berger’s Community Advocacy Network (CAN) and Becker & Poliakoff’s Community Association Leadership Lobby (CALL) effectively streamlined the communication networks available to associations and their members during the legislative session. This new vehicle played a critical role in the last session’s productivity by allowing associations to react quickly and in force when confronted by political pitfalls.
If association members use this new tool to thwart the upcoming session’s bad bills, it will go a long way to control future maintenance costs. If not, these bills could wind up being escorted into Rick Scott’s office by their authoring lobbyists. Six days before announcing his gubernatorial candidacy, the Governor was deposed in a case investigated by FDLE wherein his new company, Solantic, defrauded Medicare and Scott lied to regulators. After curing the violations with his checkbook, the citizens of Florida decided to reward his “integrity” with guardianship of the public trust, remanding the defendant to the Governor’s mansion.
|GOVERNOR RICK SCOTT|
Given his history of hammering the public to benefit shareholders, no one craves learning what Governor Scott will do while courted by lobbyists armed with numbered Cayman Island accounts and marching orders to “do whatever it takes!” The Galt Mile Community Association will closely monitor the session and pass on progress updates as necessary. By the session’s end, curious Florida residents will know whether their new rainmaker views them as “shareholders” or “the public.” Stay tuned...
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January 14, 2011 - In October 2009, Hollywood ophthalmologist Alan Mendelsohn was indicted for operating a $2 million influence-peddling operation. Using the Florida Medical Association as a vehicle for transferring money to legislative candidates who later delivered key votes in Tallahassee, the slick-suited power broker also skimmed $350,000 from his political fundraising apparatus to pay a mistress, feather a love nest and bankroll his children’s education. By using the 527 tax designation, he could bypass the $500 contribution limit and raise an inland lake of “soft money.” While busy funneling $millions through three political slush funds, Mendelsohn served on Governor Crist’s transition team.
Faced with an erosive threat to his wobbly political image, Crist sought to distance himself from his tainted supporter by asking the Supreme Court to convene a statewide Grand Jury to investigate corruption. Not wanting to appear complicit in the Governor’s self-absolution strategy, the Court declined, calling the Governor’s rationale “vague”. On December 1, 2009, when the Feds bagged Attorney Scott Rothstein for operating a $1.2 billion ponzi scheme, the national media painted the entire state as a behavioral sink. Literally overnight, on December 2nd, the Supreme Court approved Crist’s amended request and appointed Broward Chief Judge Victor Tobin of the 17th Circuit to preside over the grand jury. It opened for business in February, 2010.
|CHIEF JUDGE VICTOR TOBIN|
To provide lawmakers with relevant guidelines for the upcoming 2011 Legislative session, the Grand Jury completed a 127-page “Interim Report” on December 17, 2010 and released it on December 29th. The report states “We believe that the time for action is now, and we urge the Florida Legislature and other governmental bodies to address anti-corruption efforts using our findings and recommendations as a starting point.”
While comprehensive, the report’s tone is cynical, like a redundant complaint. After noting that recommendations from previous authoritative anti-corruption efforts were enacted slowly, ineffectively or not at all, the report acknowledges the dogma facing lawmakers, “We cannot ignore the reality that it is often hard to impose more severe restrictions on one’s own interests.” The jurors were particularly irritated by the fact that Florida’s more than 800 federal corruption convictions from 1998 through 2007 lead the nation - by a country mile.
Decrying corruption “pervasive at all levels of government,” the Grand Jury observed that “mismanagement and theft penalizes taxpayers by driving up the cost of all government services” and “calls for an immediate repeal of what can only be referred to as Florida’s Corruption Tax.” Lamenting gross statutory deficiencies in education, deterrence and enforcement, the jurors offered the following four reasons why “public officials are often not being punished under the public corruption laws in Florida.”
- The act is not criminalized;
- The cases are too difficult to prove due to their definitions and extra elements of proof;
- The punishments imposed too lenient and do not fit the crime; or
- The prosecutor decides to charge another crime or accept a plea in order to allow a defendant to avoid the negative publicity of public corruption charges.
Under a quote by Thomas Jefferson, “Where a man assumes a public trust, he should consider himself a public property,” the Grand Jury listed its recommendations. Jurors viewed the first two items as systemic problems, citing differences in how civil and criminal violations vary for elected officials, bureaucrats, other government employees and “fellow conspirators” in the private sector. Of specific concern were some adverse effects of privatization on former Government Departments.
One non-profit organization whose functions were formerly performed by a Government agency created to channel Federal Funds to needy citizens was nailed for bid rigging, kickbacks, and bribery. The Company habitually spent money on excessive program costs including clothes, laptops, field trips, and elaborate graduation ceremonies with champagne toasts. Although they were doing Government business using taxpayer dollars, the jurors found it “frustrating and absurd” that the employees or recipients of this government funded contract couldn’t be charged under Chapter 838 (a statute that governs the behavior of Public Officials) since they technically weren’t “public servants.”
Other instances included a suspect who was paid cash to falsify the number of community service hours completed by a probationer for the Department of Corrections; another took cash from undercover law enforcement officers to dodge reporting and other requirements of a pre-trial release program. Home inspectors paid with taxpayer dollars religiously falsified records about conducting home visits. The State Attorney’s Office concluded that since these employees failed to meet the definition of “public servant”, no charges could be filed under Chapter 838.
Privatization proponents extol the fiscal virtues of replacing lumbering Governmental bureaucracies with profit-oriented corporate machinery. The report surmised that the taxpayer-funded corporate waste, fraud and abuse that replaced Government waste, fraud and abuse wasn’t subject to oversight or prosecution. When an agency is privatized, taxpayers continue to fund program deficits. The Grand Jury noted the impact this portends for Florida’s prisons, many of which are or will be privatized. The bribes paid to guards and prison officials increase the costs of incarceration, which are then paid by taxpayers. The jurors submit “The time has come for the Legislature to close this appalling loophole.”
To differentiate between criminal consequences for an action under Chapter 838 and civil penalties for the same action in the State’s Code of Ethics, the Legislature used the words “corruptly” or “with corrupt intent” throughout Chapter 838. The panel points out that legally there is no distinction and the language was used solely to create a prosecutorial burden that is nearly impossible to meet. The Grand Jury concluded, “We find that the standard criminal burden of ‘intentionally’ or ‘knowingly’ is sufficient to establish a public servant has acted with scienter (guilty knowledge) as to separate these offenses from an unintentional violation which may be civil.”
Having demonstrated that the poorly drafted laws regulating Florida’s government procurement process invite corruption, the jurors want the legislature to enact a realistic “Bid tampering or bid rigging” statute - using Federal regulations as a template. They identify Bid Suppression, Complementary Bidding, Bid Rotation and Customer or Market Allocation as the four major schemes widely used by conspiring contractors. Even when perpetrators are caught red-handed, the current Florida statute is so limited that most jurisdictions refuse to waste resources prosecuting these offenses. Contractors can split bids with impunity, use shills and middlemen, maintain no records, perform shoddy or no work and still get paid.
Bribes have become a statewide way of life since the Florida Supreme Court held that Florida’s commercial bribe receiving law under F.S. 838.15 was unconstitutionally vague. About half of the bottom line for dealerships selling big ticket items like automobiles, boats or construction equipment is generated by associated finance and insurance (F&I) subsidiaries. Employed as an independent contractor for Miami-based Kelly Tractor Company, Mark Smith received commissions for lining up loan candidates. Predatory Credit Manager Robert Roque hammered Smith for 33 – 40% kickbacks on deals Smith negotiated from October 1, 1990, to June 30, 1991, when Smith finally refused to continue being covertly victimized. When Roque was charged with 35 counts of “Commercial Bribe Receiving,” the Court granted his motion to dismiss the charges, finding the poorly drafted statute unconstitutionally vague and susceptible to arbitrary application. Although reversed on appeal, the Florida Supreme Court quashed, agreeing with the lower court’s invalidation of F.S. 838.15.
Since Roque v. State was adjudicated more than 15 years ago, the legislature has done nothing to reconstruct the judicially neutered statute. After describing a litany of outrageous payoffs by contractors, mortgage brokers, etc the Grand Jury asserts “As it stands now, commercial bribery is not unlawful under Florida law and it will remain this way until the Legislature is forced to address these statutory flaws. In our opinion, it would take little effort and have no budgetary impact to redraft these statutes so that they address the constitutional concerns outlined by the courts.” Don’t hold your breath – the jurors certainly aren’t.
A Palm Beach County grand jury proposal to prevent pleading down to a lesser charge by public officials who misuse their office was adopted by the Grand Jury. Called “Under the Color of Law”, crimes committed by public servants would be increased by one degree of classification and one level of severity, not knocked down to a parking ticket.
The panel identifies several ethics violations that should be criminalized, including soliciting or accepting a gift, unauthorized compensation, or misuse of public position. Instead of the customary slap on the wrist, categorizing these violations as third degree felonies would guarantee that they leave a scar – in the form of a criminal record.
Voting conflicts of interest should be criminally punished as well. Other conflicts recommended for criminalization include doing business with one’s agency, entering into conflicting employment or contractual relationships, using the office to secure a special privilege, benefit, or exemption for the officeholder, or others. Since the punishment should be commensurate with the size of the rip-off, the Grand Jury recommends linking it to a sliding scale of monetary thresholds.
To “hold government officials accountable for efficient, cost-effective government operations and to prevent, detect, identify, expose and eliminate fraud, waste, corruption, illegal acts and abuse,” the jurors would like to see independent inspectors general riding herd from within government agencies. These watchdogs would be administratively answerable to a new and independent Office of State Inspector General. Although responsible to the heads of their respective agencies, the local IGs are exempt from reporting to them about investigations. To protect the integrity of ongoing investigations and close a potential statutory source of leaks, the jurors also exempted them from compliance with the public records law (in F.S. Chapter 119) until the investigation is complete.
They want to enhance Florida’s Whistle-blower’s Act with a rewards program for the conviction or discharge of violators while expanding their range of targets to include “any entity, business, corporation, or non-profit organization which receives government funding to perform a governmental function or service.”
The Grand Jury approved a series of housekeeping clarifications impacting public officials who are subject to multiple regulatory codes. The resulting conflicts are often contradictory, such as one that prohibits lawmakers from voting on issues from which they derive a financial benefit and another that requires them to report such a conflict within 15 days of the vote. The jurors want lawmakers to reconcile how the corruption Statute treats disclosure of potential conflicts of interest and abstention from voting with the more rigorous standards in the House and Senate rules.
They would also remove compliance discrepancies between elected and appointed officials performing the same function. For instance, unlike elected County Commissioners, those appointed by the Governor aren’t subject to State Ethics Code constraints against voting conflicts. They also suggest raising the maximum fines that can be imposed by the State Commission on Ethics from $10,000 to $100,000, significantly beefing up the deterrent.
Similar to the prosecutorial anathema created when lawmakers applied the language “corruptly” or “with corrupt intent” to create a false legal distinction between actions based on motive, the Grand Jury sought to supplant the ill-defined “special private gain” in the corruption statute with “any gain.”
A Sun-Sentinel survey revealed that only 600 out of an expected 30,000 financial disclosure forms were filed by Florida public officials. The jurors explained that filing a false report is a criminal violation while filing no report would only evoke civil charges - if caught. They recommended applying the same criminal penalties for both actions.
While satisfied with the efforts of the State Ethics Commission, the Grand Jury is leery of its dependence upon the Legislature for budget appropriations. They are also fans of the Miami-Dade and Palm Beach models for patterning local Ethics Commissions, which they recommend for every Florida County. Not Surprisingly, the report states “when Broward County initiated its Commission on Ethics, many on the Broward County Commission opposed giving the ethics commission the authority needed to investigate and enforce the local code of ethics.” Jurors were referring to the “Ritter Amendment,” a poison pill created by Broward Commissioner Stacy Ritter which threatened to change the independent County Inspector General conceived by the Broward Ethics Commission into an impotent lackey. Incredibly, it precluded the I.G. from using evidence of wrongdoing developed by the media and actually punished whistle blowers.
Following a week-long blistering county-wide public outcry, Ritter backed off, telling reporters that when she read her amendment several times at the County Commission meeting – specifically convened to consider the new Broward Code of Ethics – she hadn’t noticed that a section of her amendment was mysteriously missing. The press was understandably confused, given her earlier claim that she developed the amendment’s language over many months. At a special meeting called a week later, the missing language magically reappeared, vesting the Inspector General with the right to follow any viable leads, whether or not they were acceptable to Ritter or the other Commissioners.
|BROWARD COMMISSIONER STACY RITTER|
The Grand Jury identified loopholes in the State Election Laws that need to be plugged. For example, campaign contributions are prohibited in Government-owned buildings but permissible in space leased by the Government. They support striking the two-year statute of limitations for investigating a first degree misdemeanor and other violations. By prohibiting 3-pack advertising they hope to eliminate a loophole that allows three colluding candidates to pay for advertising with party or committee funds instead of their individual campaign funds. They also ask the Legislature to define the term “residency” to adequately enforce the requirement that a candidate actually live in the district when running for or elected to office. Finally, the Grand Jury asked for greater latitude for the Election Commission to initiate investigations, adding “willful” criminal violations and “willful and non-willful” civil violations to their jurisdiction and vesting them with the authority and tools to investigate residency violations by candidates. They stated that the Governor, Lieutenant Governor and Cabinet members should be required to temporarily place their financial interests and assets into blind trusts.
The Grand Jury offered 6 recommendations to address the Department of Management Services’ failure to effectively manage lists of convicted and suspended vendors. They seek to replace arbitrary penalty periods with fixed terms to prevent personal relationships from impacting the process. They also recommend that “Any vendor or person convicted of a crime involving theft or procurement related crime with the State of Florida should be barred from entering into any contracts with the State of Florida for life.”
The jurors recommended that “elected or appointed officials subject to the Code of Ethics undergo ethics training prior to or within sixty (60) days of holding office” and update that training annually. For both local and State agencies, they support the appointment of a chief ethics officer to oversee this training. The Grand Jury specifically stated that candidates for state, county, and municipal office receive education and training regarding election and campaign finance laws.
Intermittently, the jurors would squeeze out a series of twisted assumptions and equally skewed conclusions. Assuming that thieving employees working for Florida Fish and Wildlife stole flat screen televisions from the office because they were emulating management and supervisory personnel who abused spending policies and fixed bids, the jurors concluded that educating the crooked managers would “trickle down” and cure the lightfingered worker bees. Stranger still, instead of recommending a deuce in County (jail), they suggested that posting copies of the ethics rules about the office would convince the management crooks to lead the thieving employees “by example.” After listening to eleven months of systemic rip-offs, an occasional mental “slip and fall” is to be expected.
Finally, the jurors noted that only Miami-Dade, Broward, and West Palm Beach State Attorney’s Offices have been able to afford dedicated resources for a public corruption prosecutor or unit. They assume that other counties may be hampered by a lack of resources, political will, size of the office, or perceived size of the problem. The jurors recommended that Law Enforcement and prosecutors receive funding to pursue public corruption cases.
The report provides a blueprint for confirming Florida’s status as an ethics cesspool. The laws created to enforce appropriate behavior by public officials are ninety percent window dressing. For several decades, when similar recommendations were sent to the Legislature, they were given some lip service and forwarded to the dog house. With Crist a memory, the only chance these recommendations have of seeing daylight is a boost from the new Governor when negotiating with the legislative leadership.
|GOVERNOR RICK SCOTT|
First informed about the Grand Jury report during a preinaugural tour in north Florida, Governor Rick Scott commented “Clearly I believe in accountability so I’m going to do everything I can to make sure that the citizens of the state feel comfortable that the things the state’s involved in are done fairly, honestly and with transparency.” He neglected to mention whether or not he would extend the Grand Jury.
Since Scott was at the helm of Columbia/HCA when it was fined $1.7 billion by the Justice Department for fraud, discrimination and kickbacks during the largest case of healthcare fraud in U.S. history, expectations for his support of the Grand Jury findings were muted. Scott surprised skeptics when one of the four Executive Orders he issued shortly after his inauguration directed his staff to see how it might implement some of the Grand Jury’s recommendations.
Florida’s rookie Attorney General Pam Bondi, who campaigned on cleaning up the State’s rampant corruption, said “I will do everything in my power as attorney general to put a stop to it. I talked about it in the campaign and that will be a priority.” Unfortunately, Florida Attorneys General from Butterworth to McCollum have complained bitterly about the State’s Swiss cheese ethics statutes, which are largely useless for addressing corruption on any level.
|FLORIDA AG PAM BONDI|
Former State Senator Dan Gelber from Miami Beach summarized the State’s dilemma “The problem has not been the ideas. It’s been the unwillingness of the Legislature to really reform itself and public offices around the state. The Legislature refuses to seriously address public corruption. I commend the grand jury for cataloging a lot of the ideas. At the end of the day, unless there’s the political will to implement them, it will be meaningless.”
|FORMER SEN. DAN GELBER|
On Page 38, the report applauds two of last year’s bills that would have criminalized certain ethical violations, including soliciting or accepting a gift, unauthorized compensation, or misuse of public position. Senate Bill 1546 by Jacksonville Senator Stephen R. Wise [R] and its companion bill in the Statehouse, House Bill 347 by former Representative Carl Domino [R], proposed to add the following language to the Code of Ethics: “In addition to being subject to penalties under s. 112.317, a person who violates this subsection commits a misdemeanor of the first degree...” Both bills never made it past their first committee stops. SB 1546 was frozen in the Senate Rules Subcommittee on Ethics and Elections and HB 347 died - unread - in the House Governmental Affairs Policy Committee.
|FLA SEN. STEPHEN WISE|
At least two lawmakers will respond to the Grand Jury’s plea for reform in the upcoming 2011 session. Lakeland Senator Paula Dockery, a dark horse Republican Gubernatorial candidate from Queens, New York, filed Senate Bill 86 on November 23, 2010, prohibiting voting conflicts for State legislators. When the report was released on December 30th, New Port Richey Republican Senator Mike Fasano promised to file legislation addressing several of the Grand Jury’s major complaints. His bill would require Scott and the other Florida Cabinet members to place their assets into a blind trust, empower the Ethics Commission to initiate investigations, define “public servants” to include private contractors performing Government work with taxpayer dollars and put teeth into bid tampering prohibitions.
|FLA SEN. PAULA DOCKERY|
When the Broward Legislative Delegation was commiserating in the State Capitol about legislation to create a Broward County Inspector General – as requested by the Broward Ethics Commission – a Statehouse member was asked about the two Ethics bills filed during the session. He said “They have about the same chance as a snowball in Hell.” Despite the annual anti-corruption gestures that habitually die in committee, Florida lawmakers will only enact effective Ethics laws when the FBI is convinced that Tallahassee would provide as fertile a stomping ground as South Florida. Until then, the 127-page report will have consumed a lot of trees for nothing.
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A Supreme Court Bearing Gifts
New Legal Victory for Associations
January 3, 2011 - The lending industry has refined foreclosure foot-dragging into an art. Early on, foreclosing banks realized that they could sidestep any statutory obligations to associations by not taking title to defaulted properties. Threatening Florida’s legislative leadership with sharp cuts to available mortgage financing successfully thwarted lawmaker attempts to plug this elephantine loophole. When associations turned to the courts for relief, lenders traded on their superior recorded mortgage liens to control scheduling for every stage of the foreclosure process, further enabling strategic delays. Lower court pro-association decisions based on “fairness” or “equity” were reversed as appellate courts cited the absence of any statutory justification.
It gets worse. Until last year, state law entitled condominiums to a maximum of 6 months of lender assessments or an amount equal to 1% of the outstanding mortgage (whichever was less) – minimal relief for units that hadn’t contributed for 2 to 4 years. Until the non-producing units were sold to viable purchasers, the other association members would be forced to continue offsetting the ongoing deficit. By deliberately delaying the sale of these units, lenders pushed many associations to the brink of receivership. With no legislative or judicial relief in sight, desperate associations joined with abused borrowers and appealed to the Florida Supreme Court for a Hail Mary. To everyone’s amazement, rather than squeezing out some convoluted treatise on judicial regulatory impotence, it appears that the Supreme Court delivered!
|FLORIDA SUPREME COURT|
The Third District Tanks Tadmore
In February of 2008, when the U.S. Bank National Association sought to foreclose a first mortgage on a condominium unit owned by Danny Tadmore, his Condominium Association was joined as a defendant, having also filed a lien. After a full year of watching bankers twiddle their thumbs (during which time Mr. Tadmore expired), the struggling Association filed a February 20, 2009 motion to compel the bank to move forward within a certain time frame or pay maintenance assessments on the unit.
Instead of trying to move the action along by requesting a trial date or filing a Show Cause order for the lender’s year-long delay, the Association claimed that it was being unreasonably prejudiced by the Bank’s “undue delay in pursuing their [sic] foreclosure action”, making it fair and equitable for the court to order the Bank to make monthly assessment payments to the Association.
Before ruling on the motion, Judge Scott J. Silverman of the Eleventh Judicial Circuit of Florida for Miami-Dade must have popped a happy pill, fallen into a reverie and dreamed of legislating from the bench. Upon opening his eyes, he granted the Association’s motion, ordering the bank to “diligently proceed within thirty (30) days or” start paying the $939.56 monthly maintenance fee to the Association.
Since banks are bound by statute to assume assessment responsibilities only after acquiring title to a property, the Third District Court of Appeal for Miami-Dade rejected the idea that equity and fairness are adequate reasons for requiring lenders to pay association fees while a foreclosure case is still pending against the unit owner.
In a December 2, 2009 Opinion, the Appeals court chastised the association for not exhausting more traditional means available to address delay, such as filing for a Show Cause order. Contending that the association was therefore not entitled to extraordinary relief, the appellate Court reversed Silverman’s popular Order and sent the association back to the drawing board. In its opinion, the appellate Court observed that “in its quest to do equity, a court cannot trammel the legal rights of the parties.” Alas, Silverman’s brief career as a lawmaker was over.
In fact, aside from shamelessly begging some Judge for relief, there was no legal mechanism available to compel a lender to move the case along under Florida law. Also, there was no existing legal provision that could force a lender to pay statutory maintenance obligations prior to taking title.
|FLORIDA BANKERS ASSOCIATION|
PRESIDENT ALEX SANCHEZ
In January of 2010, Florida Bankers Association President Alex Sanchez admitted, “We don’t want the property. We’re not into the property management business.” Tampa foreclosure attorney Kristopher E. Fernandez agrees that banks deliberately immobilize foreclosure cases to avoid association obligations, explaining “These cases are stuck in legal limbo because banks don’t want to push foreclosures. I’ve seen cases where nothing is done. The lenders don’t want these homes back. They know they have to pay assessments once they take them back.” The statutory “loophole” brazenly exploited by the lending industry has been an insurmountable obstacle – until now.
Task Force on Residential Foreclosure Cases
While these frustrating courtroom melodramas were playing out, the Florida Supreme Court appointed a “Task Force on Residential Mortgage Foreclosure Cases” to frame the mortgage foreclosure crisis from the standpoint of mortgage holders (borrowers) and associations. Irked by repeated appellate opinions challenging the Judiciary’s right to do equity, when the Court issued Administrative Order AOSC09-8 creating the Task Force on March 27, 2009, it specifically charged them to “examine existing court rules and propose new rules or rule changes that will facilitate early, equitable resolution of residential mortgage foreclosure cases.”
While prohibited from making new law, the Task Force was empowered to plug long neglected statutory loopholes by amending court rules for Civil Procedure and Judicial Administration. On August 17, 2009, the 15-member Task Force released their 51-page final report. On February 11, 2010, the Florida Supreme Court amended the Florida Rules of Civil Procedure to include a majority of the Task Force recommendations.
Among the adopted proposals was a new form - 1.996(b) - created to accompany a trial tactic conceived by the Task Force to expedite foreclosures – a “Motion to Cancel and Reschedule Foreclosure Sale”. To deter lenders from exploiting their status as “judgment holders” to interminably delay foreclosures, the Task Force provided a vehicle to circumvent their absolute control over the process. The Task Force explained that “many foreclosure sales set by the final judgment and handled by the clerks of court are the subject of vague last-minute motions to reset sales without giving any specific information as to why the sale is being reset.”
The Task Force identifies Community Associations as being twice victimized by Florida’s foreclosure process, when “delinquent owners do not pay statutorily required association maintenance assessments, and mortgage holders do not pay assessments until after the foreclosure is over and title has passed, and then the delinquent amount is statutory reduced to a mere fraction of an association’s expense to maintain the property.” Focusing on the other unit owners, the Task Force observes “Especially inequitable is that community associations and their members are involuntary participants, never being involved or profiting from the mortgage process; nevertheless, they are statutorily and contractually required to maintain the foreclosed property.”
Lamenting this unconscionable inequity, the Task Force complains “This is a windfall for mortgage holders and delinquent owners residing in the property because the remaining parcel owners who timely pay assessments are in fact paying for the property’s insurance, utilities, cable television, exterior maintenance, and access to roads and other common facilities, depending on the community.” To illustrate the inevitable consequences of lender delays, the report concludes with a snapshot of the victimized association’s catastrophic slide toward insolvency, explaining “As associations preserve cash flow by increasing assessments on owners who timely pay, the resulting strain has lead to more defaults, threats of violence, and the expense of police attending association meetings to keep the peace, as well further decreasing property values for the entire community because the association cannot afford to maintain entrances and other common facilities.”
Having defined the problem, the Task Force prescribed their legal therapy. The plaintiff's information on the form “would provide the court with an explanation of why the foreclosure sale needs to be cancelled and request that the court reschedule the sale.” While requiring some ethically challenged lender’s attorney to whip up a bogus rationale for the cancellation is marginally useful, the new form additionally binds the plaintiff to empower the court with setting a date for the sale. By forcing the lender to relinquish control over scheduling the sale, the Florida Supreme Court expects to “keep properties out of extended limbo between final judgment and sale.” It sounds like a home run – but would it work?
The Legal Litmus Test
In a case adjudicated by Florida’s Fifth District Court of Appeals in Daytona Beach – LR5A-JV, etc. v. Little House LLC, et al (Case No. 5D09-3857) – where a Massachusetts limited partnership known as LR5A-JV, LP (“LR5A”) was stiffed for a 2005 $17.5 million mortgage loan to Little House, LLC, and Little Lakes, LLC (the “borrowers”), lender “LR5A” won a final judgment of foreclosure in 2008. Since the Matanzas Shores Owners Association (the “Association”) had also filed liens against the defaulted borrowers, the lender enjoined them as a defendant in the Flagler County action in order to foreclose their claims of lien for unpaid assessments totaling approximately $400,000. When the trial court entered a final judgment of foreclosure, it found that LR5A was due $30,651,523.93, and set a date for a judicial sale of the property.
The lender cancelled the sale under the pretext of requiring confirmation of its lien’s priority over the association lien. Forced to accommodate the lender’s transparently dilatory request, the Court affirmed the final judgment of foreclosure, ruling that LR5A’s 2005 recorded mortgage was superior to the Association’s assessment liens and instructed LR5A to foreclose their superior mortgage. The Association couldn’t turn the foreclosure back into a contributing property or recover the past due assessments until after the lender scheduled a judicial sale. As such, the Association moved the trial court to set a sale date for the borrower’s Flagler County property. Following a hearing on the motion, and over lender LR5A’s heated objection, the court entered an order setting a date for a judicial sale.
LR5A appealed the order, contending that as judgment holder, it has the sole right to control when, and if, a foreclosure sale should take place under section 45.031, Florida Statutes (2010). They also held that the Association, as a junior lien holder, cannot demand that a foreclosure sale date be set, and the trial court erred as a matter of law in setting the date for the judicial sale.
The Association whipped out its shiny new “Motion to Cancel and Reschedule Foreclosure Sale” bag of tricks – as provided by the Florida Supreme Court. The lender would have to complete the accompanying form 1.996(b) with a “viable legal rationale for further delays instead of simply asserting that its status as the priority lien holder trumps a trial court’s right to schedule the sale. The Association’s final argument noted that the Supreme Court’s Task Force created the new motion to deter “the financial toll that foreclosures take on association members. Ironically, the High Court’s new form that the plaintiff had to submit “came pre-packaged with the language “If this Court cancels the foreclosure sale, Plaintiff moves that it be rescheduled.” Game, set and match!
Unwilling to challenge the Florida Supreme Court, the appeals court forged a breakthrough in case law by upholding the trial court’s right – and legal obligation – to set the sales date. In the court’s opinion, District Judge Richard B. Orfinger disparages the lender’s argument for ignoring “the Association’s interest in collecting lawful assessments on the subject property.” He also addresses how lender foot-dragging further damages the Association, opining “As the Association points out, LR5A is not obligated under (section) 720.3085, Florida Statutes, to pay the Association’s assessments, yet, the Association must still maintain the common property and facilities, which inure to the benefit of the property.”
RICHARD B. ORFINGER
This was a legal landmark. Until now, the junior liens held by associations placed them at the mercy of lenders whose superior liens hard wired their control over every stage of the foreclosure process. Also, Florida courts had repeatedly ruled it immaterial when the “Judgment Holder’s” case management knowingly damaged other lien holders. Florida association attorneys began filling legal blogs with expectations of clearing out hundreds of frozen foreclosure cases. Instead of impotently waiting for sleepwalking bankers to muddle through the snail-paced process, associations can use this new tool to bypass longstanding lender roadblocks to taking title and/or selling a property.
And Now... the Gauntlet
While the Supreme Court’s Task Force strategy passed its acid test with flying colors, to remain effective, it must also survive the legal pounding it will absorb throughout the next year. Specifically, it will be aggressively vetted by legal skywalkers employed by the 600 pound gorilla of the “special interest” universe - the lending industry. Despite decades of arrogantly breaking every rule, regulation, ordinance, statute and Federal Law, in addition to emerging unscathed, bankers have been rewarded with full reimbursement and bags filled with taxpayer-funded “fresh start” working capital. Facing the state’s most powerful lobby, association attorneys should prepare for a blizzard of dirty tricks in the courtroom and steel cage rollerball in Tallahassee. Whatever the outcome, Happy Holidays to the Florida Supreme Court.
|2010 FLORIDA SUPREME COURT - THANKS|
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