Private Loan From Sinking Fund - Part 2

Following from my previous article about how, despite massive savings, the body corporate tried to justify a massive increase in strata levies for the sinking fund and then promptly, without consulting all owners, borrowed $26,525 from the Sinking Fund so 3 owners could have a connection to Foxtel via the existing TV aerial cables, this article shows why I have so many concerns about how the body corporate council goes about handling our monies.

Below I have listed several of the anomalies that arose when the body corporate tried to justify their actions, including: no other quotes being sought nor other technologies being explored and a raft of misleading and erroneous statements made about the costs. In my opinion the whole matter was a rushed and botched job to satisfy 3 demanding owners as quickly as possible.

On September 14th, only a few weeks before the 2013 AGM when financials would go public, the body corporate finally sent an email to all owners telling them what they had been doing. There are several statements from that email that I wish to take issue with below.

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"The upfront cost of the “blue box” solution is about the same as 20 months subscription to Austar under the old regime, but it is certainly preferable to the cost of recabling the building complex."

Wrong! At the time of their email, the BluBox was actually the same as 26.59 months subscription to Austar and was it preferable to the cost of recabling? Where are the quotes?

According to Alpine Strata only one written quote was obtained for BluBox and none were obtained for recabling the complex in twin RG6/U Quad-shield cable, which would meet the current standards and also remove the need for a BluBox to access Foxtel. And where were the investigations into other technologies that may have been far more future-proof than the one solution provided?

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Regarding the old Austar service:
"The packages were very expensive at more than $1300 per month...".

Wrong! In fact the cost to the Association was under $1000 per month ($997.50).

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"For $56 per month owners will get access to all free to air channels already available as well as the 84 channels showing in the box below. This amount is only marginally more than each individual owner paid through the previous levies to cover the cost of the previous unsatisfactory service."

Wrong! Although the commercial package offers more channels than the old package, contrary to what we were told, it comes at more than double what each apartment paid for Austar, without taking into account the cost of BluBox for each apartment. There's nothing "marginal" about it at all. The chart below shows what the Foxtel commercial package plus BluBox would really cost each apartment at the time of council's statement. They said it would be $56 per month or $672 per year.

Cost may vary depending upon how many sign up and how much Foxtel increase their package price p.a.
If 20 apartments sign up and remain signed up - it will take more than 8 years to pay off BluBox.

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Then in an another email to owners on September 25th, regarding the 12% rise in levies:
"...it actually translates to just over $3-00 per week for the median levy."

The following chart indicates the true cost of the increased levies:-

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Does our body corporate council (which includes accountants and retired solicitors) actually understand the numbers they are publishing?

Then in June 2014, despite massive savings in insurance, lighting, electricity and the discontinued Austar service, the body corporate decided to increase levies by a further 10% (see previous article on levy increases). This extra 10% increase, applied to levies last July, almost doubles the figures in the chart above to $19.87 per week extra for a 1 bedroom apartment since April 2013 and an extra $14.90 per week for the studio.

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Then another extract from the same email to owners:
"... those owners who want the service will pay for it, while those who do not, are insulated from the cost."

"insulated" Please!. I was told by the body corporate treasurer that no interest would be paid on the money borrowed. Money that would have otherwise generated interest in our high interest bearing bank account whilst waiting to be spent on necessary maintenance items. And what if the 'loan' never gets fully repaid (see 'Repaying Sinking Fund Loan' chart on previous article).

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Why is the body corporate council disseminating such misleading information?

How can we trust anything the body corporate prints? Is this the reason that they are making it so difficult for me to examine the body corporate books? (see earlier article)

My biggest concern now, is that having established a precedent for borrowing very large amounts of money from our Sinking Fund what will be next?

Surely a body corporate council MUST be there to represent ALL owners in an accurate, open and fully transparent manner and to uphold the best interests for the majority of owners in Squatters Run not just for a few loud owners?