Pavilion from the Ocean

Pavilion from the Ocean

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Failure to Allow Inspection of the Condo Association Official Records

If the Condominium Association fails to provide access to the condominium records, then damages can be assessed against the Association under Florida Statute 718.111(12).

The law sets minimum damages here as $50 per calendar day for up to 10 days  ($500), beginning on the 11th working day after receipt of the written request. 

Attorneys’ fees are also available under the statute for those who are forced to expend legal fees after being “… directly or indirectly, knowingly denied access to the records.”

Failure under the statute to provide the Official Records is established  after a written request was presented to the association, 10 working days has passed without access to the records being provided.

Oops! - $3.6 million missing in Miami Beach amid fraud investigation

About $3.6 million is missing from one of Miami Beach’s bank accounts, leaving administrators and law enforcement agencies scrambling to figure out how it happened, who did it and why no one noticed earlier.

In a letter sent Wednesday to the city commission, City Manager Jimmy Morales said he learned earlier this week that someone had accessed bank information for one of the city’s accounts and illegally set up an automatic transfer to other banks. The money moved the way one would set up automatic payments out of a personal bank account to pay monthly bills.

Over an unspecified period of time, dozens of transfers from the Beach’s SunTrust account amounted to $3.6 million — taxpayer money that flowed out of the city’s coffers and should have been noticed by the finance department.

“This is shocking,” said Commissioner Kristen Rosen Gonzalez. “I am waiting for an explanation.”
I don’t think we could have prevented this, but we should have caught it sooner. City Manager Jimmy Morales

Morales said the city is the victim of bank fraud and that he doesn’t believe city employees are to blame, but details won’t be clear until the investigation concludes. Two managers in the finance department who Morales said should have noticed the unauthorized transfers resigned Wednesday as Beach police and FBI agents continue looking into what happened.

“I don’t think we could have prevented this, but we should have caught it sooner,” Morales said in an interview Wednesday night. He said he is examining how internal controls failed to catch the problem immediately.“This was not just one month of activity. We probably should have caught it earlier, and I’m trying to figure out if we did something wrong and where that happened.”

The account that was pilfered, which has since been closed, was a general account used to house money collected from permit fees and water bills. This money goes to pay government bills, such as payments to Miami-Dade County for drinking water. Dollars are also transferred to other city accounts for other expenses, including payroll.

Morales said the city has sent claims to the banks that received the transfers to get the funds returned. The compromised SunTrust account is now closed, and a new one with tighter monitoring has been opened. Most automatic payments have been stopped. The city’s staff is now reviewing transactions every day and reconciling all money being paid out in electronic transfers.

No money was missing from any of the city’s other accounts, but tighter controls were put on all of them, a city spokeswoman said.

No money was missing from any of the city’s other accounts

According to sources familiar with the circumstances, the managers overseeing accounts payable and the city’s treasury division were forced to resign Wednesday after the money was found to be missing. Morales declined to name the employees.

The bombshell revelation comes one year after another unexpected shakeup in the Beach’s finance department. In September 2015, the city’s top two financial officers — longtime chief financial officer Patricia Walker and Georgie Echert, assistant finance director — were forced to resign after the administration learned that they manipulated paid vacation and sick time to benefit future payouts when they left the city. Both hastily submitted resignations scribbled on notebook paper.
Late Wednesday, Mayor Philip Levine said that fraud, hacks and identity theft hit individuals and companies alike.

“It’s unfortunate,” he said. “You say it can’t happen to you, until it happens to you.”

Florida Statutes - Petition to Appoint an Election Monitor

718.5012 Ombudsman; powers and duties.The ombudsman shall have the powers that are necessary to carry out the duties of his or her office, including the following specific powers:

(10) Fifteen percent of the total voting interests in a condominium association, or six unit owners, whichever is greater, may petition the ombudsman to appoint an election monitor to attend the annual meeting of the unit owners and conduct the election of directors. The ombudsman shall appoint a division employee, a person or persons specializing in condominium election monitoring, or an attorney licensed to practice in this state as the election monitor. All costs associated with the election monitoring process shall be paid by the association. The division shall adopt a rule establishing procedures for the appointment of election monitors and the scope and extent of the monitor’s role in the election process.

Miami Beach wants to know if you’re renting your condo on Airbnb

The city of Miami Beach wants to know if you plan to rent your condo on Airbnb and other short-term rental platforms.

City law permits short-term rentals only in certain areas of the Beach. Neighbors blame Airbnb and its competitors for noisy parties thrown by guests. The powerful hotel industry says the services are unfair competition because hosts don’t pay local resort taxes.

The Beach has responded by cracking down on illegal rentals with fines as high as $20,000 per violation.

On Wednesday, commissioners voted to further tighten regulations on short-term rentals. In order to advertise units on Airbnb and other sites, homeowners will now have to submit an affidavit to the city affirming that their property lies in an area approved for short-term rentals and that they have obtained a business tax receipt and resort tax account. They will also need to show that their condo association allows short-term rentals.

Fines for violators start at $1,000.

In order for us to stop it you must make it punitive. Mayor Philip Levine

“I think [short-term rentals] are rampant and in order for us to stop it you must make it punitive,” Mayor Philip Levine said during the meeting. “The residents of Miami Beach, the voters of Miami Beach, I believe do not want to see short-term rentals in their buildings or in their neighborhoods.”
The ordinance passed unanimously, at least after Commissioner Kristen Rosen Gonzalez changed her initial “no” vote to “yes.”

“There was more that I agreed with in the ordinance than not,” she said on Thursday. “I was bothered by the fact that people must go to city hall to fill out an affidavit. I would like us to be technologically savvy and move into the 21st century.”

(Commissioner John Elizabeth Alemán, a sponsor, was absent.)

Representatives from the hotel industry and individual condo associations spoke in support of the new rules. But some residents said they should be allowed to rent their units without burdensome regulations.

Airbnb, the largest short-rental company, expressed frustration with the ordinance.
“It is disappointing that an opportunity to collaborate with the private sector on protecting quality of life and economically empowering the middle class is instead being used to over-regulate and punish the constituents of Miami Beach,” company spokesman Benjamin Breit wrote in an email. “As the commission freely admitted from the dais, the desired intent was ‘punitive’ rather than constructive and that, in our opinion, is not good policy. Unfortunately, the real losers of this measure are visitors and the constituents in Miami Beach.”

Single-family homes in Miami Beach are not allowed to participate in short-term rentals, no matter their location. The city has fined residents and rental companies more than $4 million for violating its rules. Short-term rentals are defined as being less than six months and one day.
“South Florida is the fraud capital of the country, and we just felt it was putting too much trust in every condo owner, saying, ‘Yes they are going to tell the truth,’” Commissioner Joy Malakoff, a sponsor of the ordinance, told the Real Deal. “If you get an affidavit and a letter from a condo association, we as the governing body of the city feel much more comfortable that they really are allowed to do short-term rentals,” she said.

Foreign Buyers Moving Away From Miami's Condo Scene for Commercial Real Estate

Foreign investors are moving away from buying Miami condos because prices have gotten too high, says Alex Zylberglait, senior vice president of investments with Marcus & Millichap in Miami.

Yet foreign capital is still flowing into the region's real estate market.

The Daily Business Review spoke with Zylberglait about why. This interview has been edited for length and clarity.

You've noticed a trend shaping Miami's real estate landscape over the past couple of years: When condo sales to foreign investors begin to decline, commercial real estate sales to foreign buyers go up. Why is that?

For decades, foreign buyers came to the U.S. to buy condos. But a strong dollar and skyrocketing condo prices has been shifting foreign investors' appetite in Miami real estate from residential to commercial.

We really began to see this in early 2015, when commercial real estate deals in Miami involving foreign capital jumped to $2.3 billion from $468 million in 2014, according to data from Real Capital Analytics.

In 2016, deals involving foreign capital in Miami-Dade totaled roughly $1.72 billion. While this number is down from last year, it remains extremely high compared to 2014, 2013 and 2012.

The volume of international investment is down this year compared with 2015. Why is that?

While the absolute numbers are down, they're still very strong. Part of it relates to the fact that the dollar has strengthened against foreign currencies. That has caused somewhat of a pause or slowdown.

Nevertheless, the numbers are still healthy. The fact that financing has been available to international buyers more so than in the past has fueled strong foreign investment activity, as buyers are able to leverage their equity and increase their purchase power.

Miami's real estate market has grown beyond its luxury condo offerings. What drove this evolution?

As the condo pricing got significantly out of balance in mid- to late-2014, we began to see a lot of foreign buyers saying, "I would rather own a commercial asset that's going to give me more predictable cash flows and a higher appreciation potential."

Investors who traditionally stuck to the residential market noticed that demand for commercial property was outpacing supply. We began seeing a migration of residential investors into the commercial sector.

Between 2009 and 2014, the volume of commercial sales to foreign investors ebbed and flowed, ranging from $71 million up to $714 million. A noticeable shift took place in 2015, when foreign buyers invested over $2 billion in the region's commercial sector, simultaneous to a softening in the condo market. That tells us that foreign capital isn't really leaving Miami, but rather changing the type of asset.

For example, I'm working with an Argentinian investor who stopped buying condos last year and is now buying single-tenant, triple-net-leased assets in South Florida. Between 2010 and 2014, he bought three high-end condos. But in 2016, he decided to stop buying condos because he perceived that prices had hit a plateau and wouldn't appreciate much more in the near future.

He's actively looking for more single-tenant assets that are easy to manage at a distance, can generate cash flow and are still increasing in value.

What notable trends have you seen in today's commercial real estate market?

We're seeing some segments of the market leveling off in terms of pricing. There has been an unprecedented growth in values up until last year. This year, we're seeing less price appreciation.

Miami Beach Might Crack Down Harder on Airbnb, Spend Fines on Affordable Housing

Miami Beach — a paradise for both tourists and the people who cater to tourists — remains one of the most repressive cities in America when it comes to room-sharing.
 In most of the city's residential zones, short-term rentals have long been illegal. Lately, the city has dropped the hammer on Airbnb users, jacking up fines to $20,000 a pop this year. The city has levied more than $3.2 million in fines since March.
But that's apparently not enough for the city: Miami Beach might soon force short-term renters to check in with the government before advertising any of their properties online.
At the city's next commission meeting December 12, commissioners will debate cracking down even harder on the few short-term renters who are able to do so legally. Vice Mayor Joy Malakoff, along with Commissioners John Elizabeth Alemán and Michael Grieco, are proposing that anyone advertising a "transient" (or short-term) rental must first register with the city or else receive a warning. If renters continue to flout the rules, they'll face a $1,000 fine.
Commissioners will also discuss a separate ordinance that would use money collected from people caught "advertising" or renting their properties illegally to help the homeless. Advertising, in this case, mainly means using Airbnb.
According to city documents, the rule change is meant to serve as a failsafe and second layer of fines to make it even more expensive for short-term renters to rent out their places illegally in Miami Beach: