View, facing north to a number of apartments and residential buildings, from King St. East and Berkley St. in Toronto. Fred Lum
A condominium maintenance expert warns that the chronic reduction in future building renovation costs leaves new owners unprepared for potentially large fee increases in the coming years.
“It’s like watching a train crash in slow motion,” said Sally Thompson, an engineer who has worked in the industry for nearly 30 years and runs Synergy Partners Consulting Inc. The company advises building managers on maintenance studies. “I hate to criticize my own industry, but again and again I see studies that completely and utterly underestimate future costs. I have worked politely in this decade; I want to retire soon and I don’t want to retire unless it is fixed. “
The worst-case scenarios are not hypothetical: in 2021, court documents revealed that York Condominium Corporation No. An 82- to 50-year-old building with 321 units near Jane and Finch faces an $ 11 million lag in renovation, which will require each apartment owner to invest between $ 30,000 and $ 40,000 to cover costs or risk the apartment. to be sold off.
Ms Thompson set out a number of concerns in a recent paper that covers everything from the impact of rapid inflation on maintenance budgets designed to estimate pre-pandemic repair costs to the governance issues included in existing condominium regulations.
In Ontario, condominium law requires managers of condominium buildings to conduct a study of the reserve fund to determine the likely costs of potential renovations over a 30-year horizon. Ms. Thompson said that was not enough for new buildings.
“When you have a brand new building, it’s like a new car: you don’t have to spend money for a while. So in the first 20 years of the building you have very few repairs, but after 20 you have to change everything: the boilers, the seal [around windows], the roof, everything. So when you’re only 30 years ahead, you’re actually planning 20 empty years and 10 busy years.
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Her preferred term is 45 to 50 years, which helps current owners pay something closer to the real price of their stay.
“I was a beneficiary in the early years when I was in the building of what I would call lower than appropriate fee increases,” said Ted Cadsby, who has lived in his Avoca Vale apartment in downtown Toronto for 10 years. For the past three years, he has been on the board of the corporation that runs it. “The previous councils were very proud of keeping the fees low, [around 2-per-cent growth a year at the most] and they managed to do that by not building as stable a reserve fund as they could and probably should have. “
Completed in 1998, Avoca is now 24 years old. The building recently spent $ 500,000 to upgrade the elevator, potentially spending hundreds of thousands of dollars to repair a leak in the underground car park structure, and residents are also opposed to proposals to spend another $ 500,000 to update decor in hallways and lobbies. . None of these adjustments could be covered by the almost 20-year installments of the reserve fund maintenance fee, which led to a gradual annual increase to fees of 6 percent per year. The alternative was a special estimate of a one-time installment of tens of thousands of dollars. “So the current owners of the building are essentially subsidizing the first owners to get away with low fees,” Mr Cadsby said.
Mr Cadsby still has the support of his board, but disputes over fees can lead to serious disagreements, and Mrs Thompson has seen how entire boards can be withdrawn when maintenance problems return.
When Frank Nafan and his wife cut their living space in 2004 to live in The Gazebo apartments in Thornhill, the building was already 27 years old, but fees were still quite low; about $ 500 a month. About 10 years after moving, Mr Nafan ran for office and said he was shocked by what he found.
“Wow, I mean, they haven’t worked in years. “There was all sorts of engineering research that was ignored,” he said. When Ms. Thompson’s firm conducted a study of the reserve fund, it found a number of potentially costly problems, but the most serious was the deterioration of the concrete on the roof of the adjacent parking lot, which could be close to collapsing. The cost of repairing it? Mr Nafan recalled estimates starting at $ 2 million.
“We raised the monthly fee by about $ 200 and also received a loan approval of up to $ 1.5 million in case we needed it,” he said, and then the board offered a special estimate of $ 7,000 to return the building’s books. in order .
“The owners rebelled. … Sally came to help us with some town hall meetings with the owners and she was severely abused. “It was kind of like a political rally by Trump at those meetings, and people just didn’t listen,” he said. The owners banded together to recall the existing board and vote on a completely new list. “I was re-elected last year without any problems, so I had a three-year term and they replaced me. They simply would not pay a special assessment, “said Mr Nafan.
Engineering work to repair the garage was still needed, but according to Mr Nafan, it has been going on piecemeal and has begun in the last two years since it was removed from the board. The new board – which includes such prominent Toronto figures as Liberal MP Judy Sgro – upheld the $ 200 increase voted on by his board, but overturned the special estimate.
With the pace of apartment construction only increasing, Ms Thompson called on provincial governments to introduce stricter rules to force councils to raise the right amount of money for future renovations. In 2021, 30,844 pre-construction apartments were sold, close to the all-time record set in 2017 (31,216 units), according to a study by Urbanation Inc. Although the number of completed homes is usually lower each year – there were 13,885 newly settled apartments in 2021 – there are still tens of thousands of new owners who may not be aware of the true cost of their apartment.
“A lot of people are young buyers of these new buildings and they’re mortgaging to the end,” Ms. Thompson said. “Then we come on stage and say we have to triple the reserve fee, and in the end it’s like hundreds of dollars a month. There will be much bigger increases than you will probably get on your salary. “
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