Strata not lim­ited to cost-es­ti­mates in de­pre­ci­a­tion re­port

Times Colonist - - Homes - TONY GIOVENTU Condo Smarts

Dear Tony: Our coun­cil re­cently put two items on the agenda of our an­nual gen­eral meet­ing to ap­prove con­tin­gency funds for re­pairs and up­grades. One was the roof­ing on our eight town­houses and the other was a sched­uled up­grade to the fire-safety sys­tems in our high­rise.

The roof­ing was for $135,000 and the fire-safety up­grade was for $22,000. Both items were in our de­pre­ci­a­tion re­port and rec­om­mended for 2018, so were passed by ma­jor­ity vote. How­ever, an owner raised a very good ques­tion at the meet­ing.

The re­port was last up­dated in 2015, so how do we know these amounts are ac­cu­rate? This raised a num­ber of other ques­tions and pro­posed amend­ments at the meet­ing, re­lated to the process for pur­chas­ing these prod­ucts and ser­vices, and of course, what hap­pens if there isn’t enough money ap­proved?

Our coun­cil wants to pro­ceed with these projects, but the own­ers have raised some valid ques­tions and amend­ments. Our prop­erty man­ager told us we could only ap­prove the amount in the de­pre­ci­a­tion re­port. How do we pro­ceed?

Karen Feather­stone One of the sig­nif­i­cant ben­e­fits of de­pre­ci­a­tion re­ports and fund­ing the con­tin­gency re­serve fund is that the strata cor­po­ra­tion will only re­quire a ma­jor­ity vote to ap­prove the funds when the re­newal or main­te­nance is rec­om­mended.

With the changes in the Strata Prop­erty Act, the in­ten­tion was to pro­vide strata cor­po­ra­tions with the abil­ity to plan fund­ing, spend funds and au­tho­rize ma­jor projects, all by a ma­jor­ity vote. The ma­jor­ity vote also means the own­ers have the au­thor­ity to make amend­ments to the ma­jor­ity-vote res­o­lu­tions at a gen­eral meet­ing.

The re­sult is that el­i­gi­ble vot­ers have more au­thor­ity on process, pro­ce­dures and ex­penses. Ma­jor projects, re­gard­less of the type of vote that is re­quired, should all be treated with a high level of fidu­ciary re­spon­si­bil­ity. The de­pre­ci­a­tion re­port is an ex­cel­lent planning tool for sched­ul­ing and fi­nan­cial planning, but time pe­ri­ods af­fect the pro­jec­tions, due to prod­uct and ma­te­rial changes and avail­abil­ity, build­ing-code changes, con­trac­tor avail­abil­ity, in­ac­cu­rate cal­cu­la­tions of project and cost im­pli­ca­tions and de­lays in im­ple­ment­ing the re­ports.

Re­view the de­pre­ci­a­tion re­port an­nu­ally and iden­tify those projects sched­uled within the next five years. Your roof, iden­ti­fied for re­newal in 2018, is a project that should have been started in early 2017.

The first fund­ing ap­proval, which could have been ap­proved un­der con­sult­ing ser­vices in the an­nual bud­get, is for a roof­ing con­sul­tant/in­spec­tor to in­spect the roof­ing con­di­tion and pro­vide rec­om­men­da­tions on main­te­nance or de­fi­cien­cies and set the spec­i­fi­ca­tions for the planned re­newal.

The con­sul­tant will pro­vide you with cur­rent mar­ket costs and an over­view of the scope of the project. One other as­pect of the con­sul­tant’s work will be to ad­vise you on the com­plete scope of work to avoid any du­pli­ca­tion of fu­ture cost and work. This will form the frame­work on the amount you will pro­pose to the own­ers for the project.

The best ex­am­ple of this is your eight town­house roofs, which also have 16 sky­lights. Given that they are 21 years old, re­plac­ing sky­lights at the same time as the roof­ing will be the most eco­nom­i­cal choice for your strata and will en­sure that the re­moval and in­stal­la­tion will not af­fect your fu­ture main­te­nance and war­ranties. It’s also a good op­por­tu­nity to con­sider an en­ergy up­grade to the types of win­dows and ven­ti­la­tion.

The only con­di­tion that is im­posed by the act is that the re­port rec­om­mends the re­pair, re­newal or main­te­nance. The act does not limit your strata to the cost es­ti­mates es­tab­lished in the de­pre­ci­a­tion re­port. Other than es­ti­mates of when projects are due and pos­si­ble costs, the de­pre­ci­a­tion re­port has no reg­u­lat­ing au­thor­ity over the busi­ness of the strata cor­po­ra­tion. Tony Gioventu is ex­ec­u­tive di­rec­tor of the Con­do­minium Home Own­ers As­so­ci­a­tion.

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