The Board has once again proceeded with inappropriate approval of a Capital Expenditure, that now being the elevators. Once again, this conduct of the Board is obviously in violation of both our Bylaws and the Condominium Property Act. The call for cash is also not permitted prior to receiving the benefits derived from the Capital Expenditure. No such expenditure is permitted without the review and approval of unit owners at a general meeting.

As was the case with the past Capital Expenditure for the heating system, the Board is again promoting the “significant savings in energy and maintenance costs” in their support of the elevator expenditure. As we now know, energy costs following the Capital Expenditure for the new heating system, increased dramatically.  The facts have been established, and  the onus is upon the Board to provide factual demonstration of the builidngs energy costs. The Boards practice of spending other peoples money at their own will, can no longer be tolerated by residents of Spadina Towers. These Capital projects, will not proceed, until all residents, have participated in a legally recognized vote of unit owners on the matter.

The proposed parkade project is yet another Capital Expenditure being considered without the required participation of residents. This project will not proceed without the required participation of residents.

The garage floor has been neglected for so long, that the soil has caked on the floor and will require much further effort to remove this caked material as soon as possible. This neglect must not be allowed to continue and once the caked material has been removed, monthly washing is absolutely necessary in order to prevent this problem and the need for additional and unnecessary costs beyond that of regular maintenance.

Another Capital Expenditure, in the excercise room, has been inappropriately approved by the Board which again is in violation of our Bylaws and the Condominium Act. Any such expenditure, to be born by residents, is clearly, most disrespectul of responsible management of residents funds. It is suggested that this item be put on a list of Reserve Fund Expenditures TO BE CONSIDERED BY RESIDENTS, at the next annual general meeting.

There is obviously a further question as to who specifically, are the intended beneficiaries of this expenditure. They of course, are very obvious. You would think, that these beneficiaries, would provide a formal request of the Board, to establish  some reason for receiving a financial benefit of the Corporation.

After approximately four years, you would think that there has been enough “discussion with consultants” regarding the ongoing problems with the domestic hot water system. It is time for some action, not simply “further discussion”.

Contrary to the comments made in the report regarding the buildings “sparse and sketchy” historical information, there has been since the building’s inception, readily available and very extensive historical information on file, all of which has been kept in the 4^th floor office. Since Colliers began management of the building, most records have been stored off site (at another property) as has been disclosed by Colliers employees.

Considering a potential change in management, immediate steps must be taken to ensure that CURRENT, RECENT AND HISTORICAL DOCUMENTS of the Corporation are in fact stored in the 4th floor office. Confirmation of such, must be provided to residents in writing which should be included in the Board’s next monthly report.The Board is hereby advised, that the 4th floor office has always been and must continue to be, the secure place of storage of all of the Corporation’s records. Any objection of management and the commercial owner to this request, must be presented to a general meeting, where a decision will be made subject to the provisions of the Condominium Property Act.

Appropriate building photos are included in our reserve fund study report which are included in the cost of that report. Should any further photos be required, they can easily be taken with a common digital camera. A motion picture taken where there is no motion is not a very responsible expenditure. Why such careless use of residents money when we have such a long list of priority projects?

About ten years ago, it was determined that the penthouse structure could very easily accomodate installation of a very secure, surrounding cable that could in turn be used to anchor window cleaning equipment. Yet every year, we simply hear that “investigating” solutions continue. Again, residents have heard more than enough about these never ending “investigations”.

Residents are reminded, that at the last Annual General Meeting, a question was asked of the treasurer as to why there was no presentation of a Reserve Fund Budget. His response was, that the Board has no expectation of any Reserve Fund Expenditures in the comming year.

Well, we all know now, that this stated position of the treasurer, is well deserving of some very serious question among residents. During the current year, we have been advised of inappropriate approval by the Board of the most costly Capital Expenditures in the history of the building, with estimated costs of BETWEEN ONE AND TWO MILLION DOLLARS! The Board is hereby advised, that all reasonable minded residents will reject any such suggested expenditures, particularly when such projects are considered without any respect for resident’s review and consideration of such projects.

The first four months of energy costs for 2014 are in and the results are not good.

Net energy costs for the January to April period of 2014 vs the same period in 2010, are up $16,654.46. Rate adjustments have been considered in the comparative analysis in order to ensure a true and accurate comparison.

This brings the total accumulated, net increase in energy costs since installation of the new heating system to $98,971.46. This considering the fact that we were promised that the new heating system would provide SAVINGS of this amount or more by this time. A $200,000 discrepancy in promised savings versus actual increases has clearly resulted in a major negative impact to the Corporations finances. This deficiency has continued to be reflected in depleting Common Expense and Reserve Funds. Cash calls to unit owners will of course continue in order to pay for these ongoing and dramatic cost increases.

SCC PROPOSED RESERVE FUND BUDGET-4

Upadated on June 6, 2014 by CJ

Residents of Spadina Towers are about to be assessed major cash calls, to fund deferred or neglected projects, primarily of a capital nature. The following is a proposed budget that will provide residents with a more reasonable view and time frame, for completion of these projects and an estimate of their required contribution which may be demanded from them over the next few years. Residents should be provided with some form of budget so they are able to assess the potential financial impact upon them. The Board is requested to first of all prepare a Reserve Fund Budget this year, and provide for the required review and approval of unit owners.

The attached schedule is a prioritized list of capital expenditures and deferred maintenance that is to be considered at Spadina Towers. It is requested of the Board to please review this schedule and the attached proposed Reserve Fund Budget which I believe is in the interest of all unit owners to order to provide them with some understanding of just what these projects are and which are the priorities. Please click on the link below to view the schedule.

Capital Expenditures & Deferred Maintenance

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Q. Does the size of the assessment make a difference?

A. Size certainly does matter. The larger the assessment (generally) the larger the amount of work that is required. Sometimes this work is done over a period of time, and therefore the total cost of the assessment isn’t always known. Often this type of assessment is sold to the owners by saying “that it will improve the value of the property.” In most cases this is true, but a lot has to do with the management of the project and money. I have been involved in projects where the concept of the scope of work of the assessment was fantastic and would definitely add value to the property once it’s done. However, if the project is not managed properly it can lead to further assessments.

Q. If the value is only going to improve why would people be nervous about buying a condo with an assessment?

A. Fear of the unknown. In my experience buyers fear that unknown quotient – how it will turn out, will there be additional assessments, will the project well be well managed? They are also comparing the properties that they are looking at now in their current state, and it is often hard for people to conceptualize the work that needs to be done. Again this depends on the size of the assessment. If the assessment is only $1500.00 and the seller is willing to pickup the tab it is a lot more palatable than something in the range of $20,000. Even if the larger sum will be due and payable in installments. It is because of uncertainty that buyers will stay away. The more detailed the plan, the lower the uncertainty and the more likely the buyer will consider the property.

Q. How do I sell my property if I have had a large assessment?

A. Information is important:

• Having as much documentation about the “why, how and when” will certainly be helpful.
• Details about the scope of the work will help buyers understand what inconveniences they may have to endure.
• Financial details of when the money will be due. Will it be lump sum instalments or added to the existing condo fees?

Read more: Condo assessments | The Edmonton Real Estate Blog

Reserves for deferred maintenance (performed less frequently than yearly, to maintain the asset’s useful life) and capital expenditures (purchasing or replacing assets that have a useful life over one year, or extending the useful life over one year) are required for certain building components, unless the membership votes annually to waive or reduce reserve funding.

Condominium associations must reserve funds for roof replacement, building painting, concrete maintenance, as well as for any other item for which the replacement or deferred maintenance is required.

The amount required to be annually set aside in reserve is computed by a formula that takes the estimated cost of deferred maintenance, or the replacement cost, and divides it by the remaining useful life of the asset.

As an example, assume the estimated cost to replace the roof of a condominium building is $100,000, and it is also estimated that the roof will have to be replaced in 10 years. Therefore, the current annual contribution that must be placed in the roof-replacement reserve account is $10,000.

The primary purpose of establishing and funding reserves is to spread the costs of major expenditures over the lives of the assets to be maintained or replaced, in order to avoid large annual assessment increases or the need to levy special assessments, which some owners may be unable to afford all at once.

Who Is Liable for Under-funded Reserve Accounts?

The failure to adequately fund association reserve accounts can be costly to homeowners and could potentially result in legal action against owner-elected directors of the association. When there are budget shortfalls and inadequate reserves for a capital or deferred maintenance expense, the first step generally is imposition of a special assessment against the unit owners. This means that, in addition to regular monthly or quarterly assessments paid by unit owners, the unit owners are required to make additional special assessment payments to the association to cover the expense. In some cases, the association needs to borrow funds, if such loans can be obtained by the association, to supplement the revenue obtained from the special assessments. Borrowing funds, if they are available, adds the cost of financing to the cost of the underlying expenditure. In addition to the obvious financial risks to the association and the unit owners, there are also risks of legal liability. Owner-elected boards are at risk for breach of fiduciary claims for failing to cause the appropriate funding of reserve accounts. A verdict against a director for a breach of fiduciary claim could result in personal liability of the director.

DEFERRED MAINTENANCE…PROCRASTINATORS BEWARE!