New rules governing B.C. strata councils are creating a hiring boom among engineering firms that provide “depreciation reports.”
Thanks to changes to the Strata Property Act, strata councils must commission the reports by December 14, 2013.
The only exception is if three-quarters of owners in a strata corporation vote against commissioning a depreciation report, which outlines what infrastructure needs to be replaced within 30 years, maintenance schedules for those items and expected costs. Opposition to commissioning the report must then be renewed annually.
Industry insiders estimate that 99% of the 27,000 strata corporations in B.C. have yet to commission one of the reports, the average cost for which is $8,000.
“The floodgates have opened,” said Ted Denniston, who is western Canadian regional manager at the engineering and consulting firm Halsall.
His firm has been producing depreciation reports for the past decade, mostly in other provinces where mandatory reporting has been the norm for strata corporations for years.
Six of Halsall’s 30 B.C.-based employees are dedicated to producing the reports. That’s twice the number of staff that worked on them at the beginning of the year.
RDH Group, the other engineering firm in Vancouver that has more than five years’ experience producing the reports, recently hired four new employees to help produce the reports and estimate their costs for strata councils, principal Mark Will told Business in Vancouver.
Both Denniston and Will plan to keep hiring because they expect a spike in demand after the majority of strata councils have held annual general meetings this fall to get approval to commission the reports.
“We’re turning away requests for proposals now,” Denniston said. “There are so many strata corporations in B.C. that need to have these reports done that I don’t believe there are enough service providers to deliver on them.”
RDH and Halsall have each provided estimates to more than 500 strata councils, and they each have more than 100 requests to provide estimates in the queue. They say that thus far between 10% and 20% of the estimates have been converted into commissioned reports.
Denniston knows some strata corporations that have voted against having a report commissioned because their members believe the prices for the reports will drop.
“I don’t see that happening,” he said. “If anything, it will come to a client that says they want us to complete a report, and we’ll have to say we can’t do it because we’ve got too many to do already.” •
Could a depreciation report affect property values?
The Condominium Home Owners Association (CHOA) was a driving force in getting the B.C. government to revise the Strata Property Act late last year to implement the current requirements.
CHOA executive director Tony Gioventu told BIV that he believes that when depreciation reports become common, buyers will have more certainty and strata corporations will be encouraged to use strata fees more efficiently.
Gioventu said the certainty that depreciation reports provide will increase property values. Conversely, buyers comparing two condo projects would likely see depreciation reports as a differentiator if one of the projects had a report and the other didn’t.
“I’m always amazed at how much money strata corporations squander because they haven’t planned for repairs and then are stuck in an emergency situation,” he said.
“By the time the roof has leaked and you’ve got two insurance claims and damage to the building, it’s too late to get the roof replaced because you’ll spend 30% to 50% more than you should have.”
