August 2022
Some communities operate under the belief budgets should be created to avoid condo fee increases. While consistently maintaining the same level of condo fees is a great platform for director-candidates to campaign on, adhering to this is detrimental.
In condo living the only certain things are death, taxes and higher condo fees. Even when inflation is low and costs are stable, it is reasonable to expect condo fee increases reflective of future costs.
The cost of everything associated with building maintenance and community management is always on the rise. From insurance to management fees, utilities and building maintenance, expenses rise to pay for people, product and services. Reserve funds rely on projections of expenses extending more than a decade into the future. Lapses in fee increases can have more severe consequences. Failure to maintain reasonable annual increases can be met with a dramatic and unpopular increase or special assessment when unanticipated expenses occur – and the nature of budgeting is such that they will nearly always occur. The alternative, increasing problems and damages arising from any failure to fund necessary work, is less desirable.
The board has a fiduciary responsibility to ensure the condominium corporation remains solvent. A fiscally well-managed corporation is not one that artificially keeps fees low by failing to maintain its buildings and systems. It is one that is realistic and tries to keep up with increased operating costs and inflation.
At the very least, annual increases should be at the current rate of inflation. Even when expenses are down for a year or two, nominal increases protect against more drastic, sudden increases resulting from past decisions not to increase fees. Stable and consistent increases are more palatable for owners while possibly increasing resale values by presenting a stable financial profile to prospective buyers.
Considering current inflation and cost increases, condo fees are anticipated to increase by at least eight percent for 2022.
