A Special Meeting of the Unit Owners was held on Monday January 13th at 7:30pm, to review the budget proposed for the 2020/2021 Park Tower Condo Association. At the Board Meeting following the Special Meeting the Board of Directors approved and adopted the budget which will now take effect on March 1, 2020 and runs through February 28, 2021.

Click Here, for to review or download a copy of the approved budget.

As previously reported, an initial draft was reviewed line item by line item, on three consecutive Saturdays in November.  The base assessment level increases by 3.5%.  In addition, beyond the association’s control, RCN is increasing video charges due in part to the additional taxes and fees it collects on behalf of the city.  This amounts to a total RCN increase of 5.6%.

Some other key charges and fees changing with the budget effective March 1st, 2020:

Washer
Increase 25¢ per wash cycle (from $1.75 to $2.00), Increase 10¢ for additional soil settings

Dryer (stack)
Increase 15¢ per dry cycle (from $1.25 to $1.40)

Dryer (large drum / 30 pound)
Increase 50¢ per dry cycle (from 50¢ to $1.00 for first 20 minutes), Increase 25¢ for additional 10 minutes

Health Club Membership
Increase 5% for all types of categories (single, double, family; at all three buildings 5415, 5445, 5455)

Valet Parking
Increase $5 (from $130 to $135)

Self-Parking
Increase $5 (from $130 to $135)

Premium Parking
Increase $5 (from $145 to $150)

Day Parking
Increase $10 (from $170 to $180)

Hourly Parking
Increases 1 hour $10.50 to $12, 1-3 hours $12.50 to $14, 3-6 hours $16.50 to $18, 6 to 8 hours $20 to $22, 8 to 24 hours $36

Major projects over $50,000 in 2020-2021 and their projected costs include:

Domestic Cold Water Pump #2
$60,000
Low Rise Domestic Water Heaters #2 and #3
$100,000
Riser Projects – three tiers total
$500,000
Heat Exchangers
$100,500
Fan Coil Loop Pumps
$154,900
Garage Project – Continued (1P Membrane and 2P Concrete)
$805,000
Northeast Masonry Flashing along Bike Room and Garage
$150,000
Driveway Resurfacing Asphalt (this represents Park Tower’s portion that is shared with 5445)
$50,000
Pool Area Roof / Skylight
$250,000
Pool Walkway Roof / Gutters
$60,000
Roof Lighting Project
$56,700
Passenger Elevator Cabs
$80,000

This proposed budget includes an increase in projected annual income of $334,000 for total income of $7,435,600. Approximately $183,400 of that increase is accounted for by the adjustment in assessments. The bulk of the balance in the increase comes from cable/internet, and income from parking operations.  Total proposed non-reserve operating expenses are $5,644,500. The proposed annual reserve contribution is increased $51,400 to $1,791,100. We presently expect total reserve expenses for the year of approximately $2,534,500.

At the Special Meeting, and following a general overview of the budget by Board President Michael Parrie, the Board Treasurer Jean Shamo shared some background on the development of the annual budget, and answered questions. Here is the report she presented:

Our fiscal year begins March 1 and ends February 28/29 of each year. After August financials have been prepared by our Management Company, which this past year means FirstService Residential, a draft budget is prepared for every ledger account, showing the total annual budget, YTD totals for the first six months, an estimate of the remaining budget and the projected year-end total, based on current information. Also shown in another table is the annual history for that category for the 9 years prior to this year. Show “Office Expense” for demonstration.

For many of the categories there are details of how the budget number was arrived at. Our manager, Tim, sits down with the responsible staff, committee chairs, alderman or outside experts such as our insurance agent or utility resource experts, and builds the necessary components to come to a number.

The budget is then allocated across the 12 months of the year. A general description gives further detail of what items are included in the budget number. In November, on three consecutive Saturday mornings, the board and the Budget & Finance committee, currently consisting of two members, delve into the detail of each line item and considers changes up or down, based on further discussion with Tim, Tricia, and, when available, our Management Company supervisor.

These meetings, except for during discussion of payroll and legal matters, are open to all owners. This November we had one owner present at one meeting to discuss a specific item. At the end of these  three meetings, after all issues have been resolved and Tim has updated the numbers based on our decisions, the board votes on an assessment increase.

Question:

Can you provide some examples where the Budget Committee significantly reduces expenses?

• Budget Committee, when acting alone, only makes recommendations to the board. It is the board that considers and approves the budget.
• Tim, our manager for the past 12-13 years has been instrumental in negotiating lower costs, in conjunction with board approval, as projects have gone out to bid. He has saved us hundreds of thousands of dollars. He has also made strategic moves to maintain our building in excellent condition, rather than the “band-aid” approach that had been in place.
• Prospect Resources , our utility consultant, has dramatically reduced expenses in the past 8 years or so, by hedging when prices have seemed low and keeping increases in check. (PP slides)
• BOD has just negotiated a contract with our new Management Company, the Habitat Welcome to Dave Barnhart, our Supervising Manager!

Our new contract decreases our Management Fee (combined for Admin & Garage) 7% for the next 5 years and negotiated a 2% increase for each of the following 2 years. The contract currently runs for 3 years and is cancellable with 60 days written notice by either party.

Comparison of national inflation of 2% with 4.5% in operating expenses:

CPI, which is based on an average of a person’s “basket of goods” (rent, auto, clothing, etc), is not relevant to the expenses of running an almost 50-year old condominium building, where services and upkeep are the major expenses. City laws, union rules, utilities and maintenance are much bigger factors.

Question on salary and wages increases

Most of our employees are union workers and wages are based on tenure and contracts. These include Janitors, Doormen and Garage employees and we have no control over these.

• Office salaries have been intentionally increased by the board in the past year to reduce turnover and to keep our excellent staff. Tenure also plays a role in salaries.
• Security workers have been used more in the past year for door man relief and moves.

Question on categories that have not been changed

These are generally based on history where changes have not been forecast. After the audit, which is generally completed in May or June, for the past several years the board has voted to add any surplus to the Reserve Fund. Of course if there were a deficit, that would have to be absorbed by our operating funds. In fact, in recent years, we have had unanticipated capital projects, forced by City Code or emergencies, that have required additional funds. An example:

A couple of years ago, because of a new City law,  we had to have anchors installed at about $250K.

Question on Insurance increase

The majority of this increase ($32K) is for property insurance due to a new appraisal of our building, now valued at $215 million. The last appraisal for $141 million was done in 2010. Another $8K increase is for umbrella insurance caused by changes in the marketplace related to non-sprinkled buildings. What we’ve spent on capital projects and maintenance in the past 10 years has helped increase the building value by more than 4% a year, despite increasing in age by more than 25%!

What are the Reserve Fund balances projected as of Feb 29, 2020 and Feb 28, 2021?

Feb 2020: $2,220,927

Feb 2021: $1,514,527