The High Cost of Failed Condominiums

By Deborah Goonan, Independent American Communities Blog


On one end of the condominium spectrum are luxurious towers in world-class cities such as New York, Chicago, Los Angeles, and Miami – architectural wonders built for wealthy owners and  investors, located in the best parts of town with sweeping views from penthouse units.

On the other end of the spectrum are basic low-rise apartment buildings and unremarkable townhouses. These are the condos that were marketed to first-time homebuyers and empty nest seniors, looking for an affordable home with someone else in charge of the maintenance. Many, but not all, were condo conversions. That’s the term used to describe condominiums that were originally designed as rental apartments or roadside motels. Newer condominiums were hastily built during the real estate madness leading up to the crash in 2008.

At the time, local governments were approving condo developments, and banks were financing developers and condo buyers, giving little thought to the likelihood of all the units being sold to owners that would have the willingness and  ability to pay their assessments in full and on time, into the forseeable future.

It still boggles the mind, when you think about it.

How can people living on social security and relatively low wages be expected to pay for expensive ongoing maintenance of structures that are 25, 30, 40 years old or more? How can a first-time homebuyer, that wasn’t even able come up with a small down payment, be expected to pay for rising utility and assessment payments, let alone unexpected repairs due to construction defects, fire, or natural disaster?

Was it realistic to expect inexperienced homeowners and others who bought into the “carefree, maintenance-free lifestyle” hoopla to take a sincere and thoughtful interest in properly planning for long-term maintenance of their Association-Governed Residential Community?

Did any decision makers in local government ever stop to consider the likelihood that several or hundreds of households sharing ownership of multifamily structures would be able to get along and agree on how to spend their money and run their community?

Apparently not.



This week, I provide you several examples of condominiums that have failed miserably, in various stages of their ultimate demise.

  1. Side Streets: Troubled Colorado Springs condo complex in ‘world of hurt’ financially Sierra Pointe Condominiums, 282 units, built in 1974, with a history of embezzlement, and currently lacking funds for essential repairs. The community is on the brink of bankruptcy.

2. Residents kicked out of condemned North County condos  Clark Tower, 96 units, 50+ year old 9-story building, Moline Acres, MO. A defunct condo association, and a non-working elevator. Condemned in Jaunary 2014, forcing all residents — mostly tenants — to vacate.

3. County hears ‘depressing’ update on condemned, crime-ridden condos Blossom Park Condos, Orange County, FL, a 1970s-era motel converted to condos in 2003. Only 40 of the 345 units remain inhabited, and the county has issued multiple code violations resutling in condemnation. Notorious for prostitution, gun violence, drug crimes, and heroin overdoses.

4. More buildings at trouble Orange County condo complex set for demolition  Tymber Skan townhouse condominiums, also in Orange County, FL. A 49-building complex with multiple abandoned units, many infested with rats and other pests, multiple code violations. Eight buildings have already been demolished, with several more soon to follow. Plagued by more than a decade of unpaid water bills, fires, squatters, and violent crime. Just a few residents remain.

5. How Failing Institutions Left an Atlanta Condo Complex Derelict and Crime-Ridden  Brannon Hill Condos, DeKalb County, GA, a 369 unit disaster zone, home to 400 people, mostly poor Somali immigrants and squatters. More than half of the units have been burned by several fires. Violent criminals and crack users live here amongst poor families with nowhere else to go. The County has given up code enforcement, because nobody has the $10.5 million it would cost to bring Brannon Hill back to life.

What do all of these condominiums have in common?

All of these condos experience varying levels of crime and blight. This is despite the existence of multiple restrictions and rules meant to protect property values. It’s ironic that in past decades, people have abandoned cities to escape crime and blight, only to discover the same or worse in their homeowners or condo association.

That’s because blight and crime find their roots in poor maintenance and inadequate security, both of which are direct results of a lack of sufficient revenue to get the jobs done right.

And as owners that can pay move away, there is no one to fill the void. Entire condo communities morph from a majority of owner-occupants to a majority of absentee landlords. When most of the absentee owners don’t care about the complex, and stop paying assessments, vacancies and squatters become a problem.

If you look a bit closer, you’ll observe that many of these low-end, financially insolvent condos now serve as housing for the poor and the unwanted, amongst the criminals.

And now portions of our cities are being demolished and gentrified for the well-to-do, displacing residents with limited incomes.

Instead of dealing responsibly with an affordable housing crisis and homelessness, government policies are simply allowing dysfunctional condos to absorb social problems and poverty, and hide them away from public view in run-down, unsafe buildings behind once-proud entry monuments.

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