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The monthly common element fees (CEF) your condo board collects come with an obligation to your unit owners. Your job is to ensure you allot those funds properly to cover expenses and manage your reserve fund effectively. Here we offer a comprehensive guide to help you understand the average proportion of cost allotments for a typical 300-unit high-rise condo.
32% is the typical amount of money set aside to cover a condo corporation’s utilities which include hydro, gas, and water.
- Are your condo units sub-metered?
- What is included and not included in your utilities?
- Are you making changes to reduce (or worse) increase consumption?
- Are government rate changes likely for the coming budget year?
An average of 24% goes towards operation costs for shared recreational and other condo facilities.
- Are upgrades likely needed in the fiscal year?
- How are amenities being used, are they worth maintaining, or is there a better use you can propose to owners?
- Can you reduce consumption to save costs?
18% should be enough to maintain a healthy reserve fund. Remember, the amount contributed must be the greater of the following:
- 10% of the operating budget or
- The amount the reserve fund study indicates is required to fund major repairs and replacements
- What major adjustments are expected in the next five years for the reserve plan?
- Is this the time a special assessment would work better than increasing monthly fees?
- Can you include a general inspection to determine if the current contribution is suffice?
- Are you using your reserve fund study to determine the right contribution number?
- When was the last increase to common element fees?
Service and maintenance contracts
15% of your CEF cover either your own or property management’s cleaning staff, as well as maintenance contracts for elevators, the HVAC system, pest control, window cleaning, etc.
- Are there other costs specific to your condo building that require a higher percentage?
Repairs and maintenance
5% should cover minor repairs and maintenance not included in the reserve fund’s budget, such as minor electrical and plumbing issues.
- Do you have enough to cover items on your wish list?
- What projects might arise that would change your average contribution this year?
- Did the prior year’s increase cover predicted costs allowing you to return to your usual average?
Of the average 3% allotted to administrative costs, most goes to insurance, with the balance covering professional fees such as legal costs.
- Are there any major projects planned such as an audit, that will increase administration expenses?
- Are you spreading expenses out to avoid sporadic spikes such as insurance increases every three years?
2% covers employee payroll or third-party contractors providing various services.
- What is the going rate for each employee role?
- Is it more cost-effective to outsource on a part-time basis than a full-time employee?
- What is the renewal date for third-party providers?
- Is there room to see some payroll/third-party savings, i.e., automation, reduced hours, work from home, etc.?
A final overall consideration is how outstanding common element fees impact your ability to cover costs. Although all condo corporations have specific costs to contend with, these proportions provide an average contribution guideline.
The condo experts at CPO Management Inc, a full-service property management company in Toronto and the GTA, has the experience you need to avoid maintenance fee hikes. They have tremendous success helping condo corporations implement budget modifications and cost-saving strategies for condo corporations. Reach out to us today to learn more about our condo services.