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COVID impact on condos has been felt throughout the GTA and beyond. Many condo boards could find the operational adjustments made for COVID could contribute to financial issues for their condo. Here we outline five unexpected ways COVID impacts your condo board’s plans.
1. Lagging Maintenance Schedules
No one can blame you if your maintenance schedule lagged due to the pandemic. Small repairs might not seem so important when considering the restrictions and risks the pandemic presented. However, those small maintenance tasks help avoid costly major issues post-pandemic. If the endless roller coaster of lockdowns and easing of restrictions keeping you from scheduling maintenance work, you should seek advice on the repairs that shouldn’t be delayed. This helps ensure your reserve fund study plans don’t get derailed and help minimize COVID impact on condos further.
2. Delayed Reserve Fund Studies
Your site-visit based studies provide much-needed insights on foreseeable building component replacements. With on-again, off-again restrictions, you might have missed your onsite reserve fund study assessment which is a COVID impact many condos haven’t anticipated. As things wind down, it’s certain calls to providers from boards trying to make up for the lost time increase. As a result, you should set up your assessment as soon as possible so it is completed as soon as things open up again. If you did miss your timing, you have to inform owners of your challenges and provide some form of plan that shows your commitment to finalize your study. Let them know you could face challenges for your next fiscal year budget. Without some consideration, your plans for future funding could be in jeopardy. In turn, you might find insufficient funding without plans to increase fees to reflect upcoming replacements and repairs. You want to avoid the need for special assessments.
3. Less Effective Spending
Delayed planned projects could lead to less than effective spending in future months/years. As contractors try to meet demands for their backlog of work, your planned projects could lose priority. This is a critical COVID impact on condos as it leads to emergency situations for major systems in the building. Reprioritizing projects now based on urgency and budget expectations can help avoid less effective spending.
4. Unplanned ways COVID Impacts Costs for Condos
Failure to keep track of unplanned costs in your condo such as ramped up sanitizing or accommodating virtual work, could lead to operating fund issues. Because your reserve fund sets aside funds to cover your major replacements and repairs, unplanned COVID-related costs require new budgeting initiatives. For example, there could be an opportunity to temporarily reduce the amount contributed to your reserve fund, so you have more available to cover current COVID-related operating costs. However, even this can lead to issues impacting your ability to cover scheduled major repairs and replacements. As a result, you’ll have to make up the difference the following year to maintain adequate reserve fund project funding.
5. Interest Rates and Inflation
Low interest rates can impair reserve fund growth. Newer buildings are the most vulnerable. Luckily, newer buildings are also not yet facing major replacement and repair costs. Unfortunately, if you included interest for growth, you’ll need recalculations to find ways to make up the difference. Add to this the ridiculously high increases in building materials, and you can really see a shortfall in your reserve fund as a result of the COVID impact on condos.
If you want to avoid special assessments in 2022, paying close attention to these possible shortfalls can help.
Finding an effective way to overcome negative impact of COVID on your board’s plans is easier with the help of CPO Management Inc, Toronto property management company specializing in condo management services. For more information about reserve fund studies, or for any other questions reach out to us today.