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When the current rate of inflation is applied to your capital projects, you will very likely experience a shortfall in the Reserve Fund. Even if you do have the cash today to support the current project, you may be borrowing from funds
earmarked for other projects to cover the increased cost
Add the greatly increased cost of completing major repairs and replacement, to the current state of Reserve Funds in the Province of Ontario; a market is already in financial crisis. In 2020, Ontario's Auditor General suggested that 69% of condo built between 1980 and 2000 do not have enough funds in the Reserve Fund. The tables above show that the condos they surveyed need to increase condo fees by an average of 50% to meet their long - term capital repair obligations. Because the majority of condos do not have enough money in the Reserve Fund, we ’ re playing catch - up in the maintenance and repair of our property. This was already the case even BEFORE inflation came for us. The reality is that the projects you're doing this year, after experiencing just two years of inflation, can be almost 40% more than you had anticipated and saved for . When we're dealing with projects in the millions of dollars the impact is substantial. To put this into simple terms. A project that cost $1,000,000 at the end of 2019 now costs $1,400,000. As a lender for condominium corporations, I see the impact of this everyday. If your corporation is struggling, you ’ re not alone.
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CCI Review 2022/2023 — 1
August 2022 - 15
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