Sometimes condominiums make bad decisions.
This was the case in a building where the old management and board decided to start a major project without enough money to pay for it. The project was a garage renovation, and could have been held off for years with only a small amount of patchwork, according to a later report from an engineering firm. Still, the building decided to go “all-in” and spend almost 4 million with only 1 million in the bank.
What happened next was not hard to predict. Halfway through the project, the building ran out of money, and the owners were approached with the option of a loan. As this would have raised maintenance fees for years to come, the owners threw out the board and fired the management.
When BPM was interviewed for the job, we were given the task of cleaning up the mess. The property was literally half-complete, with the roads, walkways and gardens on one side brand new, and the other maintaining it’s late 90s charm.
Our solution was to put a hold on the work once it was safe to do so at the end of the current phase, and to draft a new Reserve Fund Study. By reassessing all of the condominiums components, and pushing back many of the non-essential projects, we were able to avoid the loan, and get by with a modest increase. This would buy us time to save money in order to complete the garage project (now mandatory due to the different landscaping), which could be done in phases over the three to five years.
At the same time, an aggressive cost-cutting program was put into place. Non-essential operating expenses were cancelled, and preventative maintenance programs were launched in order to extend the lifespan of building components.
Owners meetings were held, and people were made aware of the situation. Despite the pause in the garage project, people were more than happy to avoid a loan which would have brought maintenance fees well out of line with similar condominiums, and would have brought down the value of the property.