2006 Legislative Session

CONDO OMBUDSMAN VIRGIL RIZZO

January 2, 2006 - During the 2004 Legislative session, a few Miami Legislators with designs on creating an assortment of condominium related business opportunities for certain constituent-donors, created a confusing rationale for reincarnating the Condominium Ombudsman. Claiming that the Department of Business and Professional Regulation’s (DBPR) Division of Land Sales, Condominiums and Mobile Homes was so devastatingly inept – bordering on criminal negligence – they insisted that an Ombudsman would somehow accomplish what the Division could not. The Ombudsman’s Office mirrors some of the duties and responsibilities of the Division, sowing the seeds of a redundant agency. Condo owners now have two bureaucracies for the price of two.

Designed as a support agency, the Division was originally conceived to protect Condominium purchasers from attempts by devious developers to retain control of the Board for nefarious purposes. To preclude developers from continuously influencing Association policy through the use of “shill” candidates, regulations governing the behavior of condominium board volunteers were instituted. Under their mandate, the Division launched thousands of Condominium Associations throughout the State into unencumbered self-governance. Not conceived to police the behavior of unit owners, the Division was never appropriated the extensive financial resources required to settle arguments between feuding neighbors. Several intransigent owners, frustrated with the compromise consequent to condominium living, approached a few legislators with some novel ideas about “correcting” the problems they had with their respective Associations. The legislators saw an opportunity to kill two birds with one stone. Always on the lookout for a viable new re-election platform plank, they set out to “liberate condo owners” from their yoke of oppression. While accomplishing this noble rescue, they could simultaneously square some of their outstanding election “commitments”.

A Miami union that had fallen on hard times, Local 11 of SEIU, was desperately seeking new sources of revenue. Their National Union was built on organizing Building Service Employees. As new building management technologies lessened the demand for labor, the number of dues-paying members dwindled. Millions of apartment dwellers, long beholding to landlords for their residence needs, turned to new housing strategies – co-ops and condos. These vertical communities not only offered an appreciating asset, but also afforded them greater control over their home environment. Whereas the union could influence a landlord to cooperate, they were precluded from going into private homes to insist that the housekeeper pay union dues. The hybrid nature of these vertical communities imbues an Association of homeowners with employer status. To engineer access into this fertile new arena, Local 11 had to devise a marketing strategy designed to create a need for their “services”. They needed an “abusive employer” from whom they could protect hapless hirelings.

PARTNERS OMBUDSMAN VIRGIL RIZZO, SEIU LOCAL 11 Deputy Director HIRAM RUIZ AND STATE REPRESENTATIVE JULIO ROBAINA (AT PODIUM IN SEIU T-Shirt)

This created a dilemma. In apartment buildings, organizers could appeal to the tenants to pressure their landlord into unionizing the residence. Apprehension about potential negative publicity was often enough to elicit the landlord’s cooperation. Unlike apartment buildings, the employers in Condominiums are the homeowners. Unions foraging for replacement income faced the awkward task of convincing homeowners that their employees needed protection from them. If they could isolate those residents that serve on the Association’s volunteer board from the residents that elected them, they would have a viable straw dog. They could assert that while homeowners are fair, their boards aren’t.

Condo owners didn’t buy it. While some Associations evidenced the deficiencies sought by the union, the vast majority of elected volunteers comprising condo boards have proven responsive to the owners’ interests. These amateur democracies have been so successful that condos have surpassed single family homes in popularity throughout South Florida. The prospect of relinquishing control of their homes to an outside business interest conflicts with the reason that many homeowners originally opted for the representational self-governance inherent in condo living. To adequately support their “unfair employer” scenario, the union needed deeper divisions within the Associations and enough dissention to create an intolerable work environment. They allied themselves with groups of disgruntled condo owners with little in common save their disappointment with some rule or decision made by their respective Associations. They also invested in several “legislative prospects” campaigning for State office. By sponsoring harsh regulations designed to wrest control of Associations from elected homeowners and otherwise disrupt Association operations, the legislators will have satisfied those campaign “investments”.

REP. JULIO ROBAINA

When Virgil Rizzo showed up to work and requested his operating capital, the Division gave him a $103,000 initial budget - which included his $65,000 salary. Annualized, he will receive $177,000 and a fully-equipped Tallahassee office location. Section 718.5012, F.S., of the Condominium Act describes the Ombudsman’s duties and responsibilities. He is supposed “... to act as liaison...”, “... to assist ...parties to understand...”, “To monitor and review ...”, “To make recommendations...”, “To provide resources to assist ...” and “To encourage and facilitate...” Created to truncate litigation by promoting enlightened communications and education, his office would receive the modest capitalization adherent to accomplishing these functions. The legislators who promoted the revival of his office went ballistic.

SENATOR WALTER CAMPBELL EXPLAINS SB 1184 TO GALT MILE OFFICIALS VISITING TALLAHASSEE

He wasn’t accorded the sweeping police powers his supporters envisioned. “He needs subpoena powers,” exclaimed Miami Representative Julio Robaina, author of several ill-fated legislative attempts to hyper-regulate condominiums. Every piece of legislation in Tallahassee is subjected to several questions expressly designed to ascertain whether the legislation is consonant with the Governor’s commitment to smaller, more efficient government. Determining taxpayer cost and whether a bill increases or decreases governmental regulation helps lawmakers gauge Administration support for their bills. A House of Representatives Staff Analysis revealed the cost of Robaina’s bill, including investigating “violations of the statute and rules by individual owners,” to be exorbitant. In addition to being unacceptably expensive, the “Condo Killer” bills aspired to heavily regulate how people live in their homes – a double whammy in Tallahassee. They died in committee. By attaching the remnant “Ombudsman provision” language to Senator Walter “Skip” Campbell’s well-supported Senate Bill 1184 (a bill that otherwise helped condo owners) during the 2005 session’s finale, Representative Robaina managed to backdoor the redundant entity. However, no funding was appropriated for the controversial office. In a “Wag the Dog” moment, the same Legislators who neglected to appropriate funds for the Ombudsman angrily claimed that the funding inadequacies were part of some conspiracy organized by the “status quo”.

RIVER REACH CONDOMINIUM

Upon enactment, Governor Bush asked the Legislation’s Senate sponsor to recommend a candidate for the Ombudsman position. Senator Campbell recalled a physician and attorney whom his law firm had hired right out of law school to analyze medical malpractice issues. Occupied with a full plate, the Governor hastily assigned Dr. Virgil Rizzo to the post. He realized that he might have acted precipitously when several dozen of Dr. Rizzo’s neighbors at the River Reach Condominium organized a press conference wherein they described him as a “disruptive” individual unfit to lead the state’s condo mediation efforts. Evidently, Dr. Rizzo had been waging a war against his own Association for some years, as part of which they are suing him for libel.

RIVER REACH Condominium Residents Confront Representative ROBAINA about his Controversial Bill

Since then, Rizzo has graced the media with an assortment of colorful recommendations and opinions. During a February Town Hall Meeting in Plantation, the “neutral” Ombudsman said, “I need money and personnel... to put the handcuffs on the bad people.” When interviewed by a Sun-Sentinel editorial board member, he stated that because condo owners rarely read their condo docs, he would recommend that the Legislature create “a uniform set of covenants, by-laws and procedures for everything.” His new Condo Docs would be applicable to every Association, notwithstanding its size or composition. When the interviewer pointed out that six-unit condominiums face different issues, problems and obstacles than Associations comprised of hundreds of units, he responded enigmatically, “There isn’t any difference between the large ones and the small ones.”

In June, he proposed a formal set of recommendations for enactment by the Legislature. They included reinstatement of almost every provision excised by the House committees reviewing Representative Julio Robaina’s failed “Condo Killer” legislation. He recommended removing an association’s right to self-determination with regard to financial reporting, election procedures, contracts and term limits. He again requested the expensive police powers repeatedly denied him by the legislature. In August, Dr. Rizzo stated regret at being precluded from “taking a baseball bat” to association members that file liens to protect the members’ assets. To clarify his authority, he asked Florida Attorney General Charlie Crist if “the Condominium Ombudsman has the authority to impose a civil penalty individually against any officer or board member who willfully and knowingly violates… an order of the Ombudsman.” On September 22^nd, the AG responded, “The statute specifically states that it is the intent of the Legislature that the ombudsman act as a neutral resource for the rights and responsibilities of unit owners, associations, and board members. While the statutes provide for the ombudsman to make recommendations and assist condominium owners and boards, they do not authorize the ombudsman to issue orders or impose penalties or to initiate legal actions…”

CONDO OMBUDSMAN VIRGIL RIZZO IN HIS OFFICE

To herald in the Holiday Season, Dr. Rizzo seems to have stepped up the immoderate rhetoric. Associations recovering from Hurricane Wilma reopened an ongoing debate about the advantages and disadvantages of fully or partially funding reserves in view of anticipated stiff emergency assessments. Homeowners in Associations with adequate reserves weren’t hit nearly as hard as those whose survival is contingent on special assessments. In some cases, the availability of reserve funds served as the determining factor between recovery and a red tag. As if to punctuate his litany of pronouncements prejudicial against board volunteers, instead of weighing in based on which proposal would best address the needs of the homeowner, he stated, “I’m against reserves, it puts money into coffers that directors can [illegally] get into.” It is remarkable that the man charged by the State to be a neutral, unbiased resource freely expresses such rank prejudice.

In a blatant effort to promote a private anti-Association political organization, the Ombudsman misled hundreds of condo owners attempting to get information from his web site. Homeowners investigating the Ombudsman’s new official web site (www.myflcondo.org) were offered a list of resources, ostensibly to help them investigate the factual basis for decisions involving condos. Of great interest to many homeowners is the Condominium Act, Chapter 718 of the Florida Statutes, which contains the laws governing condominiums. When they clicked on a link labeled “Florida Condominium Act, Chapter 718, Florida Statutes”, instead of going to the official State of Florida web site containing the Florida Statutes, they were diverted to the web site for “The Cyber Citizens for Justice”.

This is a private self-interest group comprised of a few hundred disgruntled homeowners with virulent anti-Association leanings. Their political agenda includes support for the Condo Killer bills and other legislation that erodes self-governance for Association members. Upon being surreptitiously redirected to the CCFJ web site, an admonishment appeared, “This is the Condo Act, very hard to read and quite boring.” Hundreds of homeowners, angered by a “bait and switch” tactic being practiced at an official State web site, protested to the Governor, DBPR, legislators and other elected officials. Within hours of the scam’s disclosure, the good doctor – one of the St. Augustine-based organization’s original members – swapped out the bogus link and replaced it with one that correctly connected people to the official Florida Senate web site that offers the Statutes. When appointed to the Ombudsman seat, he appropriately severed membership in organizations whose political bias calls his neutrality into question. He has, however, appointed another CCFJ member as an election monitor, a service for which he recently charged an Association $3000 to perform.

To sum up Dr. Rizzo’s dream community as per his statements and actions during the past year, there would be no “naïve” elected volunteers to represent the owners. Decisions and rules would instead filter down from Tallahassee, presumably his office. As he described, the rules would be the same for every Association, large or small, timeshare or standard. In view of his demonstrated antipathy to condo owners governing themselves, it isn’t clear how an Association should contend with an issue not addressed in his one-size-fits-all regulations. Since Associations would be precluded from establishing reserves, all expenses will be addressed through special assessments – “pay as you go.” Deadbeats will sidestep collection enforcement since no Association will be permitted to lien a scofflaw’s unit for not paying their fair share. Other Association members will then have the option of paying the deadbeat’s debt or doing without the service, repair or improvement for which the assessment was levied. For a percentage of the Association’s labor budget – paid through employees as dues – a union official will decide who fills what position in your building and how much you will pay them. Life will be a continuous celebration of the joys of public housing.

In early December he exclaimed that Association members needn’t focus on legal justifications prior to acting. In contravention of his mandate to examine the source of a conflict and recommend a resolution based on an objective application of the law, he proclaimed, “The most important issue before a condominium is whether the people are happy, not what’s legally correct or what the attorneys think is legally correct.” This statement is particularly confusing when juxtaposed with the long list of onerous condo regulations either recommended or supported by Dr. Rizzo. If the Ombudsman discards a legal basis for judgments, his subjective opinion will remain as the single critical guideline for decisions, recommendations and actions. Since the conflicts he is charged with resolving arise from differences in what makes people happy, how else will the Ombudsman decide which people deserve “happiness”? While our Ombudsman isn’t the first public official to recommend substituting his opinions for legal parameters, his characterization of replacing the law with “happiness” is colorfully unique – a nice touch! Virgil, we wish you happiness, too.

January 7, 2006 - On Wednesday, January 4^th, President Garland Warren of Regency South Condominium on Galt Ocean Drive perused his copy of the Sun-Sentinel. While reviewing his daily paper, he noticed an article that widened his eyes. A headline read, “FEMA changes policy, allows condo boards to seek hurricane aid”. The article stated, “The Federal Emergency Management Agency is taking applications from condo associations needing financial assistance to repair roofs and other commonly owned property destroyed or damaged by Hurricane Wilma, reversing an earlier refusal to offer such aid.” Garland smiled. The article continued, “But the application deadline is midnight Thursday night.” Garland cancelled his Thursday appointments. He would be busy.

Early Thursday morning, Garland went to the Small Business Administration office at 300 NW 1^st Avenue in Fort Lauderdale, just off Broward Boulevard. When Garland explained his intention to apply for a low-interest loan to local FEMA representatives, they looked at him as if he had two heads. They informed him that the assistance he described didn’t exist. He showed them a copy of the article that he wisely brought with him. After some head-scratching, the supervisor contacted his Orlando Sub-Regional Office and FEMA headquarters in Tallahassee for clarification. Not surprisingly, Tallahassee FEMA officials were similarly perplexed. The local FEMA supervisor drew their attention to the newspaper article explaining the benefit. Apparently, Garland noticed only one other Association applicant attempting to navigate the FEMA condo maze. Finally, they conceded that condominiums are eligible to apply for Small Business Administration (SBA) loan assistance through FEMA.

Consistent with typical FEMA surgical efficiency, they were unable to locate the proper format to create a case number. As such, the methodology ultimately deployed required Garland to open a case using his personal social security number. Once in possession of the case number, he approached SBA to apply for assistance for Regency South. They gave him the application papers which he will complete and return. “I still can’t get over that no one in FEMA was aware of their own regulations,” said Garland.

Federal Emergency Management Agency (FEMA) regulations have long precluded corporations from applying for assistance. Since the October 24^th inception date for Hurricane Wilma applications, thousands of Associations applying for AID have already been denied adherent to this policy. Several weeks ago, FEMA adapted their policy to accommodate Associations, which are non-profit corporate entities. FEMA policy makers failed to alert federal, state and local FEMA operatives to this change. NOT to worry. Garland did it. He force fed the information through the FEMA chain of command as far as Tallahassee.

Evidently, FEMA computers haven’t as yet been programmed to accept applications from Associations. Jim Homstad, Orlando-based spokesman for FEMA, explained, “An elected member of an association’s board must apply on behalf of the association. If qualified, associations would be referred to the Small Business Administration for low-interest loans.” The loans could provide relief to condo owners from potentially huge one-time special assessments addressing storm damage. Homstad also recommended that individual condo owners with uninsured damage to their interior property, such as furniture and carpeting, should also apply. He suggested that homeowners should apply whether or not they wanted loan money. He elaborated, “Just because you apply doesn’t mean you have to take the loan, but if you don’t apply you may not be eligible for any government money.” Associations that qualify will be directed to the Small Business Administration, where they will be considered for low-interest loans.

It suddenly dawned on the FEMA think tank that if FEMA officials weren’t aware of this benefit, neither were the thousands of Associations and individual unit owners throughout the state whose experience didn’t include reading the morning paper. On Friday morning, January 6^th (the day after the application deadline), SBA - which makes loans to businesses, including associations - announced a deadline extension of seven additional days for condominium and homeowner associations. The Federal Emergency Management Agency - which provides grants to individuals, including unit owners - has extended the time individuals can apply for grants until Thursday, January 19^th. SBA spokesperson Gus Fernandez in Atlanta stated, “The SBA, aware that all federal agencies haven’t been providing the same information to callers, will accept loan applications if they’re accompanied by a letter of explanation. The letter should indicate that they received the wrong information from another source and request consideration for their late presentation of the application.” Explaining the reason for the extension, FEMA federal coordinating officer Justin DeMello said, “We want to make sure that every Floridian has had the opportunity to apply and receive the assistance for which he or she is eligible. Don’t prejudge yourself, call and apply by January 19^th.”

Applications for SBA loans can be mailed to the SBA’s Texas office - National Processing and Disbursement Center - at 14925 Kingsport Road, Fort Worth, TX 76155. The SBA has set a July 24^th deadline for aid to offset the loss of business revenues because of Hurricane Wilma. Fernandez said, “The deadline is later because businesses need time to show the loss of revenue.” Despite the SBA’s approval of 588 loans worth $33.5 million in Florida for Wilma recovery to date, they strongly recommend that condos and homeowner associations also apply to banks and alternate funding sources. After enduring a three to four month processing period for the 2.687% loan money, an application denial could send applicants back to the drawing board. Taking advantage of alternate funding sources could help avert the consequences attendant to putting all of one’s eggs in SBA's basket.

The types of AID available are rental assistance, repair grants, small business loans and temporary housing placement. People without insurance or whose losses are not completely addressed by private coverage or other aid programs are eligible for the assistance. However, insurance deductibles are not covered. Individuals and business owners who are ineligible for a FEMA grant may apply for a U.S. Small Business Administration loan to cover disaster-related losses. Unlike FEMA grants, loans from the SBA must be repaid. The first step in applying for aid is to register with FEMA. To apply for a FEMA grant or SBA loan, visit www.fema.gov or call 800-621-3362. The telephone number for the SBA Customer Service Center is 1-800-659-2955 and their web site is www.sba.gov.

The negligible turnout by Associations is understandable given the repeated denials for aid to Association applicants in the past. Fortunately, when the Regency South President realized the nature of the opportunity being offered, he set aside his doubt and decided to go for it. While the outcome will remain cloudy throughout the processing period, if successful, Garland Warren will have spread a painful assessment over a convenient repayment timetable. While demonstrating to his Regency South neighbors that his selection as President was no mistake, Garland Warren also drew a road map for neighboring Galt Mile associations facing similar financial strain. Interested Associations need only follow his lead. Eligible unit owners can apply for available grant money. The clock, however, is ticking...

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March 5, 2006 - “Its déjà vu all over again…” Mr. Berra’s famous observation aptly describes the most recent legislative effort to transfer control of condominiums from the people that own them to a governmental bureaucracy in Tallahassee. During the past two years, a cabal comprised of a local union, a group of disgruntled condo owners and some legislators hoping to cash in on controlling condo operations has repeatedly attempted to pass legislation terribly destructive to condo owners. In 2004, Miami Representative Julio Robaina sponsored the first “Condo Killer” bill - HB 1223 - which he publicly described as the “Peoples Bill”. Once condo owners read the actual text, they buried their representatives, Senators and the Governor in a blizzard of angry emails, letters and phone calls opposing the legislation. The bill was an ill conceived, poorly drafted monument to ineptitude. Through a series of harsh regulations, it sought to alter the current condo system into one more consistent with public housing... and pass its $multi-million costs to the homeowners. As the bill was vetted in the legislature’s “Committee Process”, its glaring deficiencies came to light. Unsurprisingly, it went down in flames.

REPRESENTATIVE JULIO ROBAINA

In 2005, the legislation was reincarnated (HB 1229) by the same cast of characters. This time, they took some precautions prior to plowing the faulty bill through the legislature. They mischaracterized their handiwork to their fellow legislators, stating that the vast majority of condo owners supported their onerous regulations. Decisions about funding reserves or who could serve on a condo’s board were too important to be left to “naïve” homeowners. In fact, one provision that dictated how many months an owner had to spend in the building annually before qualifying as a board candidate rendered every time-share condominium owner in the State ineligible to serve on their own boards. The bill mandated how Associations should allocate their parking spaces. It created different classes of condo owners within an individual Association, each subject to a different set of rules, obviating the constitutional guarantee of equal protection under the law.

REPRESENTATIVE RENE GARCIA

When fellow legislators asked the sponsors why their bills were so vehemently opposed by condo owners, they exclaimed that condo owners were being misled by their attorneys. Asserting that the average condo owner was too simple-minded to understand the bill text, they proclaimed that condo attorneys throughout Florida, attempting to sabotage the bill, brainwashed their condo clients into fomenting mindless opposition. Inasmuch, they demanded that the myriad objections to their heavy-handed regulations be summarily dismissed – ignored. The hundreds of condo owners that flooded Tallahassee last March during the Community Association Day event gave lie to the assertion that they supported the legislation. After the House staff’s analysis of the bill confirmed its opponents’ trepidations, the legislation was withdrawn by its sponsor. Legislators who took campaign contributions from a union supporting the disruptive legislation promised to their benefactors that they would return next year for another bite at the apple.

REPRESENTATIVE JUAN ZAPATA

On February 21^st, Miami Representative Rene Garcia, a new player in this group of Miami Representatives who, strangely enough, have few or no condos in their home districts, sponsored House Bill 1227 (HB 1227), this year’s version of the “Condo Killer” legislation. Co-sponsoring the bill, however, is one of the original legislation’s sponsors, Miami Representative Juan Zapata. It appears that the vested interests behind the twice-defeated bills assembled every provision that was excised by various legislative committees as “unacceptable” and rolled them into one legislative “weapon of mass destruction” - HB 1227.

The public face of the coalition is a small collection of disgruntled condo owners whose unifying ideology is dissatisfaction with decisions made by their respective Boards. In response, the “Cyber Citizens for Justice” adopted a scorched earth policy; if they couldn’t control their condos, nobody would. Their intention is to dismantle the Condominium system in Florida. Their methodology is to regulate it into oblivion. Consistent with their previous ill-fated legislative attempts, the bill is designed to relieve homeowners of the responsibility for controlling their own homes. Decisions currently made by homeowners will instead be made by legislators in Tallahassee or an Ombudsman with overt ties to the “Cybers” and the legislators. This truckload of heavy-handed regulations will effectively disable condominium operations and skyrocket maintenance expenses. Its primary political objective, however, is to obliterate self-governance.