Sent: Thursday, March 06, 2014 6:03 PM
To: MP ZAINAL SAPARI
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Subject: 20140306 S & CC hike – town council did not consider all factors
Dear MP Sapari
Thank you for your reply dated 3 March.
1 I refer to PRPG-TC Annual Report FY 2012 (pg 20) and Annual Report FY 2013 (pg 17). There was no breakdown to confirm a deficit for residential property after taking into account government grant for the last 2 financial years. As have been mentioned, surpluses of past years (probably more than a decade), have all been transferred into the sinking fund. This is detrimental to residents’ interests as it locks up OUR money in a sky’s-the-limit sinking fund account.
(“Although there is total net surplus for residential, commercial & car park activities, we have been operating on a deficit for residential property after taking into account government grant for the last 2 financial years. However, it is not possible for the Town Council to continue to operate with the existing rates as we have projected a total deficit by financial year 2015.”)
2 The TC has “projected a total deficit by FY 2015”. Residents do not know how the TC arrived at this projected deficit and we need more transparency on this. Why is the TC so certain that costs cannot be cut further to prevent this deficit?
3 The government grant is the mainstay of our public housing programme. The right interpretation of ‘surplus/deficit’ MUST therefore take into account necessary government grants ie. in our case – Revenue less Expenditure plus Govt Grant = Surplus. To cherry pick on a single item (residential property) defies logic ie.
Conventional accounting – Revenue less Expenditure (deficit) plus Govt Grant = Surplus
Irregular accounting – Revenue less Expenditure = Deficit
4 The media has repeatedly mentioned increasing costs due to an increased number of lifts and higher electricity and water bill. What has never been mentioned is the increase in our managing agent (MA) fee which was the highest at 26% from 2011 to 2013.
|Managing agent fee||5785314||7315268||1529954||26%|
|Water and electricity||19177269||21298519||2121250||11%|
This is followed by cleaning works at 22 %. As mentioned in my previous email, the amount spent on 10 cleaners for 2 years is almost $600,000. Has PRPG-TC been overpaying and could our town council have reduced costs for residents? MP Sapari did not address my suggestion if costs could be cut and address my suggestion as a query.
5 The tender which I was referring to specifically stated “Term contract for The Provision of Workmen for The Period 1 Oct 2013 to 30 Sep 2015”. EM Services MP Sapari now claims that “other than labour, cleaning equipment and material are provided in the contract”. The “provision of workmen” should have no other meaning than as stated.
If a company contracts to supply the TC with a temporary receptionist, surely the contract does not include the supply of equipment such as a PBX system, the required stationery, etc.
Since EM Services manages about 500,000 HDB units, for their fees to increase by a hefty 26% in two years confirms there is zero economy of scale. Since our TC is now managing less units after the Punggol by election, I hope there will be a reduction in management fees.
6 Will millions be needed as an estate grows older? Toa Payoh estate, built in 1968, will be 50 in 4 years time. B-TP TC manages about 33,000 units less than our town council but has a whopping $141.5 MILLION in its sinking fund in FY 2013. Annual Report 2013 (page 6) The answer is clearly a ‘no’ as its sinking fund has not been drained but has been increasing over the years. Why are town councils building their ‘reserves’ in ways similar to the government’s reserves and the treatment of our CPF money?
The other reason is older blocks will go for en bloc, demolished and new blocks will be built by the HDB. The TC takes over the new blocks and maintenance costs will be low.
7 In FY 2012, government grant was $10,854,005 but was reduced to $8,790,610 in FY 2013. link (pg 17) B-TP TC’s government grant was also reduced by $1.1 million within the same period. link (pg 12) Perhaps the government has plans to cut funding to town councils and is therefore making residents pay for the expected shortfall?
The sky cannot be the limit for the sinking fund account. Older estates have confirmed that their sinking funds have not been depleted despite much fear mongering. Instead, their sinking funds have been growing steadily.
The mandatory 30% to 35% of our S & CC has already been set aside in the sinking fund. There is no reason to transfer additional surpluses and simultaneously hike our S & CC. Huge increases in the management agent fees have not been addressed.
As our cost of living has drastically increased, government grants must go up in tandem for public housing. In a double whammy, the government has cut back on grants and allows town councils to hike S & CC rates. This is not right.
Are town councils anticipating huge costs for a possible building collapse, our island sinking or perhaps preparing for unknown unknowns?
From: Zainal Sapari
Sent: Monday, March 03, 2014 6:48 PM
Subject: Re: 20140301 S & CC should not be increased when TC has surplus
Please refer to your email dated 2 Mar 2014.
Although there is total net surplus for residential, commercial & car park activities, we have been operating on a deficit for residential property after taking into account government grant for the last 2 financial years. However, it is not possible for the Town Council to continue to operate with the existing rates as we have projected a total deficit by financial year 2015.
The Town Council works closely with the Residents’ Committees and take into consideration the feedback and needs of residents before deciding on which improvement projects to implement. The Town Council will continue to provide improvement works that are functional and beneficial to all residents, for example covered linkways & drop off porches.
It is mandatory for 30% to 35% of the monthly S&CC collection and government grant to be transferred into Sinking Fund to carry out future major cyclical maintenance works such as cyclical repainting and repairs, reroofing, rewiring, replacement of lift major parts, water pumps, etc. Cyclical maintenance is required to ensure that the buildings and its supporting M&E services are properly managed and maintained throughout its life cycle. With consistent building up of the sinking fund, the Town Council need not resort to asking residents to pay out a hefty sum of money when there is a need to carry out any such major cyclical work.
Although different Town Councils manage properties with different profile, we face similar pressure with cost increase. Some, like those smaller TCs you mentioned,
have raised their rates earlier. Our S&CC was last revised 10 years ago in September 2004. Please be assured that we have been making conscientious effort to control costs and expenditures to avoid increasing the S&CC despite rising inflation every year. However, it is becoming increasingly difficult to continue our operations at the prevailing S&CC rates as Town Council’s operating and cyclical expenses have increased significantly.
With reference to your query on the cleaning contract, other than labour, cleaning equipment and material are provided in the contract. As it is a simple cleaning contract, all contractors who are able to supply workmen and cleaning equipment, can tender for the job.
Zainal Sapari Chairman
Pt. 7 correction. ‘$1.1 million’ should be ‘$2.05 million’