Pavilion from the Ocean

Pavilion from the Ocean

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Another President is sent to the slammer for stealing from the community association. It wouldn't have happened but for the efforts of a determined owner.

By Eric Glazer, Esq.

I really wish I didn’t have to write this particular blog this week. It’s about another HOA President who helped herself to the association’s funds when she thought she wouldn’t get caught. And if not for the hard work of a particular resident of the community, she might have been right.

Three years after the case started, I decided to look at the very first e-mail I received from my client and this is how it reads:

Greetings Dr. Glazer,

I’ve been a CCFJ member since 2007, and you were recommended to me by Jan Bergemann when I asked for a homeowner-friendly HOA attorney in the Fort Lauderdale area.  (Jan said to say, “hello.”)

Myself and several homeowners in my community have discovered evidence that our HOA board is writing checks to someone that doesn’t exist based on a contract that also doesn’t exist.  We attempted to approach the board at its last regularly-scheduled meeting, hoping the honest members would begin an investigation.  Tonight, we had a general membership meeting, and it’s apparent that the board is doubling-down in an attempt to deflect from the theft of association funds and instead, so it seems, initiate a lawsuit against us.

Now here’s the funny part. You know the joke about asking someone if they think they’re a rocket scientist? Well my client actually is a rocket scientist. So, he wasn’t afraid or stupid enough to turn away and avoid the fight. When the Board tried to convince him to mind his business, he dug his heels in harder.

I got hired by Steve and demanded some records from the association and the City of Tamarac. The records showed that someone with nearly the identical name as the President was getting paid by the HOA for acting as a liason for the City of Tamarac. The only problem was that The City of Tamarac never employed such a person and there was no such position as City Liason. Notwithstanding this, the payments went on for years, even under the nose of a professional management company.

Finally, my client and I met with the police, we provided exemplary records, and an arrest was made. Last week, the President changed her plea from not guilty to guilty. There was no slap on the wrist this time. She was sentenced to five years incarceration, 15 years probation and ordered to pay back $192,000.00 in restitution.

The former President of course got all the publicity in the press, even though it certainly was negative publicity. My client, who truly uncovered the crime and spoke about it years ago on the Condo Craze and HOAs Radio Show received no Thank You at all from the prior board and certainly no accolades in the press. Without him and a few others at the HOA, who knows how long this would have went on and who knows how much more the owners would have suffered.

So this week……here’s to you Steven Soloff for being smart enough and brave enough to fight back, ask questions, and refusing to take NO for an answer. You are an example for all owners in community associations throughout Florida of what to do when you think you’re being ripped off and are stonewalled when you start asking questions. Your neighbors certainly owe you a drink.

City of Miami Beach: Preparation for Inclement Weather August 26, 2016

As inclement weather is a possibility in South Florida, we would like to assure you that city will continue to work tirelessly to ensure the effective and efficient elimination of stagnant water throughout Miami Beach, which could lead to a potential habitat for mosquito breeding.

While we are working to prepare for all possibilities, we encourage you to be vigilant and report water that has been standing for more than 48 hours on Miami Beach to our Public Works Department at 305.673.7625, 305.604.CITY, or through the free, Miami Beach eGov app. Please also remember that it does take between 7 and 10 days for an egg to develop into an adult mosquito.

We cannot fight the bite alone. Mosquitoes only need a teaspoon of water to lay eggs, so it is important to drain all sources of standing water on individual properties, including flower pots, buckets, tires, toys and any other container that makes a great "nursery."

We would also like to remind everyone to have an updated hurricane plan. We are prepared and want to make sure you are too.

Click here for the city's hurricane guide in English, click here for the Spanish hurricane guide.

Condo owners in Miami Dade County met today with our Future Mayor Raquel Regalado

Aug 26, 2016 — As Raquel said VOTA PARA QUE TE RESPETEN! RESPECT IS EARNED VOTE! Raquel Regalado has earned my respect. She provides solutions, which is what condo owners desperately need. We spoke at length of what can be done at the local level because we cannot wait any's been 12 years of waiting for our legislators and DBPR to act. Condo owners are done with living in lawless Florida, we are taking our County back.

As mayor of Miami Dade County Raquel committed to creating a special task force within the Economic Crimes unit dedicated only to investigating condos. Raquel knows that condo fraud is rampant and as crime goes in Miami Dade county way underreported. She would lower the CAP this department is allowed to investigate to $50, 000 compounded over 2 years. She explained that our officers are not given the tools necessary to address the problems. As our Mayor Raquel will bring the training on condo law to our police and detectives so they can pin point how the these frauds are being orchestrated. They would work closely with the State Attorneys office.

Condo fraud is a multi-million dollar industry in Miami Dade County.
Raquel stressed that a strong police presence in this condo epidemic will deter these crimes from being committed and ultimately protect condo owners pockets. She is the only leader that will make sure our detectives investigate these crimes and bring back law and order in Miami Dade County!

Carlos Gimenez has done NOTHING for condo owners in 5 years and has done nothing for our Miami Dade County as Mayor. Looking back not even when he was Commissioner ;(. Carlos Gimenez served as vice chair of the transportation committee, if he ever cared about our County maybe we wouldn’t be in the problems we are with the transit today. He has been a deplorable public servant to say the least. Carlos Gimenez does not care about you or me, he is in bed with the special interests they are the only people he answers to!

Please VOTE for Raquel Regalado she cares about our families, she cares about our homes.


Maryin Vargas
Condo Activist

P.S. great read: Carlos Gimenez’s links to lobbyists lead straight to his staff

#Miami real estate had a really bad month in July

Close your eyes if you don’t like bad news.

The volume of existing home sales in Miami-Dade County fell 20.8 percent in July compared to July 2015, according to a monthly report released Wednesday by the Miami Association of Realtors.

“That’s an eye-popping number,” said Peter Zalewski of

Three main factors are conspiring to slow down Miami’s real estate market: Not enough affordable housing for locals. A lack of foreclosure inventory available for investors to snap up. And a major drop-off in the number of foreign buyers, who’ve been burned by the strong dollar.

“When you see a 20 percent drop, you start thinking not just housing recession but housing depression,” said Jack McCabe, a South Florida real estate analyst.

Even so, prices are still going up. And today’s housing market isn’t built on bad debt, unlike the financial crisis, lessening the chance of a massive bust.

Realtors say it’s not time to panic. The pace of sales set in 2013, 2014 and 2015 simply wasn’t sustainable, said Ron Shuffield, president and CEO of EWM Realty International.

“A lot of the decline we’re seeing is in the million-dollar market and in foreclosures,” Shuffield said. “The middle of the market is still strong.”

The new report shows Miami-Dade’s condo market suffering more than single-family homes.
Condo resales dipped to 1,104 in July, down 24.7 percent year over year, the Realtors’ group found. Existing condos are competing with a glut of luxury offerings, making older units a tougher sell.
Single-family resales fell to 1,128 in July, a 16.4 percent decline from last year.

A lot of the decline we’re seeing is in the million-dollar market and in foreclosures. Ron Shuffield, Realtor

Miami-Dade sales numbers have dropped consistently so far this year, although not by this much.
Home buyers and sellers haven’t adjusted yet to slowing sales.

The median sales price for single-family homes in Miami-Dade rose 7.9 percent annually to $299,000 in July. Condo prices hit $225,000, up 15.4 percent year over year.

Prices usually lag behind sales six to 12 months, experts say.

Broward’s real estate market also stumbled in July, suggesting the slowdown could be region-wide. Zika travel advisories from the Centers for Disease Control and Prevention could also lessen interest from out-of-town buyers.

High prices, low wages

In Miami, wages and housing prices remain deeply out of whack. That’s because foreign investors have driven up prices beyond what many locals can pay. Since the bust, developers have built almost exclusively for the luxury market. And there’s little land left on which to build new homes. As a result, the inventory of single-family homes priced below $300,000 fell 34.3 percent over the last year, according to the Realtors’ association.

Four-in-five Miami-Dade households would struggle to afford a median-price, single-family home, according to research by the Metropolitan Center at Florida International University.

“There’s been an absolute dearth of construction in the lower and middle price ranges,” McCabe said. “We’ve had growing population due to migration, but we’ve seen no increase of supply in those lower ends.”

Without new construction of mid-range housing, don’t expect prices for homes under $350,000 to come down, even as luxury prices drop, he added. It’s an issue of supply and demand.
Low inventory at affordable prices is a nationwide problem.

Total existing home sales in the U.S. fell 3.2 percent in July, the first year-over-year decline since November, according to the National Association of Realtors.

“It's very difficult to sustain growing sales volumes when there simply aren't many homes for sale,” Svenja Gudell, chief economist for real estate website Zillow, said in a statement. “What's more, those homes that are for sale are increasingly unaffordable for first-time and entry-level home buyers.
Another reason for slow local sales: Miami’s massive foreclosure inventory is dwindling. Investors jumped on low-priced homes during the recovery to fix them up and rent them out. But in July distressed sales fell 55.3 percent, according to the Realtors’ association.

The county still has one of the highest foreclosure rates in the U.S. at 2.4 percent, but it’s falling fast, according to research firm CoreLogic. The foreclosure rate soared to 27 percent in 2010.

At the upper end of the market, the velocity of foreign buyers is down significantly over the last year. Currencies in Brazil and Venezuela have tumbled. Interest from buyers in new markets outside of Latin America such as Turkey and China is a positive sign but it could be years before they have a big impact.

Developers have begun delaying planned condo projects, especially in areas off the water, including Auberge Miami Residences & Spa in the Omni district and Boulevard 57 in the Upper East Side.
“The pullback has been pretty dramatic,” said Zalewski, who watches the new construction market closely. “The industry has been recognizing that going forward with some of these projects doesn’t make sense. It’s not surprising.”

#MiamiBeach Has Fined Airbnb-Style Landlords $1.6 Million Since March

In Miami Beach, it's no secret that the hotel industry is the city's biggest economic engine. City Hall certainly knows who pays the bills. This past in March, the city voted to begin fining Airbnb-like short-term renters a whopping $20,000 a pop.

Hoteliers say the new fines protect the tourism industry from unregulated renters who can offer cheaper rooms without paying employees or taxes. But short-term renters — including one who spoke anonymously to New Times out of fear that the city government would fine him — argue that the law just protects deep-pocketed luxury hotels from competition.

One thing that is not in dispute: The city has not been shy about handing out the new fines, which can go to anyone renting a space for less than six months and one day. According to a memo that City Manager Jimmy Morales sent to the city commission last week, Miami Beach has levied $1.59 million in fines against short-term landlords since the new fines have been in place.

In the August 17 memo, Morales writes that the city has issued 106 fines since March 9. Four of those fines, totaling $80,000, went to Airbnb, Inc. It's also illegal to advertise a short-term rental in Miami Beach, and the city says it caught Airbnb advertising in town on three occasions and renting out an "apartment/townhome" on 14th Street.

The city says it issued penalties to Airbnb,, and a total of 18 times for advertising in the city. The memo also says that in 31 cases, the city called the police department and had short-term renters evicted onsite.

Elsewhere, a few individual landlords appear to have racked up more than $100,000 in fines. SoBeautiful Lifestyle LCC, a company owned by landlord Reed Zaroff and managed by Jamey Kolka, has had $240,000 in fines levied against a property at 244 W. Rivo Alto Dr. At least three of the fines apparently stemmed from advertisements the city says the LLC had been running.
Another property, at 2232 Alton Rd., which the city says was related to Gleason Properties LLC, Miami World Rental LLC, and Airbnb, was fined at least $225,000.

The crackdown has hit an industry that once operated with relative impunity on the Beach. One short-term-property owner tells New Times that although multimonth or single-week rentals have long been illegal in the city, code compliance didn't begin citing him until Mayor Philip Levine was elected in 2013.

After that, the landlord says, code-compliance officers began knocking on his doors at all hours and harassing his tenants. "They would threaten to shut off the power or turn my water off," he says.
Before March, the landlord says, it made economic sense for landlords like him to continue renting properties illegally and rack up fines because they could charge enough in rent to cover the penalties.
"It was definitely worth the price of business," he says. "Now there is a $20,000 violation for less than renting your property six months and a day."

The property owner argues that the city's strict rule has the unintended consequence of forcing out anyone who's staying longer than a typical hotel stay but too short for a full half-year rental.
"If you've got a family coming in from Paris for the summer, or a celebrity filming here who wants to stay in a house instead of a hotel, or a Saudi prince coming for two months who needs more privacy than the top floor of the Setai [a luxury oceanfront hotel in South Beach] can give, you can't do anything," he says.

Though hotel owners — and the city government — view the new rule positively, the landlord says the city's six-months-and-one-day time limit makes no sense.
"I'd understand if they wanted to ban weekend rentals," he says, "but this is completely unreasonable. It's just so over-the-top. It just shows the hotel lobby has a much stronger hold on this administration."

Is the condo market ripe for bulk buys?

While the Miami condominium market can be unpredictable, it is also very cyclical. Real estate experts and insiders often can see what’s coming next. And what’s next could be bulk buys.
As the market cools, investors can oftentimes buy 10 or more units — and sometimes even entire buildings — at a discount. Of seven conditions that typically lead to bulk buys, we are already seeing signs of six of them.

1. Commissions and incentives to brokers are increasing. The practice started in late 2015 and has spread. In March, one developer announced it was raising commissions to 10 percent on two Miami projects and lowering deposit requirements. Another developer upped its commission from 6 percent to 7 percent while also offering Realtors car leases or jet skis as additional incentives and other projects promptly followed suit.

2. Sales prices are flat or falling. A report released by Miami’s Downtown Development Authority at the beginning of August showed that downtown Miami condominium prices dropped for the first time in five years. The report focused on resale prices, which declined 4 percent, a phenomenon representative of the entire Miami market. Which leads to…

3. Resales in new buildings. The same DDA report compared listings from May 2014 to May 2016. There were 1,900 listings then; there are 3,000 now. Over that same period, monthly sales fell 43 percent. Immediate resales drive down prices if purchased during a pre-construction or early period at prices below those on new units. With new and resale residences hitting the market simultaneously, you can find projects with 20 percent-plus of units available.

4. Banks are tightening lending requirements. Good news: We will not see a repeat of 2008. To better insulate themselves, banks have instituted higher sales threshold levels throughout this cycle and become more selective about which projects to fund as we have moved through this cycle.

5. New inventory builds up. According to the Integra Realty report released by the DDA, more than 2,500 units were available in any given month over the past two years. This May, the number topped 3,000. Because of long lead times, nearly 7,500 condos were under construction in the second quarter of 2016 with another 1,550 being marketed in the pre-construction phase.

6. Developers and investors begin looking for financing against their unsold or all cash units. This is where we are right now. For example, the demand for hard money lending to foreign buyers has never been higher.

All of these steps could eventually lead to…

7. Off-market opportunities. If history repeats itself, we could start to hear developers whispering about blocks of units for sale. Although we have not seen this yet, the practice became common in the last cycle when velocity slowed and buyers stopped showing up for closings. Between July 2008 and August 2009, nine bulk sales in Miami-Dade County totaling 613 units averaged $199 per square foot, according to Condo Vultures. One buyer bought 10 units at Brickell on the River South Tower at a 43 percent discount. Another buyer paid less than $200 per square foot for 21 units at Marina Blue. Over the next two years, bulk sales were recorded at a Fontainebleau project, Regent Hotel, 900 Biscayne Bay, Downtown Dadeland and others.

Will we get to Step 7 this time? This is not 2008-09. And Miami has become a destination because of the lifestyle, arts and business opportunities the city offers. Those should cushion any decline and then bring new life to the condo market.

Steven Fischler is a co-founder and principal of New Gables Capital, a real estate private lending company. He can be reached at

#Miami condo developers make push for Chinese buyers

A group of nearly 20 top Chinese real estate brokers are touring luxury condo projects in South Florida this weekend as local developers seek to drum up business in the Far East.
The attraction of Miami is clear.

“Just look at this,” said Gene Shi, president of international operations for China’s massive Homelink brokerage, as he gestured toward Biscayne Bay, its waters shimmering out the window of the Missioni Baia sales center in Edgewater on Friday. “This is something you could never dream of, even for a millionaire in New York City. But this is a typical view for a citizen of Miami.”

Another advantage: Miami offers much lower prices than Manhattan and San Francisco, the traditional U.S. hot spots for Chinese buyers.
Between April 2015 and March 2016, Chinese buyers splurged on U.S. real estate to the tune of $27.3 billion, far more than second-place Canada, whose residents spent $8.9 billion, according to the National Association of Realtors.

But only a small portion of that money found its way to South Florida. Without a direct flight from Miami to China, it will be difficult to attract more capital.

Chinese buyers made up just 2 percent of international sales in Miami-Dade and Broward counties in 2015, according to the Miami Association of Realtors. While that number has doubled since 2012, it still pales in comparison to Latin American buyers, whose cash fueled Miami’s recent real estate boom.

New markets

With currencies tanking in major markets like Brazil and Venezuela, Miami brokers are turning to new buyers.

“We’ve always had our eye to the Asian markets,” said Jesse Ottley, president of development sales at brokerage Cervera Real Estate. “As we watched the capital flow out of China over the last five years, we at Cervera thought that was the time to make our move.”
Ottley said Cervera projects in Miami and Fort Lauderdale have made sales to Chinese buyers. He pointed to a growing number of Chinese students at the University of Miami as another encouraging sign.

At Elysee, another condo project in Edgewater, broker Jennifer Cervera preached the benefits of the nearby Design District, Miami’s growing luxury shopping destination.
“If you start shopping there, you won’t leave,” she said.

This is far from the first time that the local real estate industry has reached out to Chinese buyers. Some Miami brokers have traveled to China to pitch new developments. One condo project, Paramount Miami Worldcenter, even hired a feng shui consultant to advise on design.
And China City Construction Co., a developer owned by the Chinese government, spent more than $110 million on land in Brickell and Miami Beach.

Everyone on the tour agreed that a direct flight from Miami to Beijing or another Asian location is crucial.

“A direct flight would be a big factor,” said Frank Peng, who leads Cervera’s marketing efforts in Asia. “If you look at the other major cities in the United States, every single one had direct flights before the Chinese invested, no exceptions.”

Cathay Pacific Airways Ltd. is considering a larger plane that would allow for direct flights between Hong Kong and Miami. Officials at Miami International Airport have said they hope to land a regular direct flight from Cathay or another airline within the next 24 months.

The Cervera firm organized the visit with Beijing-based Homelink, which has more than 60,000 agents in China. The two groups recently signed a joint marketing agreement. Miami brokerage International Sales Group inked a similar deal with Homelink last year.

The Chinese company selected brokers with annual minimum sales of $17 million to come on this trip, its second of the year to Miami. Stops in New York and San Francisco are also on the agenda.
This time around, the visitors heard from Miami Mayor Tomás Regalado, Commissioner Ken Russell and officials from Miami’s Downtown Development Authority.

On Saturday, the group will drive to Fort Lauderdale and finish the day with shopping at Sawgrass Mills mall in Sunrise.

President of Association to Prison for 5 Years

Article Courtesy of The Sun Sentinel
By Erika Pesantes    
Published August 20, 2016

A former homeowners association president in Tamarac has been sentenced to prison for embezzling more than $180,000 from her community.
Court records show that Michelle Changar-Coe, 46, changed her plea to guilty on a grand theft charge and was sentenced to five years in prison followed by 15 years of probation. She also was ordered to pay $192,416 in restitution during a court hearing Tuesday.

Changar-Coe was president of the Mainlands Section 7 homeowners association from January 2009 through December 2013 and forged signatures on dozens of checks she deposited into her personal bank account, authorities said.

A letter filed in court in January from Maureen Utich, a Mainlands resident, spoke of her wishes for prosecution of the crime and said more than 200 people in her community had suffered from Changar-Coe's actions.

"She has caused hardship for many of her victims. Families with children, elderly on fixed incomes, laid off and unemployed people struggling to pay their bills," she wrote. "She stole from all of us."

About a half dozen residents echoed her sentiments in letters to Broward Circuit Judge Michael Rothschild.

Changar-Coe's attorney, Michael Gottlieb, said his client has two young children and stole from her community at a time when her husband had lost his job due to an injury and she was a pregnant stay-at-home mom.

"She engaged in this conduct at a point in time when her family was suffering a great financial tragedy and she made a foolish decision stealing from her association," he said. "I know she regrets it. She's remorseful."

Court records show that Changar-Coe pleaded guilty to charges of grand theft and uttering a forged instrument in 1997. At the time, the judge withheld adjudication, meaning there was no conviction on her criminal record, and she was given three years of probation. She also was ordered to pay about $4,500 in restitution.

ALERT: New Cluster of Zika Cases Is Reported in #MiamiBeach

A cluster of Zika cases most likely transmitted by local mosquitoes has been identified in Miami Beach, a health official said Thursday. Health authorities are trying to decide whether to designate a section of the bustling tourist city as a zone of active Zika transmission, and whether to advise pregnant women to avoid the area.

The health official said Thursday that there are “a handful of cases” of likely local transmission that involve people who were in “close proximity to each other.” The official insisted on anonymity, saying that the cases and the location are not likely to be officially announced until late Thursday or early Friday.

Neither the Centers for Disease Control and Prevention nor the Florida Department of Health had released official information on the cases or the location in Miami Beach.

To date, only one neighborhood in Miami, a one-square mile section of Wynwood, has been declared an active Zika transmission zone in the United States, and the C.D.C. has advised pregnant women to stay out of the area. As of Wednesday, Florida authorities had tied 25 of the 35 locally-transmitted Zika cases to a single area in that Wynwood zone.

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Miami’s biggest developer is pumping the brakes on downtown condo tower

No one can escape the chill creeping into Miami’s luxury real estate market. The Related Group, South Florida’s biggest condo developer, confirmed Wednesday it would delay construction on a 298-unit project called Auberge Residences & Spa Miami.

“The market is slower,” said Carlos Rosso, president of Related’s condo division. “The dollar has appreciated a lot against Latin American currencies.”

Groundbreaking was originally set for 2017. Rosso said he wasn’t sure yet how long the project at 1440 Biscayne Blvd. would be delayed. “Do you have a crystal ball?” he asked.

A cascade of foreign buyers pushed Miami real estate into overdrive after the recession but has since dried up. Rosso says the slowdown doesn’t worry him and sales will continue at Auberge.

“We have to be a little more patient with this market,” he said. “I think it’s very good for all of us that the market takes a breather.”

Land prices have escalated, leading to fights over prime properties. And a glut of inventory means existing condo prices in downtown Miami fell for the first time in five years.

The Real Deal first reported the delay at Auberge, the first-phase of a three-tower development.
The project has pre-sold 15 percent of its units, according to a second quarter report from brokerage International Sales Group. Developers generally need to sell two-thirds of their units before they start building.

In July, Bloomberg reported that Related CEO and chairman Jorge Pérez was making plans for his sons to take over the company. His eldest, Jon Paul, was put in charge of marketing for Auberge.
Slumping sales across the market should come as no surprise given the lack of foreign buyers, said analyst Tony Graziano, who authors regular reports on the condo market for Miami’s Downtown Development Authority.

Other developers have put projects on hold, including Boulevard 57 in Miami’s Morningside neighborhood.

“Bank financing for development in Miami right now is dicey,” Graziano said. “It’s harder for banks to do their due diligence because there’s no way to accurately forecast how many foreign buyers will come.”

He added that smaller, boutique projects may have a better chance of hitting sales targets.

The federal government has also put pressure on buyers. Over the last year, it handed down new disclosure rules for certain kinds of cash home deals in Miami, along with other luxury markets around the country including New York, Los Angeles and San Francisco. Regulators suspect luxe properties are being used to launder money.

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#Miami home sales fall in second quarter as market cools

A tight market for mid-range homes in Miami-Dade County drove up prices in the second quarter of 2016, but the overall number of existing home sales fell.

There were nearly 7,500 existing home sales in Miami-Dade between April and June, down from roughly 8,300 during the same period last year, according to the Miami Association of Realtors. That’s a 9.7 percent year-over-year drop. Single-family home sales fell 7 percent, faring better than condos, which dropped 12 percent.

Foreign buyers have pulled back from Miami real estate as the dollar strengthens, hurting sales. A lack of foreclosure inventory is also cooling the market.

But the middle of the market remains hot, meaning locals will continue struggling to close affordable deals. The number of single-family home sales in the $200,000-to-$600,000 price range rose 6.2 percent during the second quarter. And the number of condo sales in the $150,000-to-$300,000 range rose 6 percent.

Strong sales activity for middle-class homes means prices are continuing to rise overall. The median price for a single-family home in Miami-Dade hit $295,000 in the second quarter, an 8.6 percent year-over-year jump. The median price for a condo rose to $215,000, a 5.5 percent increase.

FREE Condominium Workshop City of Miami Beach

Condominium Elections, Rules and Official Records/Board Member Certification

Hosted by the City of Miami Beach and presented by the Department of Business and Professional Regulations, Division of Condominiums, Bureau of Compliance.

Monday, August 22, 2016
3 p.m. - 6 p.m.

Miami Beach City Hall
1700 Convention Center Drive
3rd Floor, Commission Chambers
Miami Beach, FL 33139

Contact: Claudia Rodriguez,305.673.7575 ext. 6620 

"All because of the Galbuts": Owners at #MiamiBeach South Beach’s Shelborne fight $30 million assessments, foreclosure

Article Courtesy of The Florida Bulldog
By Francisco Alvarado   
Published August 12, 2016

For the past four years, about 40 investors and snowbirds who own 42 rooms in a landmark oceanfront art deco hotel have been locked in a pitched court battle with one of Miami Beach’s most politically connected families to keep their units.

An ongoing civil lawsuit in Miami-Dade Circuit Court alleges that Miami Beach developer Russell Galbut, along with relatives and business associates, broke Florida condo association laws by passing nearly $30 million in illegal assessments for renovations at what is now the Shelborne Wyndham Grand South Beach. That works out to roughly $107,142 per room.
Ronald M. Rosengarten of the Greenberg Traurig law firm represents Shelborne Property Associates.

“While it is true that friends and supporters of the Galbut family projects may sit on the board, the Galbut family does not ‘control’ their votes,” Rosengarten said. “Currently, Galbut family related entities only have a minority interest in the Shelborne, owning less than one sixth of the units and certainly do not control the units.”

Rosengarten said court records also show the Galbuts’ renovation of the Shelborne “has been a financial boon for the unit-owners and not a fraud.”

Built in 1940, the iconic hotel at 1801 Collins Avenue was entirely owned by Galbut and his relatives in the 1980s. A decade later, the Galbuts began selling some of their units to outside investors when the property was converted to a condo-hotel, according to the 10 owners and Rosegarten. The new owners were allowed to rent their rooms to tourists through a Galbut entity that managed the hotel or other companies that provided booking services.

Galbut family big political contributors
Galbut family members and companies they control have contributed tens of thousands of dollars to political committees supporting Miami Beach city commission candidates. Through six companies he controls, Russell Galbut also has raised $10,000 for a PAC supporting Miami-Dade Mayor Carlos Gimenez’s re-election. Three Galbut family members have contributed a combined $15,100 this year to Republican congressional candidates including Sen. Marco Rubio, and Republican U.S. Reps. Carlos Curbelo and Ileana Ros-Lehtinen.

Things began going awry in 2010, a year after management of the Shelborne was handed over to Menin Hotels, a company controlled by Galbut and his cousin, Keith Menin, the lawsuit states. From 2006 through the beginning of 2015, Menin also served on the condo association board. The lawsuit alleges Menin and the board voted in favor of a $15 million renovation in 2011 to redo the Shelborne’s common areas, from the hotel hallways to the lobby to the pool deck without obtaining approval from at least 75 percent of the unit owners as required by state law.

Yet the non-Galbut owners still got a bill for the $15 million through a series of special assessments between 2011 and 2012.

“Keith Menin knows the Menin Alterations are unlawful,” the lawsuit states. “But he caused or allowed the partnership to make them anyway.”

The lawsuit also claims that Joan Brent, the other Galbut cousin who served on the condo association’s board from November 2011 and June 2013, knew the Menin Hotels renovation was unlawful.

Barely a year later, Galbut and his alleged surrogates signed an agreement with Wyndham Hotel Management allowing them to market 125 rooms and the common areas of the hotel under the Wyndham brand, the lawsuit states. The non-Galbut owned-rooms were not part of the deal.

Despite just finishing the $15 million update to the building, the condo board initiated another renovation project in the summer of 2014 in order to meet Wyndham standards, the lawsuit states. This time, the non-Galbut owners were assessed a combined $28.7 million, according to the complaint.

Again, the condo board did not obtain consent from 75 percent of the owners, the lawsuit alleges. It also says Galbut, Brent, Menin and their allies on the board devised a plan to lie to the non-Galbut owners about the extent of the renovations – saying only that they were replacing the Shelborne’s windows and making repairs required by the City of Miami Beach.

In the ensuing months, the lawsuit say, the non-Galbut owners learned that the scope of the work was much bigger than they were told and that the developer and his cohorts barred them from entering the hotel, preventing them from seeing what was actually happening in the building.

“While the property was closed, the conspirators caused or allowed the structure to be completely gutted,” the lawsuit states. “By closing the property, the unit owners were simultaneously deprived of the use and income generated by their residential units.

Many Shelborne owners “forced to sell”

Predictably, many members could not afford this wave of special assessments with or without the building being closed so they were forced to sell their units.”

The lawsuit also notes that Shelborne Property Associates obtained a $125 million loan around the same time the deal with Wyndham was signed. The proceeds were used to buy rooms from non-Galbut owners who wanted out, the lawsuit alleges. Court and property records confirm that Galbut-owned shell companies purchased 120 units at the Shelborne since 2012, the complaint alleges.

“There were not $125 million worth of units for sale when Shelborne Property Associates obtained this financing,” the lawsuit alleges. “But SPA knew that the association was about to levy tens of millions of dollars of additional special assessments against its members, and close the condominium property for over a year.”

The purchases gave Galbut controlled entities 75 percent ownership of the Shelborne, and the board the necessary majority to approve the Wyndham renovation after the construction had already begun.

A non-Galbut owner who identified himself as “Jackie” said Galbut and his accomplices are squeezing them out because they don’t want to pay them fair market value for their rooms. “They saw that Miami Beach real estate in general was skyrocketing, especially beachfront hotels,” Jackie said. “Rooms have been going for $700,000 to $800,000 a room. That was the case with Raleigh Hotel, the SLS South Beach and the Shore Club.”

According to a review of some of the Shelborne units purchased by Galbut-related entities in the last four years shows rooms have sold for an average between $150,000 and $250,000. Rosengarten countered that non-Galbut owners who sold rooms to his client got good deals.

“Property records evidence that the overwhelming majority of transfers occurred in sales whereby the owners received vastly greater prices for the units they sold compared to what they paid for them,” Rosengarten said. “In other words, the condo owners were not victims but were beneficiaries of the increasing valuation which resulted from maintaining and improving the building.”

Adding insult to injury, construction workers entered their units without their consent and destroyed their rooms, the non-Galbut owners allege. “When we finally gained access to our units, we found our rooms completely wrecked,” said the New Yorker who owns two rooms. “They demolished my kitchen, my bathroom and my living room. They never repaired the damages.”

The owner said city inspectors flagged his units for 20 life safety violations and told him he couldn’t use the rooms until he fixed it. He spent close to $25,000 per room after paying nearly $40,000 in special assessments, he said.

Another owner, a retiree who lives in Atlanta, said she had to dip into her 401K to finance her repairs. She had plans to live out her retirement in her Shelborne unit.

“In anticipation of losing my unit, I tried to buy a house,” she said. “But I was denied a mortgage when the bank saw I was shelling out these huge sums of money and that my income had dropped to $50,000 a year. All because of the Galbuts.”

Mexican president's family faces calls for investigation into #Miami apartment

Political and civil society leaders in Mexico are calling for an investigation into the first family’s use of a luxury apartment in Miami, which has raised the spectre of a fresh conflict-of-interest scandal.
Opposition parties demanded that authorities probe the property arrangement between a Miami-based Mexican businessman and Angelica Rivera, the wife of President Enrique Peña Nieto.

Mexican newspapers and social media have led an outcry, alleging cronyism, since the Guardian reported the arrangement on Tuesday.

The revelation has prompted fresh scrutiny of the embattled president’s ethics following an earlier scandal over his family’s purchase of a Mexico City mansion, known as the Casa Blanca, from a government contractor.

Suspicion in the latest case focuses on why the businessman, Ricardo Pierdant, let the first lady use the $2.05m Miami apartment – and also why one of his companies paid close to $30,000 in property taxes on her behalf for a neighbouring apartment which she owns.

Pierdant is a close friend of the first family and his company, Grupo Pierdant, was expected to bid for lucrative contracts to run Mexico’s ports.

The first lady cannot receive lucrative favours without authorisation from the federal executive’s legal counsel, an oversight agency, wrote Salvador Camerana, a columnist, in El Financeiro. “The president of the republic cannot accept that his friends extend favours worth thousands of dollars to him, his wife, their children, or to their collaborators.”

Eduardo Bohorquez, head of the advocacy group Transparency International’s Mexico chapter, told the Wall Street Journal that the first couple faced renewed scrutiny. “It reignites the discussion over the links that the president and his wife have with businessmen, particularly the type of relation that they could have with someone who pays your property taxes.”

The two main opposition parties, the National Action party (PAN) and Party of the Democratic Revolution (PRD) have asked for an investigation into the Miami apartments, which are in Ocean Tower One, a gated community with a pool, tennis courts and white glove concierge in Key Biscayne, an affluent enclave in Miami-Dade County.

Such a probe would likely be the responsibility of federal auditors and the comptroller’s office.
In a statement, Eduardo Sánchez, the president’s spokesman, said that the first lady used Pierdant’s apartment only on rare occasions and that there was no conflict of interest because the businessman had no federal government contracts and was not participating in current bids.

The spokesman declined to say why Pierdant’s company, Biscayne Ocean Holdings, paid taxes in 2014 on the first lady’s apartment, unit 404, which is directly beneath his own unit 304.
In a statement the spokesman also questioned the Guardian’s veracity and claimed the newspaper had apologised several years before over a separate story about the president. The Guardian has not apologised for its reporting.

Pierdant, the co-founder of DecoBikes, a bicycle-sharing program in Miami and San Diego, has declined to speak to the Guardian, but a Mexican news website quoted him saying the first lady, a former telenovela star, asked him to handle the property tax and reimbursed him.

At the time Pierdant bought the Key Biscayne apartment in 2009 he was overdue on mortgage payments for another Coral Gables property, according to court documents seen by the Wall Street Journal. Asked by Univision how he could afford to pay one apartment in cash while owing money on another property, Pierdant was quoted: “I had the money available.”

The outcry over the first family’s property dealings in Miami comes at a delicate time for Peña Nieto, who is battling a sluggish economy and rampant crime. A poll taken before the current row showed his approval ratings dropping to 23%, his worst showing since taking office in 2012. The newspaper Reforma said it was the lowest approval rating for a president since it began publishing similar polls in 1995, just after a massive currency devaluation.

The Miami property arrangements have fuelled unease because they echo aspects of the first lady’s purchase of a $7m mansion in Mexico City from another businessman with government contract – the so-called Casa Blanca (White House) scandal.

It landed like a bombshell in 2014, wrecking Peña Nieto’s reformist credentials and reviving long-standing concerns about corruption in the ruling Institutional Revolutionary party (PRI).

The first lady later returned the property and last month Peña Nieto apologized, saying the scandal had dented faith in the presidency and government. “For this reason, with all humility I ask your forgiveness.”

The president made the apology as he signed into law an anti-corruption system that his PRI party hopes will boost its credibility in the run-up to the 2018 presidential election.

Miami Vice: Citi Bike #Miami founder paid property tax for Mexican first lady’s condo

Downtown Miami Condo Prices Took a Nosedive for the First Time in Five Years

Article Courtesy of The Miami New Times
By Jerry Iannelli

Since the 1980s, Miami residents have been able to judge their city's relative economic health by counting the number of cranes in the sky. More than ten? Congrats, the city is in the midst of a housing bubble. Zero? Recession.

Right now, the downtown Miami skyline is absolutely flooded with cranes, and it's impossible to drive more than ten blocks in any direction without hitting construction traffic. But a study released this week by the Miami Downtown Development Authority (DDA) might be the first hint that the city's latest construction boom is finally ending: Following five straight years of price hikes, downtown Miami condo resale prices have dropped 4 percent this year.

Through the first half of the year, "few projects continued to be announced and planned, and some observers and media continue to issue dire predictions as to the future of the downtown market," the study says. "However, most developers are taking a wait-and-see approach."

In essence, the price drop shows there have been so many new condos built over the past few years that investors simply have no need to buy old units. This is a problem, because gigantic condo towers are a bit harder to dispose of than last year's BMW X6. A city with no resale market means entire towers could end up empty in a few years' time.

"A review of monthly listings indicate[s] a large increase in the level of inventory offered for sale," the study says. As more condos get built, the DDA predicts that "resale pricing will adjust. This will likely continue if for-sale inventory remains at a level exceeding 2,500 units a month."

(The study was also published before the Zika virus hit Wynwood, and it's unclear how, or if, the virus will damage the city's economy in the long run.)

Though the DDA expects things to "level off" as more condos are built, Miami doesn't exactly weather that whole "leveling off" period well. As famed cocaine importer Mickey Munday told Vice in February: This city is basically one gigantic pyramid scheme, centered around selling condos to an ever-increasing list of outside investors.

Granted, the study took only condo prices, not overall rents, into account. But until the city diversifies its talent pool and starts drawing in more high-earning millennials in science and technology jobs, building new towers is pretty much all we've got.