Reflections On "CHANGE"

In early February, we had our annual general meeting (AGM 2017), elections were integrated into the agenda of the meeting, and a speech from the President of The Board reassured more than 190 unit owners that “The State of The Union”/Condominium Corporation is in an enviable position, due to the relentless efforts of 5 owners/volunteers who sit on The Board of Directors , and with the help of a management company protect and shape a glorious future for the republic that operates under the legal name of Metro Toronto Condominium Corporation (MTCC) 000-Not the real number of the corporation.

Like previous elections, candidates belonged to two camps and since in the previous paragraph we used the analogy of a country and a government”, based on the same analogy we had 2 candidates from the ruling party (Board members) and 1 candidate from the opposition (Owners Alliance). All candidates had 2 minutes to deliver a short speech, and in this article we will reproduce “ad verbatim” a portion of The Alliance’s candidate speech, and then produce a “Forensic Analysis” of the key facts that paved the way for an anonymous unit owner to express his anger through a letter dropped at the door step of the Alliance’s candidate, a few days after expressing his vision in the resume distributed with the AGM documents delivered in the building.

Before we proceed to providing the details of the speech, we would like to clarify to our readers what the Alliance’s candidate mentioned in his election Resume/Bio:

 “As a movement we pursue the following three critical goals:

-      An end to 100% increases in maintenance fees every 10 years.

-      Confining annual increases in maintenance fees to inflation figures released by “Statistics Canada” (2, 2.5%).

-      An end to existing AGM election rules that adhere to the “standards of The Condo Industry”, but fail to meet the standards promoted by Elections Canada, an institution that clearly advocates the full and unhindered disclosure of the total number of votes obtained by each electoral candidate, and full access to documents used to tally the scores of a winner or a loser.

I strongly believe that with fiscal prudence, responsible governance, open dialogue, and constructive criticism the previously mentioned goals can be reached. If you share my vision and would like to make any suggestions, you can reach me in writing at …”

In a very angry tone the anonymous neighbour overwhelmed by fear wrote:

You must be blind, stupid, and ignorant. After 4 elections you failed to see that those who cast the vote decide nothing. Those who count the vote decide everything. We don’t want your rotten ideas and visions in this building. Leave us alone. Move Go and live somewhere else. Angry neighbor.

The Alliance’s candidate after reading the letter during the election speech replied:

“I hope the author of the letter is here tonight and listening carefully to my response. I do not like your vulgar statements, but as a firm believer in freedom of expression, I will sacrifice my life for your right to express them. I am also sorry for all the psychological pain and suffering you had to go through during the last few years because of my principles and visions.

I strongly suggest that you seek medical help for anxiety, insomnia, and depression because I am not moving anywhere, and as long as I am living in this building you will see me again next year and the year after until the building is ruled by the highest level of transparency that can be targeted and achieved.”

I examined the original letter written on a unique type of paper that provides several clues about the profile of the author.

[1] The paper is a thick paper specifically used for typewriters. You hold it against a source of strong light and you will see the name of the manufacturer who no longer produces that type of paper.

[2] The condo owner who wrote the letter (hand written) worked in an office environment where typewriters were the norm not computers. By retirement age he or she managed to bring home a significant amount of the paper that he/she still uses decades after typewriters became defunct and considered relics from the “Dinosaur Age” of technology.

[3] The anonymous author is an avid supporter of “The Condo Industry” that has successfully peddled to condominium owners all over the Province the argument that unless you spend an x amount of dollars per Squ. Ft., supported by annual rates of 6 to 8% increases in maintenance fees, your unit will lose value and your investment will bring an extremely poor return the day you decide to sell it.

[4] It is obvious that the Alliance’s candidate, by advocating in his vision the notion of “Confining annual increases in maintenance fees to inflation figures released by “Statistics Canada” (2, 2.5%)”, sent his anonymous neighbour into a panic mode. Facing the existential threat of losing value on his/her most valuable asset, his/her condo unit, the angry neighbour instead of attacking the argument and providing solid evidence that low maintenance fees undermine the value of a condominium, he/she decided to attack the author of the vision.

[5] The anonymous author did not mention that the statement “Those who cast the vote decide nothing. Those who count the vote decide everything” is attributed by many historians to Soviet dictator Joseph Stalin. But he/she is extremely serene with the fact that we have an elite group of decision makers in the building, who fully and loyally adhere to the dictates of “The Condo Industry”, and with an iron fist make sure that no one who challenges the edicts of the industry reaches the inner circle of power.

In conclusion, I would like to remind the anonymous author that the only constant in life is CHANGE. Individuals, groups, and nations hate change because change is disruptive even if it paves the road for very serious and meaningful improvements. It is good that most visionaries in documented history were never intimidated by the ruthless anger of those who feared change. Imagine if we refused to change our understanding of how our solar system works, and stuck to the notion that the sun revolves around planet earth and every person, who insists that planet earth is not flat and the classical religious understanding of planetary movements is wrong, should be the subject of an “Inquisition” and then burned at the stake. Refusal to adopt change would have forced us to remain engulfed in the stark realities of “The Dark Ages” of the 10^th century.

Admin “The 215 Forum” © 2017 

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