North Miami Condo Insurance Dispute
By Paul Brinkmann
564 unit owners at aging Buckley Towers in North Miami Beach have a pending $20 million lawsuit over hurricane insurance coverage.
The building faces possible condemnation because of water damage, mildew, utility problems and roof and structural damage. The lawsuit is the latest in a string of federal suits against global condo insurer QBE Insurance. It also highlights the plight of some older buildings in Miami-Dade County as they near their 40-year anniversary under the county’s recertification program.
The program requires that commercial and condominium buildings undergo a rigorous re-inspection for safety. A Miami-Dade County Building Department official said it has issued 890 notices of recertification and 428 notices of violation under the program. Sometimes more than one violation is issued for a certain case.
Re-certification for Buckley Towers is crucial, but might not happen soon enough, according to the county. The condo’s board and its attorney, Dan Rosenbaum, say QBE owes Buckley Towers more than $18 million for damages from Hurricane Wilma. But, the insurer said in a written answer in court that Buckley Towers failed to comply with efforts to investigate damages at the building, and that many of the problems are due to “wear and tear.”
On Sept. 23, the building faces a county deadline to submit its 40-year re-inspection report. Buckley Towers’ lawsuit against QBE is not set to go to trial until November.
Without the report showing compliance with county codes, “within a matter of weeks, we will post the building unsafe. It will be condemned,” said Charles Danger, director of the Miami-Dade County Building Department.
Rosenbaum, who already has won a $8.14 million judgment against QBE at Chalfonte Condominium in Boca Raton last year, said the Buckley case is far more dire.
“The people at Chalfonte were able to make repairs themselves and then argue over money,” said Rosenbaum, a partner in the West Palm Beach office of Katzman Garfinkel.
“The people at Buckley Towers are not so fortunate. Many are retirees on fixed income.” Buckley Towers are two Y-shaped buildings, a popular style in the late ’60s and ’70s.
That configuration caught Hurricane Wilma’s eye-wall winds for a sustained period on Oct. 24, 2005. Rosenbaum is presenting radar images that show the North Miami area was especially hard hit by Wilma’s wrath. He said the towers actually racked or twisted slightly in 105 mph sustained winds, causing structural joints to loosen.
The building had paid a premium of $202,896 for a 12-month policy starting May 1, 2005.
South Florida Boat Sales Plummet 26%
By Brian Bandell
As buyers dry up and repossessions rise, one of South Florida’s largest industries is struggling.
Though that could describe the real estate market, it also fits the state of the marine industry. Some experts call this the worst downturn in boat sales in decades.
New boat sales in South Florida fell 26 percent, from 5,411 in the first half of 2007 to 4,000 in the first half of 2008, according to Info-Link. The Miami-based company tracks new boat registrations in Miami-Dade, Broward, Palm Beach and Monroe counties and is often cited by the Marine Industries Association of South Florida (MIASF).
The year-over-year sales decline has gotten progressively worse, dipping 32 percent below 2007 numbers in the second quarter. The second and third quarters are historically when most boats are sold in South Florida.
New registrations cover everything from Jet Skis to megayachts. Sales in the mainstay category of 17-foot-plus outboard fiberglass sport fishing boats – which usually account for about one-third of regional sales – fell 30 percent in the first six months of the year.
Boat sales had their best growth in 2004 and reached a peak in 2005, said Jesse Wells, director of sales and marketing for Info-Link. But, it has been low tide since then.
“Once this downturn is finally over, everyone will look at it and agree it was the worst downturn in the boating market ever,” Wells said.
Nationwide, some boat builders have closed, he said. Delinquencies on boat loans are also up, leading to record boat repossessions.
The industry’s struggles are a concern in already reeling South Florida, where the marine industry has a $13.5 billion economic impact and provides more than 150,000 jobs, according to a study by the MIASF.
Steve Sprague, a co-owner of Tuppens Marine in Lake Worth who has sold boats for more than 20 years, said he’s never seen things this bad in the marine industry.
“It seems like when it stopped, it just shut off like a faucet,” he said. “It’s been a long year.”
Tuppens Marine has compensated for slow boat sales with its boat service and fishing tackle store. Instead of cutting employees, it reined in its advertising expenses and presented at fewer boat shows, Sprague said.
The slumping real estate market and decline in construction jobs has kept away many potential buyers, Sprague said. He also noted that getting financing for a boat purchase loan is more difficult than it was a year ago. Banks are making more demands on borrowers, and access to home equity lines of credit has tightened.
Info-Link’s Wells believes the spike in fuel costs caused boat sales to sink. Because going out on the water is much more expensive, people are boating less and for shorter distances, he said. That diminishes their desire to buy a new boat.
While all types of boats have experienced sales declines, Wells said smaller boats haven’t been hurt as much because they’re cheaper to buy and operate.
MIASF Executive Director Frank Herhold said a lack of available boat slips is a major limit on boat sales in South Florida. If people don’t have a place to dock or launch their boat from, they aren’t likely to buy.
Herhold’s organization is promoting Amendment 6, which will appear on the Florida ballot in November and would make sure working waterfront properties are taxed at their current values, rather than for their highest and best use. Herhold said it would help marine businesses’ retention and expansion.
Sprague believes an expansion period isn’t that far away. Boat manufacturers have scaled back their production and dealers are getting rid of excess inventory. He said the market should balance out in four to five months.
School Numbers Confirm Continued Population Drain
By Ed Duggan
South Florida's public school enrollment dropped by 6,136 students this year, casting a shadow over growth in employment and the economy.
The drop in young families will likely be reflected in sales of everything from big-ticket items consumed by families – such as homes, furniture, cars and boats – to everyday purchases of groceries, school supplies and medical services. An economics consultant sees a short-lived demographic reason for the enrollment declines, while a prominent real estate analyst notes South Florida's cost of living and dwindling supply of raw land.
Enrollment has dropped 37,000 statewide and South Florida school districts are cutting back on new school construction. Miami-Dade County has cut 370 positions.
The drop is based on enrollment counts within the first 12 days of the school year, but the enrollment count for state funding will be in the first two weeks of October.
The biggest enrollment drop is in the region's most populous county, Miami-Dade, which is down 3,540 students. Broward is down 2,392 and Palm Beach County is near breakeven, down 204.
Current enrollment has generally receded back to numbers last seen in the 2000-01 school year. Stanley Geberer, an associate with Fishkind & Associates in Orlando, sees the recent drops as more demographic than economic. He said the last time there was a nationwide drop in school numbers was in the 1972-74 period, when baby boomers graduated high school. “Their children, the echo boomers, have graduated and, instead of young families leaving, we think it is just the normal progression of the birth-school cycle,” Geberer said.
He expects a large inflow into primary schools over he next three to five years as the children of the echo boomers enter school.
“The state hit a high growth mark in 2005-06, with a 430,000 net gain in population,” Gerberer said. “In the past year, [the growth rate] has declined by 50 percent, and this year, it could be down to just a 150,000 to 180,000 gain.”
The enrollment drop, along with the overall property value decline, means budget cuts ahead and a change in direction for the region's school districts. South Florida's school districts are among the biggest in the nation, with Miami-Dade at No. 4, Broward at No. 6 and Palm Beach County at No. 12, according to U.S. Department of Education statistics based on 2006 enrollment.
Subhead: Less building, more remodeling
“Our attention is now focused on schools that need remodeling and renovation rather than on new school construction,” said Joe Asen, manager of special projects in the Palm Beach County School District’s Planning Department.
Since December, the school district has only put a couple of jobs out for bid, versus one or two a month previously.
Miami-Dade is struggling with budget challenges, and few jobs are up for bid. Broward, on the other hand, has advertised $250 million in contracts for bid – but the competition is getting fierce.
“Where we used to see five or six contractors looking to bid, there are now 18 or 19 for every job,” said Dagoberto Diaz, VP of the education group at the West Palm Beach-based division of Suffolk Construction.
Even the $3 million and $4 million school jobs that major companies wouldn’t look at three years ago are in demand.
“Now, everyone wants them, including residential contractors, who are out of work, but have little school construction and rehab experience,” Diaz said.
Florida Boat Show
