Finances

Doing the right thing is not always popular
 
Managers often have the tough task of presenting a budget when there are significant increases involved. In these tough economic times, there is a tremendous amount of pressure put on managers and directors to not increase (or even pressure to decrease) monthly maintenance fees. Setting this precedent can cause a downward spiral for the condominium in future years by not being able to catch up with the monetary requirements in order to optimally maintain it – eventually leading to court appointed administration. Here is a true story of one condominium that will surely end up under court appointed administration, much like its sister corporation next door.

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The HST hits condominiums hard
 
Now that the HST is in full effect, condominiums across Ontario are suffering financially. Operating costs are up and reserve funds are suddenly short. Across the board, the HST implementation means the cost of living in a condominium is around six per cent more than it was a year ago for condos that are in good financial shape.

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Condominium insurance – from the condo corporation’s perspective
 
An obvious concern is the buildings and other property that the condominium corporation may own. Legally, most acts require corporations to insure the buildings against “major perils.”

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The devil’s in the details
 
Maintenance fees are a necessary evil, and while running a condominium is an expensive job, everyone benefits from a well-funded and professionally-run building. But for the owners of newly built condominium buildings blissfully enjoying their first year in their new home, the turnover from developer to condominium board can come with a huge shock hitting them right in the pocketbook.

Opportunity costs knock off alternatives
 
In most condominium corporations the first review of the forthcoming year’s budget traditionally occurs 90 days prior to the current year end. However the collection of the data and information necessary for the budget should be underway throughout the prior fiscal year.

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Reserve fund investing for maximum returns
 
Reserve Funds investments have unique characteristics. They are classified as fixed income investments, because they consist only of bonds, bond equivalents, or cash. They do not contain any equities. However, unlike normal fixed income investment accounts, reserve fund accounts have continuous monthly cash flows. Contributions are coming in every month, investment maturities, and interest received, add to the cash when they occur, and expenditures deplete cash at irregular times. Therefore, to consistently get the best investment returns, future cash flow should be estimated as accurately as possible.