The changes to the Strata Property Act (SPA) in December 2011, with the introduction of mandatory Depreciation Reports, is driving a good deal of activity in the BC Strata “community”, but we must encourage Owners not lose sight of what should come out of these reports. They are not an “end” in themselves – only a beginning.
While a Depreciation Report should offer the all important baseline information, through its inventory and assessment of a Strata’s Common Property assets, and a financial forecast of the funds required to renew or replace them, it will not create a Long Term Maintenance Plan (LTMP) for your property. The approach to generating such a plan is something that each Owners Group will have to choose.
As consultants; we can provide the “tool” – in the form of the Depreciation Report – which will allow the Owners to “build” their own plan, suited to their own abilities and financial capacity. We will continue to support our clients with the development of an LTMP, but we cannot make the decisions necessary to implement the changes required.
First and foremost – we can assure readers that this does not have to happen all at once, and will suggest that even a well organised and focused group will take several years to create a plan that the Owners can fully accept. We will repeat it in as many places, and as many ways, as we can – real estate is a long term investment – and the development of an appropriate LTMP will take time.
Unity Services Corporation can provide the Depreciation Report that starts the planning process, and we will be there to support our clients as they develop their Long Term Maintenance Plans.
With the Depreciation Report (DR) in hand, the planning process or discussion might look something like this…
Our roof is now 12 years old and has an expected life of 25 years. According to the Depreciation Report from Unity Services, although its overall condition is good, it is showing some signs of deterioration in specific areas.
- At this time, we must assume that the roof will have to be replaced at the 25 year mark, and we will budget for annual contributions to the CRF to accomplish this, based on the estimated value provided within the DR.
- We shall ensure the annual Operations budget has funds to cover the cost of a qualified roofing contractor to inspect and report on the roof, and institute a minor preventative maintenance program, twice each year, in Spring and Fall.
- We will adjust our Operations Budget requirements annually, based on the semi-annual inspections and reports from our roofer.
- At year 20 (8 years from now), we shall engage a Roofing Consultant to provide a detailed assessment of the roof, its remaining life expectancy, and recommendations on the types, and anticipated costs, of replacement roofing systems that will best meet our needs.
- Costs for the Consultant’s report will be included in the LTMP. (Unity Services is qualified to provide a Roofing Assessment)
- We will adjust our LTMP financial forecasts, and CRF contributions, based on the three-year review and updating of our Depreciation Report by Unity Services Corporation.
- In the event of an early roof failure, the Long Term Maintenance Plan’s CRF allocation for its replacement will minimize the one-time cost of a special assessment.
Where, When & How to Start Your Long Term Maintenance Planning..??
A comprehensive Depreciation Report will provide much of the detailed information necessary to start charting the course for your Strata Corporation. Once the document is in hand, the Owners can make some decisions on the priority of major Repair, Upgrade and Replacement Projects, and this is the basis for a Long Term Maintenance Plan.
No matter where a property is in its lifecycle, nor how much, or little, planning has been done, the important point is to assess its existing condition, here and now, in order to create a starting point. The SPA’s requirements take that several steps further by including relevant financial information such as current replacement/renewal values, and presenting several options on how your Strata might fund the costs of the work. This takes much of the “leg-work” out of the LTMP process for the Owners.
Once the Depreciation Report is completed, Unity Services can continue to support Owners and Councils by assisting them to develop their Long Term Maintenance Plans. We can facilitate the discussion that this process inevitably, and in fact, should, generate. We offer a 3rd party, non-biased perspective, and are able to draw on wide ranging experience in Property Maintenance and Project Development to help an Owners Group to discern fact from hearsay.
Unity Services Corporation offers the experience, knowledge and perspective to assist you in becoming knowledgeable owners, making sound, educated decisions, to ensure the ongoing health and value of your property.