Toronto-area condominium owners can be certain of three things: Death, taxes and regular increases in their monthly maintenance fees, according to the men and women who build and manage condo projects. In fact, expect maintenance fees to double over the next 10 years. For some unfortunate owners, that increase will come sooner rather than later.
"You can be reasonably certain maintenance costs will increase 100 per cent over the next 10 years. For some lucky people it may be 15," says Sheldon Rosen, president of Panterra Federated Properties Corp., whose most recent project is Jarvis Mansions on Jarvis Street just north of Wellesley Street.
It is just a fact of life, he says. Energy costs continue to rise.
Salaries and benefits for the men and women condo corporations hire as security, to do maintenance, to trim the lawns and remove the snow, to clean the pool, will tick gradually upward each year. Insurance rates have doubled on some properties and increased significantly on others.
Changes to provincial regulation, which demand condominium contingency reserves be fully funded, have meant that annual contributions have doubled in some existing properties and risen significantly in new ones.
"Many condo owners may well be looking at dramatic increases in monthly maintenance fees just to cover that cost alone," says Laura Lee, general manager of Prompton Real Estate Service. Her company manages all the newly completed buildings at City Place, south of Front Street West at Spadina Avenue. Condo maintenance fees can hold unpleasant surprises, experts agree.
Unlike mortgage payments and property taxes, which can be accurately predicted over the near term, maintenance costs vary from year to year.
In fact, a series of bad snowstorms in a single month can send owners' monthly condo fees skyward. The cost of trucking away all that snow from a downtown building with no surplus space to store it until it melts ranges between $6,000 and $7,000 a storm, says Ms. Lee.
The prospect of living in a building or complex that has all the amenities, from round-the-clock concierge to an indoor pool and bowling alley, may set the heart dancing. The eventual costs of keeping all those amenities in good repair, however, may bring that dancing heart to the edge of a coronary.
Which buildings get what amenities depends on simple mathematical formulas, says Shane Baghai, president of Baghai Development Ltd. Once North America's largest builder of custom homes, he now creates condominiums, most recently at Galen Weston's Avondale community at Yonge Street just north of Highway 401.
"The rule of thumb is that you must have 85 per cent of the building as saleable space; the other 15 per cent can be devoted to amenities," he says. "Since the cost of the amenities must be shared among all units, you can only provide those which result in reasonable monthly maintenance fees. If you want round-the-clock concierges, a spa with a Jacuzzi, pool, sauna and showers, and a media room and exercise room, you can't go much below 200 units and still bring costs in at 50 cents a square foot a month or below."
For a 1,000-square-foot, two-bedroom condo that means paying $500 a month for maintenance on top of taxes (1.25 per cent of purchase price) and mortgages, which will likely rise to $1,000 a month in 10 years.
Mr. Baghai's twin 27-storey towers at Avondale share costs for all those items among 611 units. As a result, monthly costs should come in at 35 cents a square foot or better.
"I am confident of that," he says.
Unfortunately, a developer's confidence is often misplaced. While developers are responsible for the shortfall between forecast and actual maintenance costs in the first year after registration, owners often find the monthly fees jumping the year after that. Between 15 per cent and 20 per cent is typical, says Ms. Lee.
Currently, the biggest chunk of monthly fees is gobbled up by utilities. Where two years ago, gas and electricity might have accounted for a third of maintenance charges, today it approaches 60 per cent in some projects, says Ms. Lee. More than 40 per cent is not uncommon, adds James Ritchie, senior vice-president of sales and marketing for Tridel Corp.
"Dealing with rising gas and electricity costs is one of our biggest challenges right now," he says. "What we have done is both buy at bulk rates and then equip each unit with individual meters."
While residents must still pay their share of common energy costs, they have control over how much they use in their own home.
"If they go to the cottage or to Florida or on a trip, they know they are not paying anyone else's bills," he says.
After utilities, the item certain to rise with the regularity of a ticking metronome are any costs associated with human effort. Concierges, security staff, maintenance people, gardeners, pool boys all have to be paid and all expect occasional increases in pay and benefits.
"The costs that prove to be the most expensive over the long run all have to do with people," says Mark Cohen, vice-president of sales and marketing at Tribute Communities. .
"Just having a single concierge on duty 24 hours a day, seven days a week, means hiring at least six people. That adds up very quickly."
While many developers have turned to electronic security systems as a way to keep condo fees low, even those systems come at a price, says Lorenz Schmidt, president of Windleigh Holdings Corp. His most recent project is the mid-rise Terraces on the Green on Islington Avenue in Woodbridge.
"Every time an alarm is sounded and a security firm responds, it costs between $175 and $300," he says. "That can add up if you have one or two easily frightened or just plain lonely residents."
The bottom lines
What do amenities cost? Laura Lee, general manager of Prompton Real Estate Service, provides some insight. Her company manages the five completed condominium towers at CityPlace, south of Front Street and east of Spadina Avenue.
Concierges: $180,000 a year for one person, 24 hours a day, seven days a week plus one supervisor. To man two desks the cost, including supervisor, is $305,000 a year. Prompton pays $11 an hour for its concierges and $13 an hour for supervisors.
Swimming Pool: $25,000 a year, including all chemicals, maintenance and regular cleaning. Swimming pools are the least used of all amenities, she says. Only 1 per cent of tenants use them regularly.
Exercise rooms: The most used of amenities, exercise rooms require minimal annual upkeep -- except for treadmills, which are the single most used piece of equipment. "They are constantly breaking down," she says. "I think it is because developers don't buy top-of-the-line equipment. I know of one major developer who learned that lesson when it had to replaced all its treadmills after just one year." Stationary bicycles are also popular and they seem to go on forever without need for repair or replacement.
Snow plowing and removal: $40,000 a year plus an extra $6,000 to $7,000 a time to remove snow after a heavy storm. Like many downtown projects, CityPlace has nowhere to store snow until it melts.
Garbage removal: Toronto is about to shift from free pickup to charging condo corporations by the ton for waste removal. Picking up recycling bins will continue to be free.
Window cleaning: $40,000 a time, performed at least twice and for some buildings three times a year.
Insurance: $22,500 a tower, a 100-per-cent increase from last year.
Maintenance: $65,000 a year for an outside maintenance service, available only eight hours a day.
Live-in superintendent: $28,000 to $35,000, plus the cost of an apartment. While most developers replaced live-ins with outside, on-call maintenance services, some are returning to on-site supers. The reason is that damage done while waiting for an outside maintenance company to show up to repair a broken water pipe can almost equal the cost of giving a live-in super a small apartment. "We are seeing some developers create a unit for the super and then mortgaging it, creating an asset for the condo corporation," Ms. Lee says.
Landscaping: Costs depends on too many factors to offer even a ballpark figure, says Ms. Lee.