Time is up for two condominium communities after years of financial mismanagement.
Guildwood Terrace (MTCC 1013 at 3233 Eglinton Ave. East) owners were recently informed they need to pay between $25,000 and close to $50,000 each to cover the $12.5 million “building envelope” project that includes replacing all windows. Owners can choose to make a single lump-sum payment, annual payments or monthly payments.
At Twin Towers (MTCC 655 at 234 Albion Rd.) owners each had to pay a special assessment of about $10,000. This is in addition to paying off a bank loan from about seven years ago to repair balconies.
There is always a backlash from owners receiving a special assessment. Some residents complain they can’t afford it. Older residents at Guildwood Terrace may not live long enough to appreciate the new windows. Many blame the current board for mismanagement.
A large special assessment arises only after years of financial mismanagement. Successive condo boards fail to increase monthly condo fees sufficiently to pay ongoing operational expenses and set aside funds to pay for anticipated future repairs. Condo owners like lower condo fees which gives them more money to spend on restaurants, vacations and entertainment. Many hope to sell their condo before they are required to pay for known and worsening building infrastructure problems.
The problem begins with developers, seeking to keep condo fees low so they can more easily sell units, establishing reserve fund contributions at an unrealistically low level. Once management is handed over to an owner-elected condo board, they may undertake further underfunding actions. They may poorly manage the building, follow bad advice, defer necessary maintenance and/or oppose increasing condo fees.
Reserve fund contributions should be sufficient to ensure funds are available for repair and replacement of common elements. This requires paying for all operational costs PLUS an estimated 30 percent being directed to the reserve fund.
It is convenient and preferable for some to avoid paying to maintain their home and while hoping someone else will deal with problems and pay the bill. Eventually, the bill comes due. When that time comes, everyone involved bears responsibility – condo owners, the current condo board and past boards.