Published in www.reminetwork.com Tuesday, March 1, 2016 By Van Smith
How to go about creating a financial plan when a corporation is facing rate increases.
Some may think of condo budget review as a yawn fest; however, others may spend hours working out the smallest of details. That’s because a budget is basically a financial plan — not sexy, but extremely important in the condominium industry. Budgeting is so important that the Condominium Act requires all corporations to maintain an operating budget and a capital budget for the repair and replacement of major components.
Ontario is home to thousands of registered condominiums, each with a unique budget. What makes each unique depends on building construction, occupancy, services, amenities, staffing, weather, and the list goes on. All of these factors contribute to annual expenditures and must be considered by the board of directors when approving an annual budget.
The elected directors for a condominium corporation meet annually to review a preliminary budget — often prepared by the corporation’s management company. This typically takes place in the ninth month of the corporation’s fiscal year, to allow time for review and final approval of the budget before it gets distributed to the unit owners.
Management firms put several days into preparing the budget and the supporting documents to justify the budget categories and amounts. Much data is gathered, including historical data from prior years, new utility rates, insurance estimates, EI rates, WSIB rates, and contracted services, all to assist with budget packages.