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8 NEW ENGLAND CONDOMINIUM -JULY 2022 NEWENGLANDCONDO.COM materials in general has become tricky.” Labor Shortage Staffing is another problem facing ven- dors, managers, and by extension boards, particularly when it comes to capital proj- ects. The pandemic led to what is now re- ferred to as the ‘Great Resignation,’ and companies across the board are struggling to hire and retain workers. That situa- tion is pushing labor costs and ultimately vendor bids upward—and employment watchers say it’s unlikely to change in the immediate future. “It’s harder to find people to work the smaller jobs,” says Wolf. “There is clearly a labor shortage at the moment. Overall, there are just fewer people in the trades. A recent graduating class from a local plumbing school was composed of 25, down from 100-plus previously on an an- nual basis. Some tradesmen left what they were doing during the pandemic, changed fields, and didn’t come back.” “While vendors and contractors have adjusted pricing and services according- ly,” says Kurian, “co-op and condomin- ium boards should plan to remain very prudent when it comes to budgeting and planning for projects. In addition to high- er costs, timelines for repair and renova- tion projects have extended as well.” “Fuel is knocking budgets for a loop,” adds Wolf. He points out that it’s both a direct and indirect cost increase. “An in- direct result of the increase in fuel prices is that we see all the vendors increasing their vehicle surcharge,” he says. “Month- ly billings are really starting to \\\\\\\\\\\\\\\[reflect\\\\\\\\\\\\\\\] that now. We thought this fuel price jump would be short term, but it’s not. Any ven- dors coming to properties we manage are passing higher vehicle charges on to their customers to cover the increase in their fuel costs.” Controlling Costs…Where Possible So we’re in a price/cost crisis at the mo- ment—that seems to be a given. But how do we manage it? “We highly recommend accounting for a five- to seven-percent increase in line items like materials and supplies for future budgets whenever pos- sible,” says Kurian. “While this amount is double the typical forecasting, conserva- tive budgeting will help cover any unex- pected costs, even as we move towards more stability.” According to David A. Levy, a CPA based in Needham, Massachusetts, given that boards and managers can’t forecast future costs based on prior information, “budgeting during inflation can be tricky. However, by taking into consideration reasonable inflation rates such as the Consumer Price Index (CPI), budgets can be forecasted with more accuracy.” “The availability and pricing for prod- ucts affected by supply chain issues (ex- cept oil) can shift at a moment’s notice,” Kurian continues. “Co-op and condo sessment may correct a current cash flow boards should be thinking about their problem, or act as a stopgap measure. most critical building system services and “For 2023 though,” he says, “we are ob- supplies, and purchasing in bulk wherever serving how this year plays out.” If infla- possible. As a matter of course, seasonal tionary pressures continue as they have, supplies like calcium chloride (for melt- ing snow and ice) and other winter-spe- cific goods are typically purchased in ad- vance and in bulk, and that will certainly increases. “It’s about monitoring things,” be the case for the upcoming season.” It’s also a good idea to prioritize proj- ects and plan for additional time to com- plete them. “Bidding repair and main- tenance contracts is critical in order to ensure service providers such as HVAC, overall,” says Kurian, “it will be difficult to landscaping, etc. are at competitively sim- ilar levels when it comes to cost as well areas will be impacted by higher pricing as distribution and delivery timeframes,” and availability in the near future.” stresses Kurian. He also recommends having major suppliers bid on commonly about how things may trend going for- purchased items on a quarterly basis to ward also applies to reserve funding, says find the best deals. “Vendors are in a command posi- tion these days,” adds Wolf. “We try to ing up, labor and supplies are harder to get more bids than we might have previ- ously—say five instead of three—but in one-time assessment, payment plans are the end it doesn’t matter much. We also an option, but ultimately the community recommend that associations purchase needs the funds.” goods in bulk to try to get the overall per- unit price down. In other words, buy 36 co-op, condominium, and HOA boards units instead of 12—but remember it’s a and managers can do to control inflation, bulk purchase, not negotiation. The price supply chain issues, and labor shortages is still the price.” Budgeting for the Future “The 2022 budgets were set at the end sis in a century. We will have to ride this of 2021, before this \\\\\\\\\\\\\\\[current inflation out. But good management and attention wave\\\\\\\\\\\\\\\] hit,” says Jayson Prisand, a partner to detail can help to defray some of the with Prisand Mellina Unterlack & Co, costs. No matter the circumstances, vigi- an accounting firm located in Plainview, lance and planning are your best tools. New York. “There were trends at that time, but no one expected these spikes. In some cases, some of the boards we advise are taking a look at their first quarter ver- sus where they are now, and considering whether they may need a short-term or one-time operating assessment to bridge the gap for this year. And in some cases, they’re even considering a second full maintenance increase, mid-year. To do that is not always popular.” Prisand suggests that a one-time as- co-op corporations and condominium as- sociations may have no choice but to level high single-digit or even double-digit says Prisand. “Most buildings have this year’s results through May. It’s still too early for budget planning for 2023, but we recommend boards keep on top of it.” “Although we are seeing increases pinpoint precisely which goods or service That lack of precision and certainty Levy. “Reserve funding is more compli- cated, because not only are prices go- purchase with current supply chain is- sues. You might have the funds for a new HVAC system, but the unit might be backlogged for six to ten months. This needs to be addressed in the reserve fund budget analysis.” Wolf and his colleagues recommend transparency as the best policy for ex- plaining to shareholders and owners what is happening and what may well happen in the coming year(s). “If the association is over budget,” says Wolf, “the board should let the community know, and why. If they budgeted for ‘X’ last year for a project or line item, they have to come clean and say that costs, etc., have risen.” In terms of affordability and the ability of association members and corporation shareholders to absorb higher monthly costs, Wolf adds that “the association must collect what it needs. If there is a Ultimately, there is little to nothing that are plaguing the economy now, as we emerge from the worst global health cri- n A J Sidransky is a staff writer/reporter for New England Condominium, and a published novelist. He can be reached at alan@yrinc.com. INFLATION... continued from page 1 “Th e association must collect what it needs. If there is a one-time assessment, payment plans are an option, but ultimately the community needs the funds.” — Scott Wolf etary lease after closing. After approving the application, thereby waiving its right of first refusal, the co-op discovered that the defendant (having since closed title on the shares) was renting his unit out on Airbnb, both in violation of the proprietary lease and in refutation of his application represen- tations. Rather than seeking to terminate the proprietary lease and recover posses- sion of the defendant’s apartment in a landlord-tenant proceeding, the co-op sought monetary damages and rescis- sion of its waiver to right of first refusal. Even though lower courts denied the defendant’s motion to dismiss, citing the misrepresentations the defendant made in his purchase application that caused the co-op to waive its right of first refusal, Justice Joseph found for the defendant, concluding that the co-op didn’t show sufficient proof of damages relative to its waiver of its right of first refusal, and that the rescission claim was not legally viable. As Koplovitz and Freedland contend, Trump Village Section No. 4’s “choice to request rescission of the occupancy agreement instead of pursuing a hold- over case appears to have been a time- consuming and likely costly one, since Justice Joseph also awarded legal fees to Mr. Vilensky as the prevailing party.” Condo’s 10-Yr Legal Battle Against Lowell, MA Nears End Grand Manor Condominiums in Lowell, Massachusetts, was built in the 1980s. According to reporting in the Lowell Sun , residents there were un- aware that they were living on top of a municipal landfill dating to the 1940s and 1950s until a 2008 drainage system installation at the site. Only then was it discovered that the property’s soil con- tained hazardous materials including lead and arsenic. In 2009, according to the Sun , the state Department of Environmental Pro- tection declared the city of Lowell to be responsible for the cleanup as well as for the decrease in home values at Grand Manor. The condo association then sued the city for that loss in 2012. A trial be- gan in 2016 after the parties could not reach an out-of-court settlement. The jury in that trial sided with the city, saying that the statute of limitations had expired. The condo association ap- pealed in 2017, claiming that it had filed its suit well within the statutory period. The Supreme Judicial Court agreed and remanded the case back to the Lowell Superior Court for another trial in 2018. In that trial, the association sought $2.8 million in property damages as- THE YEAR IN... continued from page 1 continued on page 10