Dollars & Sense

By Debbie Dale, President, Muskoka Condo & Rental Services

 

With the enhancement of the Condominium Act, 1998, by the launch of both the Protecting Condominium Owner’s Act (PCOA), 2015, and the Condominium Management Services Act (CMSA), 2015, condominium owners and the property management industry are both facing new expenses that fall outside existing budgets.

All condominium units will now be subject to a $1 per unit per month fee payable to the Condominium Authority of Ontario(CAO) to fund its services. Invoices are already being issued and the scramble is on to register, pay and wait to see where those per unit fees will settle later in 2018. This unbudgeted expense levied by statute against condominium corporations is easy to understand and account for amidst the continuous condominium Board/Owner quest to keep condo fees low.

The real dilemma is in understanding the impact and real cost of licensing both condominium managers and the management firms which employs them. While the five-year stakeholder review of what’s wrong with the way condominium corporations were managed or operated has clearly driven massive change, the actual cost of the wide sweeping changes is just hitting home. Condominium property managers are poorly paid, some are untrained, instances of theft have hit the headlines and consumers demand change. And so, they should. But who is paying for the new consumer protection focussed essential changes? That matter has yet to be settled and uniformity in application of license fee charge backs to condominium corporations would benefit all.

Enter the Condominium Management Regulatory Authority of Ontario (CMRAO) to assess, license, monitor and collect license fees from both condominium management service providers and condominium property managers. Inspectors are to be appointed and the CMRAO is busy setting up to process license applications, is already gathering criminal police record checks for future licensees, hiring staff and setting up operations. The details of how the CMRAO will function is under development. The prayer of the condominium management industry is that whomever is ‘judging’ managers and service providers will possess beyond significant insight into the condominium market place so as to cast realistic and informed decisions or verdicts.

Licensing fees for a condominium property manager will range from $379 for an employee with less than two years experience up to $607 for an experienced manager employee as defined by criteria established by CMRAO and ACMO (Association of Condominium Managers of Ontario). A one-time per application fee will apply of $150. HST implications are not yet defined.

Licensing for a condominium management services provider that employs a licenses condominium property manager will be $799 plus $350 per licensed employee.

The quick math version for one of the four large condominium property management service providers in the Toronto area employing fifty (50) experienced managers tallies up to $18,299 for only the management firm itself. The license fees for the fifty (50) experienced managers adds up to $30,350. We know what the fees will be, until sometime in mid/late 2018 at least, but who is paying and how they will suddenly be able to pay without cutbacks or financial distress is a rather significant question.

Analyzing minds perceive a potential increase in the volume of unlicensed support staff to reduce the number of license fees applicable to fully qualified, experienced, educated managers. How many units or condominium corporations can, or could (or should!), one trained manager actually be accountable for? Others ponder a market opportunity to overtake competitors through acquiring the best managers by paying the manager license fees and leaving competitors with the dregs of the barrel. Time will tell – it always does. Smaller firms with only a few experienced managers are also hit hard with the fees atop the increased work loads. Bottom line – if the expense is not in your bottom line then how do you balance your budget? Either you do not and cease operations (leaving an even larger hole in the huge shortage of trained, experienced condominium managers alongside continuing construction of more condominium units) or you inform clients of the new costs and seek fair reimbursement for unavoidable government mandated costs. Or, you just increase per unit fees ASAP and wait to see how it plays out.

License fees may go up, and presumably not down, once the number of managers and management services providers is realized.  Currently, no one is too sure how many there are of each so it’s not possible to determine a long-term license fee income from which to fully fund all the services of the CMRAO

Information Certificates will be required to be sent to the CAO at set intervals plus more forms when certain events occur. Notices of meetings will be preceded by notice of notice of meetings. Budgetary changes will lead to other notices to be filed. Change of Directors means another notice to be filed. Property manager changing employers is another notice. A property manager moving is yet one more notice to file. Clearly there is a cost for the time to prepare and submit these new notices. The property management service providers will bear the cost, initially, despite having no budget to cover the costs of this extra labour or the costs of their licensing or that of their manager-employees. The thought of pushing the manager licensing fees on to condominium managers that are already very poorly paid for hours worked and services performed is not logical.

The true win-win is simple. Investors in condominium units need to acknowledge and pay for the actual, measurable financial impact of the newly developed consumer driven legislative changes with substantial fees to both condominium management service providers and experienced, trained condominium managers. Perhaps the management industry can absorb the labour costs and all the extra work but absorption of the license fees as well is simply not realistic. These are the costs of progress, better service, safer investments for condominium owners and the natural increase in condominium units and solid condominium communities that is simply a part of evolution.

 

(Impact Points of  PCOA (2015) and CMSA (2015))  (mymcrs.com)