July 2014 Council Newsletter To Owners (Part 2)

My response to another section of the Newsletter recently mailed to Squatters Run owners by the body corporate council:

"Levy increases

Council decided after its annual budgetary deliberations that levies for the coming year should be increased by 10%. Council was mindful that this was greater than a CPI increase, but is hopeful that the levy increase will be restoring the Association's income to a level which will be adequate in the longer term and avoid the need for special levies.

At the 2010 AGM, it was decided that levies would increase by CPI each year, but the following year this policy was dropped because of the pressures caused by the GFC and the concerns expressed by a small number of owners and by KT's commercial tenants.
Unfortunately this has had a significant impact on our ability to maintain aging buildings in a harsh environment, creating a situation which needed ultimately to be redressed. Owners have previously been provided copies of the maintenance program prepared for us by an external consultant (further copies of which can be obtained from Alpine Strata), and should now be aware of the significant challenges facing us in maintaining the building to an acceptable standard. The current size of our sinking fund is clearly inadequate for the work which will need to be scheduled over the coming few years. Any queries concerning the Association's budget can be addressed to Alpine Strata who will pass them on to the Treasurer."

Reading the above section of the Newsletter may all seem quite reasonable but taken into account with last year's massive increase in levies of 12%, this year's 10% increase in levies is not as insignificant as it appears.

Yes, in October 2010 it was agreed that levies would increase by CPI and consequently levies rose by 3% (the same rise as the KT Rates).

But contrary to how I read the inference in the statement: "... the following year this policy was dropped because of the pressures caused by the GFC and the concerns expressed by a small number of owners and by KT's commercial tenants.", the levies were actually increased by 4%, which strangely enough was significantly higher than the KT increase of 2% that year and from my understanding KT rates always increase by CPI. So, the Squatters Run levies were increased by a different or higher CPI? They certainly didn't drop.

And as far as I am concerned, this surely negates Council's message/justification to owners for this year's 2014 levy increase.

I did not disagree with last year's 12% levy increase as Council put forward a very persuasive argument for that increase, but after seeing where the levies went last year I certainly do not agree with this year's 10% increase. More about that when my grump articles get back to 2013. I'm still just trying to deal with July 2014.

One more thing to remember, when I talk about Squatters Run levies: under standard lease agreements, levy increases would also be generally passed onto the retailers in Squatters Run, increasing their costs and ultimately prices. We are all under pressure.