Governance

October 16, 2024 Published by Golden Horseshoe Chapter - By Dave Williams

A Chat with Eric Plant, President of ACMO

From the Volume 21, Fall 2024 issue of the CCI GHC Condo News Magazine

Eric Plant is the current President of the “Association of Condominium Managers of Ontario” and a Director of Brilliant Property Management in Toronto. Eric’s work with ACMO involves the development of advanced training courses for Property Managers. The following interview is the next in a series, featuring principals from different sectors of the Condo industry.

D.W. If you were to write a brief “next” 5 year “Vision Statement” for the Condo Industry, what would it look like?

EP. First and foremost, we would like to see our managers being able to operate in safe work environments, with reasonably sized portfolios, and welltrained boards of directors. We would also like to see each manager have sufficient education and experience to do the job well and to be seen as a trusted professional by their respective boards. Finally, we would like to continue to see salaries for our managers increase to reflect the skill and experience that each possesses.

DW. The industry has many challenges currently; including shortage of property managers, possibly skill sets of property managers (given more complex issues to deal with), need for better industry communications generally, need for condo board directors to have better all-round experience, underfunded Reserve funds and in some cases fees.

The current industry players. ACMO, CCI, CMRAO and CAO will play an important role in making improvements in the next five years. How do you see marshalling these various groups to organize and cooperate in terms of the needed changes?

EP. ACMO’s position has always been to provide education to the condominium managers. Since licensing, we have shifted to more advanced education for those who really want to hone their skills, and we offer this free to every member. Education will of course play a large role in improving the industry, but several other factors – size of portfolio for one, must improve, and for this we need more people in the industry. Rising salaries will help, but it will take time to educate many of these new entries.

ACMO currently has an agreement with CCI-Toronto and works closely with them on the Condo Conference as well as other initiatives. We are also in regular communication with the CMRAO and have ties with several MPPs. While each organization has its own mandate, all of us share a desire to see improvement through collaboration in our industry.

DW. Do you think the average condo corporation understands the need to fund the reserve appropriately to meet the challenges inherent in building (asset) deterioration over time? Also, are you comfortable that the average condo manager can “coach” their boards in terms of good reserve management?

EP. I believe that most boards do understand. The last four years have seen a substantial increase in the construction price index (upwards of 100% in Toronto and over 80% in much of the rest of the province, according to Statistics Canada). This “sticker shock” can be difficult to work through, especially when a condominium that has been keeping up with its Reserve funding is, suddenly, well behind on savings due to inflation alone.

DW. A blend of reasonable assessments and supportive funding of the reserve could be a solution to modern condo financial management. It could be said that residents should be a part of deciding about this process and not something done by the board in isolation. What would be the ACMO position on this?

EP. Legislation in the Condo industry does mandate transparency when it comes to the community’s finances. A good board and management company will go well above and beyond the required minimum and will strive to be as transparent as possible. While residents do not typically get involved at a granular level (we sometimes don’t even get candidates for the board!) owner’s meetings and regular communication is often enough to lower owner anxiety about how the building’s finances are being handled.

DW. Five-year plans are important for many reasons. Good “rolling” five-year plans are updated annually, dropping the current year and adding a year at the end. One of the major benefits is continuity of governance in terms of achieving future goals.

What is the ACMO position with respect to ensuring that Condo Corporations plan appropriately? Should 5-year plans be mandatory? Should property managers lead their condo boards in annual planning exercises?

EP. Reserve Fund Studies are typically the standard used when looking at planning for large projects, and these are repeated every three years. A good board and management company will typically take the time at least once per year (if not more) to go over a high-level view of their community and put together a plan to make the repairs and improvements that they feel are necessary. The best managed condominiums will take it a step further and track metrics or KPIs ( Key Performance Indicators) in various categories to help guide these conversations and ensure that their community is getting resources where they are most needed. We do not feel at this time that a 5-year plan should be made mandatory.

DW. People arriving at retirement often purchase a condo in efforts to downsize, economize, and eliminate maintenance tasks. They see the condo as being their final residence. Appropriate “reserve funding” can often, over time, put their monthly costs “out of reach.” This phenomenon is probably more evident after the recent round of inflation. Do you see a fix for this?

EP. It is an unfortunate truth that inflation, especially on construction related projects, has caused many well-funded condominiums to fall behind. For example, if a condominium is saving for a window replacement at $2.5 million, and the price jumped to $4 million, this can have serious implications on the Reserve Fund contributions, and thus maintenance fees. However, the same would be true for those who chose to retire outside of condominiums as well. The cost of living is an issue that impacts all of us, and unfortunately retirees have been hit especially hard. A good condominium will explore different paths to funding and will work closely with their Reserve Fund engineer to ensure that the funds can be raised in a manner that is not overly difficult for residents.

Another solution would be to increase education provided to potential condominium buyers. Many buy into condominiums with limited knowledge of what that entails and about what authority the board of directors must have to raise money. Improved education in this area would help avoid the shock some owners face when their property is underfunded and looking to raise revenue.

DW. In my experience, condo boards can be notoriously lacking would you see mandating better communication practices?

EP. We must remember that condominium board members are volunteers who often have full time jobs. Communication with their neighbors may not be their top priority, especially if the news is not good. A good manager should take on this role, and we have seen time and time again that it is better to communicate too much than not enough. ACMOs position would not be that a set amount of communication should be mandated, but that managers be educated and encouraged to do so as part of their regular routine and responsibilities.

DW. Many states in the US have robust laws covering all aspects of condo governance. All board meetings must be posted for everyone to see, people are free to attend and ask questions or make comments, minutes of meetings must be very detailed and director terms are mandated. The same applies to nominating committees. There seems to be a reluctance in Ontario to adopt some of these practices. Is there a lobby or lobbies against adopting more democratic approaches to condo governance?

EP. ACMO has connections with several MPPs and has been looking for the government to pass the amendments to the Act for some time. Our laws are not all that different than those in the US. The Act and Regulations mandate various practices, while giving each condominium the space to govern based on their own needs. Additional legislation (beyond the amendments listed above) could certainly be beneficial, but with any new laws, there are often pros and cons, and these would need to be well thought out. I am not aware of any lobbies that exist to oppose adopting more democratic approaches to governance. I would suggest, if anything, the opposite is true.

DW. The condo governance model in Ontario can sometimes be a bit autocratic. This can be measured in terms of poor or no communication, lack of prescribed turnover of board members, lack of the use of nominating committees etc. How does ACMO envision correcting some of these practices?

EP. It is true that a poorly run building can end up feeling quite autocratic. While the legislation does provide owners the opportunity to remove board members, misinformation or poor communication can make this difficult in practice. A good management company can often overcome this, but the incentive to do so needs to be in place. Managers with limited supervision, or who are afraid to “stand up” to their boards for fear of losing their jobs may end up making the problem worse. Ultimately, as is true of any level of government, it is up to the owners to act when their condominium’s governance is no longer working in their favor.

DW. Nominating committees can be very useful. Does ACMO see this and other meaningful changes coming to the governance model in the next five years?

EP. Nominating committees could work in favor of a more democratic process, but may also have the opposite effect, depending on the make-up of the committee. As is true with any legislative cure, there will always be people who will use the rules to their advantage, and any new legislation needs to ensure that it functions as intended. ACMO believes that a strong manager who is open and transparent can drastically improve the governance of a condominium, and we are educating our managers to follow best practices.

DW. The cost of “Property Management” fees towards the overall costs of any condominium’s monthly expenses is reasonably insignificant. If say a 50% increase in these costs could provide a higher skill level, that might offer more objectivity and informed input, would that not be attractive to most condo corporations?

EP. As in any industry, higher salaries attract more individuals, and more candidates typically means better managers. Increasing the attractiveness, and competitiveness of the job would indeed, over time, improve the quality of managers. There is, however, reluctance on the part of many condominiums to pay extra for a service, especially at a time when costs are going up across the board.

Eric, thanks for your time and input on a very important subject. Your ideas around collaboration with all sectors of the industry will indeed be critical to the future success of the industry.

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Dave Williams is a retired corporate executive and graduate of York University. As is our usual practice we invite comments from our readers at williamsdavem7@gmail.com.