Big Condo Fee Hits Boston Residents

Towering assessments leave waterfront residents divided

By Thomas C. Palmer Jr., Globe Staff | November 1, 2007

It's the condo owners' nightmare: The building's heating and cooling system needs an overhaul, so everybody must pay a huge one-time assessment.

But the 500-plus owners at Harbor Towers on Boston's waterfront are facing the mother of all bills: from $70,000 to over $400,000. And they're due by the end of this month. In full.

The owners are reeling from the news, delivered in August, that collectively they owe $75.6 million for replacing much of the buildings' main systems; some can't afford the assessment and are selling their units.

"I'm just going to cut my losses and get out," said Renee Greene, a market research broker who lives on the seventh floor of one of the two towers and was hit with an assessment of about $95,000 for her 880-square-foot unit.

The whopping assessments have bitterly divided residents into two camps: those who have faith in the condo's trustees and the experts hired to examine the systems' conditions, and those who do not. Dissenters question the need for the work, while supporters contend that additional delays will only make an expensive project more costly.

Designed by the architectural firm of I.M. Pei and opened in 1971, the imposing towers with 624 units on the waterfront have been a premiere address for downtown dwellers, with the best views of the city and harbor, bar none. Over the decades, however, the towers have had minimal renovation. Now the bill for that has come due, with the electrical, ventilation, and heating and air-conditioning systems in need of repair or replacement. Since a 2002 report by R.G. Vanderweil Engineers LLP that documented corrosion on heating and cooling water pipes, the buildings' systems have been studied by multiple engineering firms and consultants.

About 40 percent of the owners signed a petition asking that collection of the assessments be stopped until more analysis is done. Francesco Pompei, the most recent leader of the opposition, a penthouse owner with MIT and Harvard engineering degrees, filed suit Tuesday charging the trustees with "breach of fiduciary duty" and asking the court to halt renovation work.

Though Pompei hasn't moved into his top-floor unit yet, he insists that the problems with the existing pipes and other system components are exaggerated. His assessment is $360,574. The assessments are roughly 20 percent of the value of most units.

"The trustees have never asked the critical question of the engineers - take out the samples and look at them," said Pompei.

The long-running dispute resulted in a contentious election a year ago, after the old board of trustees was unable to generate sufficient support among unit owners to go forward with the costly repairs. Half of the 10-member board was replaced with new faces. The new board has already collected about $30 million of the $75.6 million from owners, and signed a contract with the construction firm Walsh Bros. in October. Repair work is underway and scheduled to end in mid-2009.

"The current board literally went through the project item by item and scrubbed it and said, 'Do we need to do this?' " said Susanne Lavoie, a trustee of Tower 1 reelected last year. A former skeptic, she said, "They concluded basically that the work had to be done."

She said replacement was not done sooner because it was so expensive, and maintenance work successfully extended the life of mechanical systems. "We realized that, reviewing all the things that needed to be done, it was much more cost-effective to do it all at once than piecemeal."

The trustees this month issued a 15-page document with 53 detailed questions and answers about the project, including, "Why are we replacing the fan coils?" A companion 125-page document to be sent out soon contains details on the scope and cost of the project, and the resumes and qualifications of all the professionals involved.

"The new board believes in maximum transparency and has been working very hard on communications," said Bob Gordon, a trustee of Tower 2 and one of the five who were reelected. He supports the renovations.

The delay added significantly to the cost. "We came up with an estimate between $62 [million] and $65 million," said Joe Baerlein, head of a prominent Boston public relations firm, who voluntarily left the board a year ago after it struggled unsuccessfully to get renovations going. "Each day was real money and cost."

In his lawsuit, Pompei, his wife, Marybeth, and two other residents criticized the trustees for choosing "the 'nuclear option' of wholesale replacement of the HVAC system," rather than more modest repairs that Pompei said might cost one-tenth as much.

Pompei and the petitioners want three sets of further tests done before any work proceeds. Engineers said those tests have either been done or are impossible to do without risking a catastrophic failure of the old pipes.

Two consultants working for the trustees say Pompei and his supporters don't know what they are talking about. "Frank wanted to stop the corrosion, but his scheme doesn't work," said Bob W. Stewart, senior mechanical engineer for Sebesta Blomberg & Associates Inc., Harbor Towers' engineering firm.

In the question-and-answer document distributed to residents, the trustees summarize what they call "Pompei Scheme 1," as well as two others , and conclude they're all unworkable. They cite the "ramifications on Harbor Towers' insurance coverage if a decision were made not to correct a known problem."

Said Baerlein, "The owners have put their faith in the trustees, and Pompei has wanted to crown himself king of Harbor Towers."

Some residents want the dissenters' latest set of questions answered, and then to be done with the whole thing. "I believe the people will feel better psychologically if Dr. Pompei's concept is looked into," said Earl Stone, a retired dentist. "Although I don't think it will be worth anything."

The trustees say they know of only a half-dozen owners who may be unable to pay the assessment, and they have engaged a financial adviser to assist those residents. But, said Marybeth Pompei, "Far more people are at risk of losing their homes than we thought at the beginning. People are embarrassed to admit it."
Boston Globe