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Madison House resident fears home is 'just like Surfside'

Reserve funds a key issue for condo towers
A 19-story apartment tower, beige in color, checkered with windows and balconies, sits behind a line of trees and in front of a partly cloudy sky.
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Posted at 8:57 AM, Jul 16, 2021
and last updated 2021-07-16 19:18:10-04

CINCINNATI — The collapse of a condominium tower in Surfside, Florida, has sparked fears and worry in high-rise residential buildings nationwide.

And that includes Cincinnati, where Edgar Ragouzis has waged a five-year crusade against leaks, cracks and crumbling concrete at Madison House, a 19-story condo community in Hyde Park.

Ragouzis sees troubling similarities between his own battles with the Madison House Condominium Owners Association and news coverage of events that preceded the collapse of Champlain Towers.

“I’ve been here a long time,” Ragouzis said. “There’s people that I care about here. Even people I don’t care about. If I know something, I should try to make it right.”

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Edward Ragouzis takes the WCPO 9 I-Team on a tour of the Madison House garage

Ragouzis is the founder and president of River Corp., a coupon publisher. He’ll be the first to tell you that he’s not qualified to judge whether Madison House is structurally impaired. But he is convinced his condo board isn’t doing enough to make sure the 175-unit tower won’t fall victim to structural damage.

Ragouzis is raising issues worth exploring and relevant to every condo owner, said Robert Nordlund, CEO of Association Reserves, a California-based consulting firm that helps condominium associations plan for long-term maintenance and repairs by establishing reserve funds as part of their annual budget.

“About three in 10 associations have a weak reserve fund,” Nordlund said. “So, I don’t care if the person is crazy or talks too loud or forgets to put their garbage down the trash chute in the right way, if they’re the one that has their finger in the dyke or is sounding the alarm, they’re the important one.”

Ragouzis sounded the alarm by sharing condo association documents with the WCPO 9 I-Team and taking us inside the Madison House garage, where our camera documented exposed rebar, water-damaged concrete and rusty window frames flaking away from shattered panes.

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Exposed rebar in Madison House garage

“I’m concerned about this cavernous area where they park the cars and the tunnel that connects to the building,” Ragouzis said. “If it were to collapse, at least that part of the building would come down.”

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Rain water pools on garage floor at Madison House.

Ragouzis said he got chills when he saw pre-collapse pictures of a water-damaged garage and the pool deck that experts identified as a factor in the Florida collapse. Those pictures reminded him of Madison House.

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Water caused paint to peel and concrete to crack in Madison House Garage

“When it rains all day, this is, this is a flood,” Ragouzis said, as water swept through a 20-foot crack behind him. “We have other things here that are different than Surfside. We have the four-season weather, so the hydrostatic pressure accentuated by the freezing and the thawing. We also have a hill behind us. I think they have a beach, but the hill scares me.”

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Madison House garage is open to valet service only.

The I-Team tried to reach Madison House through its management office, its attorneys and Towne Properties LLC, which holds the management contract on the building. We received no responses.

Cincinnati Building Code records show no violations related to concrete problems at 2324 Madison Road in the last five years. A 2016 order for an inspection of the building’s facade also led to no violations.

Madison House is trying to evict Ragouzis through an 18-month-old foreclosure and breach of contract lawsuit that alleged Ragouzis failed to pay more than $20,000 in condo fees. Although he lost a summary judgment ruling in May, Ragouzis continues to dispute the fees and pursue a counterclaim against Madison House. It alleges the building’s managers failed to “allocate reserve funding for the execution of regular inspections, repairs and maintenance of all exposed structural concrete.”

Before their dispute landed in court last January, Ragouzis and the condo association battled at board meetings, where he argued the building was responsible for leaks in his balcony. The condo association argued such leaks were the owner’s responsibility.

Steve Oyster, president of Highlift Equipment Ltd., witnessed many of those battles when he served as a board member and treasurer for the condo association. He said many of the building’s leaks were caused by owners who enclosed their balconies, installed new windows or drilled holes in their balcony floors to prevent the pooling of water.

He also said a thorough analysis of the problem was hampered by a lack of transparency between board members who supported Towne Properties’ management of the building and those who didn’t.

“Many owners felt they weren’t getting the full story," Oyster said. "It was hard to get information. That leads to speculation and innuendo and all that... The financial information that was being released was incomplete, at times difficult to obtain. I was afraid I was going to have to take legal action to get certain information and I’m on the board.”

Oyster said he resigned from the board and sold his Madison House condo in 2018 because he was tired of the infighting. On his way out the door, he filed a 12-page critique of the organization that included this line about the building’s reserve funding:

“The annual CPA opinion letter has consistently identified the Omission of Required Supplementary Information about Future Major Repairs and Replacements. This critical information relates to projected future expenditures from the reserve account, a major portion of annual expenses.”

Three years later, Ragouzis is still accusing the Madison House board of failing to budget for major repairs. He pointed to a “Reserve Fund Study,” commissioned in 2015 by the Madison House board, because it included less than $9,000 in estimated expenses for garage repairs over 10 years and nothing for concrete facade damage due to balcony leaks.

“If 65% of the building is exposed concrete, then that’s what I would call a very, very significant element,” Ragouzis said. “It hasn’t been (included in reserves) for many years, and as a result, it hasn’t been tended to.”

The I-Team shared the document with Nordlund, whose company has completed more than 40,000 reserve fund studies since 1986.

Nordland said reserve fund studies are planning documents, not engineering reports. They’re used to budget forecasted expenses over time to avoid the need for one-time assessments. He said the Madison House study does a good job of that by allocating between 10% and 40% of its annual spending to reserves.

“They are contributing 25% of their total budget towards reserves,” Nordlund said. “That is a good number.”

But Nordlund said the report lacks another key detail.

“Reserve fund strength is measured by a term called ‘percent funded,'" Nordlund said. "It’s the balance between the reserve cash on hand and the reserve needs of the building. What we find across the country is three out of 10 associations have a reserve fund that is in the zero to 30% funded range, meaning their cash in reserve on deposit is zero to 30% of the current deterioration at the building.”

To determine the percent-funded estimate for Madison House, Nordlund said Ragouzis should look for “a recent building integrity report” or “a structural integrity or infrastructure report by an architect or engineer.” Ragouzis and Oyster both said they’re not aware of any such report undertaken by the Madison House board.

“Where there’s smoke there’s fire,” Oyster said. “They need to bite the bullet, do the study, find out what are the issues.”

Ragouzis aims to work for change while fearing the worst.

“If the garage were to slide down the hill, it’s possible that because these slabs for the patios are weak, that they would go like dominoes, just like Surfside," he said.