Jason Chudnofsky, board president of the Coronado, stands amid exterior repair work underway at the 336-unit Highland Beach condo. Tim Stepien/The Coastal Star
Dropped by insurance carrier, condo finds new one covers fraction of value
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By Rich Pollack
The letters from the insurance company in the middle of last year brought the bad news to board members at the Coronado at Highland Beach.
First the insurance company let the board know that it would raise the annual property insurance premium for the 336-unit condo — with two towers on the west side of State Road A1A and a beach club on the east side—from $1.5 million to $1.9 million.
Then the insurance company, concerned about the condition of the roofs, decided to drop the Coronado completely, leaving the board with just 30 days to get coverage.
“We couldn’t even get insurance from Citizens,” board President Jason Chudnofsky said of the state’s insurer of last resort. “We shopped and we shopped until we found a company.”
That new company, however, offered only policies that were less than optimal.
The annual premium for the buildings, which were built in 1983, is now just shy of $2.8 million and it provides only 35% coverage, meaning the insurance company will pay a maximum of $38.5 million even though the buildings are valued at $110 million. Chudnofsky said the Coronado is hoping to find a company that will provide 100% coverage as soon as possible.
Insurance now represents close to half of the board’s annual operational budget — 42% — up from 24% in 2002.
To cover the rising insurance rate, the board of directors raised the quarterly maintenance fee from $4,150 to $5,300, or from $16,600 to $21,200 a year.
For residents of the Coronado, some who have been in the 40-year-old community for decades, the increased insurance premium is just one factor requiring them to reach deeper into their pockets.
The price tag of state-mandated repairs and the need to bolster reserves translate into more extra costs. Coronado residents are now being hit with a one-time $40,000 per unit assessment, to be paid over eight years, along with the likelihood that the maintenance fee will continue increasing in coming years.
As part of its efforts to meet state and town recertification requirements, the Coronado board hired an engineering firm, which detailed the work that needed to be done.
Replacing the roof was one of the big expenses, as was concrete restoration. Also on the agenda was rewiring and making improvements to common areas on each floor and lobbies.
Those improvements, Chudnofsky said, included projects that would have eventually needed to be done, but the recertification requirement speeded up the process.
“We would have done some of them, but probably not at the same time,” he said.
The price tag for all the repairs came to $12 million. The board then implemented the $40,000-per-unit assessment, payable over the terms of the eight years to cover the loan.
That assessment, Chudnofsky says, is manageable for most of the unit owners and reasonable in light of assessments that other condos along the beach are making.
“It all comes down to, we did a pretty good job,” he said.
While some condominium communities have gone without reserves, the Coronado has been putting money aside over the years and has several million dollars in savings.
Still, with a reserve study mandated by the state by the end of the year, the board might need to require a small increase in quarterly maintenance to ensure enough funds are available to cover major costs.
One of the challenges for the board at the Coronado, where units sell in the $900,000 to $1 million-plus range, is the demand for improved amenities and services that comes with a younger and perhaps more affluent resident base.
“There is an appetite to raise the level of improvements,” Chudnofsky said. “New people want a higher lifestyle. They want a lobby area that will knock people’s socks off.”
They also want to convert tennis courts to pickleball courts at a cost of about $50,000. The cost of such improvements, Chudnofsky says, will have to come from the residents and be shared by all at a time when unit owners are dealing with charges they can’t avoid.
“These are expenses that will come out of our pockets,” he said.
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