Calculate the clear account of community public benefits

This article is adapted from: Ningxia Daily

By our reporter Yang Chao (Text/Photos)

Residents of the Zhonghai Yuefu community in the Jinfeng District of Yinchuan review the public disclosure of public-earnings details.

Grid worker from the Ziyang Community in the Jinfeng District of Yinchuan visits residents to solicit their opinions on the community’s public-earnings funds.

Public earnings from residential communities are an important reflection of owners exercising their shared rights and participating in community governance. And calculating the “clear ledger” of public earnings is a key part of ensuring benign community self-governance and achieving the preservation and appreciation of shared property.

Where do the monthly parking fees collected by the property management company ultimately go? How much revenue do commercial placements actually generate—such as outdoor ads in residential compounds, corridor notice boards, and elevator-cab advertisements—and what do the subsequent expense breakdowns look like? With these issues, which owners generally care about, the reporter conducted in-depth visits and investigations with multiple departments.

Residents’ voices: Transparency is the bottom line

Public-earnings funds refer to the income obtained in the property management area of a residential community by using shared portions owned by the owners and shared facilities and equipment such as elevators, stairwells, and outdoor spaces. After deducting necessary management costs—including statutory taxes, energy-use losses, and labor operation and maintenance—what remains is the remaining portion of the earnings.

On March 31, a relevant official from the Yinchuan Municipal Housing and Urban-Rural Development Bureau introduced that the sources of public-earnings funds are fairly broad, mainly including: income generated from leasing or operating shared public supporting properties or spaces within the community; vehicle parking fees charged using shared roads and public areas; income obtained by setting outdoor advertisements in public areas, light boxes, unit doors, and exterior walls, as well as indoor advertisements set in elevator cabins, unit lobbies/foyers, and corridor passages; fees charged by carrying out commercial activities in public areas, and by installing and using facilities such as parcel locker stations, water purifiers, and vending machines; fees charged to telecommunications operators for use of sites for communications facilities and equipment; residual value income from recycling and disposing of scrapped shared facilities and equipment, after approval by the owners’ meeting; and interest income from public earnings and other income that legally belongs to all owners.

These earnings belong to all owners, and where the money flows to is a hot issue residents care about. Ma Tao, a resident in the Litong District of Wuzhong, said plainly: “For money like elevator ad fees and parking-space fees—how much is collected in total and where is it spent? No one says, so we don’t know.” Yu Xiaomin, a resident in Shapotou District of Zhongwei, was equally clear: “Public earnings are money from all owners, not the property company’s ‘private small treasury.’ We hope there will be regular disclosures, and every receipt and payment is shown clearly, line by line.”

When it comes to the specific uses of the earnings, residents’ priorities differ. Zhang Xingmin, a resident of Xingqing District in Yinchuan, hopes: “No matter how much it is, the dividends should be paid; or offset the property fee; give us some benefits, so we can genuinely feel the owners’ rights and interests.” Guo Yu, a resident of Jinfeng District in Yinchuan, is more inclined toward improving the community environment: “It’s not about splitting the money—first of all, fix the roads and replace some streetlights, or deposit it into a maintenance fund. Improving the community environment is better than anything else.”

Although residents have different views on the uses of the earnings, they reach a strong common understanding: public-earnings funds are shared property owned by all owners, and they must under no circumstances be withheld or misappropriated by the property company or used for the company’s own expenses. Zheng Qiang, a resident of Jinfeng District in Yinchuan, said: “We don’t oppose the property company making reasonable money, but we oppose backroom handling. We’re not hung up on how to split it, but we care whether it’s transparent and whether management is standardized.”

A way to break the issue: turning muddiness into clarity

Public-earnings funds are originally shared property generated based on owners’ shared areas and shared facilities and equipment. But because information is not disclosed openly in some communities and management is not standardized, they have become the “muddled ledger” that many residents in people’s minds can’t quite make sense of.

“Every day we see ads cycling in the elevator and vehicles filling up the public parking spaces, but how much these earnings actually are and where they’re spent—we have no idea.” The question raised by Zhang Xiaodong, a resident of Xingqing District in Yinchuan, voiced the common sentiments of many owners. Some residents reported that certain property management companies keep the account reconciliation information under wraps. They even fob people off with excuses like “Only after establishing the owners’ committee can we apply to disclose it,” trying to blur the boundaries between income and expenses and to fish in muddy waters. Meanwhile, many owners also have insufficient understanding of the ownership and oversight of public earnings. They think, “The money isn’t much, so there’s no need to make a big deal of it,” which to a certain extent tolerates problems of unstandardized management and makes public earnings even more unclear.

In response to governance pain points, multiple localities in Yinchuan took the initiative to break the issue open, promoting a shift in public earnings from a “muddled ledger” to a “clear ledger.” On March 30, the Zhonghai Yuefu community in the Jinfeng District of Yinchuan publicly disclosed the details of public earnings in the notice board, listing clearly the income and expenses such as the annual revenue from gate-and-entrance gate ad rentals and monthly management fees from communication operations, all of which could be verified at a glance.

Previously, during a special rectification campaign, the Haiperlanxuan Community on Halanshan Middle Road Subdistrict in Yinchuan found that some property companies had not, as required, deposited public earnings into designated special accounts, and they also delayed rectification by claiming they were not familiar with the policies. On March 23, the community specially convened the “Lanxuan Discussion Meeting,” and required on site that the noncompliant property company return the full amount of public earnings to the special regulatory account by the end of March. It strictly implemented earmarked funds for a specific purpose, ensured openness and transparency, and also signed a standardized use notice letter on the spot to reinforce management responsibilities.

The Zhongying Yujing community in Xingqing District of Yinchuan took another route through full-process supervision by the owners’ committee, exploring a viable path for standardized management of public earnings. Before the owners’ committee of that community was established in 2018, public earnings were managed unilaterally by the property company. After the owners’ committee was established, the community re-hired a property service enterprise. The annual earnings from public sources such as community parking fees and elevator ads increased to more than 700,000 yuan. The community not only published the details of income and expenses and disclosed them regularly, but also clarified that any single expenditure over 50,000 yuan must be decided by the owners’ meeting via voting. It also returned 980,000 yuan of surplus earnings to owners in the form of dividends, and—through the public earnings—successively added high-altitude monitoring, renovated the road surface of the parking lot, and opened a community canteen. Shared funds were truly used for owners’ benefit and to support the community’s development.

Nowadays, more and more communities adopt open-and-transparent, standardized, and orderly management measures to clarify the income and expense “path” of public earnings. In this way, the previously vague “muddled ledger” becomes clear, checkable, and truly protects the shared property and lawful rights and interests of all owners.

Institutional safeguards: standards with rules to follow

“Elevator ad fees, parcel locker rental, these public earnings—exactly where should they be used? Which expenditures are not compliant, and which expenditures are strictly forbidden?” Recently, in the second phase of the Xinhai Jiayuan community on Mancheng North Street Subdistrict in the Jinfeng District of Yinchuan, a member of the owners’ committee raised questions that directly pointed to real pain points in the management of public-earnings funds. Although this community was among the first to disclose the income and expenses of public earnings, in actual use it still frequently hits obstacles—can this fund be used to repair unit doors? Is it feasible to replace monitoring equipment? Due to a lack of clear and well-defined usage standards, the community often ends up in situations of “we dare not spend the money that should be spent.” Some expenditures also trigger residents’ doubts because there is no basis to justify them. The problem of standardized management of public earnings urgently needs to be solved.

“It’s a good thing to disclose the earnings, but we want to make it clear which lawful uses this money can be put to. With clear rules and regulations, people will feel at ease, and we can also avoid unnecessary disputes.” Zhu Mei, a resident of the second phase of Xinhai Jiayuan, said. To address this issue, Xue Ning, Party Secretary of the Ziyang Community in Mancheng North Street Subdistrict of Jinfeng District in Yinchuan, proactively took the lead in organizing a coordination meeting. She systematically reviewed and listed one by one the questions that residents and the owners’ committee commonly care about, including “whether unit-door repairs can use public earnings,” “whether aging monitoring can be replaced,” and “whether replanting/補种 green areas in public areas counts as an expense.” She organized discussions among three parties—property service enterprises, the owners’ committee, and residents’ representatives—to build consensus.

“Without a unified expenditure standard, every time we use public earnings we have to repeatedly explain it to residents. Not only is work efficiency low, but it also easily leads to misunderstandings and dissatisfaction among residents.” The person in charge of the property company of the second phase of Xinhai Jiayuan stated the difficulties in management. A member of the owners’ committee, Gao Yun, also said: “As long as the expenditure concerns the maintenance of public areas and the common interests of all owners, it should be usable—but we must strictly control the spending scale and we cannot spend arbitrarily or without order.”

The second phase of Xinhai Jiayuan community formulated and adopted the 《Guidance List for the Use of Public Earnings》. It clearly defined the scope of expenses that can be charged to public earnings, major matters requiring decisions by the owners’ meeting, and the scope of expenditures strictly prohibited. It also rigidly stipulated that all expenditures of public earnings must be subject to owners’ meeting approval. Each year, special audits must be conducted and the audit results disclosed to all owners. After this system was implemented, governance effects were immediate: the community’s planned replacement of 66 unit doors and supporting access control systems had a budget of 350,000 yuan. After recognition by the list as falling within the scope of “public-area safety facilities renovation,” it successfully passed the owners’ meeting vote and—according to regulations—could be charged to the public-earnings fund. This fully realized the shift from “using public earnings in a muddled way” to “using public earnings in a standardized way.”

“From the days when neither owners nor administrators ‘knew how to use it,’ to today when ‘we have a list to follow’—the key is to set up the rules.” Xue Ning said. Property service enterprises and the owners’ committee regularly report operating and earnings information to the owners’ meeting, which can fully ensure owners’ rights to know, participate, and supervise. “With clear rules and transparent operating procedures, people can spend the money with confidence and use it with peace of mind, and residents’ trust is also built up gradually through standardization.”

Zhang Jinguo, chair of the owners’ committee of the Zhongying Yujing community in Xingqing District of Yinchuan, further discussed the experience based on the community’s practices. He said that using public earnings reasonably can strengthen owners’ cohesion and sense of belonging, and push owners to move from “spectators” to a “community of shared interests,” thereby comprehensively improving grassroots governance. “When public earnings are managed with transparency, fundamentally it is a coordinated co-governance process involving government oversight, the owners’ committee performing its duties, and owners participating. Only by clarifying the boundaries of responsibilities among all parties and achieving efficient cooperation can public earnings truly be handled as ‘taken from the public and used for the public,’ benefiting all owners.”

From a legal perspective, Wang Ling, a lawyer from the Ningxia Yingzhi Law Firm, provided a definition: public earnings of a community are operating income generated based on owners’ shared areas and shared facilities and equipment. After deducting necessary costs, the remaining portion belongs to all owners in common. There is no exception of “agreed priority.” The core is “the gains from shared property belong to all co-owners.”

Around ensuring owners’ rights and interests and promoting transparent management, Wang Ling provided specific recommendations: first, strengthen disclosure. Disclose income-and-expense detail every quarter, disclose the annual audit report, ensure the disclosure period is no less than 30 days, and ensure the content covers sources of income, amounts, costs, remaining earnings, and usage plans. Publish through channels such as notice boards and owners’ groups, and keep materials on file for no less than 5 years; second, establish a diversified oversight system. Owners can review original vouchers, and set up supervision groups to verify. Local government oversight and assistance from village-and-community units in mediating disputes, as well as special inspections by the competent authorities for property management. Each year, the owners’ meeting decides whether to commission a third-party audit; third, standardize account management. It is strictly forbidden to mix public earnings with other funds, to protect owners’ right to query.

According to information available, the Yinchuan Housing and Urban-Rural Development Bureau, together with the Yinchuan Municipal Party Committee’s Social Work Department, has already issued multiple standardized measures: for communities establishing an owners’ committee or a property management committee, open accounts independently. For the early stage when the property is managed on behalf by the property company or with approval by the owners’ meeting, each single project should open its own account. Public-earnings funds should primarily be used to replenish the special fund for residential maintenance and repair. After approval by the owners’ meeting, they may also be used for repair, maintenance, renewal, and renovation of shared parts and facilities. At the same time, require the entities managing the public-earnings accounts to, within 7 days of signing the contract and within 5 days of opening the account, respectively disclose contract information and account status, with disclosure periods no less than 30 days and 7 days respectively. Regularly disclose income-and-expense information, establish ledger archives, and protect owners’ right to query.

“Currently, we are connecting with Yinchuan’s Data Bureau to promote the development of an owners’ query module and build a public-earnings information inquiry platform, so that funding information is disclosed openly and transparently.” A relevant official from the Yinchuan Housing and Urban-Rural Development Bureau said.

To solve the “muddled ledger” problem and plug management loopholes, Yinchuan relies on the “six-open” property service information system, guiding communities to achieve a full-process closed-loop management model for public earnings—account opening and aggregation, fund identification, open disclosure, standardized use, audit supervision, and responsibility implementation. It clarifies boundaries among funds such as property fees, public earnings, and corporate investment, and promotes the standardization, transparency, and rule-of-law governance of public-earnings management, effectively safeguarding the safety of owners’ shared property and their lawful rights and interests.