Is AHPETC in financial trouble?
A simple matter of three points and one question ...
What is Sinking Fund?
The Sinking Fund is a long term savings fund required by law. The Fund is to pay for repair and replacement of major things like lifts and electrical re-wiring.
For instance, over the next 10 years, AHPETC needs to pay $54m from SF just to replace lifts in the older blocks. That leaves only $55m from its current SF to do many other essential works:
· Repairs and Repainting of over 700 blocks (which alone may be as much $100m if not more)
· Implementing LUP (this can be as much as $20m)
· Electrical Re-wiring
· Repair and Replacement of old sanitary pipes
· If there is not enough money in the SF, these critical things will not get done. Residents affected will suffer. Their property value will drop.
· The TC meeting its SF requirements on time therefore is critical
How is Sinking Fund Collected
Each month every TC collects S&CC from residents. Every 3 months, the TC is required to deposit one third of the total S&CC collected into the SF.
In addition, the Government gives the TC an annual grant. One third of this must also be paid into the SF. The rest is up to the TC to use.
What is the Sinking Fund Situation in AHPETC
AHPETC has defaulted on their SF payments. Their present outstanding SF deficit is $9m. AHPETC will have to pay another $13.5m into their SF for the rest of this financial year (FY2015/16). AHPETC therefore needs a total of $22.5m ($9m + $13.5m) to meet their SF obligations this financial year.
MND currently holds $14m grants due to AHPETC because their accounts have not been cleanly passed by their own auditors. At the Sylvia Lim’s request, MND is prepared to release the grants if the TC furnishes its latest financial status. AHPETC has chosen not to give the info despite many reminders.
When MND releases these grants, $4m must be deducted upfront for additional deposit into the SF. This leaves $10m for the TC to use.
This $10m is not enough to cover the AHPETC’s SF requirements for this financial year. The TC needs to find another $12.5m this financial year to do so from their operating account.
One Simple Question Sylvia Lim Needs to Answer to Residents
Under George Yeo’s team, the TC ran an annual operating surplus of $3.3m. Under the WP, this has turned into an annual operating deficit of $1.5m by early 2013.
Their latest financial situation is unknown because they cannot even produce a clean set of audited accounts for the last 3 years. Whatever it is, the negative and downward trend known so far must give residents cause for concern.
Residents should ask Sylvia Lim to state plainly and honestly:
· How much surplus money they have in the TC operating account after paying off all bills and meeting SF obligations this financial year.
Residents have a right to know the truth. Is the AHPETC boat leaking and sinking slowly into eventual insolvency?