Year in Review: 2020 Strata Reserve Contributions

As we start 2021 we thought it’d be worth looking back at an important aspect of strata budgets: reserve fund contributions.   This is the amount that is set aside for repair or replacement of assets that occur less than annually, such as replacing a roof, upgrading an elevator or repairing roads.  Expenditures are usually identified in advance through a depreciation report, and the reserve funds are designed to cover the costs when necessary.

The picture around reserve fund contributions is more encouraging than we anticipated: strata corporations have been putting aside an average of nearly 17% of their operating budgets. This is above our expectations and the prevailing 10% recommended by the Strata Property Act regulations – though the latter is being reviewed and expected to increase.  Here is the average of the reserve contributions as a percent of operating budgets in Eli Report over the past two years:

2020: 16.9% (average $70.0k per strata)

2019: 17.7% (average $63.5k per strata)

As you can see, despite a slightly lower percentage stratas have managed to put more dollars aside into their CRF in 2020 budgets vs 2019 in spite of the increased burden of insurance premiums…10% more. This is a positive sign as stratas with healthy reserve funds are less likely to charge special assessments.

We took a deeper dive looking at the average contributions per unit, as for owners this is a relevant figure. From this analysis we see that 2020 annual reserve contributions averaged approximately $700 (~$60/mo) per unit, out of total unit strata budgets of $4,800 (~$400/mo) per unit. If that feels steep, know that some reserve contributions were in the thousands of dollars – either funding a significant project or replenishing low reserves!

Finally, in terms of CRF balances, while the average dropped slighly (by less than 2%) in 2020, the median inched up by a similar margin, so those have remained fairly stable.

If you are curious about how your strata compares as an owner or member of your strata council, obtain a free Eli Report by emailing us here.

As a prospective buyer performing due diligence on a strata community, you can always get a free Eli Report from your realtor.