Condo resident asks MA for transparency on facebook

A resident took to facebook group MCST and posted the following.

To which a few others replied…

I assume every seven years the residents re-accumulate the equivalent of 60% of their existing Sinking fund. Sounds like one of the following.

1. The condo has very few things to maintain, except for painting. 2. Condo is running out of funds after the paint job. (see previous post)

If only more residents start attending AGMs/ EOGMs, asking the right questions (“not the second parking lot”). Then will the prudent decisions be made.

As to Fand’s question about how an AGM can be conducted without sufficient owners. A quick reference to BCA will show you the criterion. See screenshot below.

Is your condo running out of funds? (part 2)

“Yah lar,” cries my friend over kopi. He laments the existing playground and landscaping are not properly maintained. Some parts of the rubber-floor lining had dislodged due to wear and tear. Nothing done. The greenery used to be tended by two gardeners, now only one.

Related posts: “How much for your green?”

But as he showed me the financial reports, I pointed out the total Strata funds are plentiful and robust. That is, the total of Sinking funds (SF) and Managing funds (MF).

How did I know? Well, let me show you a real-life example of one condo running out of funds. An almost twenty year old condo development in Upper Bukit Timah, I call “PanCit”. A relative had bought a unit and appointed me to take charge of it.

PanCit awakening from ten years of grandiose

In 2018, PanCit finally voted to raise their SF from $15 per share value to $25, and to increase MF from $72 per share value to $78. Managing agent had highlighted the operating deficit over the past two years. This resulted in drawing down from the existing MF. The SF had approximately $2.1 million(M). Taken together, total funds was $2.56M.

To put in perspective, this condo with about 350 units comprises of three blocks. Since TOP, the maintenance fees were largely unchanged. Annual contributions amounted to $1.16M for MF, and $0.24M for SF. Over the past 17 years, total collections are as shown below.

 Managing Funds (MF)Sinking Funds (SF)
Annual $1,160,000$240,000
17 years $19,720,000$4,080,000
Current $460,000$2,100,000
PanCit’s funds as of end year 2018

Most of the building, equipment and facilities were estimated to have a lifespan of 10-20 years. MA calculated weighted average of 16 years and projected $750,000 annual provision. In total that’s $12,000,000 replacement costs. It is already the 17th year. Assume all monies accumulated in SF since have been used for replacement. There is still a shortfall of $8,000,000.

MF isn’t doing too well either. The operating deficit raised earlier meant whatever was collected was spent, and more. No wonder both MF and SF were raised, albeit insignificantly, amounting to less than $260,000 annually.

How do we raise $8,000,000? Oh dear, now it’s clear. We could not afford those gardens, pools, guards, cleaners and fresh coat of paint for the past ten years. Not possible, unless we triple the recent increments from $260,000 to $780,000, ten years ago. We thought we could have our cake and eat it.

Related posts: “Sinking funds tell a tale of two cities”

Source: Jock McTavish on Quora

Is your condo running out of funds? (part 1)

During the circuit breaker period, tenants have been given rent reprieves to cope with the downturn. With the worsening of Singapore’s GDP (-13.2% for Q2 yoy), there is an on-going second round of retrenchments and pay-cuts. Some condo owners are finding themselves in financial difficulties. They have been asking for a reduction in MCST maintenance fees, which can amount to $250-$800 per month (depending on development size and facilities).

Council members review contributions and expenses continuously. I would say this is their biggest concern and main responsibility. Once a year, all owners are informed during AGM and given the opportunity to voice out regarding this matter. Therefore such contributions should either be sufficient or with a small buffer (in older and more conservative condos).

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No doubt construction cost is widening amongst Builders

Three months ago, our Minister of the multi-ministry taskforce on Covid mentioned he had no doubt that construction costs in Singapore will be higher because of new regulatory requirements. I was keeping my arms crossed (instead of fingers).

Earlier our condo MCST had agreed on carrying out renovation and repair works to the common areas and landscaping. This was in the beginning of 2020 but the tender was delayed due to the coronavirus. The list of works are as follows.

  1. Rewiring of some electrical cables (150m)
  2. Demolition of old BBQ pits and 1m low walls
  3. Replacement of paver stones approximately 1.2m along 120m trail
  4. Removal of debris

Our committee was expecting the full cost to be less than $6K, even after factoring labor constrains with the safety distancing measures. To our surprise, the quotes received this month were between $12K- $16K. I wonder how the figures are higher than 100%.

Somehow it reminds me of Pricing elasticity. Assume a huge inventory of Coffee Mugs that were written off previously, whether you sell 100 Mugs at $1, or 50 Mugs at $2 makes no difference to the underlying profits. Could the contractors be pricing Q3 works at double the price to make-up for zero projects in Q2?

Anyway we are not prepared to accept sky-high prices. Prefer to wait out and see. Meanwhile, I hear numerous small contractors are facing cashflow problems. Perhaps they fancy smaller projects with timely payments?