Inequitable Distribution of OC2 Costs
The distribution of RekDek costs, whether they be Administration, Maintenance or a Special Levy are inequitable. Each Tower receives the same allocation of costs to run the RekDek but there is a vast difference in the number of apartments in each Tower - this is before you realise that Towers 2 & 3 (60 and 70 Lorimer) are considered one Tower when it comes to RekDek costs.
What is the Problem?
When the RekDek Owners Corporation was setup, each Tower was allocated 10,000 points. What this means is each Tower gets the same allocation of costs regardless of the number of apartments in that Tower.
Owners in Tower 4, pay significantly more due to there being a small number of apartments - that is, Tower 4 gets the same allocation of cost as all the other towers but there are less apartments to divide the total into. Similar issues occur in some other towers for some owners.
With the current issues facing the RekDek (those structural and waterproofing problems) some owners are facing an unfair allocation of the bill to pay....and that bill will be in the millions of dollars.
The distribution of RekDek costs is inequitable as those paying more don't receive any additional services from the RekDek.
This inequity has persisted since OC2’s inception, and has led the Tower 4 owners and some other Tower apartment owners to significantly subsidise other owners for 23 years. As an example, In the last 5 years alone, the owner of a 2 bedroom apartment in Tower 4 has paid at least $3,500 extra in levies than a 2 bedroom apartment owner in Tower 2 or 3..... for the same benefit - a grossly unfair distribution.
But....we have a plan to change this
An example of current Cost Distribution
The current cost distribution allocates the same cost to each of the 6 Towers, so in the above example, each tower is allocated $166,667.
- Towers 2 and 3 (60 and 70 Lorimer St) are considered one tower for RekDek (OC2) - yes, it just gets better - 281 apartments to share the same cost allocation so their fees are significantly lower than what other Towers pay.
- Given the small number of apartments in Tower 4 the average cost per unit is high - almost double of most other Towers and nearly triple that of Towers 2&3
- This example applies to the annual levies you pay for the RekDek, that is, you pay more simply because you own an apartment in Tower 4.
How should it work?
RekDek costs should be distributed in a more equitable way. Options could be:
- Based on square meters of each apartment. This is how many other OC costs are distributed.
- Based on the number of bedrooms. This might be a good solution as current RekDek rules limit the number of allowable passes based on the number of bedrooms (i.e., 2 passes for 1 bedroom; 4 passes for 2+ bedrooms etc).
- Some other method that represents an equitable distribution of costs.
Case for Action
The following table shows the budget RekDek costs for the coming year (of $1.315m). These costs are evenly split between the 6 Towers, noting that 60 and 70 Lorimer are considered one Tower. Why is 60 and 70 Lorimer considered one tower? Most likely because they share a common podium.
- The number of apartments in each Tower start with 109 in Tower 4 (80 Lorimer) up to 281 in Towers 2&3 (60 & 70 Lorimer). This is a significant difference when it comes to allocating the costs to each apartment.
- The Average Annual Fee per lot (or apartment) varies widely from a low of $780 for 60&70 Lorimer up to $2,012 for 80 Lorimer. Taking this into account:
- Tower 4 (80 Lorimer) pays 158% more in RekDek fees than Towers 2&3. What extra does Tower 4 owners get at the RekDek? Absolutely nothing! It's unfair
- Tower 4 (80 Lorimer pays 84% more in RekDek fees than Tower 6 (100 Lorimer)......and it goes on.
- You can see that other Towers pay inequitable amounts, especially when compared to Towers 2&3 and some owners in these towers pay an inequitable amount.
What is the Plan?
To get the current distribution of costs changed we need to:
- Conduct a vote of all owners (in all Towers) and achieve 75% of owners approving the redistribution of costs; or
- Go to VCAT and request a ruling on changing the distribution of cost
It's unlikely that a vote from 75% of owners across all towers will succeed - ok, it's a million to one shot so we have to go to VCAT.
What is needed for VCAT
The advice we've received to submit a request to VCAT is:
- Document the desired cost distribution model - let's say based on number of bedrooms, size of apartments (in m2) or allowable RekDek passes;
- Conduct and submit results of a vote of all OC owners - this is the vote mentioned above. VCAT will want to see that we've at least asked and not succeeded and not just assumed it would fail.
- A letter from the OC2 committee acknowledging the inequitable distribution and their support that it should be changed.
- Your support for the change. We need to show VCAT that the owners of Tower 4 want this change - not just 3 or 4 owners.