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Contested Budget

By Liezl van tonder on Fri, 09 Mar 2012 at 15:40

We had an AGM where the proposed budget was tabled, the levy increase to accomodate the budget was in excess of 10%, however some of the costs proposed were highly contended by those residents in attendance to the point where the trustees were specifically requested and accepted to look into ruling out ceratin costs and obtaining alternate quotation options to reduce the overall budget. They then proceeded to vote on and by means of mostly proxies held by the chairperson (who is a tenant), accepted the proposed levy increase, which was based on accommodating the contested budget. A number of attendees such as single parents and pensioners stated that the proposed levy brought on by the budget was more than they could afford with one even saying the proposed levy alone would then be more than her monthly pension!

My question is two parts, first if this was correct, I would have thought that if budget items were contested and it was resolved that means of reduction on specified costing’s were to be investigated, that the budget couldn’t or shouldn’t have been voted on/accepted? This mandate to investigate costing and unnecessary expenditure was agreed to in the meeting by those persons in attendance so how could the proxy votes be counted, surely the mandate would overrule the proxy votes as those persons who signed a proxy wouldn’t be aware of the mandate or particulars of the disputes raised.

Secondly, if the vote is in order despite the above, can the acceptance of the budget be overturned if a majority of residents now petition against it?

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RE: Contested Budget

Myburgh Brink replied on Fri, 09 Mar 2012 at 20:43

The levy increase is NOT an agenda item for the AGM (PMR 56), it is the estimates, as prepared by the trustees, which are discussed and either approved without amendments or with amendments at the AGM (PMR 56 (b) (ii)). Once a decision is reached on the estimates it only requires a simple majority for approval. Once this is done the newly elected trustees should within 14 days notify the owners of their new contributions, as determined from the approved estimates. Once the trustee resolution is passed the contributions become legally enforceable (§37 (2) and PMR 31).

It is normal for the chairman to have a number of proxies from owners who are unable to attend the AGM. The fact that he is a tenant is irrelevant. He must have been nominated (PMR 7) the previous year and duly elected by the owners as a trustee – unless he should have been disqualified i.t.o. either PMR 5 or PMR 13. The trustees elect the chairman (PMR18)....Show More

RE: RE: Contested Budget

Liezl van tonder replied on Sat, 10 Mar 2012 at 09:01

Thank you for enlightening me on these points, I understand the reality of the situation but I still feel it is a poor show when it’s your community, as members of the board you should also be guided by the needs of the community which includes their financial situation, one person proposed a separate levy be considered specifically for pensioners where they could show the levy was unaffordable to them but his suggestion was totally ignored

Since you do seem to be very knowledgeable could I push my luck a little more and ask for your opinion on two more budget related items?...Show More

RE: Contested Budget

Myburgh Brink replied on Sat, 10 Mar 2012 at 10:24

There is nothing in the STA which provides for differentiated contributions because of someone's financial status. If this was the case those who could afford higher contributions would have to subsidise those who cannot, but they would not enjoy any greater benefits and would in fact be prejudiced. In any case who would make the decision and by what criteria who pays more and who pays less?

By keeping contributions artificially low, by either the trustees or the members, has a direct effect on the value of each owner's investment. The first item which normally gets cut is maintenance and this has a snowball effect over a period of time. After that it is playing catch-up all the time until someone wakes up and an enormous increase is required to get things right. Then nobody wants to accept responsibility for the deterioration of the scheme, especially those who were originally responsible for the problem....Show More

RE: RE: Contested Budget

Liezl van tonder replied on Sat, 10 Mar 2012 at 15:00

I thank you for that and agree that any split levy would be impossible and unfair.

It is not as though our complex is eating into its reserves, and i acknowledge that increases are necessary to avoid falling short is important, its not an increase I am opposed to its this particular percentage of increase as it is unneccessary.  My problem is that the budget was contested and heavily at that so should have been  accepted with  amendments, this is not the case it was accepted without, despite the errors and including the camera and biometric costs which made the general running and upkeep annual cost appear higher than it actually is. ...Show More

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