Looking north toward a row of condominiums and apartment buildings, from King St. East and Berkley St. in Toronto. Fred Lum
A condominium maintenance expert warns that the chronic drop in future building repair costs is leaving new homeowners unprepared for potentially significant rate 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 don’t like hitting my own industry, but over and over again I see studies that completely and completely underestimate future costs. I’ve been politely working on this for a decade; I want to retire early and I don’t want to retire unless this fix it ”.
The worst case scenario is not hypothetical: in 2021, it was revealed in court documents that York Condominium Corporation no. 82, a 50-year-old 321-unit building near Jane and Finch, was facing a $ 11 million repairs delay. they require all apartment owners to enter between $ 30,000 and $ 40,000 to cover costs or risk having their apartment sold below them.
Mrs. Thompson set out a number of concerns in a recent paper that addresses everything from rapid inflation impacts on maintenance budgets designed for pre-pandemic repair cost estimates to government issues built into the pandemic. existing condominium regulations.
In Ontario, legislation requires condominium building managers to conduct reserve fund studies that examine what the likely costs of potential repairs will be in the 30-year horizon. Ms Thompson said this is insufficient for new buildings.
“When you have a new building, it’s like a new car: you don’t have to spend money for a while. So during the first 20 years of the building you have very few repairs, but after 20 you start to have to change everything: the boilers, the caulk. [around windows], the ceiling, everything. And so when you’re just waiting 30 years, you’re basically planning 20 empty years and 10 busy years. “
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Their preferred timeline is 45 to 50 years, which helps current homeowners pay for something closer to the actual cost of their residence.
“I’ve benefited for the first few years from being in the building of what I would call lower-than-adequate rate increases,” said Ted Cadsby, who has been living in his Avoca Vale apartment in downtown Toronto for ten years. . He has been a member of the board of directors of the corporation that manages it for the past three years. “The previous meetings were very proud to keep rates low. [around 2-per-cent growth a year at the most] and they were able to do so by not building a reserve fund as solid as they could have and probably should have. “
Completed in 1998, Avoca is now 24 years old. The building recently spent $ 500,000 on modernizing an elevator, it could potentially spend hundreds of thousands of dollars to fix a leak in the underground parking structure, and residents are also rejecting proposals to spend $ 500,000 more in updating the decor of the hallway and lobby. None of these corrections could have been covered by the nearly 20-year contributions of reserve fund maintenance commissions, which has led to a gradual increase in commissions of 6 percent annually. The alternative was a special assessment of a single contribution of tens of thousands of dollars. “So the current owners of the building are essentially subsidizing the first owners who escaped with low rates,” Cadsby said.
Mr. Cadsby still has the support of her board, but tariff disputes can lead to serious disagreements, and Ms. Thompson has seen entire boards retire when maintenance issues come home.
When Frank Naphan and his wife moved to The Gazebo in Thornhill in 2004, the building was 27 years old, but the fees were still quite low; about $ 500 a month. About 10 years after moving, Mr. Naphan ran in the election for the board and said he was surprised by what he found.
“I mean, they haven’t worked for years. There were all sorts of engineering studies that had been ignored, “he said. be the deterioration of the concrete on the roof of the attached parking lot that could be about to collapse.The costs to fix it? Mr. Naphan recalls estimates from $ 2 million.
“We increased the monthly installments by about $ 200, and we also got approval for a loan of up to $ 1.5 million in case we needed it,” he said, and then the board proposed a special assessment of $ 7,000 to retrieve the building books in order. .
“It simply came to our notice then. … Sally came to help us with some town hall meetings with the owners and was very mistreated. It was like a Trump political rally at these meetings, and people just didn’t listen, “he said. no problem, so I had a three-year term and they replaced me. They just weren’t going to pay a special assessment, “he said. Naphan.
Engineering work to fix the garage was still needed, but according to Mr. Naphan has been making adjustments piece by piece and started over the last two years since he was removed from the board. The new board, which includes such prominent Toronto figures as Liberal MP Judy Sgro, allowed the $ 200 increase voted by its board, but canceled the special assessment.
With the pace of condominium construction only increasing, Ms. Thompson is urging provincial governments to set stricter rules to force boards to raise the right amount of money for future repairs. In 2021, 30,844 condominiums were sold before construction, close to the historical record set in 2017 (31,216 units), according to research by Urbanation Inc. Although the number of completed units each year is usually smaller, there were 13,885 condominium units. recently occupied in 2021: there are still tens of thousands of new homeowners who may not be aware of the true costs of their apartment.
“A lot of people are young buyers of these new buildings and are mortgaging to the fullest,” Ms. Thompson. “Then we show up at the scene and say we have to triple the contribution to the reserve and they end up being hundreds of dollars a month. It will be much bigger increases than you will probably get on your salary.”
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