Every condominium in Ontario is required to maintain both a reserve fund and an operating fund. While the reserve fund is set aside for major repairs and replacements, the operating fund is used to cover the day-to-day expenses of running the condominium. Both funds are stored in separate bank accounts and are funded through monthly contributions from owners.
Understanding Operating Expenses
The operating fund is responsible for covering all costs related to the daily management and upkeep of the condominium. These expenses include (but are not limited to):
Utilities – Energy costs for common areas (e.g., steam, water, gas, hydro).
On-site Personnel – Costs for building staff, such as concierge and cleaning services, whether employed directly or through third-party contracts.
Services – Expenses related to shared amenities, such as recreation rooms and fitness centers.
Property Management – Salaries, office supplies, and technology required for property management operations.
Administration Costs – Legal fees, audit fees, telephone services, and insurance premiums.
Contributing to the Fund and The Annual Budget
The amount contributed to the operating fund is determined by the annual budget, which outlines how the condominium’s funds will be collected and spent over the fiscal year. This budget takes into account both operating expenses and reserve fund contributions, ensuring that the condominium corporation remains financially stable.
Budgeting is one of the key responsibilities of the condominium board. Effective financial planning helps prevent unexpected shortfalls that could lead to higher fees or special assessments. Since financial needs fluctuate, boards should continuously refine their budgeting strategies to ensure long-term stability.
Managing Variable Costs
While many condominium expenses are fixed and predictable, others—such as utility costs—can be variable and subject to market pricing or consumption. These fluctuations can lead to budget deficits if not properly managed. Fortunately, tools are available to help boards monitor and adjust their spending.
The images above illustrate the Vertical City Energy Analytics tool. This tool provides real-time tracking of utility bills, comparing predicted and actual consumption. This allows boards to proactively identify unexpected cost increases and implement corrective measures to improve energy efficiency. To learn more, read our article: Vertical City Toolkit - Energy Analytics.