Do We Really Have Control?

Based on today’s market values, purchasing the smallest unit in our complex will cost a potential buyer approximately $300.000. For first time home buyers, the home ownership dream is the most expensive investment that will consume somewhere close to 50% of their annual income, though banks extending mortgages prefer to see a percentage closer to 35%.

One major question that many first time condominium owners confront is: “After investing so much money to purchase a condominium, how much freedom do we have in controlling the destiny of our biggest investment?” 

In our building the answer is plain and simple “ZERO CONTROL”. The Board of Directors, with the TOP/DOWN governance style, may precipitate in your mind the illusion of control by asking for your input or ideas about extremely trivial projects, but when the time comes to decide who gets what out of the $2.000.000 collected in maintenance fees, the owners have no say in it. Let me elaborate more with a concrete example. During the 2016 annual meeting The Board announced that approximately $1.2 million dollars was set aside to replace the carpets and the wall papers of the building. The amount is not open to any form of negotiation with unit owners. It was announced without any formal or informal contribution of suggestions and ideas from unit owner. However, The Board intends to form a committee of unit owners with the narrow mandate of helping The Board in the selection process of the most compatible color and carpet pattern with a good visual appeal.

Of course the previous example is not the only arena where unit owners can express their opinions. Back in June 2014, The Joint Management Council (JMC-not the real name of the council), distributed in the complex a survey, supposedly designed to help The Council plan new “Community Activities” and strengthen the “Sense of Community” by bringing together unit owners who share the same hobbies or social activities.

In July 2014, the newsletter of The Council published the results, and the figures were earth shattering. In a survey distributed to more than 570 unit owners, only 52 residents completed and returned their “Community Activities Survey”. Approximately 10% of unit owners showed an interest in the goal pursued by The Council. A very impressive percentage that indicates a clear apathy about the strong sense of community that exists in the complex, and how noble goals are exploited to shape the notion that decision makers are providing a large array of “CHOICES”, but unit owners are too reluctant to take advantage of what is being offered by the JMC.

It is true that the survey had a long list of potential activities (approximately 20) from dancing, to movie nights, to Yoga and Tai Chi classes, etc…The only problem is “there is a fee for an activity” to be paid by the unit owner, if it meets the most crucial condition of “a minimum of 10 participants per activity”. During the last 2 years, many activities were planned and scheduled only to be cancelled by the instructor simply because the number of participants was unacceptable from a “Business Model” point of view. One is forced to wonder why instructors, often unit owners in the same building, are insisting on a minimum of 10 participants, and cancelling classes simply because the criterion is not met, when the purpose of the activity is not to generate an extra income for the instructor (who is using the common elements of the building but not paying to The Board a single penny), but to strengthen through social activities the “Sense of Community”. If the activities are advertised out of the benevolence of a heart willing to serve the common good, why are instructors following a “Business Model”?

To understand the bizarre behavior of unit owners, their apathy in holding accountable decision makers, and surrendering the destiny of their biggest investment to “Experts” who promote the image of infallibility, one has to understand modern marketing techniques designed to manipulate people, influence them to invest mindlessly in products and services, and obey authority figures blindly by buying the argument that all decisions come from the benevolence of the heart to promote “The Common Good”.

A good source to understand the previous phenomenon is a book titled “The Paradox of Choice - Why More Is Less”. Researched and written by American psychologist Barry Schwartz who emphasizes throughout the book the cardinal importance of autonomy and freedom of choice in a modern democracy, and how the 2 factors (autonomy & choice) impact our psychological well being, positively if we can see how we are manipulated by clever techniques, and negatively if we allow others to victimize us by selling us the illusion that we have control over our day-to-day choices and ultimately our destinies. 

One practical example of clever marketing and manipulation techniques is the purchase of a cell phone. The service provider offers you a product that has more than 20 functions and applications, meanwhile on a day-to-day basis all you need is 3 or 4. You can have the product in 12 different colors, even more if you are willing to buy an extra casing that comes decorated with 25 different patterns. To operate the phone you have to study a fifty-page instruction manual. By the time you try to see which color is a close match to your purse and clothing, and which purse is more compatible with the size of the gizmo you plan to buy, you are so exhausted and mentally drained, that you cannot think about the most critical aspect of your purchase-a long-term contract that you have to honor for three years and a monthly payment where you have no say at all.

Of course it would be unfair to talk only in theories and blame The Board for imposing on us a Top/down method of governance, where unit owners can decide which ornament goes where on a Christmas tree, but we cannot participate in any serious endeavor about how the $2 million-dollar budget is spent. We are expected to follow blindly without any criticism and the most concrete evidence is the following letter reproduced in full with minor modification to prevent the identification of the Corporation:

===============================================================

Attn: Board of Directors,

MTCC No 000

Resident Services Office

August 15, 2016

Dear Members of The Board,

Year after year, during the Annual General Meeting of unit owners, The President in her annual report emphasizes the notion that “…Board members are volunteers who spend untold hours serving our condominium community…” It is safe to assume, based on assertions made by The Board in a variety of sources and circumstances, that a significant amount of time is invested by Board members into probing cost cutting measures while maintaining a high standard of living for owners and residents.

I am also convinced beyond a reasonable doubt that no Board member is willing to claim for herself or himself the Divine attribute of being infallible. If The Board is not willing to challenge the previous statement, then one can safely argue that The Board had made mistakes in the past and adopted projects that neither improved the high standard of living in our building, nor made any meaningful contribution to the common good despite the thousands of Dollars invested and all the noble intentions associated with each project.

To avoid such mistakes, a group of unit owners in the building are willing to invest time and effort to help The Board assess the merits of projects $10.000 and up, do a background check (open sources) of contractors to avoid selecting companies such as Plenora Restorations Ltd. (PRL) boycotted by The City of Toronto “…to enhance the reputation of the City for ethical and fair business dealings.”  Plenora was selected by decision makers of the complex based on the strength of a recommendation made by an engineering firm, without any rudimentary check of the reputation of the company. Had any decision maker made a simple background check, substantial complications could have been avoided during the entrance and exit ramps repairs of the underground parking lot.

Please advise in writing if The Board is willing to support and coordinate projects review and analysis with  a committee composed of owners fully dedicated, like The Board, to cost cutting measures while maintaining a high standard of living for owners and residents. Needless to mention that the recommendations of the committee will be non-binding recommendations and The Board is free to adopt or reject the findings or the views expressed by the committee.

Looking forward to hearing from you, I remain

Yours truly

================================================================

In a letter dated Nov. 01, 2016 for a variety of reasons, ranging from ethical factors to privacy concerns, The Board clearly said NO. Even if within the ranks of unit owners we have architects and engineers who can contribute to the collective good, they cannot share power with The Board. And if mistakes are made and thousands of dollars are wasted on projects that do not contribute anything to the collective good, blame it on the experts who have access to the ears of The Board.

In conclusion your most valuable asset, your condominium’s destiny is well beyond your personal control.


 Admin “The 215 Forum” © 2017 
 

Should We Maintain The Momentum

For the first time in almost two decades, the Board of Directors approved a 2% increase in the operating budget for fiscal year 2016/17. While many Boards across the City of Toronto, as a standard practise adopt increases based on the annual inflation figures published by “Statistics Canada”, our building’s Board established a tradition of imposing increases that have reached at one point 7%, and every unit owner was the victim of an unsustainable increase doubling monthly maintenance fees every 10 years (100% increase).

In a previous article titled Board Elections & Ethical Principles published on Monday, 2 May 2016 on this blog, we pointed out to our readers that the most common grievance expressed by unit owners signing proxy forms a few days before the AGM of March 2015, was the high maintenance fees approved by The Board, based on inputs solicited from “The Experts of the Industry”. A point even Mr. Hovsim Janovo (not the real name of the candidate), acknowledged during his election speech. With every complaint voiced about high maintenance fees, The Board was peddling fear to silence unit owners, and the tactic worked exceptionally well, especially with owners who never make an effort to check the financial statements delivered with the AGM kits.

The Board’s reply was very simple: “Our maintenance fees are within the averages of “The Industry”. If we don’t maintain the existing trend, we will have to impose a Special Assessment”. Not a single owner dared to challenge Board members on the spot by pointing out that, according to an article published on Friday Feb. 13, 2015 titled “Maintenance fees take a toll on Toronto condo owners”

http://www.thestar.com/business/2015/02/13/the-real-costs-of-maintenance-fees.html

many Condominium Boards, not only contain increases within the annual inflation rates published by Statistics Canada, they reduce/roll back monthly maintenance fees. The article highlighted the bold move made by Mr. Craig Gagliano , The President of The Board of Directors of the west-end Toy Factory Lofts, who rolled back the monthly maintenance fees for each of the building’s 213 units by a stunning 30 per cent.

The Toy Factory Lofts maintenance fees, at the time of the article’s publication, were just 31 cents per square foot, almost half the city-wide average of 59 cents per square foot for similar units. Not only unit owners were saving hundreds of Dollars every month on their monthly maintenance fees, the resale price of units consistently experienced a substantial increase compared to other buildings in the same neighborhood. “Our rate of property value increase has outpaced similar buildings and I believe it’s by virtue of the attractiveness of the low maintenance fees,” confirmed Mr. Gagliano to the reporter. Units in his building were the subject of an almost 21 per cent price appreciation between 2009 and 2014. While a similar building in the same geographical vicinity, The Indigo, where maintenance fees are 90 cents per square foot (compared to 31 cents), units sell on average for $229 less per square foot than others in the area, according to research results published by www.condo.ca  

Mr. Gagliano’s arguments and moves undermine seriously our Board’s position that if certain averages p.s.f are not maintained, a special assessment will be needed and property values will go down. On the contrary Gagliano’s strategy means below average (maintenance 59 cents p.s.f) maintenance fees, automatically pave the way for higher resale prices and make the building more attractive to potential buyers. 

Mr. Gagliano’s views are fully endorsed by the evidence gathered by Mr. Carl Langschmidt, a condo expert and co-founder of www.condo.ca “The reason The Toy Factory is so successful is that it has a board with smart, business-minded people,” says Langschmidt. “It is proof that maintenance fees can be kept in check.”

For the first time in two decades, our Board managed to keep the maintenance fees in check. Was it due to the organized efforts of “The Owner’s Alliance” movement, and the movement’s co-founders insistence that with fiscal prudence lower maintenance fee increases can be achieved? To answer the previous questions I conducted an email survey with 27 unit owners in the building who had provided email addresses under a variety of circumstances. Two prominent questions were promoted in the survey, (a) should we maintain the pressure to keep the maintenance fees at a manageable level? b) Should we seek election on The Board if The Board remains committed to 2% increases as part of a long-term strategy, not a short-term tactical maneuver to neutralize the popular anger with high maintenance fees?

Many owners believe that The Board relied on the 2% increase to diffuse the popular anger, and it is only a matter of time for The Board to slap all owners with a “Special Assessment”, and then argue: “We told years ago, low maintenance fees lead to “Special Assessments”. In other words, the answer given to unit owners a few days prior to the 2015 AGM will be turned into a self-fulfilling prophecy within the next couple of years.

As a co-founder, I will adopt a “Guarded Optimism” about the new direction adopted by The Board, but I will conclude my article with the analogy provided by a unit owner during the email survey. Imagine a person who experiences headaches due to a high blood pressure/hypertension. His/her family physician prescribes a drug that neutralizes the headache in a matter of a few weeks, and normalizes the blood pressure. Do you think the person who used the prescription drug should stop using it because the intended goal was achieved, or should she/he continue the use without any interruption because the goal cannot be sustained without the prescription drug?

If we apply the previous analogy to our maintenance fees, should we fold our tent and close our blog site because our goal (2% increase) was achieved, or should we keep everything intact because without our pressure the gain we made this year cannot be sustained in the future?

Admin “The 215 Forum” © 2016 

Respecting The Board

A few days ago a neighbor, well known for her loyal and blind support for The Board and the management company, stopped me in the underground parking lot to unleash a diatribe about my lack of respect for The Board, and the excellent service provided by management company to keep the building clean and insuring the smooth running of the day-to-day operations in the complex.

About the excellent service we receive from the management company, I reiterated to my neighbor the views expressed in my article titled “Direct Democracy”:

Any person familiar with the basic rules of logical reasoning, will agree that when someone claims that he/she is getting an Excellent service from a management company, it unavoidably means that the claimant was exposed to a minimum of two different management companies, and one is bad or mediocre and the other one is excellent. In the case of our complex, the current management company was selected by the builder when construction was completed, and ever since, Boards for a number of considerations, stayed with the same management company. Had we relied on the services of another company, with proper merits we could have said company X failed to provide adequate service for approx. $330.000 (current amount paid by the complex for the three full time employees of the management company), and company Y did an Excellent job. As a possibility we all know well that other management companies do exist in The Condo Industry that may do a better work for less than $330.000. But since the current management company has enjoyed the exclusive right to service the complex since 1999, we don’t have any other source of reference, and owners/cheerleaders of The Board before announcing a value judgement such as Excellent, Very Good, Impressive should ask themselves Excellent compared to what, Very Good compared to which competitor,…”  

As to the “lack of respect” problem, manifested in my behavior according to my neighbor’s perception, I am not sure if she is expressing her own opinion or voicing on behalf of The Board an invalid grievance often conveyed to me in writing by The Management company. During the last thirteen years I received numerous letters pointing out to me that I should refrain from “…unsubstantiated and abusive attacks against the Board and management in every communication”.

I have often counter argued, and it is well obvious from my articles published in this blog, that I always  provide facts, dates, adequate description of events. So every allegation I make is supported with an adequate level of solid evidence and what the logical conclusion of each piece of evidence is. And if The Board and The management have any issues with the abusive attacks, they have to stop their abusive exploitation of the rules, laws, regulations, and extend a decent respect to the opinion of unit owners, and start believing like any “Reasonable Man/Woman”, that respect is a two way street. If you want respect you have to extend it first to others, the way a “Reasonable Man/Woman” will do.

My understanding of the notion of the “Reasonable Man/Woman” is based on the following definition of The Ontario Court of Appeal:

"...He is a person of normal intelligence who makes prudence a guide to his conduct. He does nothing that a prudent man would not do and does not omit to do anything a prudent man would do. He acts in accord with general and approved practice. His conduct is guided by considerations which ordinarily regulate the conduct of human affairs. His conduct is the standard 'adopted in the community by persons of ordinary intelligence and prudence' " (Arland v. Taylor, [1955] 3 D.L.R. 358 (Ont C.A.))"

A reasonable Board Member who expects respect should not promise during 2 consecutive AGMs, in front of 67 unit owners, that The Board will not invest any money in “Band Aid” projects, and then reverse his/her decision for the expediency of the moment, and invest thousands of dollars in a project (speed bumps) that works six months of the year only (winter time the bumps must be removed for snow removal vehicles).
A reasonable Board Member who expects respect from unit owners should not set a deadline for applications (volunteers for The Rules Committee), and then announce a new extension, simply because the only 2 owners who submitted their candidacy before the deadline are considered “Persona Non Grata”. When you conveniently twist the rules and abuse your power you should never expect respect.

When you arrange 2 meetings of owners to discuss if an antenna project The Board is considering adopting, is compatible with the viewing habits of unit owners, and the majority of unit owners tells openly The Board that the antenna project does not even come close to their viewing habits, and despite the clear answer of owners, The Board spits at their faces and moves ahead with the project, that is not respect

A reasonable person before endorsing a $10.000 project (door viewers) spends 5 minutes on the internet to check the validity of an estimate submitted by a contractor. I dismantled my own viewer, and traced the product to 2 US distributors in 5 minutes of search on the internet. Both US suppliers offered the same wide angle viewers we have on our doors for $ 9.00 CAN (including shipping charges to a Toronto address and customs clearance) for a high volume purchase of 200 units. So if we minus $9.00 from the $50.00 charged by the contractor, we are left with an amount of $41.00 charged for labor. I dismantled and reinstalled my own door viewer in less than 5 minutes. Now we are confronted by the big mystery that no one can explain: How did so many enlightened minds (5 members of The Board) and the agents selecting and managing the contractors on behalf of The Board, miss the blatantly unfair price of $41.00 charged by the contractor for 5 minutes of labor, or the equivalent of $492.00 per hour. You want respect answer the following question: “Why did The Board favor this contractor and agreed to pay the unreasonable price of $492.00 per hour of labor?”

Don’t expect too much respect when you blindly rubber stamp projects without investing a few minutes to assess the validity of a claim/estimate submitted by a contractor. All Board members are educated individuals, and this is what Albert Einstein has to say about “education”: “Education is not the learning of facts, but the training of the mind to think.”

I can bore my readers “Ad Nauseam” with dozens of well documented decisions taken by The Board during the last 10 years that represents nothing but contempt of owners and their opinions. So to make a long story short, my neighbors/cheerleaders of The Board should seriously try to promote to The Board the cardinal principle of “you want to see respect from owners then lead by example and show respect to unit owners.” I promise the rest will proceed naturally. 

Last but not least, the most disrespectful position adopted by The Board was the refusal of the 5 members to lift the ban placed on my freedom of speech (in paper form), and my association with my fellow unit owners (through door-to-door delivery of my views), based on the argument that the rule used by The Board was “Duly Enacted” and considered reasonable in the industry (The Condo Industry).

The notion of a “Duly Enacted” laws, rules, regulations is an integral part of a logic frequently adopted by individuals and groups obsessively attached to power. Slavery rules were duly enacted in Southern States where slavery was legal. Abraham Lincoln did not buy that argument. He sacrificed the lives of 500.000 Americans to impose just rules banning slavery, instead of passively accepting “Duly Enacted” rules supporting slavery. Oskar Schindler and Raoul Wallenberg, knew well that Nazi Germany had “Duly Enacted” rules to justify the atrocities committed against Jews, Gypsies, and other minorities. Like Lincoln they defied every single duly enacted rule to save the lives of thousands of Jews, and other innocent minorities in Nazi occupied Europe, and became legends considered “The Righteous Among Nations”. Nelson Mandela, did not give a damn about the duly enacted rules of South Africa supporting apartheid. He spend more than two decades in jail to highlight the plight of his nation, instead of endorsing the argument that “Duly Enacted” rules should be followed even if they are not just.

After all the previously mentioned examples I can guarantee my neighbors and The Board that the issue of using corporate rules to silence in a disrespectful manner an outspoken critic in the building, will not disappear. In our culture we have a saying: “It is not the size of the dog that will scare the bear. It is the ferocity of the fight that will convince the bear to retreat”, in other words blind respect will never be extended to The Board for ill conceived plans and decisions that do not contribute anything to the “Common Good”, and if and when they decide to mobilize their legal power to serve the “Common Good”, respect will be extended unequivocally.

Admin “The 215 Forum” © 2016