Gambling with contingency funds
No-lympics pointed out this article in todays Province. Apparently two BC condo strata councils have lost substantial amounts from their reserve funds by putting that money in higher risk /higher return investments than the legally allowed bonds, GICs or bank accounts.
RSS 2.0 comments feed. Both comments and pings are currently closed.“It’s been going on for years,” says Gioventu. “The first time I had to deal with it was nine years ago. People get greedy and look for shady deals. But nine years [ago], we had a pretty big drop in mutual funds and we had stratas investing in mutual funds. That was probably the first time it popped up on the radar screen.”
Legislation limits the type of investments in which condo reserve funds can invest.
The Strata Property Act Regulations, Section 6.11, says permissible investments include government bonds, GICs or simply holding the money in a bank account.
In most cases, investing in equities is not permitted.
The strata council in the Okanagan, however, alleges it was misled by an investment adviser.
“Our strata council has done something rather stupid,” wrote one strata member to Gioventu’s Condo Smarts column, published every Sunday in The Province.
“In 2005, our treasurer invited a broker from an investment firm to talk to our council about managing reserve funds. We took advantage of the advice and decided to place our contingency funds with the investment broker to gain the highest yield possible. Unbeknown to us, the funds were extremely risky.”
While the strata earned more than 10 per cent in 2006, the portfolio is now worth half its value, said the strata member.
December 5th, 2008 at 4:03 pm
Those strata council memebrs who approved money-losing investments contrary to the regulations could be sued personally by all owners to make up the shortfall.
November 19th, 2008 at 8:41 am
Patriotz:
Re: Olympic sponsorship:
I sent that out as a more generic comment.
Richmond put forward suggestions of a number of funding sources for its Oval. That included sponsorship. No one knows if they have acquired any. If they had signed – up private sponsorship, then how much? What if the sponsor pulled out or went broke? I recall that they were looking for several million dollars in sponsorship to help pay for the $180 Million Oval. If they haven’t, then how are they paying for it ? Is it digging deeper into City coffers ? Was the City blowing smoke to placate its own citizens ?
If say Coca Cola and other major sponsors is a sponsor for the 2010 games, does any money trickle down to the local venues ?
November 18th, 2008 at 8:36 pm
Question: If private sponsors bail… are the local taxpayers of the given Olympic City obligated to pick up the slack ?
The Olympics are sponsored by the provincial government, not the city, so all BC taxpayers would take the hit.
An exception is the Olympic village which the CoV got itself on the hook for. I think also Richmond is behind the skating oval there. But those are specific facilities, not the Games themselves.
November 18th, 2008 at 7:28 pm
Scotiabank takes $890M hit
Yeah, our banks are safe as … umm ..houses…
November 18th, 2008 at 5:48 pm
Thanks Squidly77! Make sure you keep those absurd bulls in check at Alberta Bubble blog, lol
November 18th, 2008 at 5:39 pm
hey vancouverites you have a blog topic concernig your collapsing real estate market @ calculated risk
http://calculatedrisk.blogspot.....ouver.html
November 18th, 2008 at 5:15 pm
U.S. Housing Market story…
Very pessimistic
http://www.theglobeandmail.com.....WBmarkets/
Ouch !!!
November 18th, 2008 at 4:46 pm
Olympic sponsors bailing ?
Check out this one ( Johnston and Johnston )
http://sports.espn.go.com/oly/.....id=3709139
Question: If private sponsors bail… are the local taxpayers of the given Olympic City obligated to pick up the slack ?
I mean, we are talking anticipated or projected revenue streams from these sponsors to help pay for the given Olympics, aren’t we ?
November 18th, 2008 at 4:11 pm
Anon 1:46
“I’m not sure if this has been mentioned yet but 2 big sponsors of the 2010 olympics are GM Motors and Nortel Networks. It is quite possible that those 2 companies may not be around by the time olympics start.”
That would be a good point if it were true. Nortel is listed as an “Official Supplier” which is the fourth of four tiers of sponsor, GM Canada is a “National Partner” which is the second tier so maybe GM Canada is a “Big” sponsor, but Nortel is not. It might mean a hit to the Olympics but it wouldn’t be a big deal if both dropped out, they’d find someone else to fill in.
November 18th, 2008 at 3:58 pm
Right now, Spectrum is a TERRIBLE investment. You cannot buy today and make money. You will lose money. Rental income will not come close to covering the mortgage. My friend rents there and she tells me she her suite would have to drop 40% in price before it would be reasonable to buy.
November 18th, 2008 at 2:21 pm
Anon #60 – Good point….both GM and Nortel have received at least one (mainstream) analyst’s target share price of $0.0 per share….luckily, I don’t think the condo market will drop that much.
November 18th, 2008 at 1:46 pm
Oh gosh, the commute was killing me hence the move back to the city from suburbia… I gave it a shot but no can do. I just think of how cheap our rent was a few years ago in the city and wish we hadn’t had to move at all. 2 years in a row, moving each time to a more expensive place… our timing sucks but we are still way ahead not having bought! And if we had bought in suburbia and I was stuck with that awful commute and a place worth 20% less?!! I would probably be wanting to kill myself right now!
November 18th, 2008 at 1:46 pm
I’m not sure if this has been mentioned yet but 2 big sponsors of the 2010 olympics are GM Motors and Nortel Networks. It is quite possible that those 2 companies may not be around by the time olympics start.
November 18th, 2008 at 1:26 pm
mk-kids,
Then again, it would cost you at least $600 odd bucks to move, no? So there’s no real point if you’re happy where you are.
November 18th, 2008 at 12:50 pm
Well, looks like hubby & I officially rented “at the top” Crap! – but c’mon I got advice at this very place in early October that rents don’t go down!!! Ugh, should’ve trusted my gut, I had a feeling…
Proof positive though: We signed a lease in early Oct and we’re moving Dec 1 and we’re paying too much. The place we are moving from was on the market 6 weeks with 2 price drops, only now does it look like its going to rent. Started at $1695, went to $1650, now is $1600. We paid $1650 here for the last year. That’s a saving of $600-$1200 a year which is nothing to sneeze at!
November 18th, 2008 at 12:34 pm
n’ski #55
That was funny!
November 18th, 2008 at 12:33 pm
C’mon Bob the Builder…
From your resume’ on post #44
—- You either built Glen Clark’s deck…or your last name is Georgetti OR Sinclair.
BTW : want jib? …go to Pattison sign shop…ask for Glen, bring Cash or Canadian Tire money.
November 18th, 2008 at 11:48 am
Grab the popcorn, sit back and enjoy the show. Coming soon to a theater near you. http://www.youtube.com/watch?v=bNmcf4Y3lGM
November 18th, 2008 at 11:31 am
Spectrum, Firenze, Woodwards and all those other downtown eastside buildings or the “new yaletown” as spectrum owners like to call it are in for a shock.
There were units renting at firenze last year for $1500 and $1600! Now that supply isn’t tight the first ones to drop in resale price and rental price are the trailer parks in the sky, as a snobby renter I wouldn’t pay $800 a month to live in that dump.
For an early 20’s service industry person, a dealer, a hooker it’s a fantastic location to rent because your neighbours will be younger and more forgiving but owning a unit there long term is just going to look worse and worse!
P.S. that gold purse dog lover is probably a hooker too
November 18th, 2008 at 11:05 am
What I find still disturbing is the young speculators that still don’t know whats going on. They think they’ve made some money in the last couple years and they think they are so smart. In my building elevator people were talking about how they were so happy they just bought a 2bedroom/2 bathroom place in Spectrum and thinking that they were going to make so much money on it and be “house rich”. And this other woman in the building who had a gold purse and minature doberman who owned a unit felt so superior to the renters in the building for owning a unit and also having an investment unit in the one of the other towers. I couldn’t help but laugh to myself about whats in store for this person and the terrible financial moves she made in the last couple years and she doesn’t even know it. I can’t believe people like this still exist.
November 18th, 2008 at 10:44 am
Let’s not pick on the construction workers.
The behaviour of care-free spending, casual drugs, drinking, etc. does not discriminate.
Anecdotally, I know lawyers, teachers, post office workers, and software developers who all engage in this kind of activity.
Last year I think I remember reading a report saying that home ownership level had hit an all time high.
Something like 60% or 70%. And I recall thinking at that time, there’s no way 60% or 70% of the adult population is responsible enough (financially) for home ownership.
More than half of the people I know spend every cent they make. In fact some spend it before they make it.
One guy was making $45K and living at home. He loves his toys. Camera equipment and video games. Rather than wait two pay cheques, he would buy a new camera lens on a credit card and make minimum payments.
Another guy was changing jobs and instead of rolling the pension contributions with his old company into an locked in RSP, he decided to cash it out, go on holidays, and buy a new car.
They seem to think they don’t need to save for retirement. Maybe everyone’s getting a $2.1M inheritance from their parents when they kick the bucket.
I know I’m not going to see a dime.
November 18th, 2008 at 10:12 am
Rents going down in Britain according to Bloomberg:
http://www.bloomberg.com/apps/.....refer=home