Where do I begin….
I recently purchased a unit in Sydney CBD and joined the Strata committee as they had a vacancy.
Its chaos, no one apart from 2-3 people do anything. Our admin fund levy has increased by 20% and they've reduced our CWF levy by 15% to balance out the overall levy but this means there is no money for major works in the coming years. Then we have a seperate fund for our car stacker which is in surplus but not all units contribute to this as they don't have a space.
Would love to get your thoughts on the below points:
Use of capital works fund for big maintenance items like fire maintenance contract, yet there is a separate line in admin fund for fire repairs. My understanding is CWF is for one off repairs, replacement, not ongoing maintenance. So the maintenance contract should be in admin and the repairs budget could go into CWF?
Use of capital works fund for NCAT / legal fees relating to illegal short term tenancy?
The admin fund levy proposed has increased by 20% but clearly the budget was not tracked through the year so rather than realising early and looking for savings to introduce this year, we're only going to look at it now for next year's budget. Apparently the same thing happened last year so guess what is or isn't going to happen?
The proposed CWF is in deficit and there is a loan with special levy for a large project which recently completed. However, they have included a huge amount of contigency. Rather than hopefully not having to use that and then get out of deficit, they want to then use that money to pay off part of the loan to save interest. I get it, but the loan is a known cost and it would be better to keep the money in the fund and get out of deficit, especially if something big comes up later rather than needing to get yet another loan, even if the other has just been paid off. Good business and accounting should mean you're not in deficit and ideally have some funds in the bank even if there is a loan. Very shortsighted approach to finance in my opinion and its risky to not have funds in the bank.
Noticed that there costs associated with the stacker that have been lumped into the admin and/or CWF. This is for last year and I need to check the supplier contract to see if its the same for this year's budget.
I did a lot of work recently reviewing and coming up with suggestions for the budget. Then at our last committee meeting, where the person who did the budget presented it, had made huge changes at the last minute with the Strata manager and sent it to use a few hours before the meeting. This meant we all only had time on the call to review and discuss but thats not enough time for a budget review but most members agreed to the budget but I stated I would need to go away and relook at everything again given the new figures. At no point in the meeting did they talk about a deficit, the risks these budgets had on our future fund balances, the risk of the 10 year plan, nothing.
Then the AGM pack went out with the 2 'approved' budgets and when I suggested an alternative, I was told no its too late. Yet the Strata Manager had told me I can and she can just send out the new one. But it requires a meeting and these people don't want to put in the effort or have hard conversations.The chair is constantly stating "We agreed on….." and whilst that might be correct, if new information comes to light, I don't understand how it is responsible to not readdress things? We're in deficit and items are not in the correct budget - I feel this puts the committee at risk for negligence.
The budgets are drawn up in isolation without looking at future years and the Capital work plan. I've build a spreadhseet to show the bottom line over the next 10 years, but no one wants to do anything about it now. Too hard. Easier to just go with what we've got and then sort it later - which won't happen.
I'm sure there's more and lots of left out, but really would love to hear your thoughts.
Also, if anyone is in Sydney CBD, I'd love to find a way to work with other Strata committees to help understand other's costs and plans but also, potentially come together to work with the same suppliers and perhaps negotiate bigger discounts for all using the same people.
I’ve only ever been involved in strata of a tiny block, but this dynamic sounds like every board or committee I have ever been involved in. (Which is why I always giggle at the rise and grind set on LinkedIn “seeking a board position “).
Firstly, understand this is not a governance or financial problem, this is a people problem, and to manage it you will need to build cooperation and alliances and gain credibility/influence. There will be a large group happy to do things the way they always been done, and unmotivated to change.
Secondly, as you realise, there will usually be a handful of people who actually do the work and are across the issues. To get anything done you will need to get them on side. In my experience this will take some time and require you to contribute to their priorities if you hope for them to support yours.
Thirdly, it is really common for troublesome or misguided people to be in important positions, and managing to get them out of the way is often the hardest bit.
From the comments you made, it seems you are looking at the specific issues very clearly, but you might also need to understand the “culture” or history of how things got to where they are and who cares about what to be able to get the items you need addressed to be actioned.
If there is someone in the “does all the work” group who might help you understand the politics, I bet they would be happy to work with you.