Dear Tony: Our strata has been struggling with the issue of determining how high our strata fees should be.
Since we received our depreciation report, our council has put pressure on the owners to increase contingency contributions, and our maintenance and inspection provisions as part of our budget. As a result we increased our strata fees by eight per cent in 2014 and are looking at another 12 per cent in 2015.
The property across the street from us was built in the same year and their strata fees are $100 a month cheaper and this is having a negative effect on the ability of owners to sell their units.
We have many opinions in our strata, but few facts and I鈥檓 afraid our community is becoming divided over this issue. Is there such a thing as an average strata fee?
Glenda Davis
听
Dear Glenda: Each strata corporation has a variety of different expenses that are included in their annual strata fees. As a result, it is often difficult to compare one building to another without fully understanding which operating costs are included in the annual budget.
Obviously, we need the detailed information of both properties to make some sort of comparisons. The neighbouring property was contacted by Glenda鈥檚 strata and they agreed to provide a copy of their annual budget to make this possible.
Glenda鈥檚 strata, Building A, constructed in 1986, has 125 units, and the neighbouring strata, Building B was constructed in 1985, and has 118 units.
The units are comparable in size, and the basic age and design are the same with one significant difference: Building A has a central boiler providing hot water and heat to each strata lot as part of the common expenses, while Building B has electric hot water tanks in each strata lot and electric heat paid for by each owner separately.
In Building A, they budget $155,000 per year for maintenance and repairs, and that works out to $1,240 annually per unit.
Building B budgets $75,000 per year at $635 per unit.
Building A has implemented its depreciation report and is funding an average of $55 a unit per month for future renewals.
Building B, on the other hand, has not yet obtained a depreciation report and is funding only $15 per unit per month.
These two items alone, not including the costs of heat and hot water, are a difference of $90 per month, making up the difference between the two properties.
While the decision to obtain a depreciation report and plan on higher levels of funding is up to each strata to decide, a major project on the horizon will be a good signal to understand how the strata is planning for the future.
Building A is planning for a new roof in 2017, to be paid for out of the contingency fund, which has a current balance of $550,000.
Building B has not investigated its roof, has only $137,000 in its reserve fund and is likely facing special levies within the next few years.
Comparisons of strata fees are only valid if you compare the exact same conditions. If we factor in the heating and hot water costs to building B and the additional contingency reserve fund contributions, their fees are actually higher.
Don鈥檛 be fooled by numbers without more information.
听
Tony Gioventu is executive director of the Condominium Home Owners鈥� Association (choa.bc.ca).
Email [email protected].
