How We Detected at $200,000 Gap in a Depreciation Report: A Vancouver Island Case Study

Bare-land strata corporations often assume their infrastructure is simple—until the costs tell a different story. We recently completed a depreciation report for small bare-land strata on Vancouver Island, and what we discovered could have saved the strata from a six-figure special assessment down the line.

The Background

This small 30 year old development had limited common property assets - a shared driveway, some landscaped areas, and a shared Type 1 septic system. Their previous depreciation report had projected an end-of-life replacement cost based on the assumption that a new Type 1 system could be installed. However, our inspection and due diligence found a critical update: Type 1 systems are no longer compliant with local environmental regulations for this type of site.

The correct replacement was a Type 3 system which had significantly higher costs, engineering requirements, and maintenance obligations.

Our Investigation

Unlike firms that rely on templated assumptions, we:

• Consulted with local health authorities on current regulatory expectations

• Confirmed with industry professionals that a Type 3 system would be mandated

• Reviewed prior operating expenses, pumping logs, and inspection schedules

• Adjusted component lifecycle expectations using inflation-indexed costing

  
  

The Financial Impact

The original report budgeted ~$120,000 for future septic replacement. Our analysis indicated a Type 3 system would require closer to $300,000 when the system comes due for replacement. Further, additional costs would be required over the lifecycle, including:

• Engineering and permitting costs

• Advanced filtration and monitoring systems

• Higher annual maintenance fees

• Shorter pump component lifespans

Had this been missed, the strata would have faced a $200,000+ shortfall, resulting in emergency levies or a depleted reserve.

The Outcome

Our revised depreciation report provided:

• A fully funded reserve plan for the Type 3 system

• Updated inspection and maintenance cycles

• A year-by-year funding strategy to avoid special assessments

Lessons for Other Strata Corporations

1. Codes can evolve and while like for like replacement is common, certain circumstances require us to dig deeper.

2. Ensure depreciation reports are site-specific, not templated.

3. Look for a provider that specializes in rural infrastructure goes the extra mile.

Need help reviewing a previous depreciation report? Our team works across Vancouver Island and the Sunshine Coast, delivering customized reports that provide real guidance and real peace of mind.

Connect with us any time www.reservefund.ca

dan@comoxvalleyappraisers.com