 It's June the 30th, 2021. Welcome to What Now America. I'm Tim Apatelio, your host. And today's title is Politics of Condo Safety. The Community Association Institute, which is known as CAI, estimates there's 70 million Americans who live in condominiums across the United States. And in those, it's not just condos, but also, you know, it's a home associations, but many of them are condominiums. And in those condominiums, many of them are high rises. And many of those high rises, actually condominiums, it's kind of a new concept. They weren't the first one, I think was in Hawaii in the mid early 60s. And so condominiums is a rather new concept of affordable living and less maintenance for a house upkeep. And so many condominiums were built in the 1970s. And being that the case, many of those condominiums now are 50 plus years old. So we have a tragic environment, we have a tragic event in Surfside, Florida. We're a 13 story that consisted of 55 units collapsed, collapsed in the middle of the night. And now we have 16 dead and 147 individuals unaccounted for. And it's the worst nightmare you could possibly have if you're a city, if you're a condo association or if you're an association manager. And we have needless deaths because probably most likely there was a structural failure due to a lack of proper maintenance. The details are yet to be determined but there'll have to be a forensic study of this. And but most likely it will be a structural failure and structural failures occur because there is a compromise of beams, girders, supports of one type of another. And that's most likely what we'll find out in the future. So we're gonna dive into this and we're gonna talk about what the politics of building safety is. We here in Honolulu, we certainly had or have had a ton of politics after the Marco Polo Fire and we're gonna get into that. So before we do, I'm gonna introduce our guests. Welcome to Jay Fiedel, Stephanie Dalton, Winston Welch and Cynthia Lee Sinclair. Welcome everyone to What Now America? So going to you Jay, remember a few years ago, the Marco Polo Fire where I believe four people were killed and we had over a hundred million dollars worth of damage to the building. And we had what I would refer to as a knee jerk reaction. Mayor Caldwell went immediately to create Bill 69 which basically said all these condos that were built in the 70s prior to 1975, I believe that didn't have sprinkler systems would now be subject to an immediate process of installing sprinkler systems. That created a lot of consternation amongst owners because many people who live in condominiums are on a fixed income. And to retrofit a concrete, most of them are concrete masonry buildings to retrofit a concrete building with a sprinkler system throughout is literally million or millions of dollars. And I guarantee you most of these associations never set aside money for sprinkler systems because they were a non-sprinkler exempt building. But here we have now condominiums across the country that are 50 plus years old and Surfside is no exemption to that. What was your impression, Jay, of what happened in Florida and what do you think jurisdictions are gonna do in the future? Not only in Surfside but across the country? I don't know if you remember but the whole notion of a horizontal property regime was established, if not first in Hawaii then very early in Hawaii in 1960 or so. That's before you were born, Stephanie. And we were the pioneers. We established more condominium, more horizontal property regimes than anywhere. And it was a perfect venue for that. But I always said in those times that it was an experiment. It still is an experiment, it's an experiment in management, it's an experiment in construction. It's an experiment in bringing the developers together with the government for proper and clean, I say clean, I mean, non-corrupt regulation. And so not everybody has had the same level of experience we've had. You know, I mean, Jay Sugimura who's on the condo insider show on Thursday was directly involved in all this with the sprinklers in the Marco Polo. And that's what happens with every kind of tragedy. Now this kind of tragedy, the first thing that happens is, the press gets hold of it and makes it the biggest story in town. Not sure that's really true. We live in a world of failing infrastructure. The real story is, we live in a world of failing infrastructure. It's not only the government that has failed to keep up with the decline of our infrastructure. It's individuals and cities and counties and states. And certainly kind of minimum association. In the case of Marco Polo, the board was directly involved in the liability. And I suppose there were other professionals, design professionals that were involved. I don't know that for sure. In this case, it's very clear that the press is trying to examine, what's his name? Chris Cuomo was going into it like a lawyer. Step by step, who was responsible? I don't think that's the right approach. Believe me, this will be examined. Believe me, the lawyers will find a way to get every single detail about everything they already are. And the targets of those lawsuits will be, of course, the board of directors, the management, mostly management companies, all of whom have insurance. Although I doubt the insurance will cover this kind of loss. And of course, the design professionals, and the people who could have, should have, would have come to inspect this. We don't really know yet. It might have been a soils thing, an underwater, I mean, under the building water problem, a sinking that was sand being carted in to a nearby location across the city line in Miami that was nearby. There's all kinds of possibilities. And at the end of the day, it's gonna be hard to ascertain exactly which one or ones were the ones responsible. But one thing is clear, you know, the lawyers and the people involved in the insurance claims and all that, they're gonna be really busy for a long time. Clearly whether this is going to make a big difference in other cities where condominiums exist, maybe so, because the insurance companies to do business in Miami area, in Dade County, whatnot, they also do business elsewhere. And when they cover condos in Miami, they cover condos elsewhere and they're gonna be taking a stark bath on this and they're gonna be, you know, making some dramatic changes. As to the politics, let me go on for a moment more. As for the politics, well, the politics involved the regulatory agencies, the planning and permitting people, the people who are responsible to make sure that somebody goes out, checks this stuff, the professional organizations for the engineers and the managers, they're all gonna be, they're all worried right now because the losses are astronomical, not only in terms of the loss of the, you know, the building, but the, you know, the wrongful death claims that will emerge when you say there are a hundred and some odd people unaccounted for, they're probably gone, they're probably dead. If this happened in the middle of the night, where might they be at nightclub and would they have not surfaced already? So bottom line is we have a huge number of deaths. It's a lesson to the industry, it's a lesson to that experiment around condos. They do get old. And I think that's a great point is the term experiment, you know, condominiums are an experiment in self-governance. In many times, a condo government then supersedes your bill of rights, your federal bill of rights. A lot of times it supersedes locals and state law because it's a, you know, it's a covenant, a covenant of the owners that purchased in there. And so it really has been an experiment for the last 50, 60 years. And I guess it goes to the point where, where is that marriage between government for building structural inspections versus the obligation and the responsibility of each board of director for every association to make sure the building's safe for its residents. And it's, you know, and properly collect enough reserves. Well, there is a statute that requires reserves and condos here. Don't know about Florida. It's pretty weak though. It used to be a lot more stringent and then it got watered down. Let me add that the, you know, the big reveal here, and Tim, you know this because if you're involved with condos, the big reveal is that condo management, condo boards, the directors who are elected by the residents, the property owners, you know, the unit owners in the condo here and probably everywhere are not professionals. And half the time they have no clue, not a single clue on how you manage a property that's worth hundreds of millions or more. And so, you know, what happens is they make horrendous mistakes in the way they manage and the way they fail to manage. And so that's the biggest lesson of all. Okay, thank you, Jay. Hey, Stephanie, let me go to you. You know, Jay Briggs brings up a great point that board of directors are volunteers. Yet in every state, and I know Hawaii in the last five years, it's really been focusing and emphasizing the responsibility of board members to get involved with their duties called fiduciary duty, fiduciary duty to the owners. And as such, that means, you know, obviously to make sure that when structural reports are received, they're acted upon. And in the case of surf side, they had structural reports ringing alarm bells left and right about some of these cracking and spalling issues in the concrete below the pool area and other areas. The problem with condominiums is, again, a lot of people buy into condominiums because they can't afford houses or they wanna get away from the maintenance or they've retired. And so we get a lot of condominium owners who are on a fixed income. And as these buildings become 50 plus years old, where if they haven't properly set aside reserves to handle structural issues, which costs, you know, hundreds of thousands of dollars, millions of dollars. And in the case of the surf side, they had to come up with a $15 million special assessment. 80,000 on the low side per unit and 160,000 on the high side for the bigger, larger units. When you're on a fixed income, this seems pretty hard to do. So is the condominium concept still viable as these buildings get older, do you think? Well, I've turned out to have a lot of experience, actually, in condos. And right now I'm straddling between Honolulu and DC. And as Jay mentioned earlier, I've worked here with the board on this, which is a cooperative, which is a whole nother nightmare story. About governance, and the ownership is a legal difference from the condo. But the point is that Honolulu, DC has no laws governing how it is that these condos are protecting themselves through financial decisions that get them ready to meet these kinds of emergencies and to actually make the repairs necessary. So I've been working in that context here for years. And then in Honolulu, and the one I'm in and working with that one, it turns out that there are Hawaii statutes that govern everything. And not only the contributions that have to be made, but the standard to which they must match. In other words, in the condominium in Honolulu, and I don't know when this law came in, because maybe it came out of some of these difficulties, but that you have to put in enough money and in fees that owners pay monthly to replace the entire building. And you are free to choose how long you want to take to do that. So you can choose 50 years to do that, to buy the amount millions by the 50, or you can do it for 30 or 20, whatever you want to arrange. But that is one of the big differences in Honolulu. So I think because they're in the game early, the state's in the game early, maybe they've learned about how to help, at least with the fiscal issues. Because the one I'm in here is an older one, and there are these concerns. And a lot of people, as you ask the question, Tim, a lot of people are facing not being able to make more than the monthly payments already assigned. And so every year, this fee increases in order to make the maintenance stay current with the building's needs. And those needs are really, really great. And all of this, as Jay mentions, is guided and decided by the board of directors and the president who here in D.C. technically is like a CEO. He's the one with the signature authority. So those decisions are made. And there's kind of a revolt going on in this one here in D.C. about, you know, this isn't the Watergate, okay? This isn't a luxury condominium. So we have to think about the definition of this building, what its needs are, and see what we can do about making everybody have a chance and opportunity to stay if they want. But I wanted to say one more thing, which is that I heard on TV that the people in Surfside's building catastrophe that they had deferred paying any of the monthly fees, maintenance fees to give the condominium, the cash, the balance, or the money to make these repairs over years. And that so happens to be the case with this one here, which is about the same age. It was a long time before anybody started really making payments. So the newer people in, you know, later people in have had to make up for what was not paid for in the beginning. Then the new one in Honolulu, they made the mistake of trying to collect too much at the start. So all of the people that bought in that condo said, we, hey, hey, you know, we bought a new building because we expected the fee to, you know, start at a reasonable level. You're like, some people have mortgages too. So there the mistake was rushing into meeting the Hawaii statutory requirements and getting some money on the reserves. But they had to back down because, you know, that was just getting, it was just too much. So each one is gonna have its story to tell. And in the case of the Florida one, and I fear they made a big mistake by thinking they could get away without keeping up on the maintenance. And I hope that's the lesson that we all learn that you have to be cognizant of the quality of your infrastructure because your life's at stake. And so presumably, you know, we'll be all more attentive to that. But it is a very expensive operation to keep these buildings going as they age because that it's huge systems that have to be tended to and at least in Hawaii, we don't have the winter to contend with. And I don't know that Florida has. I've lived in my, in what Coral Gables, but you know, it didn't get too cold there, but you still got better there too. But these systems for heating and cooling and all of these things are millions, multi-millionth of dollars to keep up. All right, well, I appreciate your perspective on that. Winston, you know, be it the Marco Polo incident or, you know, Surfside, it seems like every politician Russians they get in front of the camera. And, you know, I appreciate the message they portray about making sure all, you know, they render assistance and every bit of assistance the government can provide to help in this situation. But then what happens is we see, you know, immediately laws that are created out of the ethereal, the out of vapor trying to address what they think was the problem with Surfside or in this case in Hawaii with Marco Polo. And again, these laws were well intended, but if you really examine them and here comes the politics, not a lot of thought went into them, particularly Bill 69, which Mary Caldwell put out was to just automatically require these buildings to be slapped with the retrofit of sprinklers even though they were exempt from sprinklers. And so I guess I go to the question is this, is it right that politics should enter into this immediately or should there be a spread out responsibility of cost sharing between government hiring more inspectors, if you will, which is, you know, it's gonna cost salary and wages. And those inspections should be more frequent. Hawaii doesn't have a 40 year certification process like Surfside, Florida has. I've never even heard of a 40 year recertification process to keep your building safe and occupied. So does government have a responsibility of hiring more inspectors and making sure that these inspections take place? And more importantly, that the inspections are followed up and remediation is done. Or does government not have that responsibility? And it's all up to the particular private associations to ensure safety for his residents and the local state or county or city government just have those obligations of fire safety. What are your thoughts about that, Winston? It's all of the above. Everybody needs to up the game here when a tragedy like this happens. It's like a plane crash really, isn't it? We find out that one happened in Indonesia and then another one happens in Malaysia and then you say, well, what's going on here? And you find out that it was some computer program with the 737 Max 8 or whatever it was. And then suddenly the entire fleet is grounded worldwide and they realized some, whether it was design flaws or simulations or improper training or lack of oversight or whatever it was, all of it make it or just increased knowledge at the end of the day when I read about that. And I think the Washington Post had a good article called visualizing the collapse in today's newspaper. It's a tragedy. And I think anybody who lives in a high rise brightly is probably walking around their building right now looking for cracks and water damage. And I certainly know I was in a big edge and I noticed that the beam from this side to this side was sagging to the point where and water had been dripping in the middle. This is the middle of a seven story structure and water was on floor five, I think. And the beam had about that much gap between two beams where one was down and one was up and I thought, this is not good. And water damage coming there and it's an older building was probably about 1960 or so. You look at a ton of our buildings in Waikiki, our building inventory stock and it's probably dates from 60, 70, something like that. And you have to wonder, I know that there's a large shopping center here in Honolulu where the basement of the entire structure on part of it the columns are literally buttressed by wooden buttressing around these very thin concrete poles that have spackled and broken and chunks of concrete have fallen off. And it's very concerning, I won't park in that particular shopping center for that reason. And one little quake would be enough to bring it down. They're saying now in this one in Florida it could have been construction nearby where they were pounding the ground perhaps or something that was a straw that broke the camel's back is how they put it. I think that, so in my particular case, I called DPP here in Honolulu and I said, hey, you guys are probably inundated right now. And the fellow said, yes, we have been since last week of people calling in on their buildings and saying, I've got water damage. We have spackling issues. We have rebar that's poking through the concrete here and blah, blah, blah. And so it's about, it's all of it. It's the engineers going back. This is a 40-year-old building which you think that's pretty recent. We wouldn't expect a 40-year-old building to collapse like this and yet it did for whatever factors that they're gonna find out and maybe they won't find out all of them. Maybe it was too much landfill. Maybe it was not enough compression. It looks like about five or 10 minutes before the building collapsed, part of the parking garage collapsed first and then they think that's sort of weakened everything and pulled the rest of it down. They're gonna find out more as best as they can, like after any tragedy. But I think at the end of the day, we're gonna have stricter rules. We're gonna have better standards, higher standards. And I think a lot of these things, you know what, if you're living in an old building, it's just time to tear down the thing while you can tear it down and then build it up again and there's gonna be a massive cost to that. I don't know how we absorb that if maybe they sell some sort of future ownership in a building like that where if the people living there right now can't afford it but you buy an ownership interest in it or what. But there's engineers across the nation and architectural firms just got a massive amount of work and inspection companies and departments of planning and then inspection just got a massive task put before them because they have to go around all of these buildings now and think which ones are most egregious. And this one, it was up for its 40 year inspection and probably if you compared it with a lot of other older buildings may not have seen as bad as condition as other buildings. We don't know that but it's a tragedy all the way around and I hope that we do of course at the end of the day it is a political issue because that's where the laws are gonna be made to tighten things but at the engineers, the architects and developers will certainly and AOAOs, they're all gonna, you're gonna see if you live in a condo expect your special assessment fee to go way up just this is an FYI. Okay, good points. You raise really great points about energy and Stephanie about the infrastructure issue. Jay specifically mentioned it's not just condominiums our entire country, our roadways, our bridges, our highways and byways, I mean they're old and that's why President Biden's trying to do what he can to get a massive infrastructure bill, you know, pass. But it all comes down to dollars and cents. I recall my own situation years ago I was trying to rehab a building, a 50-unit condominium that was severely damaged by the Nesqually earthquake and fortunately I had engineers on site and I got tapped on the shoulder one day and said, you might wanna come down to the garage and take a look at this. And I said, what's up? He said, the engineer said, this column is two inches below the columns on the other side of the garage which means it's settled severely. And I said, okay, what do we do? He said, we wanna take some core samples out of the ground and drill some holes to the parking slab. And they did that immediately and they found out that there was huge voids. There was no soil underneath the slabs where all these cars were parked. And the bottom line is that erosion, soil erosion occurred over the years, over the decades. And I said, what's it gonna cost? This is a life safety issue. He said about $150,000. And I said, well, I have a lot of things planned in this condominium for that $150,000 but it doesn't matter. So we redirected the money immediately and they brought in cement trucks and pumped up all these voids with cement. And it was a lot of cement, wasn't just a little, it was most of the garage floor was void of soil and it was a miracle that the cars didn't break through and we had a catastrophic loss similar to surfside. I agree with you. I think we have a lot of those situations just waiting to be discovered, not only here in Honolulu, but across the country, particularly in environments where there's salt air and the elements and tidal actions. And as we know, we have, especially in Florida, they have flooding issues coming from the seaside. And that can't be good for a metal concrete building. So the question is, does the government step in? Because again, most residents are on a fixed income and they'll say, I don't have the money. So is the politics of the day to say, we're gonna have to come up with a special FEMA or a special small business association loans for individuals, so that they can do that. Now, private lenders, they come to the rescue, say we could fund this condominium with a loan. Those rates are pretty attractive right now because rates are very low, but is it feasible for everyone to be able to partake in that loan? So I'm gonna go to the UJ with a lot of time we have remaining and say, is that a feasible option that the government step in and say, here's a structural lending program, if you will, call it FHA, call it Small Business Administration, call it FEMA, that it's a zero percent interest rate or near zero percent and have a massive lending program for these kind of issues. Not a bad idea. The problem is with loans, such a pervasive problem with loans, you have to pay them back and Stephanie will tell you that people on fixed income have a problem. There was so many cases where people were asked for assessments in many tens of thousands. Even the sprinkler system in Marco Polo would have cost $40,000, $50,000 per unit. And the question was, who pays that? Or if you make a loan, who pays it back? It's not free money. Let me go to one something that seems to me to be a synergy of what we've been talking about. All very, very good points. Say buildings built here in Hawaii in 1960 at sec, that gee, that's 70, how many, 60 years old? That's old and they don't last forever. And a lot of them were leasehold rather than fee simple. So that was actually helpful in the sense that you come to the end of the lease, you better take stock of how your building is doing. Or in some cases, the lease required the owners to remove the building and leave a green field behind. And that wasn't a bad idea because they get old and they don't have a useful life forever. Some might be lucky, but others not. It cannot assume these kinds are gonna last forever. You cannot assume a bridge is gonna last forever. In the US, we think that our infrastructure can walk on water, literally walk on water. It's not true. That exceptionalism that we like to play with doesn't really work for infrastructure, you know? Until that, you know, we have the bridge in Italy, remember? It fell down a couple of years ago, boom. And we say, ah, that'll never happen here. Listen, boys and girls, it is gonna happen here. It will happen here. And I suggest to you that your solution, Tim, isn't really gonna come to Paris on a national level until the government changes. And until we have other tragedies, just like in Miami, just the same thing gonna happen again, and maybe again after that, before we do anything. Think of gun control. You know, you think Congress is gonna do anything about this? In the meantime, it's gonna be very tragic. Why? Because developers come and go, they do the project, they take the money, they leave. And they make campaign donations more important. And they corrupt the planning and permitting people. That's for sure. I mean, there's even indictments and trials here in Honolulu but that kind of thing right now. So, you know, if they made a faulty building back in 1960 or 65 or 70 here in Hawaii, they're gone. They're dead. Their companies are over. You can't find them. They went away. Who are you gonna sue? Maybe the insurance company went away too. The problem is these buildings do get old. Their useful lives are, you know, a defined period. They don't last forever. And some of them simply have to be demolished and rebuilt, which is not cheap. And I suggest to you that one of the things that think about what happened in Miami is this building, if all be known, should have been demolished and replaced. That it was not a question of maintenance. It was a question of complete failure. That's what it looks like happened. It completely failed. It wasn't a matter of pumping concrete into the voids. It was a matter of taking the whole thing down and everybody loses investment and then you rebuild it. And that's what we, this country is gonna have to do with a lot of infrastructure. So it's a lesson. I think your comments about the attitude that we're an exceptional country and how dare anything fail under our watch. I think that's a really spot on comment. And I think you've done a great job on trying to summarize all three of you done an excellent job of trying to pinpoint the politics of building safety, not just condo safety but building safety. And where we go from here is like you said, Jay, how many tragedies does it take before you have a nationwide approach to structural inspections and remediation if anything's discovered. And I think it's gonna take more tragedies and we just don't learn fast enough as an Americans because I think sometimes our attitudes are, we think we're an exceptional beyond reproach type of society and that's unfortunate. And again, these tragedies should not happen again. Last comments, Jay, yours. I've made my last comment. I would just, I would leave people with the notion that this is not limited to Miami, it's not limited to that property. We're gonna find a whole generation of buildings that are in the same situation as well as other infrastructure. We better wake up to the issue. All right, thank you, Jay. Stephanie, last comments, please. Hawaii brought, bring attention to it again. As I mentioned in my other comments that there are statutes in Hawaii that require, that govern how much money, how reserves are handled. I mean, there's some big concepts here that we're working hard on on these AOAOs. So we have reserves and how you're gonna keep those up and how you're gonna meet the law here whereas in other states like here in DC, they don't have that. So decisions aren't individual. But I think that Hawaii has stepped up and done something, and I don't know enough about all the others. But again, I laud Hawaii because it's just like with medical care for all and our harmony and these kinds of things, we sort of take a leadership role and do some sensible- Stephanie, remember sea level rise. Remember how so many condos are along the water. Yeah. True. And the rules about what has to happen with those, okay? Anyway, but I'm just saying that this is enormously expensive. I don't know what you would do to try and condemn a building. There aren't enough guidelines. I think you all suggested that the feds or the government or state governments start getting a little bit tighter on the code and the kinds of things that have to happen because even Howard Hughes, I mean, we're all looking at him slamming up. He's got nine, 10 buildings in progress. And a lot of them have had some really big problems from the get go. These are brand new, expensive buildings and people have had to cope with a lot of crazy stuff like their window popping out, like on the 33rd floor and there you are. So, and also no trash shoots. I mean, there's all just kinds of stuff that probably could be avoided if the state does step up a bit, but maybe they need to step up a little bit more. Nobody wants more regulation, but if we can't do it, and this is evidence that people aren't really not up to the task, so we need a little bit more. All right, Stephanie, thank you very much for your last thoughts. Winston, you get the last word and your last thoughts. I want more regulation. This is exactly what we need, but we need more regulations to specify to keep these failures. Do you need more regulations or do you need more boots on the ground to enforce existing regulation? And there's a differential there. Both, both. There's the, whatever it is that's out there has not been strict enough, whether it's a 40 year inspection. I'd love to have that here in Honolulu and we should probably make it every 10 years. And if I were an AOAO, I would be hiring an inspection inspector immediately so that I could find out what the extent of my problem is and then figure out who's gonna pay for it. We have massive infrastructure problems in this country. 40% of our dams in 2019 in Hawaii, 59 out of our 130 dams in the state are considered in poor or unsatisfactory condition. This is after the 2006 flood that killed so many people in Kauai when that dam failed. We haven't learned a lot here. So unless it's mandated and we say there is a penalty every single, whatever it is, you gotta make it hard. We have to have, this is what the government is for, is to regulate this sort of thing because if private industry and or associations won't do it on their own, they need to be forced to do it for the safety and welfare of our citizens. And so while in general, we wanna be free of too much government interference, this is exactly the point when we do need it. We need it in air safety. We need it in road safety. We need it in building safety. So in this, this is a case in point where more inspectors, but if I were an AOAO right now, I would be, I would have a third party. If I were a board of directors, I would absolutely have a professional two opinions coming in on my building and then figure out where to go from there. And it very well may be a national infrastructure bill where there's some mass loan fund or something, but whatever it is, it beats the alternative. All right, Winston, thank you. Great points. Everyone made great, excellent points. And we just hope there's no more surf side situations, but I'm afraid there will be. And so I wanna thank everyone today for showing up for What In America, Jay Fidel, Stephanie Dalton and Winston Welch. Unfortunately, we lost Cynthia Lee Sinclair somewhere along the way. She had some technical problems, but she'll be back next week, I hope. All right, so join us next week, Wednesday, 11 o'clock on Tim Appichell, your host Aloha.