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Inside the Wallet of Your Condo: Unpacking the Operating Fund

Every condominium in Ontario is required to maintain a Reserve Fund and an Operating Fund. The Reserve Fund, as we established in 🌐this article is used to pay for major repairs and replacements to the condominium’s common elements. The Operating Fund is used to pay for all costs related to the operations of the condominium corporation on a day-to-day basis. Both funds are stored in separate bank accounts that are funded on a monthly basis by the owners (see our 🌐Condo Fees article).


Operating Expenses


The operating expenses are composed of any expenses required to maintain the daily operation of a condo. These include (but are not limited to) the following:

  • Utilities – energy costs for common areas (i.e. steam, water, gas, hydro)

  • On-site personnel – normally a building has a concierge and cleaning staff, either direct employees or contracted out to separate companies

  • Services – recreation rooms, fitness area, etc.

  • Property Management – salaries, office supplies, technology, etc.

  • Administration costs – audit fees, telephone and insurance premium, legal fees, etc.


Contributing to the Fund and The Annual Budget


Contributions to the operating fund are determined by an annual budget; a formal and detailed plan for how the condominium corporation’s funds are going to be generated and spent in the upcoming fiscal year. The annual budget concerns both the operating fund and the reserve fund; the plan determines how much contribution each fund is going to require.


Budgeting is one of the key responsibilities of the condominium corporation’s board members. Research and planning are paramount to successfully maintaining the operation of the condominium. Failure to plan appropriately may end up costing the owners more than initially expected (i.e. a one time special assessment to pay for unexpected costs if there are insufficient reserve funds).


Condominium boards should have systems and processes to ensure that necessary research and planning are done; it is a continuous endeavor to improve on these processes.


Variable Costs


While most expenses are fixed and easy to predict, others (like utility fees) can be variable and subject to change based on market pricing and/or consumption. These variable costs can ruin budgets and throw projections way off, resulting in deficits. While this can be unavoidable, sometimes there are ways to manage these unexpected costs.



Vertical City' mission is to build better tools for this very purpose. The images above is an example of our Energy Analytics tool which tracks utility bills with precision. By comparing the Predicted Consumption and Actual Consumption of utilities, boards can easily see if costs are falling within their expected budgeted amounts. In some cases, like in the image above, action can be taken immediately to cut costs. For more information on how this tool works, please continue reading about it 🌐here.


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