How much should we have in our CRF? This is a question that we get asked quite often from Strata Council’s that we offer Strata Management services to.

How much do we need in our Strata CRF?

There are two answers to this question;

1. What the Strata Property Act states
2. What actually makes sense

What the Strata Property Act says you need in your CRF;

The Strata Property Act requires that the CRF must have 25% of the year’s operating budget saved up in the CRF. For example if you have an operating budget of $100,000, then at minimum, you must have $25,000 in your CRF. If you don’t, then you must contribute at least 10% of your operating fund budget (in this case $10,000) to the CRF during that year, until the 25% threshold is reached.

Well, the problem with this method is that 25% is a completely arbitrary number. It’s a good rule of thumb, and might be perfect for a fairly new building, but for a strata building that is more than 20 years old, this may not come even close to being enough.

What makes sense to have in your CRF;

It’s pretty simple to know if you’ve had a depreciation report commissioned for your strata building. The depreciation report will give you a clear picture of what you will need to budget over the next number of years to cover capital expenditures such as pipe replacement, roof, boiler, elevator, etc. This number may be 25% of your annual operating budget, but in most cases it will be much higher.

If you haven’t had a depreciation report done, this is where things can get a bit tricky. Most Strata Council’s, along with help from their Strata Management company, will be able to figure out the rough cost of upcoming major expenditures. This is something that has to be done and reviewed on an annual basis in order to be fairly accurate. A good time to do this is when preparing for the AGM. If you’re unsure about the costs of certain items, then gather 3 quotes and take the average of the 3.

As you can see, the Government mandated 25% is a great “rough guide” to go by, but if you’re trying to avoid having to issue major special levies, then for most older buildings it’s simply not going to be enough.

If you’re looking for some assistance planning out your CRF needs, then contact our property management company today, and we would be happy to help out!

July 9, 2018