Buildings have a 40 year useful life

Saw the video. Worst nightmare. The building just pancaked. It was building in 1981 so it's actually relatively new compared with the pre-war buildings and 60s buildings here in NYC?

Fiat buildings (post 1971 in the US) are more prone to having these issues. Buildings built under a gold standard are likely to have been constructed with considerably higher integrity.

https://www.surfacemag.com/articles/432-park-avenue-new-york-problems/#:~:text=The%20high%20life%2C%20it%20turns,building%20shimmies%20during%20high%20winds.

Before building collapse, $9 million in repairs needed
https://fox8.com/news/before-miami-building-collapse-9-million-in-repairs-needed/

So who's responsible for issues identified but not fixed due to the cost (possibly)?

Those poor people. I will bet good money that when the forensic investigation is finally done, some "against condo regulations" renovations will be discovered.

Everyone wants a W/D, or an overhead light, or an open floor plate, and doesn't want to be told that that wish list can be quite destructive to the structural integrity of a building.

Terrible all around.
Reminds me why I never want to be on a condo/coop board again.

Imagine the discussions when the $9M estimate came in .. and note the report itself while pointing out lots of stuff to repair doesn't point to imminent danger.
Daily Mail: "The report does not warn that the building was at risk of collapse but states that the repairs would help in 'maintaining the structural integrity' of the building."

Some ballpark math puts the per-unit cost at around 10% of the value of unit, in other words.. something the residents would throw an absolute revolt over. Even if they financed it, probably doubles their monthly maintenance/dues for the next 10 years.

When I see assessments of this magnitude its often to correct a glaring, obvious issue to residents like an already failed boiler/elevator/etc, or beautification work to increase property value (everyones favorite).

If board wanted to do the right thing, how quickly could they manage to push that through?
Plus COVID put a huge delay on projects..
I could easily see pressure from residents to get more bids and ultimately push for cheaper half solutions to kick the can down the road.. or shrug it off as its just an issue with the parking structure of the pool or whatever.

In retrospect its obvious to spend 10% of your apartment value to save your life, but in real time a lot of people would have had to be dragged kicking and screaming to cut the check.

In our own back yard it has been noted we have similar concrete falling apart with exposed rebar on the BQE getting salt water off exposure as well...

Steve - exactly. "nobody told us it would collapse" is the response to probably a decade of deferring maintenance and then a shocking $9M estimate to bring it back to safe condition. When I lived in NYC, I felt like our board made good decisions, even if they weren't popular, for the good of the structure and the well being of residents. (Really.) When you get out of NYC, not sure the same things happen.

What happened in Surfside is very sad indeed!

However, you can’t generalize useful life of residential buildings except for perhaps plumbing. As far as plumbing goes, risers only have 50-70 years life. Personally I worry less structurally about pre-wars, which are supported by a brick and column structure around its perimeter, vs buildings on stilt eqt or a concrete core. Buildings in Paris from 1850s are still standing.

While I am no expert at structural engineering, water penetration into the relatively soft lime stone like bedrock in Miami Beach (a barrier island) does cross my mind in addition to ground floor being exposed to the elements with a leaky pool on top in the case of Surfside tragedy.

https://www.nytimes.com/1999/01/17/nyregion/flooded-plaza-collapses-into-garage-on-the-lower-east-side.html

I disagree with the title.
So much depends on what era it was built in, what its built on, and what materials to build it.

That being said , from everything Ive read, it sounds like the combination of medium term leaking of water into the foundation combined with the adjacent property doing construction work over a long period of time with substantial vibration felt by residents of the collapsed tower were the main factors.
While they'll likely find flaws is the sister towers I'll bet they're not coming down anytime soon. These things usually take a perfect storm.

Have a read of the Board President's letter from April 2021 to his residents explaining why they needed $17M of repairs, which spread across 136 units, equals a $125,000 assessment per unit.

https://s.wsj.net/public/resources/documents/miamiletter0628.pdf

It sounds as if some residents were not going to pay - see the reference to hiring a collection agency.

Ultimately this collective action problem is a fundamental problem of co-ownership. If only some minority refuses to pay or cannot pay, the cash won't be there, and all that Boards can do is sue and place liens and eventually foreclose many years later. The building's reserves were clearly inadequate since repairs were "pay as you go," as the letter makes clear. However, had the building properly run its capital fund, they would have needed just $260/unit/month over 40 years to make the repairs. Even less when you consider that the cost was half as much to do the repairs just a couple of years earlier.

I also stand by the title of the thread. All those Hausmannian buildings in Paris and pre-war coops in NYC have had big work done at some point in their lives. You can extend a useful life with careful maintenance, but that often requires many millions of dollars that owners don't want to pay or cannot pay.

George, Ha. You mean "If not maintained properly, buildings have a useful life of 40 years".

Of course, all buildings require maintenance. Facade work, new windows every 20-50 years depending on the original quality, plumbing risers every 50-70 years, roof every 20-30 years etc. This needs periodic assessments as we commonly see in NYC.

For buildings with street level exposed to elements and on barrier islands, there could be clearly foundation type structural work as we read more about reasons for the sad event in Surfside.

@George - agreed, and now we see the assessment was almost 2x the $9M info up thread.
Buildings need major work over their lifespans.
Many boards are not saving enough year to year because their voters (residents) don't want to.
Having ~$500k of cash on hand for 136 units in a 40+ year old building after multiple years of special assessments is quite bad.. especially given they still had a $15M assessment on the horizon.

My new condo is 40% of the size and 10% the age with ~ 50% of cash on hand vs this Miami building.
Even with a savings rate under the recommended 10% of budget we should have 5-10x the cash on hand after 40 years.

I would also caveat that new developments benefit from the large contributions from sponsor sales which taper off every year to zero, so we may end up having to add flip taxes, user fees or increase maintenance further.

We are also subject to future boards spending responsibly and not blowing the cash on cosmetics/amenities or simply reducing savings over time to keep monthlies from going up.

Being a new development and younger crowd, the majority of what board candidates run on is how much money they are going to piss on stupid things. Further the attitude from a lot of residents is that they pay their monthlies and its "new" so why should they pay for anything else, including repairs in their own units..

By comparison my free standing home has no automatic monthly maintenance bill but I've spent north of 5% of value on critical maintenance in the first year vs 1%/year automatic in a condo.

More confirmation the board was trying to drag owners kicking & screaming to get repairs done for years..
https://www.washingtonpost.com/investigations/majority-of-florida-condo-board-quit-in-2019-as-squabbling-residents-dragged-out-plans-for-repairs/2021/06/30/43592282-d98e-11eb-ae62-2d07d7df83bd_story.html

"Despite increasingly dire warnings from the board, many condo owners balked at paying for the extensive improvements"

"As recently as April, residents appeared divided over the repairs — with dozens signing a letter that questioned the details of the proposed spending and asked the board to consider a lower assessment."

Her warnings to homeowners about the urgent need for repairs had gone on for months. “I want you to know that the numbers we are hearing so far are much higher than the original Morabito estimate,” she wrote on Oct. 23, 2020. “However, the project is also much larger . . . The concrete damage is more extensive than it was when first looked at in 2018, and prices have gone up.”

“There was a lot of fighting and bickering,” said Aguero. From the correspondence the couple received, he said, “you get the feeling that things were not right.”

Also this one:

Some Surfside condo board members quit in 2019 over sluggish building repairs, multiple outlets report
https://www.cnn.com/us/live-news/miami-florida-building-collapse-07-01-21/h_a5f6043c1c35819be298e23ede76e83c

The majority of the Champlain Towers condo board decided to quit in the fall of 2019 following disputes over the lackluster response in tackling repairs needed in the condominium complex, The Washington Post reports.

The Post cites minutes from an Oct. 3, 2019, Surfside condo board meeting and the resignation letter of Annette Goldstein, the then-president of the condo board.

Goldstein was among five members of the seven-member board who decided to resign, the Washington Post reports.

“We work for months to go in one direction and at the very last minute objections are raised that should have been discussed and resolved right in the beginning,” Goldstein wrote in her September 2019 resignation letter that was obtained by the Post.

Sadly this was my first guess as soon as they said they had a $9M 2018 quote. Tragic.
Board knew what to do, they had *some* idea of urgency, created a plan of action, lined up financing to make it a 10 year assessment instead of lump sum.. but some vocal minority of people did not want to pay causing delays.

This is almost exactly how I would imagine things playing out in my condo.
Rumor mongering, letters under doors, secret email lists, claims of discrimination, harassment of board/managing agent, complaints filed with state, threats of litigation and all sorts of mischief have been utilized by the noisy 5% for much lower stakes here..

The thing that gets me is that - yes, its a lot of money, but as a percent of value (~10% spread over 10 years) it's not crazy compared to freestanding homes. There are any number of things that need replacing unexpectedly that cost 5-10% of home value. Siding, roofs, boilers, HVAC, etc.

Maybe coastal urban condo buyers are just too overstretched by the exorbitant prices they need to pay to buy, and you will always have 5-10% of your building living well beyond their means. People think they can pay their ~1%/year maintenance and everything is magically handled.

What a terrible tragedy...

I just sold an oceanfront condo that we owned in Jupiter. It's a lot of wear and tear and a lot of expense for the enjoyment of living with an ocean view. I was close to buying another unit that was walking distance to the ocean, until they disclosed to me there was a $30,000 assessment per unit for concrete work. And this was just for a $250,000 one bedroom, in a six story building.

Bottom line it's a lot of money to maintain one of these buildings correctly.

@steve123 "Maybe coastal urban condo buyers are just too overstretched by the exorbitant prices they need to pay to buy,"

I think it's really a version of the second part of your sentence "Maybe coastal urban condo buyers have unreasonably stretched their finances and cannot handle the cost of a significant maintenance assessment"

It does rather starkly illuminate the whole discussion about how concerned NY Co-op boards should be about their shareholders' general finances.

This situation is basically why I own a single family in Nowhere and rent in the City. If the NY building isn't properly maintained, I can peace out. Meanwhile, for my single family, I talk to the contractor every day about whether I want this or that and the cost. It's stressful enough doing a reno that will consume 20% of the purchase price of the house; I couldn't imagine doing it with 200 other egotistical, self-centered, nasty-tongued New Yorkers.

https://www.nytimes.com/2021/07/01/us/condo-associations-surfside-collapse.html

Thanks for the NYT article link. The quote in one of the comments should be read aloud at every condo & coop board and shareholders meeting:

"Deferred maintenence is neither 'income' nor 'savings', but rather is an unreported liquidation of capital". Railroad executive John W. Barriger III speaking of the physical condition of the failing Missouri, Kansas & Texas (Katy) Railroad which he had been hired to turn around."

Aaron2

Great quote , thanks

North Miami Beach orders immediate closure of Crestview Towers Condominium building
https://www.cnn.com/us/live-news/miami-florida-building-collapse-07-02-21/h_e0c24e351516cd8429c777e6095d2c7b

Crestview Towers submitted a recertification report dated Jan. 11, 2021, in which an engineer attained by the condo association concluded that the 156 unit building was structurally and electrically unsafe.

Crestview Towers was built in 1972, according to Sorey. According to Sorey, the building should have been in its 40-year recertification process, but they hadn’t been in compliance.

If you're looking for a Sunday afternoon/evening read, this is pretty good. No paywall -
https://www.miamiherald.com/news/special-reports/surfside-investigation/article256633336.html

Excellent graphics, though all that scrolling text is a bit annoying. Well worth the read though.

A coop in that scenario would likely be able to borrow the necessary sum to repair the building, rather than having to deal with collecting assessments. Coops might be a superior form of collective ownership after all.

Good video, thanks Stache