Everyone hates a tax collector
“There are very few people who tell
me they want their taxes raised.”
—John Tory (Mayor of Toronto)
A condominium apartment building is a very complex structure. It can
have two to three thousand items that need maintenance, has monthly
utility bills and contractors and employees that need to be paid.
Money has to be raised to pay for:
Operating costs
There are the operating costs that include the cost of:
• utilities
• cable TV packages
• superintendent
• cleaning, drywall repairs
• security
• maintaining the elevators, boilers, machinery, amenities
• landscaping and snow removal
• various inspections that are required by provincial and municipal codes
• management and professional fees
• pest control
Reserve expenses
There are reserve fund expenses. Some of these costs are minor but others can be extremely expensive:
• roof repairs
• windows, balconies
• the exterior walls
• repairs to the underground parking garage
• new boilers, chillers and generators
• renovating the elevators
• replacing carpeting and wall coverings
• renovating or replacing fire panels
• renovating amenities
• replacing pipes, pumps, valves and hot water risers
Getting bushwhacked
Nothing like being part of a newly elected board and finding out out
that the previous boards kept the monthly common element fees low
by not paying all of the bills and pushing expensive repairs out into the
future.
Deferred maintenance
This can be the biggest expense of all. A new board finds out that the
building does not meet the fire code, the garage has serious water
leaks and needs $2 million in repairs, the elevators need expensive
renovations, the building envelop leaks and the balconies are unsafe.
All of this has been left for you to deal with.
Unpaid operating costs
This is my favourite. The utility bills have not been paid in full and
so the condo is paying huge late penalties and the utilities are
threatening to cut services.
There are also thousands of dollars in unpaid invoices and the
contractors will not do any more work until their accounts have been
paid in full.
The expenses are next to endless and they can no longer be ignored.
Increasing the fees
A condo corporation needs money and there is only one way that it can
raise money and that is by taxing the owners by assessing the owners monthly maintenance fees or taking on a loan.
The piddly amounts collected by renting out the party room, guest
suites, lockers and maybe parking spots doesn't amount to much.
Backlash
When a board announces a larger than usual fee increase, or far worse, a
special assessment; the owners will scream. How many freak out depends on
whether they are landlords who want to protect their profit margins,
fixed income owner-residents who are having trouble paying their bills
or low-income owners who are in over their heads and would, most
likely, be better off selling their units and moving elsewhere.
Demands to lower the fees
"The art of leadership is saying no, not saying yes. It is very easy to say yes." —Tony Blair
The disgruntled owners have three ways to lower the fees.
Harassment
They can harass and
threaten the directors until they repeal the fee increase or they resign. The directors
may find graffiti, feces or raw eggs on their entrance doors, their
cars vandalized and they are ostracized in the common elements.
A whispering campaign
can be extremely hurtful when gossip and anonymous leaflets are
distributed through the condo calling the directors and the management
crooks who are stealing the owners' money and/or are squandering money
on unneeded expenses.
Wait for the AGMs
The
disgruntled owners can wait till the AGMs and vote in candidates that
promise to lower the fees. This can take time but it is effective.
Requisition
If they are in a hurry, the owners can submit a requisition to remove
the directors and replace them at a Special Owners Meeting.
How to respond
Directors who need to counter the appeal of "Fee Choppers" face the
same difficulties as what faced the candidates that ran against Rob Ford
and Donald Trump. Facts and logic have a hard time countering emotions and greed.
It helps if the majority of owners live in their units, are level
headed and have the money to afford to pay annual increases in
monthly expenses.
However the best approach is to regularly communicate with the owners
by newsletters, hosting a website and holding regular information
meetings.
A presentation showing where their money is going can help a board show
the owners why fee increases are necessary. A chart showing the annual
increases in utility and cable TV bills and maintenance costs can be a big help.
If people know how their monthly expenses are being spent, if they
believe their money is not being squandered and if they realize that a well
maintained building not only increases in value but are far more
pleasant to live in, then perhaps the board can hold the Fee
Choppers at bay.
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