September 2017
Every condo owner would like to have a reduction in their personal expenses. There are only two ways this can occur. We must use less or find ways to get what we want more efficiently.
So it comes as a surprise when some condo corporations present a zero increase budget. More often than not, such “savings” are short-lived or non-existent.
It is disappointing when stated “savings” are misrepresented. In the condo world “savings” may result when money is “borrowed” from the reserve fund without a repayment plan. Reserve fund shortfalls are the reason for most special assessments. They result from reserve fund studies that under-estimate repair and replacement costs, or fail to account for certain expenditures. Much of this can be avoided by a board undertaking proper due diligence.
A condo board can obtain needed funds by approving a special assessment. This approach, not always politically convenient, is preferable to raiding the reserve fund of money that is needed in the coming years.
Special assessments should not be used for a one-time cash infusion to cover recurring operating deficits. These require a permanent annual increase in condo fees or a permanent way to reduce operating costs.
Special assessments should not be used for a one-time cash infusion to cover recurring operating deficits. These require a permanent annual increase in condo fees or a permanent way to reduce operating costs.
That condo corporation with a 0% increase shown above opted for a special assessment. As the notice on this page shows, that 0% increase was an illusion. Funds were necessary to recover from an operating deficit. Without a long-term plan that includes an immediate reduction in operating expenses, this is likely to be the first of multiple special assessments.
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Thank you to CondoMadness for their assistance in preparing this article.
