Independent Owners at the Flamingo South Tower
- Call Bob:
- (516)458-4206
- [email protected]
We are lucky that the independent owners at the South Tower Tower include so many brilliant individuals. The independent owners include attorneys, financial professionals, and business professionals. Just as important, the independent owners include individuals with plain common sense, and a long memory of the recent and not so recent past.
Please review the Frequently Asked Questions below that these independent owners have prepared. After reviewing these questions, we think you will agree – you should not vote or sign anything given to you by AIR/AIMCO or their lawyers.
It’s hard to keep up because they keep changing their name, but all these names can be used to refer to the same legal entity. AIMCO is the corporation that originally developed the Flamingo property. A couple years ago AIMCO divided itself into two (2) parts and called the parts AIMCO and AIR. Today, it is unclear to what extent AIMCO and AIR remain intermingled, so we now refer to them as AIR/AIMCO. Flamingo South Acquisitions (FSA) is simply the legal entity that officially owns about 260 condominium units in the South Tower – it has sometimes been controlled/owned by AIMCO and at other times by AIR.
It’s all about control and money. Legally, AIR/AIMCO is a developer that is prohibited from controlling the South Tower or its Board of Directors. But now, the AIR/AIMCO lawyers want to use the independent owners to try and circumvent this legal restriction – thus, do not sign anything given to you by AIR/AIMCO or their lawyers. If AIR/AIMCO could regain control of the South Tower and its Board of Directors, they would have tremendous power. For example, AIR/AIMCO would be able to operate the South Tower as an apartment rental building instead of a condominium, they would make all financial decisions for the independent owners, they would decide what special assessments independent owners should pay, and they would be on the path to terminating the South Tower condominium and converting it into an apartment complex. Remember, do not sign anything that is given to you by AIR/AIMCO or their lawyers.
Yes. AIR/AIMCO controlled the South Tower and its Board of Directors for almost a decade that ended in late 2021, when an arbitrator removed them from control, ruling that AIR/AIMCO was a developer and prohibited from controlling the South Tower Condo Association or its Board of Directors. If you are an independent owner that has suffered a special assessment, or experienced a lack of maintenance at the South Tower, all of this was caused by a previous AIR/AIMCO-Board that controlled the South Tower for almost a decade.
Not often, and in some years little more than the annual meeting. Thus, the independent owners had little to no say in how the South Tower was operated. Of course, any future AIR/AIMCO-Board would operate the same. As they say, a tiger does not change its stripes!
Simply put, AIR/AIMCO went too far when they previously controlled the Board of Directors and the South Tower. In 2019, the AIR/AIMCO parent company levied a $7.7 million assessment against the independent owners, and the AIR/AIMCO-Board at the South Tower paid most of it, even though several attorneys were of the opinion that the independent owners did not owe the money, and an audit revealed the amount was inflated. Then, in 2021, the AIR/AIMCO-Board cancelled the annual election, preventing the independent owners from voting, thereby allowing the AIR/AIMCO-board members to stay in power indefinitely. Soon after cancelling the election, the AIR/AIMCO-Board moved to approve the construction of a new AIR/AIMCO apartment tower on the Flamingo property, which would have resulted in a special assessment and increased monthly costs for all independent owners. AIR/AIMCO even sued the South Tower to try and force it to consent to the new AIR/AIMCO construction. Luckily, when the City of Miami Beach learned how AIR/AIMCO was treating the South Tower, they denied the AIR/AIMCO application to build the new tower, at the time referring to AIR/AIMCO as a “bad corporate citizen.” In the end, the independent owners at the South Tower were forced to spend tens of thousands of dollars to hire a law firm and file an arbitration to recall and replace the AIR/AIMCO-board members with independent owner board members. That arbitration also resulted in the legal ruling that AIR/AIMCO is now prohibited from controlling the South Tower Condo Association or its Board of Directors.
Yes, they did. In 2021, the AIR/AIMCO-Board committed the ultimate sin of cancelling the annual election, thereby preventing the independent owners from voting, which allowed the AIR/AIMCO-Board to stay in power. Then, immediately after cancelling the election, the AIR/AIMCO-Board moved to approve the construction of a new AIR/AIMCO apartment tower on the Flamingo property, which would have resulted in a special assessment and increased monthly costs on all independent owners. To stop this improper behavior by the AIR/AIMCO-Board, the independent owners at the South Tower were forced to spend thousands of dollars to hire a law firm and recall and replace the AIR/AIMCO-board members with the current independent owner board members.
Yes, absolutely. The prior AIR/AIMCO-Board spent 3 years trying to install a new roof but wasted the entire budget on only 1/3 of the roof (even this portion of the roof was not entirely completed), while ignoring the remaining 2/3 of the roof. The prior AIR/AIMCO-Board also failed to repair the HVAC system and replace the Fire Safety System which is at the end of its service life (finding replacement parts can take months, as they can only be found on Ebay.com). Although there is too much to discuss here, there are several other systems in the South Tower that the prior AIR/AIMCO-Board neglected.
Yes, Bob and Cliff have a comprehensive plan to correct the neglect caused by the prior AIR/AIMCO-Board. Not only has repair of the roof already begun but our insurance company has reviewed and approved the plan (i.e., our insurance company is happy). As for all other neglected matters, Bob and Cliff have put together a comprehensive plan and timeline to correct all issues by the end of 2024.
Yes, it does. During the previous decade long control of the South Tower by AIR/AIMCO, all South Tower condominium units were undervalued by at least 30-40% compared to surrounding buildings. However, in the 2 years since AIR/AIMCO lost control over the South Tower and its Board, South Tower property values have increased by about 50%.
We encourage you to talk with your local real estate agent. When AIR/AIMCO controlled the South Tower, real estate agents told their clients NOT to buy at the South Tower, which of course helps to reduce property values at the South Tower.
Yes, probably. AIR/AIMCO already owns 260 condominium units in the South Tower and is actively buying more. If property values are reduced, AIR/AIMCO can continue to buy condominium units at lower prices.
Yes, but it all depends on AIR/AIMCO. First, AIR/AIMCO needs to stop suing the South Tower. In the last two years, AIR/AIMCO has sued the South Tower three (3) times and all these lawsuits have been dismissed. Luckily, the South Tower has good insurance and an excellent legal team. Second, AIR/AIMCO has requested mediation in the Tax Arbitration, so maybe Bob and Cliff can resolve this case soon provided AIR/AIMCO is willing to be reasonable. Finally, the remaining two lawsuits for the improper $5.3 million assessment and an accounting of our parking revenue could also be resolved, but AIR/AIMCO must be reasonable and willing to work with the South Tower and its independent owners. In sum, resolution depends on AIR/AIMCO.
Not only does this amendment put AIR/AIMCO on the path to complete control of the South Tower and its Board of Directors, but it eliminates many of the protections for independent unit owners. For example, it not only renders the votes of the independent owners almost worthless, but it makes it easier for a developer like AIR/AIMCO to terminate the South Tower condominium and force independent unit owners to sell their units at a reduced rate.
As always, the devil is in the details, certainly not in the AIR/AIMCO marketing campaign. First, AIR/AIMCO is given complete and permanent control of the South Tower and its Board of Directors. Second, the AIR/AIMCO-Board grants AIR/AIMCO a multi-million-dollar management contract, which lasts forever, which the independent owners will have to pay for. Thus, independent unit owners lose control of decisions plus financial control over their homes and investments. Finally, AIR/AIMCO states that they will control certain “Controllable Costs”, but not all costs, and certainly not insurance costs. But again, the details are what matter. AIR/AIMCO provides no guarantee that they can or will control costs, and if they cannot, they will simply pay a certain amount to the South Tower Association each year for 5 years. In other words, it appears that AIR/AIMCO is simply trying to purchase control of the South Tower and its Board of Directors, stretching the purchase price over 5 years, and financing the purchase with the money paid to them by the independent owners under the management contract.
After 5 years, AIR/AIMCO has no further financial obligation to the independent unit owners. Thus, AIR/AIMCO will be able to do whatever they want. However, AIR/AIMCO retains control of the South Tower and its Board of Directors, forever. AIR/AIMCO also retains its multi-million-dollar management contract with the South Tower, forever.
Absolutely not. AIR/AIMCO never pays any money to any unit owners.
Absolutely. AIR/AIMCO grants itself a multi-million-dollar management contract, which lasts forever, that the independent owners must pay for.
AIR/AIMCO would fire the current First Service management team and, most likely, the AIR/AIMCO team in the Center Tower would take over. If independent owners needed anything, they would have to travel to the Center Tower and wait in line with all the AIR/AIMCO apartment renters. Furthermore, since this AIR/AIMCO management team could never be replaced, independent owners should not expect anything but poor service.
Yes, they do. If AIR/AIMCO were to gain control of the South Tower and its Board of Directors, they would gain complete control of all decisions, and all financial control, over the homes and investments of all independent unit owners.
Absolutely not. AIR/AIMCO absolutely does not guarantee against an increase in your monthly maintenance. AIR/AIMCO also does not guarantee against increases in insurance costs. AIR/AIMCO also does NOT guarantee against special assessments in the future. Rather, the AIR/AIMCO-Board would decide exactly what assessments independent owners pay including: (1) special assessments decided and levied by the new AIR/AIMCO-Board, and (2) special assessments levied by the AIR/AIMCO parent company pursuant to the REA (the contract that governs the relationship between the South Tower and AIR/AIMCO).
Yes, almost too many to discuss. First, an AIR/AIMCO-Board awards AIR/AIMCO a multi-million-dollar management contract. Second, an AIR/AIMCO-Boad would be able to rubber-stamp-approve all special assessments levied on independent owners by the AIR/AIMCO-parent company under the REA. Third, an AIR/AIMCO-Board would have no incentive to enforce the provisions of the REA against AIR/AIMCO, the contract that governs the relationship between the South Tower and the AIR/AIMCO. Fourth, an AIR/AIMCO-Board would have the power to excuse and forgive any damage caused by tenants of AIR/AIMCO owned units (e.g., the $500,000 in elevator damage caused by one AIR/AIMCO tenant). And yes, there are other conflicts, but we think that is too many already.
No, not really. While the terms of the management contract awarded to AIR/AIMCO are supposedly negotiated by a committee of non-AIR/AIMCO owners, the AIR/AIMCO-Board not only selects the owners on the committee but is able to replace the owners at will.
Not unless an owner is independently wealthy and has years of time. First, to enforce our condo declaration and/or bylaws, independent owners would have to sue the AIR/AIMCO-Board, but the AIR/AIMCO-Board would be able to keep the owner in court for years, easily costing the owner hundreds of thousands of dollars. Second, if AIR/AIMCO were to breach the terms of the REA, an AIR/AIMCO-Board is unlikely to enforce the terms of the REA against the AIR/AIMCO parent. And while it is unclear of independent owners could sue the AIR/AIMCO parent in order to enforce the REA, litigation with a multi-billion-dollar corporation such as AIR/AIMCO would subject owners to years of litigation and legal fees that could easily run into the hundreds of thousands of dollars (plus the risk of losing and having to pay the legal fees of AIR/AIMCO).
Absolutely. Under our current condominium declaration, the South Tower condominium can only be terminated by the agreement and vote of all (100%) owners. The AIR/AIMCO amendment not only reduces this threshold immediately but makes it easier for AIR/AIMCO to reduce it even further in the future.
Absolutely not. When AIR/AIMCO previously controlled the South Tower and its Board of Directors, they neglected many maintenance issues. We should expect nothing different from AIR/AIMCO in the future. As they say, a tiger does not change its stripes!
We don’t know, but if AIR/AIMCO did renovate, independent unit owners would pay for it, most likely through a special assessment. There is no free lunch. Worse, if AIR/AIMCO were to control the South Tower, they would have the power to ignore the independent owners, and instead decide exactly what renovations would be done and exactly what special assessments the independent owners must pay.
Yes. Two years ago, AIR/AIMCO attempted to construct a new apartment tower on the Flamingo property, which would have subjected the independent owners to a special assessment (according to their attorney Michael Larkin) plus increase owners’ monthly maintenance costs (under the REA). This is an important project for AIR/AIMCO and is highlighted on many of their investor materials and/or SEC filings. If AIR/AIMCO were to regain control of the South Tower and its Board of Directors, they would have the power to rubber-stamp-approve this new apartment tower and force the independent owners to pay for it. If the independent owners disagreed, they would have little to no recourse.
The City of Miami Beach decided not to approve this new apartment tower when it learned that AIR/AIMCO was suing the South Tower to force it to consent to this project, the City at the time referring to AIR/AIMCO as a “bad corporate citizen.” In addition to suing the South Tower, the legal team for AIR/AIMCO including the current AIR/AIMCO director (and attorney) Ken Diamond, also threatened to sue several owners and board members personally, if they refused to consent to this new apartment tower. Shame on you AIR/AIMCO.
If AIR/AIMCO gained control of the South Tower and its Board of Directors, they would have the power to mass-renovate their 260 units at one time, thereby turning the South Tower into a construction, the accompanying construction noise making the units of independents owners unlivable and/or unrentable. This is what happened in the Center Tower when AIR/AIMCO decided to renovate. When AIR/AIMCO wanted to renovate the North Tower, they simply kicked all of their tenants out.
If AIR/AIMCO gained control of the South Tower and its Board of Directors, they would have the power to operate the South Tower as a commercial apartment rental building rather than as the high-end condominium that most independent owners want and are looking for.
If AIR/AIMCO were to gain control of the South Tower and its Board of Directors, they would have the power to ignore maintenance and repairs to the South Tower, such as the roof, HVAC, fire safety system and many others, thereby enabling AIR/AIMCO to reduce costs and thus increase their profits.
Previous board members have informed us independent owners that AIR/AIMCO wanted the South Tower to transfer at least part of the South Tower Marina to AIR/AIMCO, without any compensation to the South Tower. Apparently, AIR/AIMCO expected this transfer to happen, since they installed “Water Sports Rental” signs near the Center/North Towers and purchased actual water sports equipment. If AIR/AIMCO were to control the South Tower or its Board of Directors, they would have the power to complete such a transfer of our Marina to the detriment of all independent unit owners.
Absolutely. There is nothing unusual about a real estate developer experiencing financial difficulty or even bankruptcy, especially in a rising interest rate environment. If AIR/AIMCO were to experience financial difficulties, AIR/AIMCO could seek to cut back on maintenance and other necessary spending at the South Tower, especially if this would reduce the costs associated with their owning 260 or more units.
Absolutely. There are too many risks to list but take one example. Currently, if a unit-owner stops paying his or her monthly maintenance, which does sometime happen, the Board of Directors, if necessary, can foreclose on the unit and sell the unit in the marketplace. But if a non-paying unit owner were also to control the Board of Directors, there would be little incentive for the Board of Directors to foreclose on his own delinquent units, to the detriment of all independent owners at the South Tower.
Rising interest rates are always a risk for real estate developers, and we are in a rising interest rate environment. If rising interest rates pose a problem for AIR/AIMCO, we independent owners don’t want AIR/AIMCO at the same time controlling the South Tower or its Board of Directors.
©2023. All Rights Reserved.