Having your cake & eating it too
In the previous page, I suggest that monthly condo fees that are set
low will take a terrible toll on a condo corporation over the long run.
However in a Toronto Star article—that seems to me to be little
more than an info-ad for a website—the writers of Condos.ca claim that
condo fees are out of whack and this is caused by:
• the high cost of purchasing & maintaining a parking spot.
• expensive amenities.
• 24 hour concierge/security.
• property management companies.
To back up these claims, the President of Toy Factory Lofts states that
a smart business-minded board can cut monthly fees if they have the
courage to make difficult decisions.
No. There are dozens, more likely hundreds, of condo corporations in the
GTA that have trimmed the monthly common element fees down to the bone
and kept them low for years, decades even.
How do they
It's pretty easy actually. The condos I am talking about:
• close amenities.
• push major repairs and replacements out far into the future.
• use caulking, duct tape and temporary repairs to hold everything
• underfund the Reserves.
• cut back on security guards, cleaning services and regular
• hire the cheapest contractors they can find.
In the early years the deterioration is mainly invisible to
the residents and any potential buyers.
Keep in mind the "sophisticated buyer" is a pile of
marketing bull. Most condo buyers don't have a clue what to look for when
a condo so they can't see the building defects, they can't read the
status certificate package and they never ask to read the reserve fund
studies. They don't know that CondoMadness exists and even if they did,
they wouldn't put in the required effort to read it.
Very slowly—at first—the building starts deteriorating. Then property
values start declining and
eventually the city issues work orders. Finally the corporation may
into court-appointed administration.
A link in the Toronto Star article takes you to a page at Condos.ca
that explains Stats, Facts and Myths about maintenance fees.
When you scroll down to 01 Myth: Fees Only Go Up, you will see:
This is a link to thefeefighters.com.
The Fee Fighters offers to audit condominium budgets. They use The Toy
Factory Lofts as a case study. It also gives an address, an
e-mail form and a phone number for general inquiries.
(This website is no longer active.)
Here is the Toronto Star article.
Maintenance fees take a toll on Toronto condo owners
Monthly charges seen as growing problem for industry.
By: Susan Pigg Business Reporter
Friday 13 Feb 2015
Gagliano of Toy Factory Lofts: condo boards need 'the collective
courage required to make difficult decisions.'
Four years ago, Craig Gagliano did something virtually unheard of in
Toronto’s condo industry.
The resident of the west-end Toy Factory Lofts and president of its
condo board cut monthly maintenance fees for each of the building’s 213
units — by a stunning 30 per cent.
While the price of living the carefree condo life continues to climb in
buildings across the GTA — often at rates well above inflation — the
well-kept Toy Factory Lofts still boast some of the lowest monthly
maintenance fees in the city.
They now run just 31 cents per square foot for units without parking or
a locker, almost half the city-wide average of 59 cents per square foot
for similar units, according to new building-by-building analysis of
Toronto condos done by the innovative site Condos.ca.
That adds up to about $306 per month, compared to the city-wide average
of $530 per month, for a 900-square-foot unit.
The low fees amount to more than just hundreds of dollars in savings
per month for owners of the sought-after historic former factory in
Liberty Village. They can have a major impact on a condo’s resale price.
“Our rate of property value increase has outpaced similar buildings and
I believe it’s by virtue of the attractiveness of the low maintenance
fees,” says Gagliano.
Condos.ca, which has already taken a hard look at price appreciation in
various buildings, is now pulling back the veil on maintenance fees
with a new online feature. It will allow buyers to get a sense of
maintenance fees — and how much they’ve climbed — in almost 700
buildings, as well as townhouse projects, across Toronto. What it can’t
really tell you is the reasons behind the costs.
The site’s creators — condo specialist Carl Langschmidt, his
data-crunching brother Ahren, and realtor-partner Andrew Harrild — are
still collecting and analyzing fee details on an additional 900
“One of the first things every buyer asks about is maintenance fees.
They are the thing that is hurting the condo industry the most,” says
“People who buy homes don’t have monthly (costs) nearly as high as what
some of these condos are charging. Granted, you don’t have to shovel
your driveway or take your garbage out, so there is a service component
in a condo that needs to be reflected. But condo fees are largely out
They are also confusing, seemingly uncontrollable and the
second-biggest cost of condo ownership, next to a mortgage, which is
why the Condos.ca team has been amassing data for well over a year now
from MLS and other real estate sites.
One of their most shocking discoveries was the high costs of a parking
spot, on top of the $35,000 and up it costs at time of purchase.
Buried in monthly fees are parking charges averaging $43 a month but as
high as $148, the team found.
“That makes it cheaper to just rent parking in some cases,” says
Not surprisingly, luxury condos and hotel-condos like the Four Seasons
Private Residences are in the Top Five list of highest maintenance fees
at well over $1 per square foot.
But there are a number of other standouts, like The Indigo in the St. Lawrence Market area, where
fees are now 90 cents per square foot. Units sell, on average, for $229
less per square foot than others in the area, according to condo.ca’s
Toy Factory suites have seen an almost 21 per cent price appreciation
between 2009 and 2014. Indigo units dropped an average of five per
cent, according to Condos.ca data.
Indigo property manager Joanne Selvagio was highly critical of the
“Every building is different and unique and has differentials in costs
based on its age and infrastructure. Toy Factory is an eight-storey
building with 213 units. We have 104 units and there are increased
costs to running an elevator 27 floors as opposed to eight floors.
“You can’t compare a seven-year-old building to a 25-year-old building.
It’s apples to oranges.”
But Condos.ca has taken some of those factors into account, insists
Langschmidt. In fact, one of the biggest surprises in all the data
crunching was that old buildings don’t necessarily have higher fees.
Of condo buildings built or converted between 1975 and 1980 (Indigo was
built in 1993), fees averaged 57 cents a square foot, says Langschmidt.
He singled out the 121-unit Candy Factory Lofts on Queen St. W.,
converted in 2000, where fees average 39 cents per square foot.
Buildings with a pool, gym and concierge tend to pay a 31 per cent
premium in fees, Langsmidt says. He also cites property management
companies for escalating costs: The team is now compiling a list of
companies that will show the average fees in buildings they manage.
Developers are also aware of growing concerns about fees and are
quietly questioning the need for basketball courts, movie rooms, wine
storage and libraries that may seldom get used.
“There’s a rethinking going on that less is okay,” says Paul Golini,
executive vice president of Empire Communities. “People are telling us,
‘We’re here for the neighbourhood.’ ”
Tasso Eracles, chairman of FirstService Residential, which manages
about 300 condo buildings, says cutting costs is much harder than it
appears, especially without compromising the state of the building.
Heat, hydro and water can account for 40 to 50 per cent of costs and
are climbing 8 to 10 per cent per year. (Post-2010 buildings have
meters in each unit, giving owners more control over energy costs.)
Concierge, cleaning and other services can be another 25 per cent.
Provincial requirements, like an adequate reserve fund to cover major
maintenance and repairs, are also a major fixed cost, says Eracles, and
those costs could increase further as the province revamps the
But Gagliano strongly disagrees.
What’s needed, he stresses, are more condo boards with “the collective
courage required to make difficult decisions” like reducing staff.
(Selvagio points out that Indigo has 24-hour security, at owners’
Gagliano went line-by-line through The Toy Factory’s reserve fund,
along with engineers who have to give it final approval, questioning
every assumption of future costs, some far beyond a reasonable rate of
It’s not a question of bleeding reserve funds, but “bringing the
engineer onside with a new view of austerity, as to how to meet the new
limits prescribed by law (in the reserve fund) and protect the
interests of the owners.”
The Toy Factory board stepped up preventative maintenance aimed at
prolonging the expected lifespan of major components of the
seven-year-old conversion. Hallway heating was reduced by four degrees
in winter and air conditioning turned down four degrees in summer.
Some residents complained, but the building’s budget for gas, water and
hydro was $352,000 in 2010, Gagliano says. Last year, it was $261,000.
The Toy Factory’s property manager gets a 10 per cent bonus for viable
There’s growing concern in the condo sector that board members need
training to handle budgets and other condo responsibilities, which is
being considered in the Condo Act review.
impose the odd special assessment
Some condo residents, like Gagliano, have come to believe it’s better
for buildings to impose the odd special assessment — a one-time fee for
unexpected expenses — than continue to boost monthly fees.
“The reason The Toy Factory is so successful is that it has a board
with smart, business-minded people,” says Langschmidt. “It is proof
that maintenance fees can be kept in check.”
get worried when a condo corporation starts cutting fees.
Sure there are some inefficiencies, wastage, kickbacks and potential
energy improvements in many non-profit condo corporations but like
city hall, there often isn't that much that can be cut without
reducing services or seriously compromising future major repairs and
We are also troubled by a condo imposing special assessments on the
owners. Instead of considering them as a substitute for higher
monthly fees, we see them as a failure of a board to properly budget a
We have seen condos that went five to six years without a fee increase,
or having extremely low increases, and then when reality hit, the fees
went up as high as 86% on top of special assessments that ran into the
thousands per unit.
The only winners are those smart owners who enjoyed low fees for years and then sold before the chickens came home to roost.