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CSW sees potential in strata act changes

Stratas formed before Dec. 14, 2011 must file depreciation reports by Dec. 13



The B.C. Strata Property Act is changing this year, and one of the new requirements is the need to file regular depreciation reports every three years, with the first reports due on Dec. 13.

Strata fees, typically lower in B.C. than other jurisdictions, will likely be increased once stratas map out future upgrade costs and start building up contingency funds and reserve funds to pay for them.

The Centre for Sustainability Whistler (CSW) believes there's an opportunity to leverage those changes to the strata act to encourage strata boards to invest in more efficient, environmentally sound upgrades, and hosted a workshop in May to discuss the potential with property owners.

For example, if a roof needs to be replaced then the new roof should be well insulated to reduce heat loss. If common area windows need to be replaced then stratas should plan to install windows with high "R" values that retain heat and reduce convection currents. Those upgrades do cost more, and might require higher strata fees to finance, but they are proven to save money in the long run.

"The energy bill for Whistler is $40 to $45 million a year — or rather we spend about $80 million on energy and about $40 million of that is for buildings," explained Dan Wilson, a sustainability planner for the CSW. "And all that money leaves Whistler, it goes to BC Hydro and to Fortis BC."

Wilson said that after the new laws are enacted in December, most stratas will have a better idea of their future costs as well as their future opportunities for reducing energy use and lowering costs. Done right, that could one day mean lower bills and fees for people living in stratas, more work for local contractors doing the upgrades and more money staying in the community.

"What having a capital asset management plan and depreciation statements means is that stratas can look at their buildings over the next 10, 20 or 30-year timeframe. When they know what they need to be doing and at what time, then it's easier to slot in investments in energy efficiency — a lot of which can pay for themselves in a few years. It's about taking a longer term perspective on a building... to create higher performing buildings that are more comfortable and cost-effective."

One test building in a presentation by Nigel Protter of the B.C. Sustainable Energy Association found that a mid-rise building in Vancouver could save upwards of 27 per cent a year on utilities with retrofits to reduce electricity, gas and water usage, with an estimated payback of the additional investment of just 4.4 years.

Stratas also pay one of two base rates for electricity for common areas. According to the BC Sustainable Energy Association, the annual increase for the first base rate for electricity is expected to climb from 8.68 cents per kilowatt-hour in 2012 to 14.84 cents by 2021. The second base rate for larger customers will increase from 7.8 cents to roughly 14 cents, almost doubling in a nine-year period.

As for the increase in strata fees, Wilson said that British Columbians on average pay half as much into contingency and reserve funds as Home Owner Associations in the U.S. In most B.C. stratas, just 10 to 15 per cent is saved in reserves compared to an average between 25 and 30 per cent in the U.S. and Ontario.

Wilson said that strong reserves and an investment in reducing energy use will increase the value of strata units on the resale market, as buyers want to be assured that the strata is in good shape financially. The alternative is for stratas to charge special levies to residents to cover costs, which sometimes means unexpected bills for hundreds, and sometimes thousands of dollars at one time rather than smaller monthly fee increases.

Wilson said that the workshop, funded by a grant from the Resort Municipality of Whistler's Climate Action and Innovation Fund, was a starting point. To help stratas, homeowners and others, CSW is looking to work with the Canadian Home Builders Association - Sea to Sky to host more workshops on reducing energy use and greenhouse gas emissions.