New law alters condo landscape
June 5th, 2007 - Category: Condo, Real EstateThe husband-and-wife real estate team of Norm and Janice Holloway sells more Venice condominiums than just about anybody.
But when the couple settled into their own waterfront abode at Pointe Whitecap in Venice nearly six years ago, Norm promised Janice that he would never sell it out from under her.
“I told her, ‘You can live here until you die.’ Because, you know, the man almost always dies first.”
Until this summer, Janice Holloway could depend not only on her husband’s promise, but also on the rules that govern this over-55 bayfront enclave. They prevent tearing the place down without the consent of the owners of all 32 units.
But under the new condo termination law quietly crafted by the Florida Legislature and scheduled to go into effect July 1, rules like that would be retroactively disposed of. Even if condo or co-op documents require more than an 80 percent majority vote to terminate and sell, the new law replaces that number with 80 percent.
At a place like Pointe Whitecap, the new law would instantly changes the dynamics.
The community’s board has entertained developers’ offers for four years, each offer carrying the promise to build every resident a new unit and then to profit on additional condos.
There are residents who want to go along, worrying that the single-story Pointe Whitecap — like a host of older communities in Southwest Florida — could never weather a strike from a powerful hurricane.
But there are those who prefer that the property remain just as it is, low-key and low-density.
Last year’s version of the termination bill came amid a statewide uproar over the somewhat related issue of eminent domain, but this year’s quietly sailed through both houses and became enrolled in edited form on May 2.
In 2006, Gov. Jeb Bush vetoed the proposal, saying it infringed on private property rights.
So far, Gov. Charlie Crist has given no indication that he will reject the bill, which was softened to include a claw-back provision that allows 10 percent of owners to vote to preserve the status quo.
The potential impact of the law on Southwest Florida is enormous. In Sarasota and Manatee counties alone, there are 76,000 condominium dwellings with a current market value of $30 billion, based on estimates by Scott Norris, a Bradenton-based Coldwell Banker Realtor.
“You can see that in both counties a third of the condos are 30 years old,” Norris said. “A lot of them are on the keys, too.”
The state’s developers see huge profits in redeveloping hundreds of billions of dollars of prime properties.
“For developers, it really opens up that market,” said George Huhn, a Venice Realtor. “If the majority of the owners say, ‘Hey, we want to sell for a reasonable price,’ then you can’t have one or two people essentially holding up the whole transaction.”
Dan Lobeck, a Sarasota attorney whose clients include dozens of condo associations, predicts, “Developers will be jumping on this before public reaction threatens its repeal next year.”
Not created equal
While it would be easy to paint a situation like this as the big, bad developers vs. the hapless condo dwellers, reality would be more accurately colored in shades of gray.
For starters, it could mean the rebuilding of hundreds or perhaps thousands of vulnerable properties like Pointe Whitecap to the state’s more stringent post-Andrew hurricane codes.
Some complexes are nearly all rentals, making them stronger targets for redevelopment than places like Pointe Whitecap, where owners are emotionally as well as financially invested.
“A lot of people when they see this bill, they have images of developers coming in and riding roughshod,” said Lee Lichtle, Pointe Whitecap’s board president. “That will never happen here. They are not interested in leaving their homes here. You’d have to blast them out.”
Instead, Lichtle leads a coalition of Whitecap owners who want to share their property with a developer in return for a free ride and a safer place to live on the same property.
But the 100 percent termination clause has always been the sticking point.
At the Venice property, just 32 units are tying up 5.5 waterfront acres already zoned for up to 51 units. That gives a developer considerable room to move.
If the group decided to sell out, they could probably fetch $18 million to $24 million, says Whitecap unit owner Brad VanDeventer.
“The 19 additional units would pay for the whole project. So you can see our frustration,” VanDeventer said.
Along Tarpon Center Drive
In Venice, the milelong coastal road has two names, The Esplanade and Tarpon Center Drive. The thoroughfare starts at Venice Beach, hugs the beach to the north, then curls out to the northwest as the land narrows down to a peninsula before ending at Venice Jetty.
Along this short, valuable stretch of waterfront are many older condo buildings — a mix of low-rise dwellings such as Pointe Whitecap, Quarterdeck and the Yacht Club Apartments, as well as taller buildings such as the Gulf Shores condos.
Most were built in the 1960s and ’70s, long before Hurricane Andrew redefined what a hurricane could do to a Florida urban area, and before the building codes called for beefed-up storm protection.
At Gulf Shores, the owners are now paying for the completion of an extensive renovation program that has required everyone to vacate for the summer.
Randall G. Van Vlaenderen, whose parents live at Gulf Shores, said owners are being assessed $20,000 to $25,000 for this last phase of renovations.
Workers will replace the vertical plumbing stacks and refinish the side of the building that faces the beach, including all its terraces and patios. Previous assessments provided for refinishing and waterproofing the other sides.
“It is pretty much the same all along the beach,” said Van Vlaenderen, a Re/Max agent in Venice who knows the condo scene well. “All of them are in the same boat” in terms of the age and condition of their properties.
But Van Vlaenderen does not see that as a reason to tear the buildings down, at least not most of the time.
“Just because something needs some repair on the infrastructure doesn’t mean it is time to rip it down and put something else up, just to make some bucks,” he said. “I think they wrote those declarations the way they did for a reason, and that is, these are people’s homes.
“In my parents’ case, they could move anywhere they want to move. They like where they are. If they could make 2 million bucks off that unit, they still wouldn’t move.”
Seven feet above the sea
Sandwiched between the Venice Yacht Club and the Crow’s Nest restaurant along this narrow peninsula is Pointe Whitecap.
The enclave does not look like much from the street. Around the rim are 32 one-story buildings, with a private road making an elongated loop in the middle.
Because of that layout and the way that the property sticks out into Roberts Bay, each of the 32 owners has his own seawall frontage and his own deeded underwater piece of land for a boat dock. The Venice Jetty is a minute or two away by boat, with no bridges, so the property offers superlative marine access.
“I can put a 54-foot Hatteras there,” said Norm Holloway, walking out 20 paces from his back door to his portion of the seawall.
With its ground floors seven feet above sea level, Pointe Whitecap could never be built today the way it was in the early ’60s.
The state’s building codes would no longer allow it. The ground floor would have to allow for a storm surge to pass through, making it useful for parking and little else. Residences would be built at a second- and third-story level.
“I like the fact that it is quaint and old,” says Janice Holloway, who, with her husband, just spent $200,000 turning their unit into a baby-boomer showcase, with genuine oak floors, granite countertops and a view that grabs you when you walk in the door and won’t let go.
The Holloways paid $400,000 for their two-two in December 2001. It is now worth at least twice that, maybe more.
“You go in and it is a small little community,” Janice Holloway said. “It is not towering three-story buildings with parking underneath. Everybody’s back door walks out to their dock.”
Audrey Zetena, a 74-year-old widow who also lives full-time at Pointe Whitecap, summed up the attraction and the fear that the property holds for many owners.
“It’s got a magic quality,” Zetena said. “At the same time, I worry about safety. We are looking for a building that is safe.”
Norm Holloway acknowledges that the property faces risks in a major storm.
“Do we stay and hope we don’t get hit with the wave?” he asked. “If we get hit with a 12-foot surge, we are cooked. We are cooked. It would be over my ceiling.”
Starting four years ago, the Pointe Whitecap’s board of directors set up a hurricane readiness committee.
That body began inviting developers to make proposals for the property.
The idea all along was to allow a developer to tear down existing units, build to a higher density, and then move the original owners back into homes that were comparable or better than what they had, all for free.
In return, the developer would get the proceeds from new units.
So far, the hurricane readiness committee has heard proposals from four different developers.
Each time, there has been a varying number of what owner Brad VanDeventer calls “dissenters.”
While different proposals have generated different votes, well over half of the 32 owners are interested in working with a developer who would bump up the density, make his money on the extra units, and give them new places to live with comparable views, just for letting him use the land.
One of the latest plans would have granted the developer 19 new units to sell at prices north of $1 million each. Another would seek regulatory permission to raise density to 80 units.
At present, one “no” vote or even an abstention would stop any plan.
Under the new law, it would take four votes or signatures to keep the place the way it is if more than 80 percent want to scrape the property.
While Pointe Whitecap in its present form has an emotional hold on Janice Holloway, her husband tends to look at the practical considerations of a joint venture with a developer.
“There’s more to it than ‘We can redevelop and we will all get a unit,’” he said.
Say the property owners turn the land over to a developer. “What if he goes belly-up?” Norm Holloway asked. “Then who is responsible?”
Although those in favor of redevelopment say they might be able to keep their low Save-Our-Homes-protected tax bills, Sarasota County Property Appraiser Jim Todora nixed that.
“It sounds like the developer is going to take title, and then transfer it back,” Todora said. “The properties would be appraised at their current market value when that takes place.”
Even were that not the case, the value of the improvements compared to the value of the existing structures would provoke a fresh appraisal.
That higher tax structure is a key reason why another Whitecap owner, Tom Collinson, says he has voted against redevelopment in the past.
“If they redevelop, our taxes are going to go sky high,” Collinson said. Besides that, “I don’t want to be in the development business with 30 of my friends.”
Information from: www.heraldtribune.com
