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Why I find reading AGM packages so interesting—Part 2
March 2017
Here is a campaign leaflet that was included in a recent AGM package.
The first thing that caught my eye was that the incumbent director was
writing in the third person. (I wonder if he writes like that in his
job performance reviews.)
Very knowledgeable and understands budget expenses and building operations.
Mr. Smith (not his real name) has diligently fulfilled his role as a
board member at our condo for the past 3 years. During this time, he
has utilized his experience as a landlord and knowledge from his
education in technology, business and law to make informed decisions.
For the duration of his term, our condo has been possibly the most well
managed condo complex in our District and throughout Ontario. With Mr.
Smith’s participation and influence, this condo board has been able to
preserve the original beauty of the complex and services provided,
without increasing maintenance fees.
Mr. Smith’s primary goal has been to preserve the original structural
design, function and style of our condo and to ensure the safety of all
its residents, all while keeping costs low; therefore, allowing each
resident to feel proud to call this condo their home. His
intention is to continue to proudly serve on the board, to ensure
maintenance fees remain low, that preservation of the condo continues
and resident's needs are being addressed.
During his term on the board: "Our condo has been possibly the most
well managed condo complex in our District and throughout Ontario."
That is quite the boast.
Mr. Smith makes the point (three times) that he focuses on keeping the
fees low. (This condo has not had their fees increased since they were
set by the builder five years ago, something that the nearby condos
could not achieve.)
How do they do it? All condo directors in Ontario; dare I say it, in the entire world are anxious to know.
Actually it is due mostly to smoke and mirrors. Reality consists of:
• Levy a Special Assessment.
• Having annual operating fund deficits.
• Ignoring a million dollar shortage in the Reserve Funds.
• Ignoring hefty recommended Reserve Fund increases.
However, in most condos, the owners never catch on. Very few read the
financial
statements carefully enough to understand that the incumbents, though
all claiming to be extremely well educated and holding important
managerial jobs,
are doing what far too many condo boards do: keep the fees low and fail
to put away money into the Reserves that are needed for future expenses.
This is a new condo, just five years old; too new to need major
repairs and
replacements. In fact the Reserve Fund Study calls for no expenditures
this year, or in the last year, so they can get away with this.
The investor-landlords who benefit from low fees will be happy and
since they are the vast majority and they vote by proxy, it seems certain that the
incumbents will be re-elected.
How much spent on legal fees?
A good way to get a pulse on how well condo residents and the board behave is to see how much the condo spends on legal fees.
There are condos that spend $60,000 to $100,000 a year, almost every
year, on disputes with contractors and owners. Those are condos best
avoided.
One set of AGM documents show that in 2016 a small condo spent $0.00 on
legal fees and $1,600 in 2015. Digging back in the records, showed that this $1,600 was the
highest spent in a year on legal fees.
How do they do it? The condo has a competent board and respectful owners and residents. How else?
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Why I find reading AGM packages so interesting
February 2017
|
Condo owners should read their AGM packages; from the first page all
the way to the end.
A new AGM info package is like buying a mystery
grab bag at a flea market; you never know what you may find inside.
Here is a couple of examples: |
The $75Billion condo lawsuit
Imagine my surprise to find in the back of the audited financial
statements that a condo was pursuing a $75Billion lawsuit. (emphasis in
the original.) Two directors signed off on the statements and no one at
the AGM questioned this so it had to be real right?
Ahh, no. When I queried this number, an embarrassed auditor agreed that
the number should be $75 million. (A number that is 1,000 times
smaller.)
Was I, and a single owner who also spotted this error, the only ones that examined the financial statements? Most likely.
A proven track record for reducing condo fees
The candidates campaign leaflets deserve a careful read. In this case,
an incumbent who was running for re-election, bragged about how much
money he saved when he was the vice-president of a nearby condo. Read
the second bullet point and then the last one:
Which point is accurate? The 28% reduction in fees claimed in the
second point or the zero percent increase claimed in the last line?
They both can't be true.
How many owners spotted this contradiction? Very few I suspect.
Lets look up his previous condo on Condos.ca to see what we find.
Green line–his old condo's fees Grey line–the area average fees
Oh my! The Internet tells us a different story. It tells us the condo
fees in his old condo corporation went up every year since it was
incorporated. A 44.4% increase in the monthly maintenance costs for an
average annual increase of 8.9%. Not so impressive is it?
Informing the owners
How can you inform the other owners of the deceptions on the election leaflets? That can be very difficult.
With the use of paper proxies, there are very few people showing up at
the AGMs. In some buildings of 600 units, perhaps two dozen owners
attend the AGM. Now that some condos are using electronic proxies,
those numbers will drop even lower.
As far as informing the owners who do bother to show up, unlike the
auditor who has to answer all relevant questions at the AGM, the Chair
at most AGMs will not allow voters to ask the candidates questions.
Therefore, the wildest promises, most inaccurate accomplishments and
the most dishonest qualifications can go completely unchallenged.
If you feel strongly about any untruths that you find prior to the AGM,
you could print a leaflet with your findings and distribute them throughout
the condo. On election night, you could hand out leaflets at the door
leading into the AGM.
Demand personal information
One of Ontario's largest condo management company issued this form
prior to an AGM. All candidates wishing to run for election for a
position on the board of directors needed to fill it out.
The filled out forms were distributed along with the completed candidates election sheet to all of the owners.
Why do the candidates have to fill out:
1. Their full legal name?
2. Their address? (Okay this makes sense.)
3. Their e-mail address?
4. Their phone #. (This too makes sense.)
4. Their date of birth?
5. Occupation?
6. A photograph. Why do they need a photograph?
What's worse, the management company sent a copy of the filled-out nomination
forms to all of the owners as part of the AGM package. One woman included her photo, birthdate,
her unit number and e-mail address. (All of the other candidates were
smart enough to ignore the request for a birthdate but included their unit numbers and e-mail addresses.)
Privacy issues
The requesting and publishing this information violated the candidates'
privacy and shows a lack of common sense.
Will the candidates start getting a flood of junk or hate e-mail? What
if the candidates have residents pounding on their door day and
night?
Discourage candidates
Is it not possible such snooping would have discouraged candidates from
running? I am sure the publishing of this private information
will discourage future candidates.
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When will the Toronto real estate bubble burst?
January 2017
Will the real estate bubble burst? I am no prophet so I asked a reader
who owns commercial and residential real estate throughout North
America what he thought. He replied:
"Good Morning;
Personally I believe this is the time. In 1992, same thing happened
just after the US election, Our economy was booming, and then all of a
sudden it dropped.
I remember in 2008, lenders were giving 50% Loan-To-Value (LTV) and
interest rates were low, and real estate was through the roof (not as
high as today, but it was high). As soon as the US election was over we
saw slight declines in our economy in Nov and Dec 2008, then Jan 2009
hit us like a brick wall!
I believe the same will happen again this time."
Will the balloon burst by spring? I don't think anyone knows. However,
if prices hold up until the late spring, I figure we should be good for
another year.
Detached houses will do better than condos as supply is low while
demand is high. Condos may not do so well. There are 170 new condo
towers coming on stream in 2017.
—CondoMadness
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Debt, mountains of debt
December 2016
When I started driving, 36 months (3 years) was the longest period that anyone
could get a car loan. Once it was paid off, you took a year or so to save
up a down payment so you could afford to buy a replacement car.
I recently looked at some auto advertisements in the Toronto Star.
Today, you can buy a new Chrysler 200 for only $127 bi-weekly
over 96 months with nothing down. That loan is for eight full years.
It is just a standard car with a long-term loan, not a house with a
mortgage. This is a good indication that Canadian consumers are flat
broke.
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Being lost in a huge condo complex
November 2016
“They can print statistics and count
the populations in hundreds of thousands, but to each man a city
consists of no more than a few streets, a few houses, a few people.”
― Graham Greene
When I look at the huge new condo complexes that have been built:
| World on Yonge |
• over 1,200 residential units
• three-level shopping mall
• hotel
• office space |
| Hullmark Centre |
• two towers with a total of 682 residential units
• office condos
• retail shopping complex
|
| Maple Leaf Square |
• two towers, 872 residential units
• large retail complex
• shared facilities
|
| One Bloor |
• 76 stories
• 732 residential units
• 3 levels of retail
|
| Ice Condos |
• 1,343 residential units |
| Aura |
• 995 residential units, one tower split into two
residential condo corporations
• commercial units
• underground retail stores & food court
|
I wonder how can a unit owner feel that he or she has a meaningful
say in how any of these residential communities are managed? The scale
is overwhelming.
A second issue with these huge condo corporations is that they would
need management, security guards and cleaners that have large
hotel-type training which is far superior to what average condo
contractors require.
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Planning a move to Hamilton?
Reddit
October 2016
A young man in Toronto sends a public letter to Mayor John Tory
complaining that housing is too expensive in Toronto. Below are some
reader Comments about the high costs of commuting from their jobs in
downtown Toronto to their homes in Hamilton.
northisnorth
A few weeks ago I posted to r/Hamilton asking about owning a home there
and commuting downtown daily. Overwhelmingly, the responses were
negative with some people saying that they actually sold their Hamilton
property and moved back into the city because the commute was so
horrible. We can do better as a city.
christinecatherineThe Annex
The commute is very expensive too. Around $500 a month I think? That
doesn't seem like a savings to me. I've been looking at jobs out there
and it's hard to find full time positions.
northisnorth
That's what I'd heard as well. Especially depressing are those who make
the move for a bigger home, realize the significance of the commute,
and have to downsize to get back into the Toronto market.
TorontoBob22The Annex
Around $500 a month I think?
Geez, is that on top of the normal monthly car costs?
MidnightEmber
I think they're referring to GO cost.
christinecatherineThe Annex
I was referring to the GO fare from Hamilton to Union. So yeah you
would either need to drive to the GO station or pay for a Hamilton bus.
I don't doubt that it's very expensive to commute.
Zoso03
I own my car no payments. $120 For insurance plus gas for weekend
driving and what not, so thats about $80. Then $120 a month for TTC
metro pass. So I'm spending about $320 a month on transportation. Add
in the people who pay for Go Trains or who are paying for their car and
$500 is a very easy number to hit
ag101
I pay $140 for my car insurance.
About $20/week in gas (weekends, back & forth from Go Station).
$18 per day for Go Train
$6 per day for TTC.
It really sucks.
smaudioForest Hill Village
I have been saying and thinking this ever since I moved here. Glad someone else has some common sense on the issue.
Until the GTA gets a
better, cheaper, quicker and more frequent transit system, commuting
into Toronto every work day is not pleasant, quick or cheap.
However, when you realize that Toronto cannot build a six kilometre,
one stop subway extension in nine years and within a $3 billion budget,
better transit is not going to happen any time soon.
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Everyone can be duped by fake news, experts say
September 2016
TORONTO — When their story about a condo developer who forgot to put bathrooms in a Toronto-area highrise went viral last week, writers at the CBC's satirical show "This Is That" were faced with an unexpected conundrum: many of the people who heard, read or shared the story online thought it was true.
It wasn't the first time that readers and listeners had taken the show
at face value — the radio program regularly plays voicemail messages
from people who mistake it for real news — but enough people flagged it
to the CBC this time that the public broadcaster took a drastic step to
clear up any possible misunderstanding.
It changed the show's headlines to include one word, in capital letters: "SATIRE."
"What we immediately realized is we have to take action right now
because the last thing we want is to fool people and damage our news
brand," said Jeff Ulster, director of digital talk content for CBC
Radio.
So why were so many people fooled? There were two reasons. First, it
was not made obvious that this was a joke. However there was another
reason; something more important. From the report:
From the interview:
In his interview with This is That,
developer Jordan Petrescu, admitted a mistake had been made but
surprisingly was not willing to take the blame.
"There are no bathrooms in the units,
but there were also no bathrooms on the plans or in our show suites,"
says Mr. Petrescu, "so technically, our customers bought these units
knowing they were bathroomless."
What brass Mr. Petrescu showed. Buyer beware.
We are now so use to developers cutting corners, deflecting blame and
giving less than what the buyers expected, that the "story" did not
seem too far fetched.
It is not the CBC who should feel embarrassed. It is the developers who
allowed their image to fall so low that for many, this "story" was
believable.
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Spring has
finally arrived
May 2015
I now feel confident that spring has finally arrived. It was my
sighting of the first robin of spring, nor the early morning singing
from hundreds of birds near my condo or the sight of motorcycles on the
streets.
It was the sight of front lawns
covered in green grass and
yellow dandelions.
My condo greeted the news with a whirlwind of spring-cleaning. In the
last two weeks, we have had the parking garage swept and the lines
re-painted. The windows and the windows have been cleaned and the first
grass cutting and lawn clean up has been completed.
The heating has been turned off and the air conditioning turned on and
our annual fire alarm system testing has been completed. The winter
mats in the hallway and the elevators have been put away until next
winter.
My neighbours are sitting outside to enjoy the sun and watch the people
and the dogs.
|
|
What’s more, I cleaned our balcony and planted our annuals. Then my
wife and I enjoyed our first cup of coffee sitting outside and enjoying
the view.
I don’t think I have ever been so glad to see the return of spring.
editor—Condomadness
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Our last
condo
Summer 2014
We have decided that this will be our last condo. We plan
to live here until we are too feeble to live on our own or until we die.
We love our home. Our apartment is large, bright and cheerful. Our
neighbours are respectful, warm and polite. The grounds are beautiful
and we love our amenities.
We have a pleasant view, we grow flowers on the balcony and play with
our cat. Our life here is peaceful
Yet, we stay watchful; always alert.
If we get into a serious dispute with our board, if we suspect that
there is corruption, if we see that the building maintenance and
cleaning is starting to deteriorate, if we get bad neighbours or if the
board stops raising the fees to keep up with inflation and the reserve
funds start to diminish, we will be the first to sell.
We’ll move to a rental building; we have one picked out.
We went through a four year-long battle with the board at our last
condo and it was extremely stressful, frustrating and expensive.
Too many of our neighbours wouldn’t get involved. They would not put in
any money, effort or time into the fight; a fight to get control of our
homes and our investments. They didn’t care that one of the elevators
was
permanent out of service, that we had too many water leaks, that the
hallway carpets were filthy, that regular maintenance wasn’t done, that
there was mould in the basement and that amenities were permanently
closed.
When we were organizing, and educating our neighbours on what was going
on, the younger, wealthier and better-educated owners did not join us,
even though they saw that we were right. Instead, they sold and got out.
We won’t take on a fight like that again. Next time we will be the ones
to sell and get out.
editor
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What a dumb
mistake—Part 1
Tony Zale
from Peel Region
I
had just parked my car and was walking to my townhouse when I heard
someone calling my name “Tony, Tony”. I said hello to him. His was a
familiar face that I knew lived in the condo but at that time I did not
know him by name.
He
said very excitedly, “We meeting in one hour behind the swimming pool
to talk of getting rid of the present directors. They’re no good and do
nothing for us.”
A
fairly large group of owners met behind the pool. Everyone’s main gripe
was with the property manager. Two people mainly were stirred the pot,
Dave and Mike with the others played a far secondary role at that time
though later a husband and wife team and I took very active part in
ousting the sitting directors.
After
this meeting we easily got the 15% required to call for a special
owners meeting to remove the board of directors and a few days later a
requisition was duly handed to the office of the Okay Property
Management Company.
The
requisition wording had to conform to the law was checked and approved
by a lawyer who worked for the Hero Property Management Company. Mike introduced us to
Saul, the man he touted as the one who would be our new property
manager.
It
is incumbent for our board to hold the special owners meeting within a
certain period and till that time Saul was in our complex giving us
guidance and advice that we tenderfoots really needed.
I
always believed that Saul’s guidance was very instrumental as he had 22
years experience in managing properties. A year later he would still
say “22” and I would very good-naturedly correct him to say “23”.
The
meeting was held at a local church and of course we won most handily.
The victors Mike, Dave, Amin (husband) Nila (wife) the directors along
with a few other well-wishers came to my place and the champagne bottle
was opened. We got down to serious business at once, designating
positions on the new board.
Right
from the onset I said I wanted to be the treasurer. No problem and they
all hailed me as one. Mike became the president, Dave the
vice-president and Amin became the secretary.
Overnight
our persona changed. Mike began to wear shirts with collars sometimes
and Amin began to take note of everything and I began to act as a
financial wizard.
We
took this gathering to be the first official board meeting. First order
of the meeting was to appoint a new property manager.
Mike proposed
Saul and I seconded it. Amin disagreed and needless to say his wife
followed suit. Dave in a very inaudible voice agreed with Amin to not
appoint Saul.
Saul
never in his wildest imagination thought there would be opposition and
therefore had brought along the contract to be signed. I did a little
sleight of hand. I had Mike sign the contract and I signed it. Most
unobtrusively I passed it to Dave who seeing two signatures also signed
it.
With
three signatures it passed but neither Mike nor I made a big deal of
it. There was another sleight of hand I did regarding the management
fee to Saul’s company, Hero Property Management.
Strangely
Amin was not aware that Saul has already been hired and appointed as
the property manager till a couple of weeks later when we held another
board meeting.
Amin’s
stand was that we should interview few other companies before deciding
who is to be the property manager. Mike certainly had his motives to
keep Saul that the readers can decide later. Dave had neither a stand
nor any motive.
My
contention was that Saul had truly been guiding us and visiting us
almost daily. Mike, Dave, Amin and I freely, and happily, took advice
and guidance from Saul in the matter of overthrowing the old directors.
We now had a moral obligation to appoint Saul or we should have told
him at the outset that when we win Saul would have to stand in line and
be interviewed just like any other. Saul could then have decided to
either take his chances or simply stay away till the dust settled.
Few
weeks later we had a board meeting and this time in the condo office at
the back of the complex. Less than an hour before the meeting, Amin
demanded that Saul not attend the meeting and Dave too sided with Amin
telling me there was no need for Saul to be there.
I reasoned that
since Saul is going to manage our complex he has to be in the know of
everything that is going on. Furthermore what could we all raw hands do
or talk of without someone with a 22 years experience like Saul?
Without
mincing words Amin said that the team of Mike and Saul is not good
news. He said in words to the effect that these two (Mike and Saul) are
only planning to gouge the complex and share kickbacks with
contractors.
To
my way of thinking no person should be prejudged. A person is innocent
till proved guilty. The very foundation of our Anglo-Saxon judiciary
system rest on this premise. Was it Amin’s premonition or just his
better judgment of human character? If judgment could be made by the
way people looked then no great credit can go to Amin. Slam dunk. Open
and shut case.
However,
we all took our seats and Amin demanded that Saul not be there as he is
not yet our property manager. I at once pulled out the contract and for
the first time seeing the three signatures Amin got a jolt.
He
knew he had been outsmarted, and totally out maneuvered. He and his
wife left the meeting in a huff and from that day onward the team of
husband and wife took no part in the condo’s affairs. Hence only three
directors were to run the affairs of this condo complex known as The
Gates of Paradise.
Some
of Amin’s earlier antics need to be narrated. While he was against the
appointment of Saul he asked the new contract must be exactly as the
one we had with the old management company. Every company has their own
contract that differs only slightly from each other. These are standard
forms written and drawn by their lawyers.
Amin
demanded that the contract to be signed by Saul should be exactly word
to word as it was with the Okay Property Management Company. This was
an unreasonable request and his lack of the so called “Canadian
experience” became very obvious.
One
evening, not in my presence, but as Mike, Dave as witnesses, Amin was
talked into taking Saul as the new property manager. The term was
agreed upon as $24.00 per townhouse per month. Very reluctantly Saul agreed
and Amin thinking he scored big, shook hands and it was believed by
those present that the deal at last was struck.
Not
so with Amin. Shaking hands has no meaning or significance for him. It
was only a prelude to more haggling. The very next day he took a 180
degree turn and refuted everything a gentleman would have abide by.
Talking with Amin was like trying to nail jelly to the wall. On
hindsight his walking away was a blessing in disguise.
Another
stupid behaviour by Amin needs mentioning. Soon after the first monthly
meeting when Amin and his wife walked out we held a BBQ in the
playground at the back of the swimming pool. With a great feeling of
elation at our recent victory of having thrown out the old directors we
all were having one mighty fine and a lovely time.
That
is all except Amin. He turned out with few scrap of papers on which he
has written in his inimitable English how bad we (Mike, Dave and I)
were and that this BBQ is not correct etc. I in particular had very
rough words with him. In fact I have it recorded in my Sony video
camera. It makes a very interesting show.
My
only fear was that Mike could lose his cool and re-configure Amin’s
face. I escorted Amin to his unit. Shortly after I heard through the
grapevine and later later from his wife that he has gone to India to
attend to his properties. I wished him luck then as I wish him now.
Mike
is great in organizing social functions. He feeds others well and
himself even better. It is not an understatement to say he likes to
spend. We had a very good gathering of folks at the BBQ.
Mike
insisted on catering as if everyone in the complex would be attending.
Although a fair number came, not more than 25-30 percent of the
residents turned out.
Since
Mike catered for everyone living in the complex so a huge amount of
food and drinks was not consumed. When I asked what would happen to the
leftover food, (burgers, salad dressings, drinks and lots of bread)
Mike said not to worry. Miraculously Mike had a large deep freezer available
and the leftovers went straight to the freezer.
Mike came up with the
idea that new set of lock and keys should be
installed for the office and the swimming pool. Although I did not
think it necessary Dave and I consented and gave the go-ahead to Mike.
The bill came to $550.00. Just for the office and its contents whose
approximate value could have been in the vicinity of $0.81 (yes
eighty-one cents) and a lock for the swimming pool enclosure.
Ten
unduplicatable keys were cut and each of the directors was given one
key. The rest remained with me. An unnecessary expense which was a
harbinger of things to come.
Saul,
the property manager, suggested the next monthly meeting should be held
at the nearby Swiss Chalet. We will eat and at the same time review our
condo affairs. This was for me very unsatisfactory way of conducting
business. I could hardly hear important discussion over the din of the
other customers’ voices. For someone with 22 years experience to hold
an important meeting in such a frivolous manner told me a lot about
him.
Perhaps
Saul’s view of monthly meeting was something like an occurring nuisance
to be got over and done with ASAP.
I hear monthly board meetings have
been dispensed with after I left the board.
Sometimes
prescience is not required to make a judgment. When Amin determined
that the combination of Mike and Saul spelled corruption, more to the
point kickbacks, it was plain to see. In this case Amin was dead right.
My
thought process at that time was to wait let facts and circumstances
present itself, which I knew would be just a matter of time and a very
short one at that. This was presented to me dozens of time but with two
directors (Amin and his wife) not attending any meetings I was
constantly out voted two to one.
Just a few examples:
1.)
|
At the board meeting I wanted
the directors to be able to bring in
estimates from other contractors than the ones introduced to us by
Saul. Dave and Mike promptly shot down my suggestion. Only Saul was to
bring in estimates for all jobs. This should have a bad smell to any
decent nostril. |
2.)
|
I wanted to introduce procedures
when work orders were to be placed or
something to be requisitioned. Shot down by Dave and Mike. From then
onward it was to be open hunting as most of the invoices would show. |
3.)
|
My boyhood friend a retired
chartered accountant, having spent 35 years
working for IBM, showed me the concept of cash flow. This, both of us
believed is a very integral part of running any business, organization
or non-profit corporation. |
The
three, Saul the property manager, Mike and Dave wanted no constraints
or restraints that would act as a check to the way they wanted to run
the affairs of our condo. Some of their blatant
misdeeds need mentioning:
| $550.17 |
To
change a couple of locks as was mentioned previously. |
| $25,000.00 |
Spent
on installing new letterboxes, house numbering, and outside lights. I
objected on the grounds that never did the mailman tell any residence
that they were finding it difficult to put the letters in the boxes |
With
the Reserve Fund Study saying that we were approximately $213,000
short of what we should be have, this spending was most frivolous.
Mike,
Dave and Saul insisted that I advance Mike $3,219.19 for a Christmas
party. Mike accounted for $3,066.64 and the balance $153.17 was never
reimbursed. I brought up the matter several times but the question was
always shrugged away by Mike and Saul.
To be continued
top
The
Treasurer's burden
Magda
Selmeci MSc, CMA
Ralph looked around nervously in the crowded room. All the owners came
to this meeting; everybody who was able to walk.
The faces looking back at him reflected just as much nervousness as his
own. That was a marked difference from the AGM, where they barely had a
quorum.
††
This meeting was about the new Reserve Fund Study, about the Board’s
plan to meet future spending requirements.
I must find the strength in me, but how am I going to do this? Ralph
asked himself.
This was the third Reserve Fund Study Dreamland—their condo’s
development name—had. The same engineers conducted all of them.
It was acceptable to have surprises from the first study. The condo had
been self-managed by volunteers so there was no professional knowledge
to help run a proper maintenance program. Dreamland is an old building.
Though very well built, parts started to fail; needing replacements.
Other parts need maintenance.
But why did we get these surprises now? Most of these expensive issues
should have been discovered by the first study. They were not.
The new financial requirements in this new study will put a tremendous
burden on all. How can that be handled?
He closed his eyes for a moment, and remembered back six years ago. He
was sitting then on one of the chairs at his first AGM, facing the
Directors. He was a new owner then.
He heard the President’s address to the owners, and then the
treasurer’s report.
They both stressed: “NO FEE INCREASES.
Please recall! We never, ever, raised the condo fees one penny in the
past four years.”
A thunderous applause!
Ralph recalled a later discussion with the President. That happened
when he was first elected to the Board. He had been elected, because he
was well liked, and because he had an accounting background. So he
became the new Treasurer.
Those words, spoken by the President, echoed in him now.
“You must be very aware of two important factors here.” the President
said. “The first one is that the Directors are elected by a democratic
process. If the majority of the owners don’t like you, or if they won’t
like what you are doing, they will vote you out. You will no longer be
a director.
The second thing to remember is the mix of owners you are dealing with.
We have a small group of very young owners and a large group of very
old ones. No middle aged ones. Now realize that the young ones don’t
want to stay here forever. They bought a condo because it is cheaper
than a house. Then they want to save money and move to a house when
they are ready to start a family.
The old ones don’t have a long future here either. So neither one of
these groups want to invest in the long term. They want to live as
cheap as possible, NOW.
If you try to increase the condo fees, you’ll be history.”
Ralph looked up. Time to start the meeting.
“Ladies and Gentlemen.” His voice was shaking. “You see the attached
Reserve Fund Study. It is full of expensive surprises. We need a new
budget and we need to raise revenues. It will be a heavy burden on all
of us.
We either borrow the money, increase the condo fees or have Special
Assessments. Either way, we must all pay more.”
One owner sprang to his feet shouting: “Just what do you think you are
doing to us? We are not made of money! The other treasurers never
insulted us like this before! We won’t stand for it! No fee increases!’
An almost unison followed. “Don’t you dare!”
Then the noise of emptying the chairs. All of the owners got up and
left.
What now? Ralph wondered, considering his options. A needed fee raise
won’t happen. He will be removed as treasurer and his successor will be
elected on a promise of no fee increases.
That would be detrimental to the building. That will be, and already is
very unfair to future owners. Most of the old folks lived here for
decades using the parts of the building that needs replacement. They
should have paid for them as they used it. But now the new owners will
pay for it.
Should he ask the board to apply for an Administrator? That would
create a huge additional cost to the owners. Besides, the other
directors would never agree to do this.
Should he resign and inform the city building inspectors that our condo
does not meet building codes? They could get the needed work done and
the city would bill the condo for it.
He did not know yet what he will do.
If the owners will be hit with costs that are too high, some will have
to sell their units. Maybe they will rent the units that are now their
homes.
The only one thing clear in his mind was the fact, that as a director
his responsibility was to the corporation, not with pleasing the
owners. But most of the owners did not understand this. How can a
democratic election by the owners be reconciled with the responsibility
of the directors?
Something is wrong here. Something needs changing.
He looked at the empty chairs, almost as if they were saying to him:
forget about the building. Forget about repairs, forget about
maintenance, forget about replacing failing parts. You can’t worry
about any of those because
WE ARE THE OWNERS, AND WE DO NOT WANT
FEE INCREASES.
With a big sigh and with heavy heart Ralph picked up his papers and
slowly left the room.
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