Depreciation Report

LMS 1234
Absolute Building Science Strata Engineering Inc.

August
2012
Cover letter

Absolute Building Science Strata

Engineering Inc. (“ABSSEI”)
#2322-938 Smithe Street
Vancouver BC V6B 1E5
December 10, 2012
Strata Plan: LMS 1234
XYZ Condominiums
1234 -West 23rd Avenue
Vancouver B.C. V1A 2B3

RE: Depreciation Report for Strata Plan LMS 1234

File No. 201301DR001

Dear Sirs or Mesdames,

The subject of this depreciation report consists of "XYZ Condominiums", a 54 unit

apartment constructed in 1992. We are pleased to present you the enclosed depreciation report
which we believe will serve as the basis of your reserve planning to help better equip your
members for future expenditures.

The depreciation report describes the common property conditions, providing current and
future replacement cost estimates. The projected replacement cost estimates serve to be the basis
for financial models guiding contingency reserve fund management. The depreciation report is
an extensive document prepared based on on-site inspections and financial analyses. The
replacement cost estimates herein apply solely to property defined as common property, unless
otherwise noted herein.

This depreciation report is subject to the Assumptions and Limiting Conditions in

section 2.1.

We have inspected the subject property and reviewed all documentations made available
by the strata corporation. With extensive analyses performed in conjunction with all pertinent
data, our cash flow models predict that the optimal reserve fund management includes the
following:

1. Contributions of $40,000 in the upcoming fiscal year; and

2.An increase of monthly fee allocations to the Contingency Reserve Fund by $31 per unit.

We are hereby delivering you with a report describing our study objectives, methods of
research, results and recommendations

Absolute Building Science

Strata Engineering Inc.
2 File No. 201212DR002
 We appreciate the opportunity of compiling this depreciation report for you and would be
honoured to provide you with reviews and updating services as required in future. If you have
any questions, please do not hesitate to contact the undersigned.

Respectfully yours,

Absolute Building Science

Strata Engineering Inc.

Absolute Building Science

Strata Engineering Inc.
3 File No. 201212DR002
Figure 1. Aerial view of the development and the surroundings.

XYZ C ondominiums
1234 West 23rd Ave.
Vancouver, B.C.

Absolute Building Science

Strata Engineering Inc.
4 File No. 201212DR002
Executive Summary
Property Statistics
Municipal Address: 1234 West 23rd Avenue, Vancouver, BC
Legal description Strata Plan LMS 1234
Real property type Apartment style condominiums, 1 building, 4 storeys
Size of building (ft2) 21,800
Units 54
Date of Construction 1992
Designated land use Residential (Multiple family) use.
Reserve fund Total: 28 components; 7 Building shell components; 2 Interiors
components components, 9 Services components, 1 Equipment and furnishing
component, 3 Special constructions, 3 Building sitework and 3
Consultancy components (Miscellaneous)

Financial Statistics0
Date of Study Aug 1, 2012
Critical Assumptions The review is limited to readily accessible and visible building
components and documents. Certain inaccessible, hidden problems
may not be detected.
Preventive Absent Present
Maintenance
Model1a Mode 2b Model3c Model 1 Model 2 Model 3
Future replacement costs
10 years $260,705 $260,705 $260,705 $65,722 $65,722 $65,722
30 years $1,652,826 $1,652,826 $1,652,826 $1,927,789 $1,927,789 $1,927,789
Current Contingency Reserve Fund balance
$150,000 $150,000 $150,000 $150,000 $150,000 $150,000
Contingency Reserve Fund contributions
10 years $200,000 $410,185 $355,719 $50,000 409,247 $128,375
30 years $620,000 $1,642,723 $1,667,328 $155,000 1,446,037 $1,574,469
Financial strength
10 years 100% 100% 100% 100% 100% 100%
30 years 44% 100% 100% 11% 100% 100%

0
All figures in Canadian dollars unless otherwise noted
a
The current investment schedule
b
The early investment schedule
c
The delayed investment schedule

Absolute Building Science

Strata Engineering Inc.
5 File No. 201212DR002
Table of Contents
COVER LETTER ......................................................................................................................... 2
EXECUTIVE SUMMARY .......................................................................................................... 4
TABLE OF CONTENTS ............................................................................................................. 6
1. INTRODUCTION..................................................................................................................... 8
1.1 STRATA DEVELOPMENT ......................................................................................................... 8
1.2 FINANCES ............................................................................................................................... 9
1.2.1 Operating Fund .............................................................................................................. 9
1.2.2 Contingency Reserve Fund ........................................................................................... 10
1.2.3 Special levy ................................................................................................................... 10
1.2.4 Legislation governing the CRF..................................................................................... 10
1.3 DEPRECIATION REPORTS ....................................................................................................... 11
1.3.1 Benefits of a depreciation report .................................................................................. 12
1.3.2 Legislation regarding the Depreciation report ............................................................ 13
1.4 OBJECTIVES .......................................................................................................................... 13
1.5 INTENDED USE ..................................................................................................................... 13
2. METHODS .............................................................................................................................. 14
2.1 ASSUMPTIONS AND LIMITATIONS .......................................................................................... 14
2.2 PHYSICAL ASSESSMENT ........................................................................................................ 15
2.2.1 Physical inspection ....................................................................................................... 15
2.2.2 Documentation review .................................................................................................. 15
2.2.3 Inspection of common properties ................................................................................. 15
2.2.3.1 Common property classification ............................................................................ 15
2.2.3.2 Reserve component inventory................................................................................ 16
2.2.4 Remaining useful life estimation................................................................................... 16
2.3 FINANCIAL ASSESSMENT ...................................................................................................... 16
2.3.1 Future replacement cost estimation ............................................................................. 17
2.3.1.1 Current replacement cost estimation...................................................................... 17
2.3.1.2 Inflation rates ......................................................................................................... 17
2.3.2 Projected cash flow ...................................................................................................... 17
2.3.2.1 Current CRF levels ................................................................................................ 18
2.3.2.2 Special levies ......................................................................................................... 18
2.3.2.3 Investment returns .................................................................................................. 18
2.3.2.4 CRF contributions .................................................................................................. 18
2.3.2.3 Calculations............................................................................................................ 18
2.3.3 Financial strength......................................................................................................... 18
2.3.3.1 Reserve Requirements ........................................................................................... 19

Absolute Building Science

Strata Engineering Inc.
6 File No. 201212DR002
 2.4 PROACTIVE MAINTENANCE .................................................................................................. 19
3. RESULTS ................................................................................................................................ 20
3.1 BUILDING INFORMATION ...................................................................................................... 20
3.2 RESERVE COMPONENTS INVENTORY .................................................................................... 20
3.3 REPLACEMENT SCHEDULE .................................................................................................... 23
3.3.1 Ten year component without preventive maintenance ................................................. 23
3.3.2 Ten year component replacement with preventive maintenance .................................. 23
3.5 THIRTY-YEAR CASH FLOW MODELS WITHOUT PREVENTIVE MAINTENANCE......................... 24
3.5.1 Model 1: Current investment schedule ......................................................................... 24
3.5.2 Model 2: Early investment schedule (recommended)................................................... 26
3.5.3 Model 3: Delayed investment schedule (10 yr phased-in) ........................................... 28
3.6 THIRTY-YEAR CASH FLOW MODELS WITH PREVENTIVE MAINTENANCE ............................... 30
3.6.1 Model 1: Current investment schedule ......................................................................... 30
3.6.2 Model 2: Early investment schedule (Preventive maintenance) .................................. 32
3.6.3 Model 3: Delayed investment schedule (Preventive maintenance) .............................. 34
4. ANALYSIS AND RECOMMENDATIONS ......................................................................... 36
4.1 INVESTMENT SCHEDULE COMPARISON .................................................................................. 36
4.2 PREVENTIVE MAINTENANCE ................................................................................................. 39
4.2.1 Comparison over 10 years ............................................................................................ 39
4.2.2 Comparison over the last 20 years ............................................................................... 40
4.2.3 Overall comparison for 30 years .................................................................................. 41
4.3 RECOMMENDATIONS ............................................................................................................ 42
4.3.1 Cash flow models .......................................................................................................... 42
4.3.2 Preventive maintenance ................................................................................................ 42
APPENDIX A .............................................................................................................................. 43
APPENDIX B .............................................................................................................................. 48
APPENDIX C .............................................................................................................................. 54
APPENDIX D .............................................................................................................................. 75
APPENDIX E ............................................................................................................................ 101
APPENDIX F ............................................................................................................................ 105

Absolute Building Science

Strata Engineering Inc.
7 File No. 201212DR002
1. Introduction
1.1 Strata Development
A strata development divides land and buildings into parts for separate ownership with
common features. The part of the property that an individual owns is known as the "strata lot"
whereas the remainder of the property is known as "common property”. Strata titled properties,
commonly known as condominiums, provide freehold ownership of a strata lot together with the
use of common property and facilities jointly owned with all strata units.

A strata development is administered by a strata corporation comprising of all owners

within the strata development. The strata corporation is the decision-making body responsible for
maintaining, managing, repairing and insuring the common property and the strata corporation's
common assets. The strata corporation is also tasked with record keeping responsibilities and
must enforce its bylaws or rules.

The Strata Property Act 1 (the "Act"), bylaws, and Strata Plan of the Corporation are the
typical documents governing the operation of the Strata Corporation. They form the legal basis
of the Strata Corporation and are generally enforceable in a court of law should the need arise.

As legislated within the Act, an executive body, known as a strata council, is elected
annually by the strata owners to oversee the Strata Corporation during intervals between general
meetings of all members. The strata council, meets at regular intervals and makes decisions on
behalf of and binding upon all owners for matters concerning the administration of the strata
development that don’t require the vote of the strata owners.

The strata council usually hires a strata manager or property manager for the management
and maintenance of all common areas and facilities including the exterior of the buildings. The
strata manager implements the decisions of the strata council and follows their instructions,
approves expenses and pays accounts according to the budget, administers the collection of
monthly maintenance fees, etc.

1
Strata Property Act, SBC 1998, c 43, as amended
Absolute Building Science
Strata Engineering Inc.
8 File No. 201212DR002
 Strata Corporation
comprised of
Owners of Strata Lots

Operations
governed by
Strata Property
Act, by-laws and
Common Properties the Strata Plan
-Building envelope
-Parking Strata Manager
-Grassed areas Maintained by hired by
-Shrubs and plants Strata Corporation
-Walkways and halls
-Elevators
-Lighting
-etc.

Figure 1.1: The strata community.

1.2 Finances
In order to cover the costs of operating the strata, owners are assessed dues (termed
maintenance fees or strata fees) for their proportionate share of the strata corporation's expenses
based on their unit entitlement (a measure of the owner's allocated interest within the
development). The strata fees are used to establish 1. the operating fund, and 2. the contingency
reserve fund. As outlined within the Act 2, these two funds cover the short term and long term
expenses of the Strata Corporation.

1.2.1 Operating Fund

The operating fund is a fund set up for expenses which relate to the common properties
and common assets of strata corporations that occur more than once per year 3. These are
normally recurring administrative expenses or those that relate to the routine maintenance of the
common properties. The operating expenses were treated as a separate sum of expenses and not
taken into consideration for the purposes of this report.

2
Strata Property Act, SBC 1998, c 43, s 92
3
Ibid
Absolute Building Science
Strata Engineering Inc.
9 File No. 201212DR002
1.2.2 Contingency Reserve Fund
The contingency reserve fund (“CRF”) is a fund set up for expenses that occur less than
once per year or that do not usually occur 4 (e.g. major repairs like roof repairs, machinery repairs,
etc). The CRF constitutes an important part of the Strata Corporation's annual budget and are
generally collected by means of strata fee contributions and accumulated in a separate CRF
account until they are needed. Ideally, all major repair and replacement costs can be covered by
funds in the CRF account.

1.2.3 Special levy

The strata corporation may raise money from the owners by means of a special levy for
various reasons, the primary reason being that the CRF is insufficient to cover the strata
corporation's existing or anticipated expenditures. A special levy must be approved by a
resolution passed by a minimum 3/4 vote at an annual or special general meeting.

1.2.4 Legislation governing the CRF

Section 6.1 of the Strata Property Regulation (the "Regulation"), set out a formula for
the purposes of determining the amount of the annual contribution to the CRF, as follows 5:
6.1 … the amount of the annual contribution to the CRF for a fiscal year, other than the fiscal year
following the first annual general meeting, must be determined as follows:

(a) if the amount of money in the CRF at the end of any fiscal year after the first annual
general meeting is less than 25% of the total amount budgeted for the contribution to the
operating fund for the fiscal year that has just ended, the annual contribution to the CRF for
the current fiscal year must be at least the lesser of
(i) 10% of the total amount budgeted for the contribution to the operating fund for the
current fiscal year, and
(ii) the amount required to bring the CRF to at least 25% of the total amount budgeted
for the contribution to the operating fund for the current fiscal year;
(b) if the amount of money in the CRF at the end of any fiscal year after the first annual
general meeting is equal to or greater than 25% of the total amount budgeted for the
contribution to the operating fund for the fiscal year that has just ended, additional
contributions to the CRF may be made as part of the annual budget approval process after
consideration of the depreciation report, if any, obtained under section 94 of the Act.

4
Ibid
5
Strata Property Regulation, BC Reg. 238/2011, s 6.1, as amended
Absolute Building Science
Strata Engineering Inc.
10 File No. 201212DR002
 Strata
owners

Major Routine
maintenance/ maintenance/
renewal admin

Monthly
fees

Contingency
Operating
Reserve
Fund
Fund

Figure 1.2: Financial structure of the strata community.

1.3 Depreciation reports

The depreciation report, also known as a reserve fund study, is a legislated planning
requirement for strata corporations in British Columbia. Depreciation reports are used to
establish long term planning for CRF management. They are prepared after a thorough
assessment of common properties and finances of the strata corporation, taking into account
projected expenditures, replacement costs and other factors.

Common properties (“Common Properties”) for the purposes of a depreciation report include
those items that comprise the common property, the common assets and those parts of a strata lot
or limited common property, or both, that the strata corporation is responsible to maintain or
repair under the Act 6, the strata corporation’s bylaws or an agreement with an owner, including,
but not limited to, the following items:
a) the building's structure;
b) the building's exterior, including roofs, roof decks, doors, windows and skylights;
c) the building's systems, including the electrical, heating, plumbing, fire protection and
security systems;
d) common amenities and facilities;

6
Strata Property Act, supra note 1
Absolute Building Science
Strata Engineering Inc.
11 File No. 201212DR002
e) parking facilities and roadways;
f) utilities, including water and sewage;
g) landscaping, including paths, sidewalks, fencing and irrigation;
h) interior finishes, including floor covering and furnishings;
i) green building components; and
j) balconies and patios.

1.3.1 Benefits of a depreciation report

Some important benefits to a well prepared depreciation report are listed as follows:

A. The depreciation report ensures that the strata corporation complies with the Act. As
discussed earlier, the Regulation 7 sets out certain thresholds for the management of the
CRF. The depreciation report recommends a cash-flow model that will balance
expenditures and corresponding special levies to assist the strata corporation with
maintaining such compliance.

B. The depreciation report seeks to optimize strata investments over time. The depreciation
report is a planning tool which recommends a schedule for planned investment of funds
amassed through strata fees. This optimized investment schedule incorporating interest
and inflation contributions seek to ensure CRF sufficiency while maximizing returns.

C. The depreciation report provides a more accurate description of a strata's financial

strength and market value. Hence, other parties such as lending institutions for the strata's
individual owners or prospective owners often review depreciation reports when
considering financing decisions, such as credit-worthiness. Depreciation reports are
important tools for evaluating a property and its value.

D. The depreciation report allows for the preservation of market value through a timely
maintenance schedule. The depreciation report identifies the condition of major items of
a strata corporation and their maintenance/replacement costs. It also suggests a
maintenance schedule which allows the strata corporation to make appropriate
maintenance, leading to an upkeep of components in good condition, thus preserving
market values possibly extending its residual life or useful life.

E. The depreciation report identifies risk for consumers interested in the property, thus
increasing buyer confidence. As depreciation reports gain widespread use, consumers

7
Strata Property Regulation, supra note 3
Absolute Building Science
Strata Engineering Inc.
12 File No. 201212DR002
 will use it as a tool to gauge possible special levies or otherwise unknown future costs.
This gives consumers confidence in purchasing the property.

F. The depreciation report may also identify unknown risks to strata corporations, allowing
for better management. Many strata corporations assume that their interim budget has
adequately estimated their CRF. However, developer estimates may be outdated and
might not have accounted for modifications made since the complex was first conveyed.
Hence, the interim calculations may not have reflected the strata's true exposure

1.3.2 Legislation regarding the Depreciation report

The depreciation report must be completed by a "qualified person" defined in the Act 8. It
must be based upon an on-site visual inspection, comprising a physical component inventory, a
summary of repairs and maintenance work for common expenses (for items that usually occur
less often than once per year or that do not usually occur), a financial forecasting section, and
other information specified in the Regulation 9. Beginning December 13 2012, a depreciation
report is required to be conducted every 3 years and may only be deferred with a 3/4 vote at an
annual or a special general meeting for strata corporations that is a member of a prescribed class
of strata corporations. These details outlined within the Act 10 found in appendix A.

1.4 Objectives
This depreciation report can be used as a guide to establish long term planning for the
management of common assets or properties outlined in more detail in section 1.3 hereof . In this
depreciation report we aim to determine the following:

1. The common properties the strata corporation owns.

2. The condition of common properties in the strata corporation.
3. The timeline for replacement of the common properties of the strata corporation.
4. The balance within the CRF.
5. The cost for future replacement of common properties.
6. Three cash flow models outlining future payments for future costs.

1.5 Intended Use

This depreciation report has been completed for the exclusive use of the council of the
strata corporation, strata plan LMS 1234. No other party may rely on the report without specific
written approval of Strata Engineering. This depreciation report is subject to the assumptions and
limiting conditions set out in Appendix D attached hereto.

8
Strata Property Act, SBC 1998, c 43, s 94.1
9
Strata Property Regulation, BC Reg. 238/2011, s 6.2
10
Strata Property Act, SBC 1998, c 43, s 94
Absolute Building Science
Strata Engineering Inc.
13 File No. 201212DR002
2. Methods
A physical assessment and financial assessment were first performed, providing
information regarding the current status of the building. After determining the common
properties, the data were used to generate different strategic plans.

Financial
assessment
•CRF, replacement
and maintenance
costs

Strategic plan
• Cash flow models
• Replacement
schedule
• Maintenance
recommendations
• Financial strength
Physical
assessment
•Common property
inventory, lifespan
analyses

2.1 Assumptions and limitations

This work resulted in recommendations made based on the information reviewed by the
personnel at the time of preparation. This is not a certification of compliance with past or present
regulations. This depreciation report is to be real in its entirety and as a whole. No portion of this
report can be severed and read independently of the other portions.

This work does not completely eliminate uncertainty regarding the potential for existing
or future costs, hazards or losses in connection with a property. Neither physical testing nor
design calculations have been performed unless specifically recorded. Conditions existing but
not recorded were not apparent given the level of study undertaken. Only conditions visibly
apparent during examination of representative samples can be said to have been reviewed.

Only the specific information identified below has been reviewed. Absolute Building
Science Strata Engineering (ABSSEI) is not obligated to identify mistakes or insufficiencies in
the information obtained from the various sources or to verify the accuracy of the information.
Absolute Building Science
Strata Engineering Inc.
14 File No. 201212DR002
 The depreciation report estimates are subjective and are provided for approximate
budgeting purposes only. The figures are calculated based on an understanding of the life cycle
of building components and comparative analyses of similar properties over time. Accurate
figures can only be obtained by establishing a scope of work and receiving quotes from suitable
contractors. Time frames given for undertaking replacement or maintenance work represent our
opinion of when to budget for the work. Failure of the item, or the optimum repair or
replacement process, may vary from our estimate.

2.2 Physical assessment

2.2.1 Physical inspection
A site visit was performed on Aug 1 2012 at 1234 West 23rd Avenue, Vancouver, BC, Canada.

2.2.2 Documentation review

The following documents were reviewed upon availability from the strata corporation:

• Investigation reports-maintenance.
• Building plans- structural, mechanical, electrical and fire
• Maintenance manuals/logs
• Fire inspection reports from 1992-2012
• Financial statements from 2007-2012
• Strata Plan and by-laws

2.2.3 Inspection of common properties

2.2.3.1 Common property classification
During the inspection, we classify the common properties assets according to the
Uniformat II 11 System, specified by the National Institute of Standards and Technology. The
Uniformat II system is organized into 7 major building component divisions, with a letter A-G
assigned to each specific division. The building components inspected a classified into the
following divisions 12:

A- Substructure: slab on grade, underground garage and basement structures

B- Shell: Roof construction, exterior walls, exterior windows, balconies etc.

C- Interiors: Wall finishes, floor finishes, stairs, partitions etc.

11
ASTM Uniformat II for Building Elements (E1557-97)
12
Components belonging to certain divisions may not be inspected due to accessibility issues.
Absolute Building Science
Strata Engineering Inc.
15 File No. 201212DR002
 D- Services: Elevators and lifts, HVAC, fire protection etc.

E- Equipment and furnishings: Commercial, institutional equipments, furniture etc.

F- Special Construction and demolition: Special structures, integrated construction, special

facilities etc.

G- Site improvements: Paving, landscaping, sewers etc.

2.2.3.2 Reserve component inventory

The reserve component inventory was compiled following the inspection and included in
section 3.2. It lists all common properties inspected, along with their quantities and life cycle
indices.

2.2.4 Remaining useful life estimation

The method of estimating the remaining useful life of common properties first
necessitates the determination of their physical condition. The chronological age of any asset
may not equate to its effective age. Some assets' lifetimes may have been prolonged by
continued maintenance whereas others might have underwent rapid deterioration due to
unforeseen circumstances or neglect.

In this depreciation report, the effective age of a common property is estimated via
documentation review, discussion with facility representatives and visual inspection. The total
lifespan is estimated based on manufacturer's indications. The remaining useful life is thus
represented by the following equation.

𝑅𝑒𝑚𝑎𝑖𝑛𝑖𝑛𝑔 𝑢𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒 = 𝑇𝑜𝑡𝑎𝑙 𝑙𝑖𝑓𝑒𝑠𝑝𝑎𝑛 − 𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑎𝑔𝑒

No destructive testing was carried out on any of the common properties, nor were the
common properties disassembled or subjected to confirmation of functionality.

2.3 Financial assessment

Over the life of every building, owners contribute towards operating, maintenance, and
renewal costs of capital assets. Occasionally, more comprehensive rehabilitation costs are also
incurred. The financial assessment identifies the following:

• The current replacement costs of the common properties and their future replacement
costs.
• The status of the current CRF balance and how it is impacted by ongoing CRF
requirements.
Absolute Building Science
Strata Engineering Inc.
16 File No. 201212DR002
 • The ability of the current budget to meet major maintenance renewal needs.

This depreciation report is primarily concerned with costs of building upkeep.

Expenditures such as legal consultation fees and unforeseen emergency expenses are not
included.

2.3.1 Future replacement cost estimation

The future replacement cost estimation is performed using the current replacement cost
compounded by an average inflation rate across the remaining useful life of the components.

2.3.1.1 Current replacement cost estimation

Replacement costs were estimated based on the cost data service provided by RSMeans
13
online .

2.3.1.2 Inflation rates

Inflation measurement in this depreciation report is based on construction indices rather
than the widely quoted Consumer Price Index (CPI) which measuring consumer goods.

The average inflation rate was calculated based on changes in construction price index
over a period of 20 years from 1991 to 2011. From our analysis, we found the inflation rate to be
2%.

2.3.2 Projected cash flow

The projected cash flow predicted how well the CRF would be able to cover necessary
replacement costs over 30 years. There will be three cash-flow models for your reference.

1.) Model 1 (Current investment schedule): This model maintains your current method of
funding the CRF and estimates future special levies based on your current CRF
contributions. This method has the effect of deferring the funding of replacement costs
for your Common Properties to the date when such replacement is required, resulting in
larger special levies and greater future financial burden.

2.) Model 2 (Early investment schedule): This model increases your current CRF
contributions rapidly by 10 times over the first 5 years. This method allows for the
greatest investment returns, maximizing financial strength

3.) Model 3 (Delayed investment schedule): This model increases your current CRF
contributions rapidly over a period of 10 years. This method still allows for a reasonable
return on investment while maintaining financial strength.

13
www.rsmeansonline.com
Absolute Building Science
Strata Engineering Inc.
17 File No. 201212DR002
2.3.2.1 Current CRF levels
Current CRF level is defined as the opening balance of the reserve account beginning the
year in which the inspection took place. In this case, it is $40,000 beginning 2012. In cases
where reserve accounts are unavailable, current CRF level is calculated by summing the total
amount of funds set aside for major replacement or repairs beginning the year during which the
inspection is performed.

2.3.2.2 Special levies

The strata corporation may raise money from the owners by means of a special levy for
various reasons, the primary reason being that the CRF is insufficient to cover the strata
corporation's existing or anticipated expenditures. A special levy must be approved by a
resolution passed by a minimum 3/4 vote at an annual or special general meeting.

2.3.2.3 Investment returns

For this report, the strata corporation's funds are placed with a savings account. Hence
investment returns are calculated based on the interest rate offered by the specific bank account.

2.3.2.4 CRF contributions

CRF contributions with all our cash flow models except the current model are set based
on different calculations tailored to different scenarios.

2.3.2.3 Calculations
The closing balance for a given year was calculated as follows:

𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑏𝑎𝑙𝑎𝑛𝑐𝑒
= (𝐶𝑅𝐹 𝑜𝑝𝑒𝑛𝑖𝑛𝑔 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 + 𝐶𝑅𝐹 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛𝑠 + 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑟𝑒𝑡𝑢𝑟𝑛𝑠
+ 𝑆𝑝𝑒𝑐𝑖𝑎𝑙 𝑙𝑒𝑣𝑖𝑒𝑠) − 𝑅𝑒𝑝𝑙𝑎𝑐𝑒𝑚𝑒𝑛𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠

2.3.3 Financial strength

Within this depreciation report, the analysis is performed primarily based upon the CRF
of the strata corporation, not accounting for operating expenses which are paid through the
operating fund. The financial strength of the strata corporation is thus the proportion of
replacement or maintenance expenses that can be covered by the CRF contributions and
investment returns. The CRF with the maximal financial strength would be able to cover all
expenses at any given time, resulting in no special levies over a specified period.

Absolute Building Science

Strata Engineering Inc.
18 File No. 201212DR002
2.3.3.1 Reserve Requirements
Insufficiency in this depreciation report determined by the percent of replacement
expenses covered by special levies, given by the following formula:

𝑆𝑝𝑒𝑐𝑖𝑎𝑙 𝑙𝑒𝑣𝑖𝑒𝑠
% 𝐼𝑛𝑠𝑢𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 = × 100%
𝑅𝑒𝑝𝑙𝑎𝑐𝑒𝑚𝑒𝑛𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠

Financial strength in this depreciation report is expressed in the following formula:

𝑇𝑜𝑡𝑎𝑙 𝑠𝑝𝑒𝑐𝑖𝑎𝑙 𝑙𝑒𝑣𝑖𝑒𝑠

% 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑠𝑡𝑟𝑒𝑛𝑔𝑡ℎ = 100% −
𝑇𝑜𝑡𝑎𝑙 𝑟𝑒𝑝𝑙𝑎𝑐𝑒𝑚𝑒𝑛𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠

Hence, 100% strength would mean that no special levies are needed, i.e. 0% insufficiency.

2.4 Proactive Maintenance

Proactive maintenance, in contrast to reactive maintenance, involves the performance of
maintenance before component failure, allowing for the potential extension of component
lifetime. Two types of proactive maintenance are preventive maintenance and predictive
maintenance.

Preventive maintenance consist of maintenance tasks performed at regular intervals based

on industry expected life spans and failure patterns. Preventive maintenance, when properly
performed, allows for a property 's actual life to reach or exceed its prescribed lifespan.

Predictive maintenance is conducted only when it is confirmed necessary through the use
of non-destructive tests which indicate the presence of conditions leading to potential failure.
This decreases the risk of premature failure.

In this depreciation report, suggestions for predictive and preventive maintenance is

given within the reserve component datasheets in Appendix D. Furthermore, a separate set of
investment schedules (cash flow models) have been created accounting for the potential life span
changes brought by preventive maintenance, allowing for more options in building and
investment management. However, the costs for preventive maintenance are not accounted for
within the CRF since they are usually covered by the Operating Fund.

Absolute Building Science

Strata Engineering Inc.
19 File No. 201212DR002
3. Results
3.1 Building information

The building investigated was a 8-storey building built in 1980 for residential purposes. The key
statistics of the building are presented within Table 3.1.

Table 3.1
Property statistics

Municipal Address: 1234 West 23rd Avenue, Vancouver, B.C.

Legal description Strata Plan LMS 1234

Real property type 4-storey, apartment style condominium

Size of building in square feet (SF) 21,800

Units 54

Date of Construction 1988-1992

Designated land use Designated Multi-family residential use with

RM-2 Zoning.

Reserve fund components Total: 27 components; 7 Building shell

components; 2 Interiors components, 8 Services
components, 1 Equipment and furnishing
component, 3 Special constructions, 3 Building
sitework and 3 Reserve analysis component
(Miscellaneous)

Absolute Building Science

Strata Engineering Inc.
20 File No. 201212DR002
3.2 Reserve Components Inventory
The identified components were grouped into major categories according to the
Uniformat II system. The schedule of common property components can be found on the next
page. Detailed descriptions can be found in Appendix B (reserve component descriptions) and
Appendix D (reserve component data sheets). Major replacement expenses regarding the
components over 20 years can be found in Appendix F.

Absolute Building Science

Strata Engineering Inc.
21 File No. 201212DR002
Table 3.2
Inventory of shared property components
Estimated
Quantity Effective Remaining
Class. Group elements Component lifespan
measures age (yrs) life (yrs)
(yrs)
B1011 Super Structure Balcony Flooring 4,250 SF 25 10 15
B2011 Exterior enclosure Cladding Contingency 50 20 30
B2011 Exterior enclosure Exterior sealant Contingency 10 10 0
B2021 Exterior enclosure Balcony railings 1230 LF 55 21 34
B2022 Exterior enclosure Exterior windows 15,000 SF 25 4 21
B2031 Exterior enclosure Balcony Doors 54 units 20 10 10
Front Double Passage
B2032 Exterior enclosure 1 unit 25 15 10
Doors
B3011 Roofing Roof drainage 120 LF 20 2 18
B3012 Roofing Membrane roof 8,000 SF 20 2 18
C3011 Interior finishes Corridor walls 4,000 SF 10 5 5
C3021 Interior finishes Corridor floors 1,500 SF 20 5 15
D1011 Conveying systems Elevator 1 unit 50 20 30
D2011 Plumbing Plumbing fixtures 4 pieces 25 15 10
D2021 Plumbing Plumbing distribution Contingency 60 20 40
D3021 HVAC HVAC Boilers 1 unit 25 10 15
D4011 Fire protection Sprinklers and standpipes Contingency 60 20 40
1,300 SF
D5021 Electrical Lighting fixtures 25 10 15
(40 units)
D5031 Electrical Intercom systems 1 unit 40 20 20
D5032 Electrical Fire detection systems Contingency 15 3 12
E2021 Furnishings Furnishings 3 pieces 30 15 25
F1041 Special construction Fitness centre Contingency 30 10 20
F1042 Special construction Mailboxes 54 units 30 10 20
F1043 Special construction Storage room 54 units 50 10 40
G2021 Site improvements Asphalt parking lots 7,200 SF 30 15 15
G2051 Site improvements Irrigation sprinklers 500 SF 20 5 15
Misc 01 Reports/Reviews Engineer's report 10 4 6
Misc 03 Reports/Reviews Depreciation reports 3 0 3

Absolute Building Science

Strata Engineering Inc.
22 File No. 201212DR002
3.3 Replacement Schedule
3.3.1 Ten year component without preventive maintenance
Based on the remaining life of the components, Figure 3.3.1 shows the cost of each
category of common properties being replaced at the 10 year mark. The building shell
components will take up the highest proportions of maintenance fees in the first 10 years.

Substructure
Building Shell
Interior
Services
Equipment and furnishings
Facilities
Sitework
Miscellaneous

Figure 3.3.1 Component replacement breakdown in the first 10 years without preventive
maintenance.

3.3.2 Ten year component replacement with preventive maintenance

The 10-year replacement schedule with preventive maintenance indicates that building
shell replacements take up a greater proportion of total replacement costs than a schedule without
preventive maintenance.

Substructure
Building shell
Interiors
Services
Equipment
Special construction
Sitework
Miscellaneous

Figure 3.3.2 Component replacement breakdown in the first 10 years with preventive
maintenance.
Absolute Building Science
Strata Engineering Inc.
23 File No. 201212DR002
3.5 Thirty-year Cash Flow Models without preventive maintenance
Cash flow models allow you to tailor your budget to suit your own needs or financial
abilities. We have provided 3 distinct cash flow models for the estimation of CRF contributions
and special levies not accounting for preventive maintenance. In each of these models,
calculations are based on the current CRF opening balance of $150,000 and an annual operating
budget of $100,000. In order to satisfy legal requirements, special levies are assessed to bring the
CRF closing balance to $10,000, (10% of the operating fund) when there is a shortfall in
covering replacement or repair expenses.

3.5.1 Model 1: Current investment schedule

In the current investment schedule, $20,000 is allocated annually to the CRF, with an
initial opening balance of $150,000. Over a period of 30 years, 10 special levies, ranging from
$25,331 to $267,827 will be required for the completion of all replacements. An investment
return of $86,097 is obtained.

$350,000

$300,000

$250,000

$200,000 Special levies

Replacement expenses
$150,000 Closing Balance
CRF contributions
$100,000

$50,000

$0

Figure 3.5.1 30-year projection of CRF cash flow using the current investment schedule

Absolute Building Science

Strata Engineering Inc.
24 File No. 201212DR002
Table 3.5.1
Cash flow table for CRF with the current investment schedule
Opening CRF Contribution Investment Replacement Special Closing
Year
balance contributions changes returns expenses levies balance
2012 $150,000 $20,000 $4,250 $2,000 $0 $172,250
2013 $172,250 $20,000 0% $4,806 $0 $0 $197,056
2014 $197,056 $20,000 0% $5,426 $0 $0 $222,483
2015 $222,483 $20,000 0% $6,062 $40,745 $0 $207,799
2016 $207,799 $20,000 0% $5,695 $43,870 $0 $189,625
2017 $189,625 $20,000 0% $5,241 $0 $0 $214,865
2018 $214,865 $20,000 0% $5,872 $2,500 $0 $238,237
2019 $238,237 $20,000 0% $6,456 $0 $0 $264,693
2020 $264,693 $20,000 0% $7,117 $0 $0 $291,810
2021 $291,810 $20,000 0% $7,795 $171,589 $0 $148,016
2022 $148,016 $20,000 0% $4,200 $43,149 $0 $129,067
2023 $129,067 $20,000 0% $3,727 $323,285 $180,491 $10,000
2024 $10,000 $20,000 0% $750 $106,247 $85,497 $10,000
2025 $10,000 $20,000 0% $750 $13,737 $0 $17,013
2026 $17,013 $20,000 0% $925 $0 $0 $37,938
2027 $37,938 $20,000 0% $1,448 $74,718 $25,331 $10,000
2028 $10,000 $20,000 0% $750 $0 $0 $30,750
2029 $30,750 $20,000 0% $1,269 $140,444 $98,425 $10,000
2030 $10,000 $20,000 0% $750 $2,500 $0 $28,250
2031 $28,250 $20,000 0% $1,206 $129,403 $89,946 $10,000
2032 $10,000 $20,000 0% $750 $11,503 $0 $19,247
2033 $19,247 $20,000 0% $981 $106,359 $76,131 $10,000
2034 $10,000 $20,000 0% $750 $0 $0 $30,750
2035 $30,750 $20,000 0% $1,269 $0 $0 $52,019
2036 $52,019 $20,000 0% $1,800 $33,260 $0 $40,560
2037 $40,560 $20,000 0% $1,514 $319,900 $267,827 $10,000
2038 $10,000 $20,000 0% $750 $0 $0 $30,750
2039 $30,750 $20,000 0% $1,269 $31,334 $0 $20,685
2040 $20,685 $20,000 0% $1,017 $71,969 $40,267 $10,000
2041 $10,000 $20,000 0% $750 $168,407 $147,657 $10,000
2042 $10,000 $20,000 0% $750 $76,612 $55,862 $10,000

Absolute Building Science

Strata Engineering Inc.
25 File No. 201212DR002
3.5.2 Model 2: Early investment schedule (recommended)
In the early investment schedule, contributions to the initial opening balance of $150,000
in the CRF increase 2 time over the next year and increases at 2%, matching inflation rate. Over
a period of 30 years, no special levies are required and an investment return of $217,402 is
obtained.

600000

500000

400000

Special levies
300000 Replacement expenses
Closing balance
200000 CRF contributions

100000

Figure 3.5.2 30-year projection of CRF cash flow using the early investment schedule

Absolute Building Science

Strata Engineering Inc.
26 File No. 201212DR002
Table 3.5.2
Cash flow table for CRF with the early investment schedule
Opening CRF Contribution Investment Replacement Special Closing
Year
balance contributions changes returns expenses levies balance
2012 $150,000 $20,000 $4,250 $2,000 $0 $172,250
2013 $172,250 $40,000 100% $5,306 $0 $0 $217,556
2014 $217,556 $40,800 2% $6,459 $0 $0 $264,815
2015 $264,815 $41,616 2% $7,661 $40,745 $0 $273,347
2016 $273,347 $42,448 2% $7,895 $43,870 $0 $279,820
2017 $279,820 $43,297 2% $8,078 $0 $0 $331,195
2018 $331,195 $44,163 2% $9,384 $2,500 $0 $382,242
2019 $382,242 $45,046 2% $10,682 $0 $0 $437,971
2020 $437,971 $45,947 2% $12,098 $0 $0 $496,017
2021 $496,017 $46,866 2% $13,572 $171,589 $0 $384,866
2022 $384,866 $47,804 2% $10,817 $43,149 $0 $400,337
2023 $400,337 $48,760 2% $11,227 $323,285 $0 $137,039
2024 $137,039 $49,735 2% $4,669 $106,247 $0 $85,196
2025 $85,196 $50,730 2% $3,398 $13,737 $0 $125,587
2026 $125,587 $51,744 2% $4,433 $0 $0 $181,765
2027 $181,765 $52,779 2% $5,864 $74,718 $0 $165,690
2028 $165,690 $53,835 2% $5,488 $0 $0 $225,012
2029 $225,012 $54,911 2% $6,998 $140,444 $0 $146,478
2030 $146,478 $56,010 2% $5,062 $2,500 $0 $205,050
2031 $205,050 $57,130 2% $6,555 $129,403 $0 $139,332
2032 $139,332 $58,272 2% $4,940 $11,503 $0 $191,041
2033 $191,041 $59,438 2% $6,262 $106,359 $0 $150,382
2034 $150,382 $60,627 2% $5,275 $0 $0 $216,284
2035 $216,284 $61,839 2% $6,953 $0 $0 $285,076
2036 $285,076 $63,076 2% $8,704 $33,260 $0 $323,597
2037 $323,597 $64,337 2% $9,698 $319,900 $0 $77,732
2038 $77,732 $65,624 2% $3,584 $0 $0 $146,940
2039 $146,940 $66,937 2% $5,347 $31,334 $0 $187,890
2040 $187,890 $68,275 2% $6,404 $71,969 $0 $190,601
2041 $190,601 $69,641 2% $6,506 $168,407 $0 $98,341
2042 $98,341 $71,034 2% $4,234 $76,612 $0 $96,997

Absolute Building Science

Strata Engineering Inc.
27 File No. 201212DR002
3.5.3 Model 3: Delayed investment schedule (10 yr phased-in)
In the delayed investment schedule, the CRF contribution to an initial opening balance of
is phased in over a period of 10 years. Over a period of 30 years, no special levies will be
required. An investment return of $185,442 is obtained.

500000

450000

400000

350000

300000
Special levies
250000 Replacement expenses

200000 Closing balance

CRF contributions
150000

100000

50000

Figure 3.5.3 30-year projection of CRF cash flow using the delayed investment schedule

Absolute Building Science

Strata Engineering Inc.
28 File No. 201212DR002
Table 3.5.3
Cash flow table for CRF with the delayed investment schedule
Opening CRF Contribution Investment Replacement Special Closing
Year
balance contributions changes returns expenses levies balance
2012 $150,000 $20,000 $4,250 $2,000 $0 $172,250
2013 $172,250 $24,000 20% $4,906 $0 $0 $201,156
2014 $201,156 $27,600 15% $5,719 $0 $0 $234,475
2015 $234,475 $30,360 10% $6,621 $40,745 $0 $230,711
2016 $230,711 $33,396 10% $6,603 $43,870 $0 $226,840
2017 $226,840 $36,736 10% $6,589 $0 $0 $270,165
2018 $270,165 $40,409 10% $7,764 $2,500 $0 $315,838
2019 $315,838 $44,450 10% $9,007 $0 $0 $369,295
2020 $369,295 $48,895 10% $10,455 $0 $0 $428,645
2021 $428,645 $49,873 2% $11,963 $171,589 $0 $318,892
2022 $318,892 $50,870 2% $9,244 $43,149 $0 $335,857
2023 $335,857 $51,888 2% $9,694 $323,285 $0 $74,153
2024 $74,153 $52,926 2% $3,177 $106,247 $0 $24,009
2025 $24,009 $53,984 2% $1,950 $13,737 $0 $66,206
2026 $66,206 $55,064 2% $3,032 $0 $0 $124,302
2027 $124,302 $56,165 2% $4,512 $74,718 $0 $110,260
2028 $110,260 $57,288 2% $4,189 $0 $0 $171,738
2029 $171,738 $58,434 2% $5,754 $140,444 $0 $95,482
2030 $95,482 $59,603 2% $3,877 $2,500 $0 $156,462
2031 $156,462 $60,795 2% $5,431 $129,403 $0 $93,286
2032 $93,286 $62,011 2% $3,882 $11,503 $0 $147,676
2033 $147,676 $63,251 2% $5,273 $106,359 $0 $109,841
2034 $109,841 $64,516 2% $4,359 $0 $0 $178,716
2035 $178,716 $65,806 2% $6,113 $0 $0 $250,636
2036 $250,636 $67,122 2% $7,944 $33,260 $0 $292,443
2037 $292,443 $68,465 2% $9,023 $319,900 $0 $50,030
2038 $50,030 $69,834 2% $2,997 $0 $0 $122,861
2039 $122,861 $71,231 2% $4,852 $31,334 $0 $167,610
2040 $167,610 $72,656 2% $6,007 $71,969 $0 $174,303
2041 $174,303 $74,109 2% $6,210 $168,407 $0 $86,215
2042 $86,215 $75,591 2% $4,045 $76,612 $0 $89,239

Absolute Building Science

Strata Engineering Inc.
29 File No. 201212DR002
3.6 Thirty-year Cash Flow Models with preventive maintenance
Within these cash flow models accounting for preventive maintenance, we have
accounted for the delays in common property replacement due to yearly upkeep. These models,
along with the annual costs of preventive maintenance described in appendix E, provide more
options to the strata corporation in terms of building and investment management.

3.6.1 Model 1: Current investment schedule

In the current investment schedule with preventive maintenance, $20,000 is allocated
annually to the CRF, with an initial opening balance of $150,000. Over a period of 30 years, 4
special levies, ranging from $33,675 to $743,461 will be required for the completion of all
replacements. An investment return of $216,741 is obtained.

$900,000

$800,000

$700,000

$600,000

$500,000 Replacement expenses

Special levies
$400,000
Closing balance
$300,000 CRF contributions

$200,000

$100,000

$0

Figure 3.6.1 30-year projection of CRF cash flow using the current investment schedule (with
preventive maintenance)

Absolute Building Science

Strata Engineering Inc.
30 File No. 201212DR001
Table 3.6.1
Cash flow table for CRF with the current investment schedule (Preventive Maintenance).
Opening CRF Contribution Investment Replacement Special Closing
Year
balance contributions changes returns expenses levies balance
2012 $150,000 $20,000 $4,250 $0 $0 $174,250
2013 $174,250 $20,000 0% $4,856 $0 $0 $199,106
2014 $199,106 $20,000 0% $5,478 $0 $0 $224,584
2015 $224,584 $20,000 0% $6,115 $2,500 $0 $248,199
2016 $248,199 $20,000 0% $6,705 $14,038 $0 $260,865
2017 $260,865 $20,000 0% $7,022 $31,025 $0 $256,862
2018 $256,862 $20,000 0% $6,922 $2,500 $0 $281,284
2019 $281,284 $20,000 0% $7,532 $13,159 $0 $295,656
2020 $295,656 $20,000 0% $7,891 $0 $0 $323,548
2021 $323,548 $20,000 0% $8,589 $2,500 $0 $349,637
2022 $349,637 $20,000 0% $9,241 $10,584 $0 $368,294
2023 $368,294 $20,000 0% $9,707 $0 $0 $398,001
2024 $398,001 $20,000 0% $10,450 $2,500 $0 $425,951
2025 $425,951 $20,000 0% $11,149 $0 $0 $457,100
2026 $457,100 $20,000 0% $11,927 $0 $0 $489,027
2027 $489,027 $20,000 0% $12,726 $84,803 $0 $436,950
2028 $436,950 $20,000 0% $11,424 $0 $0 $468,374
2029 $468,374 $20,000 0% $12,209 $0 $0 $500,583
2030 $500,583 $20,000 0% $13,015 $133,773 $0 $399,825
2031 $399,825 $20,000 0% $10,496 $0 $0 $430,320
2032 $430,320 $20,000 0% $11,258 $183,287 $0 $278,291
2033 $278,291 $20,000 0% $7,457 $88,858 $0 $216,890
2034 $216,890 $20,000 0% $5,922 $116,363 $0 $126,450
2035 $126,450 $20,000 0% $3,661 $267,175 $127,064 $10,000
2036 $10,000 $20,000 0% $750 $54,407 $33,657 $10,000
2037 $10,000 $20,000 0% $750 $67,979 $47,229 $10,000
2038 $10,000 $20,000 0% $750 $0 $0 $30,750
2039 $30,750 $20,000 0% $1,269 $2,500 $0 $49,519
2040 $49,519 $20,000 0% $1,738 $0 $0 $71,257
2041 $71,257 $20,000 0% $2,281 $0 $0 $93,538
2042 $93,538 $20,000 0% $2,838 $849,838 $743,461 $10,000

Absolute Building Science

Strata Engineering Inc.
31 File No. 201212DR001
3.6.2 Model 2: Early investment schedule (Preventive maintenance)
In the current model, contributions to the CRF, with an initial opening balance of
$150,000 increase 84% over 5 years. Over a period of 30 years, no special levies are required
and an investment return of $496, 357 is obtained.

$1,000,000.00

$900,000.00

$800,000.00

$700,000.00

$600,000.00
Special levies
$500,000.00 Replacement expenses

$400,000.00 Closing balance

CRF contributions
$300,000.00

$200,000.00

$100,000.00

$0.00
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042

Figure 3.6.2 30-year projection of CRF cash flow using the early investment schedule (with
preventive maintenance)

Absolute Building Science

Strata Engineering Inc.
32 File No. 201212DR001
 Table 3.6.2
Cash flow table for CRF with the early investment schedule (Preventive Maintenance)
Opening CRF Contribution Investment Replacement Special Closing
Year
balance contributions changes returns expenses levies balance
2012 $150,000 $20,000 $4,250 $0 $0 $174,250
2013 $174,250 $34,000 70% $5,206 $0 $0 $213,456
2014 $213,456 $34,680 2% $6,203 $0 $0 $254,340
2015 $254,340 $35,374 2% $7,243 $2,500 $0 $294,456
2016 $294,456 $36,081 2% $8,263 $14,038 $0 $324,762
2017 $324,762 $36,803 2% $9,039 $31,025 $0 $339,579
2018 $339,579 $37,539 2% $9,428 $2,500 $0 $384,046
2019 $384,046 $38,290 2% $10,558 $13,159 $0 $419,735
2020 $419,735 $39,055 2% $11,470 $0 $0 $470,260
2021 $470,260 $39,836 2% $12,752 $2,500 $0 $520,349
2022 $520,349 $40,633 2% $14,025 $10,584 $0 $564,423
2023 $564,423 $41,446 2% $15,147 $0 $0 $621,015
2024 $621,015 $42,275 2% $16,582 $2,500 $0 $677,372
2025 $677,372 $43,120 2% $18,012 $0 $0 $738,505
2026 $738,505 $43,983 2% $19,562 $0 $0 $802,049
2027 $802,049 $44,862 2% $21,173 $84,803 $0 $783,281
2028 $783,281 $45,760 2% $20,726 $0 $0 $849,767
2029 $849,767 $46,675 2% $22,411 $0 $0 $918,853
2030 $918,853 $47,608 2% $24,162 $133,773 $0 $856,849
2031 $856,849 $48,560 2% $22,635 $0 $0 $928,045
2032 $928,045 $49,532 2% $24,439 $183,287 $0 $818,729
2033 $818,729 $50,522 2% $21,731 $88,858 $0 $802,124
2034 $802,124 $51,533 2% $21,341 $116,363 $0 $758,635
2035 $758,635 $52,563 2% $20,280 $267,175 $0 $564,304
2036 $564,304 $53,615 2% $15,448 $54,407 $0 $578,959
2037 $578,959 $54,687 2% $15,841 $67,979 $0 $581,508
2038 $581,508 $55,781 2% $15,932 $0 $0 $653,221
2039 $653,221 $56,896 2% $17,753 $2,500 $0 $725,370
2040 $725,370 $58,034 2% $19,585 $0 $0 $802,990
2041 $802,990 $59,195 2% $21,555 $0 $0 $883,739
2042 $883,739 $60,379 2% $23,603 $849,838 $0 $117,883

Absolute Building Science

Strata Engineering Inc.
33 File No. 201212DR001
3.6.3 Model 3: Delayed investment schedule (Preventive maintenance)
In the late investment schedule, the CRF contribution is raised by 50% over a period of
10 years, added to an initial opening balance of $150,000. Over a period of 30 years, no special
levies will be required. An investment return of $466,730 is obtained in this schedule with
preventive maintenance.

$1,000,000

$900,000

$800,000

$700,000

$600,000
Replacement expenses
$500,000 Special levy

$400,000 Closing balance

CRF contributions
$300,000

$200,000

$100,000

$0
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042

Figure 3.6.3 30-year projection of CRF cash flow using the delayed investment schedule (with
preventive maintenance)

Absolute Building Science

Strata Engineering Inc.
34 File No. 201212DR001
Table 3.6.3
Cash flow table for CRF with the delayed investment schedule (Preventive Maintenance)
Opening CRF Contribution Investment Replacement Special Closing
Year
balance contributions changes returns expenses levies balance
2012 $150,000 $20,000 $4,250 $0 $0 $174,250
2013 $174,250 $22,400 12% $4,916 $0 $0 $201,566
2014 $201,566 $24,192 8% $5,644 $0 $0 $231,402
2015 $231,402 $26,127 8% $6,438 $2,500 $0 $261,468
2016 $261,468 $28,218 8% $7,242 $14,038 $0 $282,889
2017 $282,889 $30,475 8% $7,834 $31,025 $0 $290,174
2018 $290,174 $32,913 8% $8,077 $2,500 $0 $328,664
2019 $328,664 $35,546 8% $9,105 $13,159 $0 $360,156
2020 $360,156 $38,034 7% $9,955 $0 $0 $408,145
2021 $408,145 $40,697 7% $11,221 $2,500 $0 $457,562
2022 $457,562 $43,545 7% $12,528 $10,584 $0 $503,051
2023 $503,051 $44,416 2% $13,687 $0 $0 $561,154
2024 $561,154 $45,305 2% $15,161 $2,500 $0 $619,121
2025 $619,121 $46,211 2% $16,633 $0 $0 $681,964
2026 $681,964 $47,135 2% $18,227 $0 $0 $747,327
2027 $747,327 $48,078 2% $19,885 $84,803 $0 $730,486
2028 $730,486 $49,039 2% $19,488 $0 $0 $799,014
2029 $799,014 $50,020 2% $21,226 $0 $0 $870,260
2030 $870,260 $51,020 2% $23,032 $133,773 $0 $810,539
2031 $810,539 $52,041 2% $21,564 $0 $0 $884,144
2032 $884,144 $53,082 2% $23,431 $183,287 $0 $777,369
2033 $777,369 $54,143 2% $20,788 $88,858 $0 $763,442
2034 $763,442 $55,226 2% $20,467 $116,363 $0 $722,772
2035 $722,772 $56,331 2% $19,478 $267,175 $0 $531,405
2036 $531,405 $57,457 2% $14,722 $54,407 $0 $549,177
2037 $549,177 $58,606 2% $15,195 $67,979 $0 $554,999
2038 $554,999 $59,778 2% $15,369 $0 $0 $630,147
2039 $630,147 $60,974 2% $17,278 $2,500 $0 $705,899
2040 $705,899 $62,193 2% $19,202 $0 $0 $787,294
2041 $787,294 $63,437 2% $21,268 $0 $0 $872,000
2042 $872,000 $64,706 2% $23,418 $849,838 $0 $110,286

Absolute Building Science

Strata Engineering Inc.
35 File No. 201212DR001
4. Analysis and recommendations
4.1 Investment schedule comparison
The 3 different cash flow models are proposed to suit your needs. Apart from the current
investment schedule, all other cash flow models proposed increases to the CRF contributions,
eliminating special levies. The early investment schedule distinguishes itself from the late
investment schedule in the rate of CRF contribution increase. The figure below illustrates the
outcome of each investment schedule (without preventive maintenance) along with the changes
in CRF contributions.

$600,000

$500,000

$400,000
CRF contributions: Model 1
CRF contributions: Model 2
$300,000 CRF contributions: Model 3
Closing Balance: Model 1

$200,000 Closing balance: Model 2

Closing balance: Model 3

$100,000

$0
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042

Figure 4.1 Comparing CRF contributions across different investment schedules

Figure 4.1 indicates that the early investment schedule requires a greater amount of CRF
contributions from years 2012 to 2021, compared to the delayed investment schedule. However,
from 2022-2027 and from 2032-2042, the delayed investment schedule requires a higher CRF
contribution than the early investment schedule. Despite the later contributions being higher for a
longer period of time (15 years compared to 10 years), the CRF closing balance for the delayed
investment schedule is similar to the CRF closing balance in the early investment schedule after
29 years at 2041.

Absolute Building Science

Strata Engineering Inc.
36 File No. 201212DR001
 Table 4.1
Comparison of 3 models over 30 years.
Model 1: Model 2: Model 3:
Current Early Delayed
Model investment investment
Analysis for first 10 years
Opening balance
beginning year 1 $150,000 $150,000 $150,000
CRF contributions $200,000 $410,185 $355,719
Investment returns $58,720 $85,385 $73,879
Replacement expenses $260,705 $260,705 $260,705
Special levies $0 $0 $0
Financial strength 100% 100% 100%
Insufficiency 0% 0% 0%
Analysis for final 20 years
Opening balance
beginning year 11 $148,016 $384,866 $318,892
CRF contributions $420,000 $1,232,538 $1,311,609
Investment returns $27,376 $132,419 $111,565
Replacement expenses $1,652,826 $1,652,826 $1,652,826
Special levies $1,067,434 $0 $0
Financial strength 35% 100% 100%
Insufficiency 65% 0% 0%
Overall analysis (30-yr course)
Opening balance
beginning year 1 $150,000 $150,000 $150,000
Closing balance
ending year 30 $10,000 $396,625 $89,239
CRF contributions $620,000 $1,642,723 $1,667,328
Investment returns $86,097 $217,804 $185,442
Replacement expenses $1,913,530 $1,913,530 $1,913,530
Special levies $1,067,434 $0 $0
Financial strength 44% 100% 100%
Insufficiency 56% 0% 0%

From the Table 4.1 and the Figure 4.1, it is apparent that the early investment schedule
has the highest rate of investment returns after a 30 year period at $217,804. Even though the
early investment model requires a surge in CRF contributions within a 5 year window, the
overall CRF contributions were still lower than that of the delayed investment schedule (Model
3), at $1,642,723 compared to $1,667,723. Despite the CRF contributions in the early investment

Absolute Building Science

Strata Engineering Inc.
37 File No. 201212DR001
schedule being lower than that of the late investment schedule, funds in the early investment
schedule benefited from a longer investment period, resulting in a higher investment return
overall.

Absolute Building Science

Strata Engineering Inc.
38 File No. 201212DR001
4.2 Preventive maintenance
Preventive maintenance is often used to prolong the lifespan of reserve components
(common properties) which would otherwise require expensive replacement. Within this
depreciation report, we examined whether preventive maintenance would benefit the strata
corporation with the various investment strategies proposed.

4.2.1 Comparison over 10 years

$800,000

$700,000

$600,000

$500,000
Special levy

$400,000 Investment returns

CRF contributions
$300,000 Opening balance at yr 1
Replacement expenses
$200,000

$100,000

$0
Orig PM Orig PM Orig PM
Current Early Investment Delayed Investment

Figure 4.2.1 Comparison of different models with and without preventive maintenance over the
first 10 years."PM" denotes the schedule with preventive maintenance and "Orig" without
preventive maintenance.

During the first 10 years, few replacement expenses were needed and it was a period for
accumulating investment returns. With preventive maintenance, there was no special levy needed
even for the current model as reserve component replacements are delayed. There is little
investment return at the 10 year mark in all models other than the early investment model which
benefitted from the aggressive increase in CRF contributions.

Absolute Building Science

Strata Engineering Inc.
39 File No. 201212DR001
4.2.2 Comparison over the last 20 years

$4,000,000

$3,500,000

$3,000,000

$2,500,000
Special levies

$2,000,000 Investment returns

CRF contributions
$1,500,000 Opening balance at yr 1
Replacement expenses
$1,000,000

$500,000

$0
Orig PM Orig PM Orig PM
Current Early Investment Delayed Investment

Figure 4.2.2 Comparison of different models with and without preventive maintenance over the
final 20 years. "PM" denotes the schedule with preventive maintenance and "Orig", the schedule
without preventive maintenance.

Within the last 20 years, it is apparent that the investment returns for the same model is
higher when preventive maintenance is performed. This significant increase in investment
returns is due to the delayed replacement of reserve components which in turn yields more time
for the performance of investment instruments.

Absolute Building Science

Strata Engineering Inc.
40 File No. 201212DR001
4.2.3 Overall comparison for 30 years

$4,500,000

$4,000,000

$3,500,000

$3,000,000

Special levy
$2,500,000
Investment returns
$2,000,000 CRF contributions
Opening balance yr 1
$1,500,000
Replacement expenses
$1,000,000

$500,000

$0
Orig PM Orig PM Orig PM
Current Early Investment Delayed Investment

Figure 4.2.3 Comparison of different models with and without preventive maintenance over the
first 10 years. "PM" denotes the schedule with preventive maintenance and "Orig" without
preventive maintenance.

This comparison illustrates yet again that investment returns are higher for investment
schedules coupled with preventive maintenance even when overall CRF contributions are lower.
It emphasizes the investment length as a critical determinant of returns. Furthermore, this graph
also shows the danger of maintaining low CRF contributions which are insufficient for covering
the CRF. As indicated over a 30 year period, the amount of money paid towards the mandatory
replacement of aging reserve components stays constant. Low CRF contributions are ultimately
unsustainable and will result in high special levies which the legislation sought to prevent. The
high special levies imposed upon owners adds additional burden as it precludes the possibility of
partially covering the replacement expenses with investment returns. In other words, owners who
are assessed special levies forfeits the opportunity to tap into a potentially significant amount of
investment returns. Without the use of these potential returns, strata owners who are assessed
special levies pays most.

Absolute Building Science

Strata Engineering Inc.
41 File No. 201212DR001
4.3 Recommendations
4.3.1 Cash flow models
Given the aforementioned scenarios, we recommend the adoption of cash flow model 2,
the early investment schedule because it could potentially lead to the greatest investment return.
We recommend investing in the CRF at the earliest possible time because a greater delay in
investment will lead to a greater loss in potential income from investment returns.

However, in times of economic hardship, not all owners can endure the burden of a
sudden increase in monthly fees for CRF contributions. Hence, we have also provided a delayed
investment model which allows some time for financial readiness before significant increases in
monthly fees occur. Although this will lead to a loss in potential investment returns, it may be
the only solution for certain strata corporations.

If your strata corporations have additional concerns about the investment schedule, please
do not hesitate to contact ABSSEI so that we may work towards a feasible and reasonable
solution specifically tailored to your needs.

4.3.2 Preventive maintenance

In many cases, preventive maintenance may lead to greater returns through delaying
reserve component replacements and in turn, increasing investment periods. However, one must
consider the exact rates of return in order to maximize the efficiency of preventive maintenance
and subsequent delays. Even though delaying reserve component replacement increases the time
for investment, replacement costs increase due to building cost inflation. When inflation of
replacement expenses outpace the returns on investment, the delay in replacement becomes
inefficient and may even lead to net losses. This occurs without considering the fact that funding
for yearly preventive maintenance is still required from the operating funds.

On the other hand, if interest rates are higher than inflation rates, and investment growth
outpaces the inflation of expenses, then the delay in replacement becomes well worthwhile,
potentially leading to significant gains in investment.

Overall, we recommend that preventive maintenance be performed after a careful

analysis of investment return rates and inflation rates of replacement expenses. ABSSEI is not
qualified to provide advice on investments and would recommend that a third party financial
adviser be sought should the need arise.

Absolute Building Science

Strata Engineering Inc.
42 File No. 201212DR001
APPENDIX A
STRATA PROPERTY ACT
[SBC 1998] CHAPTER 43

Part 6 — Finances

Division 1 — Operating Fund and Contingency Reserve Fund

Depreciation report

94 (1) In this section, "qualified person" has the meaning set out in the regulations.

(2) Subject to subsection (3), a strata corporation must obtain from a qualified person, on or
before the following dates, a depreciation report estimating the repair and replacement cost
for major items in the strata corporation and the expected life of those items:

(a) for the first time,

(i) December 14, 2013, in the case of a strata corporation that existed on
December 14, 2011, or

(ii) the prescribed date, in all other cases;

(b) if the strata corporation has, before or after the coming into force of this section,
obtained a depreciation report that complies with the requirements of this section, the
date that is the prescribed period after the date on which that report was obtained;

(c) if the strata corporation has, under subsection (3) (a), waived the requirement under
this subsection to obtain a depreciation report, the date that is the prescribed period after
the date on which the resolution waiving the requirement was passed.

(3) A strata corporation need not comply with the requirement under subsection (2) to obtain
a depreciation report on or before a certain date if

(a) the strata corporation, by a resolution passed by a 3/4 vote at an annual or special
general meeting within the prescribed period, waives that requirement, or

(b) the strata corporation is a member of a prescribed class of strata corporations.

(4) A depreciation report referred to in subsection (2) must contain the information set out in
the regulations.

Absolute Building Science

Strata Engineering Inc.
43 File No. 201212DR001
 Strata Property Act
STRATA PROPERTY REGULATION

Part 6 — Finances

Contributions to contingency reserve fund

6.1 For the purposes of section 93 of the Act, the amount of the annual contribution to the
contingency reserve fund for a fiscal year, other than the fiscal year following the first annual
general meeting, must be determined as follows:

(a) if the amount of money in the contingency reserve fund at the end of any fiscal year after
the first annual general meeting is less than 25% of the total amount budgeted for the
contribution to the operating fund for the fiscal year that has just ended, the annual
contribution to the contingency reserve fund for the current fiscal year must be at least the
lesser of

(i) 10% of the total amount budgeted for the contribution to the operating fund for the
current fiscal year, and

(ii) the amount required to bring the contingency reserve fund to at least 25% of the total
amount budgeted for the contribution to the operating fund for the current fiscal year;

(b) if the amount of money in the contingency reserve fund at the end of any fiscal year after
the first annual general meeting is equal to or greater than 25% of the total amount budgeted
for the contribution to the operating fund for the fiscal year that has just ended, additional
contributions to the contingency reserve fund may be made as part of the annual budget
approval process after consideration of the depreciation report, if any, obtained under section
94 of the Act.

[en. B.C. Reg. 238/2011, Sch. 1, s. 2.]

Depreciation report

6.2 (1) For the purposes of section 94 of the Act, a depreciation report must include all of the
following:

(a) a physical component inventory and evaluation that complies with subsection (2);

Absolute Building Science

Strata Engineering Inc.
44 File No. 201212DR001
 (b) a summary of repairs and maintenance work for common expenses respecting the items
listed in subsection (2) (b) that usually occur less often than once a year or that do not usually
occur;

(c) a financial forecasting section that complies with subsection (3);

(d) the name of the person from whom the depreciation report was obtained and a description
of

(i) that person’s qualifications,

(ii) the error and omission insurance, if any, carried by that person, and

(iii) the relationship between that person and the strata corporation;

(e) the date of the report;

(f) any other information or analysis that the strata corporation or the person providing the
depreciation report considers appropriate.

(2) For the purposes of subsection (1) (a) and (b) of this section, the physical component
inventory and evaluation must

(a) be based on an on-site visual inspection of the site and, where practicable, of the items
listed in paragraph (b) conducted by the person preparing the depreciation report,

(b) include a description and estimated service life over 30 years of those items that comprise
the common property, the common assets and those parts of a strata lot or limited common
property, or both, that the strata corporation is responsible to maintain or repair under the Act,
the strata corporation’s bylaws or an agreement with an owner, including, but not limited to,
the following items:

(i) the building's structure;

(ii) the building's exterior, including roofs, roof decks, doors, windows and skylights;

(iii) the building's systems, including the electrical, heating, plumbing, fire protection
and security systems;

(iv) common amenities and facilities;

(v) parking facilities and roadways;

(vi) utilities, including water and sewage;

Absolute Building Science

Strata Engineering Inc.
45 File No. 201212DR001
 (vii) landscaping, including paths, sidewalks, fencing and irrigation;

(viii) interior finishes, including floor covering and furnishings;

(ix) green building components;

(x) balconies and patios, and

(c) identify common property and limited common property that the strata lot owner, and not
the strata corporation, is responsible to maintain and repair.

(3) For the purposes of subsection (1) (c), the financial forecasting section must include

(a) the anticipated maintenance, repair and replacement costs for common expenses that
usually occur less often than once a year or that do not usually occur, projected over 30 years,
beginning with the current or previous fiscal year of the strata corporation, of the items listed
in subsection (2) (b),

(b) a description of the factors and assumptions, including interest rates and rates of inflation,
used to calculate the costs referred to in paragraph (a),

(c) a description of how the contingency reserve fund is currently being funded,

(d) the current balance of the contingency reserve fund minus any expenditures that have
been approved but not yet taken from the fund, and

(e) at least 3 cash-flow funding models for the contingency reserve fund relating to the
maintenance, repair and replacement over 30 years, beginning with the current or previous
fiscal year of the strata corporation, of the items listed in subsection (2) (b).

(4) For the purposes of subsection (3) (e), the cash-flow funding models may include any one or
more of the following:

(a) balances of, contributions to and withdrawals from the contingency reserve fund;

(b) special levies;

(c) borrowings.

(5) If a strata corporation contributes to the contingency reserve fund based on a depreciation
report, the contributions in respect of an item become part of the contingency reserve fund and
may be spent for any purpose permitted under section 96 of the Act.

Absolute Building Science

Strata Engineering Inc.
46 File No. 201212DR001
(6) For the purposes of section 94 (1) of the Act, "qualified person" means any person who has
the knowledge and expertise to understand the individual components, scope and complexity of
the strata corporation’s common property, common assets and those parts of a strata lot or
limited common property, or both, that the strata corporation is responsible to maintain or repair
under the Act, the strata corporation's bylaws or an agreement with an owner and to prepare a
depreciation report that complies with subsections (1) to (4).

(7) The following periods are prescribed:

(a) for the purposes of section 94 (2) (b) of the Act, 3 years;

(b) for the purposes of section 94 (2) (c) of the Act, 18 months;

(c) for the purposes of section 94 (3) (a) of the Act, the one year period immediately
preceding the date on or before which the depreciation report is required to be obtained.

(8) A strata corporation is prescribed for the purposes of section 94 (3) (b) of the Act if and for
so long as there are fewer than 5 strata lots in the strata plan.

[en. B.C. Reg. 238/2011, Sch. 1, s. 2.]

Absolute Building Science

Strata Engineering Inc.
47 File No. 201212DR001
APPENDIX B
Building component descriptions

B 1011 Vinyl flooring on balcony

Decks and balconies throughout the
Location
building
Vinyl floorings with little abrasions and
Description
ageing
Recommendation No immediate remedies required.
Estimated Useful Life 25 Effective age 10
Remaining Useful Life 15 Replacement cost $50,920

B 2021 Balcony railings

Decks and balconies throughout the
Location
building
Metal frame guardrails and glass with little
Description
or no defects
Recommendation No immediate remedies required.
Estimated Useful Life 55 Effective age 34
Remaining Useful Life 21 Replacement cost $20,800

B 2022 Exterior windows

Location Exterior Windows around the building

Description Single layered window with PVC frames

Recommendation No immediate remedies required.

Estimated Useful Life 25 Effective age 4
Remaining Useful Life 21 Replacement cost $64,800

Absolute Building Science

Strata Engineering Inc.
48 File No. 201212DR001
 B 2031 Balcony Doors
Location Decks and balconies in all 54 units

Description Wood and glass balcony doors

Recommendation No immediate remedies required.

Estimated Useful Life 20 Effective age 10
Remaining Useful Life 10 Replacement cost $13,500

B 2032 Front single passage doors

Location Front entrance
Description Glass and aluminum front entrance doors

Recommendation No immediate remedies required.

Estimated Useful Life 25 Effective age 10
Remaining Useful Life 15 Replacement cost $1,200

B 3011 Roof gutters/drainage

Location Roof of the building
Metal frame guards with little or no
Description
defects
Recommendation No immediate remedies required.
Estimated Useful Life 20 Effective age 18
Remaining Useful Life 2 Replacement cost $6,000

B 3012 Membrane roof

Location Exterior Windows around the building

Description Torched down asphalt membrane

Recommendation No immediate remedies required.

Estimated Useful Life 20 Effective age 2
Remaining Useful Life 18 Replacement cost $50,600

Absolute Building Science

Strata Engineering Inc.
49 File No. 201212DR001
 C 3011 Corridor walls
Location Corridors

Description Walls painted with latex paint

Recommendation No immediate remedies required.

Estimated Useful Life 10 Effective age 5
Remaining Useful Life 5 Replacement cost $10,000

C 3021 Corridor floors

Location Corridors
Description Carpet flooring
Recommendation No immediate remedies required.
Estimated Useful Life 20 Effective age 10
Remaining Useful Life 10 Replacement cost $8,250

D 1011 Elevator
Location waiting area throughout floors
Description Hydraulic elevator
Recommendation No immediate remedies required.
Estimated Useful Life 50 Effective age 20
Remaining Useful Life 30 Replacement cost $80,000

D 2011 Plumbing fixtures

Location Washrooms in common area

Description Two 2-piece washrooms

Recommendation No immediate remedies required.

Service life 25 Effective age 15
Remaining life 10 Replacement cost $1,000

Absolute Building Science

Strata Engineering Inc.
50 File No. 201212DR001
 D 2021 Plumbing distribution
Location Within the building
Domestic water distribution with pipes and
Description
valves

Recommendation No immediate remedies required.

Service life 60 Effective age 30
Remaining life 30 Contingency cost $150,000

D 3021 HVAC boilers

Location Boiler room
Description 1,000 MBH boilers

Recommendation No immediate remedies required.

Service life 25 Effective age 10

Remaining life 15 Replacement cost $49,100

D 4011 Sprinklers and standpipes

Location Sprinkler room
Description Wet pipe sprinkler system

Recommendation No immediate remedies required.

Service life 60 Effective age 20

Remaining life 40 Contingency cost $20,100

D 5021 Lighting fixtures

Location On corridor ceilings
Description 40W fluorescent light fixtures

Recommendation No immediate remedies required.

Service life 25 Effective age 10

Remaining life 15 Replacement cost $3,250

Absolute Building Science

Strata Engineering Inc.
51 File No. 201212DR001
 D 5031 Intercom system
Location Building entrance
Description Enterphone intercom system

Recommendation No immediate remedies required.

Service life 40 Effective age 20
Remaining life 20 Replacement cost $23,000

D 5032 Fire detection system (Alarm)

Location Throughout the building
EST warning system cotrolled
Description
by addressable fire control panel
Recommendation No immediate remedies required.
Service life 15 Effective age 5
Remaining life 12 Contingency cost $20,000

E 2021 Furnishings
Location In amenities room

Description 2 sofas, 1 coffee table

Recommendation No immediate remedies required.

Service life 30 Effective age 15
Remaining life 15 Replacement cost Contingency

F 1041 Fitness Centre

Location On the first floor
A fitness centre complete with
Description threadmills, cycling machines and
weight machines.

Recommendation No immediate remedies required.

Service life 30 Effective age 10
Remaining life 20 Replacement cost Contingency

Absolute Building Science

Strata Engineering Inc.
52 File No. 201212DR001
 F 1042 Mailboxes
Location Main lobby
Description Stainless steel mailboxes.

Recommendation No immediate remedies required.

Service life 30 Effective age 10
Remaining life 20 Replacement cost $6,000

F 1043 Storage room

Location In the basement of the building

Description 60 wooden storage lockers

Recommendation No immediate remedies required.

Service life 50 Effective age 10
Remaining life 40 Contingency cost $8,100

G 2021 Asphalt parking lots

Location Outdoor

Description Parking garage with asphalt paving

Recommendation Repaving of damaged asphalt

Service life 30 Effective age 15
Remaining life 15 Contingency cost $24,000

G 2051 Irrigation sprinklers

Location On the lawn outdoors

Description 6 inch full circle sprinklers

Recommendation No immediate remedies required.

Service life 20 Effective age 5
Remaining life 15 Contingency cost $1,750

Absolute Building Science

Strata Engineering Inc.
53 File No. 201212DR001
APPENDIX C
Generic maintenance protocol for common strata components

Concealed Conditions:

Service life and durability of many building components is determined by concealed conditions
which cannot be detected or evaluated by a visual review. Concealed conditions can only be
detected via disassembly and/or testing. Expected service life and future performance of the
building components, along with estimated repairs or replacements are judged based on
appearance, performance of comparative components at other buildings, and the service history
of the components at this building.

Comprehensive Service Contracts:

Comprehensive Service Contracts promote regular upkeep, requiring the contractor to repair or
replace components during maintenance itself. These repairs may fall outside the scope of CRF.
Within this report, we have not received documentation of existing comprehensive service
contracts hence we assume most component replacement costs to be funded from the CRF.
Furthermore, since the scope of comprehensive service contracts is limited within its terms and
conditions for a given time frame, there is still a need for budgeting for major replacement or
repair programs within the CRF itself. For instance, replacements due to external obsolescence
are not covered within service contracts and would be funded from the CRF.

Adequate Maintenance:

Local repairs, replacements and maintenance funded by the operating fund are assumed to be
diligently completed, allowing components to achieve their expected service life. Premature
failure due to poor maintenance and upkeep may result in additional expenditures from the CRF.

SUBSTRUCTURE

Foundations:

Building foundations generally last the lifetime of the building, unless severe settlement or
deterioration issues arise. Building foundations are usually inaccessible during inspections and
hence are generally excluded within the reserve components inventory, unless indicated
otherwise.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
54
 Leakage problems may develop due to clogging of ground water drainage systems and/or
compromised waterproofing treatments applied to below grade walls (i.e. cracks, splits or other
perforations in membranes).

Localized leakage problems can be usually managed by small scaled excavations allowing for
waterproofing or drainage restoration. Sometimes, sealant injection from the interior may also be
used to address minor leaks. Repairs for leakages are generally accommodated by a contingency
allowance in the CRF unless a major defect is suspected. In latter cases, further inspection and
assessment is recommended prior to any adjustments to the CRF accounting for potential major
repairs.

Main Building Structure:

For the purposes of the depreciation report, a detailed assessment to ascertain building code
adherence is not performed. It is assumed that applicable building codes were satisfied during
original structural design and construction.

The building structure is generally contained within the building envelope, and shielded from the
weather. The main building structural elements (e.g. interior walls, frames, beams) are generally
not expected to require repair, replacement or upgrading within the time frame of this study. This
is contingent upon timely maintenance and regular upkeep such that minor defects are addressed
before major issues result. For the purposes of this report, we assume that there is no major
issues related building structure, unless otherwise indicated.

Structural Elements Exposed to Weather:

Where structural elements extend beyond the building envelope, exposure to weather and other
pollutants is likely to lead to deterioration. Elements which are exposed at some buildings
include balconies, columns, shear walls and slab edges. Exposed reinforced concrete elements
can deteriorate with concrete carbonation. This is a chemical alteration related to carbon dioxide.
The concrete surface progressively carbonates, the rate and depth varies with concrete quality. If
the layer of carbonated concrete extends deep enough to contact embedded steel, corrosion
occurs. This leads to concrete cracking and spalling, and the need for repair to restore structural
integrity. Predicting future carbonation damage would require special testing to identify
variations in concrete quality and the depth of concrete cover protecting embedded steel. In the
absence of this information, expected future repair is based upon judgement related to available
information, observations as to past performance and experience at other buildings.

Structural steel elements which are exposed to weather require regular application of a protective
coating (paint) to prevent deterioration. With this maintenance, major repair or replacement

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
55
would not be expected to become necessary. Wood elements lose protection as resins, penetrants
or coatings are washed or worn away. Splitting (checking) occurs as the wood dries and is
exposed to thermal cycles. While repainting or resealing can prolong the service life, elements
exposed to regular wetting are expected to eventually require replacement.

Balcony Guards and Dividers:

Balcony guards are subject to deterioration from exposure to weather. Painted finishes degrade
from UV (sunlight) and moisture. Wear and tear imposed by residents and maintenance activities
causes damage. Steel elements can begin to corrode (rust). Gaskets or seals which may be
present can become rigid and split. If a pro-active program of repair and maintenance is
implemented to limit deterioration, it is often possible to defer the need to replace the guards.
However, appearance tends to degrade with repeated re-painting and repair programs. Planning
for future replacement is generally recommended to avoid escalating repair cost, and to maintain
acceptable aesthetics.

BUILDING ENVELOPE

Flat (Low Slope) Roofing Systems:

Low slope roofing system performance varies. Variables that influence performance can include
workmanship in the original application, wear and tear from maintenance activities, and
maintenance quality. The waterproofing element (membrane) tends to lose flexibility with age.
Problems with splitting or debonding can occur with thermal movements. Once moisture ingress
into the system begins, progressive deterioration may develop. For most systems, testing is
necessary if current conditions were to be established to try and more accurately predict future
performance.

If promptly identified and completed, local repairs are often effective in prolonging service life.
However, before excessive degradation in performance occurs and leads to excessive or frequent
problems with leakage, a program of renewal becomes necessary. The expected repairs and the
timing for general renewal are based upon judgement related to available information, visual
observations as to current performance, the expected ability to be effective in deferring
replacement by local repair, and experience with similar roofing systems at other buildings.

Annual inspection and minor related repairs are assumed to be an operating expense. Protected
membrane systems can likely have their life extended to 30 or 35 years if the field of the roof is
well installed, and the perimeter upturns are replaced after about 15 years of service. We
generally assume that this is the normal practice, unless we have evidence that the field of the
roof is not durable.

Sheet Metal:

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
56
Sheet metal components may include sloped metal roofing systems, protective metal flashings,
and drainage systems such as eaves troughs and down spouts. These elements are subject to wear
and tear from ice and maintenance activities. Where the resulting damage affects function or
becomes aesthetically unacceptable, replacement becomes necessary. Replacement of many of
these items becomes necessary in conjunction with roof renewal.

Painted finishes degrade with exposure to UV (sunlight) and exposure to pollutants. While field
painting to renew the appearance may be possible in some instances, the quality of finish is
generally not as aesthetically pleasing or as durable as the original finish. As a result, this is
generally only considered as an option where it is expected the resulting appearance would be
acceptable and the cost for deferring replacement could be justified. Galvanized steel is protected
from corrosion only as long as the zinc coating exists. Once the zinc coating is consumed,
corrosion begins. This often first becomes evident at cut edges. Once widespread corrosion
develops, replacement becomes necessary.

Cladding

General Requirements:

The exterior walls include components which resist wind and rain, and thermal insulation to
assist in maintaining interior comfort. Many elements are concealed. A visual review is only able
to check for evidence of problems which may have developed. A more comprehensive
evaluation usually requires test openings and/or performance testing.

Local leakage may occur from time to time. This may be adequately addressed by local repair
under the operating budget. If we expect the magnitude of these repairs to be significant enough,
we include a periodic repair allowance as part of the reserve. Insulation is usually incorporated
within the cladding assembly. Most common types of insulation do not deteriorate providing
they are not exposed to frequent or excessive wetting as may occur with rain or air leakage.
Upgrading thermal insulation may become desirable in the future due to rising energy costs, but
is not included in this plan unless a specific need were identified. If this were to be considered,
this would usually be completed in conjunction with interior finish replacement or general
cladding renewal. An “air barrier” is required in modern cladding systems. This limits energy
loss from air leakage, as well as helping to resist rain water penetration, moisture accumulation
(condensation) and insect ingress (cluster flies).

Many buildings, particularly those constructed prior to about the late 80's may have a poor air
barrier. However, unless specific and general problems related to air leakage are detected,
upgrading by air sealing defects is not included in the plan. Performance testing should be
completed to identify typical problem areas and the potential benefits related to air sealing. If
required, maintaining air seals that may include interior caulking at windows, seals between

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
57
floors and walls and seals at outlets or other penetrations is assumed to be completed as part of
the operating budget.

Vapour barriers are also required to be incorporated within cladding to resist moisture flow
into the cladding. These are generally seen to be less critical to wall performance than the
air barrier. Water shedding details frequently play an important part in promoting durability.
Details that allow rain water to run onto adjacent components should be identified to consider
whether they need to be corrected to promote durability. Improvements and repairs required to
promote water shedding are assumed to be managed as part of maintenance, or in conjunction
with other repair programs.

A cleaning program (a supplement to regular maintenance such as window washing) may

become desirable to remove pollutants which may collect on the cladding to maintain an
acceptable appearance. This is a discretionary item. Whether or not this becomes necessary is a
function of the cladding finishes, details related to water shedding, and local environment. We
include this work only where we expect appearance to degrade excessively so that this is desired
by owners.

Sealants and Caulking:

Exterior sealants are generally relied upon to provide a weather seal. These tend to become rigid
and split with age and exposure to UV (sunlight). Various degrees of defects are also
incorporated at the time of application as a result of poor workmanship. There are also industry
problems with respect to poor or improper detailing, particularly with window systems. It is
often found that a program of local repair can be effective at deferring the need to complete a
program of general replacement. Depending on the expected magnitude of this work, this may or
may not require a reserve item. Before general problems with deterioration develop, renewal
should be completed. This work is best timed in conjunction with other exterior repairs or
replacements. High performance sealant materials should be employed to prolong the service life.

Stucco and Exterior Insulated Finish Systems (EIFS):

Stucco and exterior finish cladding systems (EIFS) can develop problems with internal
deterioration that could only be detected by further evaluation including test openings. Problems
which develop could involve the mesh reinforcing, water resisting sheathing wraps, sheathing
board, studs, and/or fasteners. However, unless general problems are detected or expected to
occur, it is assumed that the cladding is properly designed and constructed, and will be
maintained so that general replacement is avoided within the time frame of this study. Local
repairs are expected to be effective in deferring the need to replace the cladding. These would
include repairing local defects with cracking or deterioration, and applying a new vapour
permeable protective coating to improve the exterior weather seal and renew appearance.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
58
Paint and Coatings:

Paints and other architectural coatings provide varied performance that depends on factors
including quality of material, workmanship in preparation and application, exposure to moisture
& UV (sunlight), and wear & tear. Unless problems with inadequate bond are detected, it is
generally assumed that re-finishing can occur over the existing finishes with limited surface
preparation. Use of a high performance coating to obtain a longer service life is generally
recommended as the least cost strategy. The timing for re-finishing is somewhat discretionary.
As long as the underlying materials are not allowed to become exposed and allow progressive
deterioration, timing may be deferred as long as the degrading appearance is deemed to be
acceptable. In conjunction with re-finishing, an allowance should be provided to accommodate
local repairs to the substrate which may be necessary to provide a sound and even surface.

Window and Door Systems - General:

Window and door performance as mandated by building codes is often found to be inadequate.
Leakage problems can develop with wind driven rains. Performance testing would be necessary
to check the level of resistance to leakage. Unless reported or observed to be a general problem,
we assume that acceptable performance is managed by maintenance. With weather-stripping
wear, the effectiveness of the weather seal degrades. Replacement becomes necessary to provide
a reliable level of resistance to leakage, to control energy loss and maintain comfort. It may be
preferable to undertake a program of general weather-stripping replacement rather than replacing
it in a piecemeal fashion. This allows greater quality control. Performance testing should be
completed to identify the full scope of work which will be necessary. Drainage improvements,
and hardware maintenance would likely be included in this rehabilitation program.

Glazing tape seals at glass and metal panels become less effective with thermal movements and
pumping action from winds. The glazing tape tends to be pushed out of the joint. If leakage
develops, an increased rate of sealed insulated glass unit (IGU) failure may occur. However,
these seals are also replaced in conjunction with IGU replacement. Exterior cap sealing (needle
glazing) is recommended if leakage problems are expected and the IGU are generally expected to
have sufficient remaining service life to warrant this investment.

Some window systems have internal seals located within drained pockets which are necessary to
avoid leakage. These seals tend to become rigid with age and may split with thermal movements
and require re-sealing. Leakage may become evident on the interior, or may drain into cladding
systems and lead to concealed deterioration. Detailed evaluation and testing would be necessary
to check for current problems. This is recommended in conjunction with planning for a general
program of rehabilitation.

If proper maintenance and repair is implemented to protect windows and doors, it is expected
that replacement could be deferred to beyond the time frame of this study. Where we expect

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
59
maintenance and repair to become too costly, and/or inadequate to meet owners expectations, we
recommend replacement. In addition, owner considerations with respect to aesthetics, comfort
and ease of operation may create a discretionary desire to upgrade and replace these elements.
This decision should be made prior to investing in other related repair programs so that the
related portions of the CRF can be put towards the replacement cost.

Aluminium Systems:

It is difficult to predict whether or not modern aluminum framed, double glazed windows and
doors will require full replacement within the timeframe of the study. Pending actual industry
experience, which will only come with time, it seems reasonable to assume that replacement will
eventually be required. This may be necessary due to material degradation (corrosion of frames,
deterioration of concealed elements) or to meet resident's increased expectations for
serviceability, aesthetics and comfort. These expectations are likely to be raised by advances in
window technology.

The finishes applied to aluminium are subject to deterioration depending upon the material and
exposure to UV (sunlight). High performance fluoropolymer coatings are available to provide a
longer service life. However, lower quality finishes are common at many residential buildings
and chalk aggressively. Cleaning to eliminate the easily marked chalk can actually hasten coating
removal. Field re-coating (repainting) is expected to become necessary. Industry improvements
in materials and application techniques are expected to become available to service this growing
demand.

Anodized aluminium finishes are expected not to require work within the life of this study.
Problems with pitting from exposure to pollutants are becoming evident at some buildings, but
this is assumed to be avoided by regular cleaning.

Curtain Wall Systems:

Curtain walls rely upon concealed drainage and internal seals as well as external seals to resist
leakage. Seals fail locally with defects in workmanship, or as they become rigid with age and
become unable to accommodate thermal movements. Concealed anchors or fasteners may begin
to corrode.

Options to maintain acceptable performance include; local dis-assembly and rehabilitation in

response to leakage problems; renewing interior seals in conjunction with sealed insulating
glazing unit replacement; or general dis-assembly to allow complete renewal. Identifying the
appropriate program requires evaluation that would include review of concealed conditions. We
consider available information regarding past leakage problems and conditions when estimating
future repairs.

Sealed Insulating Glazing Units (IGU):

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
60
Sealed window units fail when the perimeter seal allows moisture to penetrate the cavity between
the panes of glass. This moisture obscures vision by condensing on and scumming the inside
surfaces. Replacement becomes necessary for aesthetic reasons. Factors which affect IGU
durability include the quantity of desiccant available in the spacer to absorb penetrating moisture,
the vapour resistance provided by the perimeter seal, and the extent to which the IGU is exposed
to moisture penetrating the glazing pocket. This moisture can arise from deteriorating external
seals, or problems with interior condensation. It is expected that these conditions will be
promptly corrected so that accelerated deterioration does not occur. In most residential window
systems, sealed units are replaced from the interior of the building. However, in some systems
replacement is completed from the exterior, requiring the higher cost of access. Some windows
are “channel glazed”, which can also require sash replacement when the IGU fails.

IGU failure tends to occur in a distributed fashion, requiring replacement on a frequent basis.
Early failures tend to occur where there are local problems with poor workmanship in
manufacturing or installation, or where there is greater exposure to moisture.

Skylights:

Skylight systems are exposed to increased demands with respect to UV (sunlight) exposure on
seals, direct rain fall, and snow and ice accumulation. Acceptable performance usually relies
upon concealed seals and drainage to collect and remove water which may penetrate the outer
surface. If leakage problems develop, rigorous maintenance to exterior seals can sometimes
provide a lower initial cost maintenance strategy to defer a program of rehabilitation. However,
dis-assembly is eventually expected to become necessary to allow renewing the system including
interior seals and glazing. Acrylic dome skylights eventually require replacement when the
plastic deteriorates and fades from UV exposure.

Steel Clad Doors:

Steel clad doors provide good resistance to wear and tear. The painted finish can be maintained.
However, these doors frequently provide poor resistance to leakage unless sheltered or provided
with a storm door. Unless specific problems are detected, we generally do not expect these doors
to require repair or replacement within the time frame of this study.

Overhead Doors:

Overhead doors tend to require repair as a result of frequent use and impact damage. Required
repairs and replacements of components are assumed to be managed as part of the operating
budget. If the cost of ongoing repair becomes excessive, replacement with a more durable, less
maintenance intensive system would be appropriate.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
61
C: BUILDING INTERIOR

General Comments Regarding Building Interior Finishes:

Replacement of common element interior finishes becomes necessary when wear and tear
becomes excessive, and/or to meet the expectations of owners regarding maintaining acceptable
aesthetic qualities. As discretion can be applied in selecting the actual timing and scope of these
projects, the Board of Directors should review the CRF items to keep them current with their
plans and owner expectations. While finishes tend to have different service lives according to
varying levels of wear, a comprehensive renewal program that includes treating all components
in the area is often desired. This avoids subsequent disruption and risk of damage. For example,
while wall and ceiling finish renewal might be deferred to a time later than carpet replacement, it
is often completed at the same time.

Where not subject to wear and tear, interior finish components may not require replacement
within the time frame of this study. Local maintenance or repairs in conjunction with other finish
renewal programs are assumed to be adequate. This can include drywall, stippled finish, stucco,
and trim.

Carpets:

Carpets fade, stain and wear from traffic. Costs for replacement carpet can vary considerably
according to the quality and application techniques selected. We estimate a budget based on our
expectations, and experience with what has been selected at other buildings. When the time for
this work approaches, the budgets should be revised according to actual plans.

Painted Finishes:

Painted finishes require renewal as a result of fading, staining and wear and tear. Deterioration
may also occur if areas are exposed to moisture. Local repainting necessary to defer general
renewal programs is assumed to be completed as necessary as part of operations.

Whether or not a painting allowance is included in the CRF depends on the expected size of the
project. Small painting projects are assumed to be managed as part of operations.

Ceilings:

While ceilings tend to be exposed to little wear and tear, some damage can occur from time to
time, particularly if interior leakage occurs. Re-painting drywall and stippled finish is possible.
Drop tile ceilings can be maintained by local replacements, and would only require general
replacement if matching original tile became difficult as a result of fading or if matching tile
were no longer available.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
62
Ceramic Tile and Natural Stone Finishes:

Hard finishes such as ceramic and stone are very durable. However, problems can develop with
time including mortar joint staining and erosion, debonding, cracking, scratching and impact
damage. Local repairs that become necessary may not match the original materials. We generally
expect that a program of replacement will become necessary to maintain an acceptable
appearance.

Furnishings:

Furnishings can require renewal or replacement with fading and wear and tear.

Cabinetry, Millwork and Hardwood:

The need for renewing cabinets and millwork is dependent upon the level of wear and tear that
they are subjected to. Options for renewal usually include refacing or complete replacement.
Natural wood floors and millwork can usually be re-finished. Whether or not an allowance is
included in the CRF depends on the expected size of the project.

D: SERVICES

Mechanical systems

Conveying systems

Elevator Cab Finishes:

Timing for refinishing elevator cabs can be dependent on wear and abuse, and owner aesthetic
expectations. The scope and quality of refinishing can vary considerably. A budget that allows a
program that is expected to be appropriated is included.

Elevator Repairs, Replacement and Modernization:

Components of the elevator system can deteriorate and require replacement as a result of wear,
age and the quality of preventative maintenance. This work tends to be completed as part of the
operating budget and/or in conjunction with comprehensive maintenance contracts which may
exist. This work may include motor rewinding or replacements, or replacement of control
devices. However, major programs of rehabilitation and modernization are generally expected to
become necessary. This may be in response to increasing frequency of problems and/or
difficulties completing repairs once the equipment becomes obsolete and replacement parts are
difficult to obtain. Upgrading to more modern equipment also tends to become necessary to meet
owner expectations or to comply to changes in the safety code. The scope of a general

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
63
rehabilitation will need to be further identified. As part of a major overhaul, providing new
control systems will be required.

Boilers:

Boiler interior components are subject to deterioration as a result of the high temperatures and
corrosive conditions which develop. Heat exchangers, tubes and pipes can crack, erode or
become blocked internally by deposits. Insulating materials may crack or crumble. Vents
(exhaust stacks) will corrode (rust) with contact from wet combustion gases. While it is often
possible to continue to maintain this equipment by locally replacing failed components on an as-
needed basis as part of the operating budget, this eventually becomes impractical. Replacement
becomes necessary from the CRF. Factors which prompt replacement can include: unreliable
and degraded performance; escalating maintenance costs; parts becoming unavailable as a result
of obsolescence, and; energy savings related to replacing with modern, efficient equipment.
Expansion joints in the distribution piping rarely develop problems and are typically not
expected to require replacement. In unusual circumstances, failure does occur and can represent
a large unplanned expenditure. However, given that this occurs in less than 5% of buildings, we
do not budget a reserve line item unless there have been previous problems. Local repairs and
replacements are initially managed as part of the operating budget. However, with increasing
rates of failure, larger sections would also need to be replaced, requiring budgets from the CRF.
The actual rates of failure and corresponding budgets will need to be determined. Unless a
problem condition is identified that suggests general replacement may become necessary,
judgement is applied to establish an allowance for progressive replacement once aged.

Heating, Cooling and Air Distribution Units:

Heating, cooling and air distribution units such a fan-coils require local repair and component
replacement as part of the operating budget to assure they provide adequate service. However, a
program of renewal becomes necessary once the extent of deterioration becomes excessive, or if
parts are no longer available to continue with repair. This may also be desirable to take
advantage of more energy efficient equipment.

In some instances, a phased or annual replacement program can be implemented to deal with
units in a progressive manner (generally for a large number of units). However, a general
replacement program may be preferable to improve the ability to apply quality control to the
project, and to assure uniform equipment to simplify maintenance (generally for less than 50
units). The CRF includes the type of replacement program expected to be appropriate and
adequate to meet owner expectations.

Since 2002, a risk of mould growth on the insulation inside in-suite fan coil units or heat pumps
has become known to the industry. Periodic investigation should be scheduled from operating
budgets to test for the presence of mould. This mould cannot be detected through visual review

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
64
only. Until the industry as a whole reveals the extent of this concern, we will only include a
reserve expenditure in buildings where testing has revealed a concern. If the strata in question
has never tested for mould, a test should be completed soon.

Pumps:

Pumps generally require replacement due to erosion of the impeller, failure of the bearings,
failure of seals, and to take advantage of more energy efficient modern equipment. Small pumps
of fractional horse power, such as those for recirculation are expected to be replaced when
required as part of operations.

Air Supply and Exhaust Fans:

Air supply and exhaust fans require cleaning, re-balancing and local repairs as part of
maintenance managed from the operating budget. This includes addressing motors, dampers,
belts, coils, cabinets, filters, etc. However, with advanced age, general replacement is expected to
become necessary to provide reliable service. Small units not included in the CRF plan are
expected to be repaired or replaced on an as-needed basis as part of the operating budget. This
can include items such as service room exhaust fans and common area bathroom fans.
The parking garage exhaust fans remove carbon monoxide (CO) from vehicles so that it does not
pose a risk to residents. These must either run continuously or be provided with CO detectors
that control the fans. The fan components are assumed to be replaced as required out of the
operating budget.

If there is a CO detection system, maintenance will require testing, yearly calibration, and
replacing failed components as part of the operating budget. However, a general renewal of this
control system is expected to become necessary once the controls fail and/or this equipment
becomes obsolete.

Plumbing, Site services:

Site services include buried piping to supply water to the building (for fire and potable purposes),
storm sewers to drain away rain and ground water, sanitary sewers to drain away waste. Periodic
maintenance including pressure flushing and camera inspection is assumed to be managed as part
of the operating budget. Unless problems are detected, we do not expect there will be a need for
widespread replacement within the time frame of this study. However, repairs may be needed to
correct local problems that may develop, such as local collapse or breakage with ground
settlement, leakage or major blockage or restrictions from deposits, or deterioration such as
corrosion of steel piping. Identifying the actual locations, quantities, types and conditions related
to these buried services would require further investigation. An allowance which is expected to
be reasonable to accommodate limited problems is included in the CRF.

Sump Pumps:

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
65
Sump pump repairs are expected to be managed from the operating budget on an as-needed basis.
An allowance for replacement is only included if cost is expected to exceed the threshold.

Drainage Plumbing:

Drainage lines are generally not expected to require replacement within the time frame of the
study unless specific problems with deterioration are identified. Flushing of all risers and main
lines should be carried out every one to two years as an operating expense to avoid major
expenses which can result from not flushing.

Domestic Water Distribution System:

The domestic water distribution system includes piping, valves and insulation. Problems which
develop as the system ages include:

• Seizing or leakage of valves

• Damage to insulation
• Corrosion, pitting, erosion and/or embrittlement of piping. This can be affected by the
quality of materials used, impurities in the water, stray currents, etc.
• Fatigue and failures related to thermal movements

Local repairs and replacements are initially managed as part of the operating budget. However,
with increasing rates of failure or blockage, larger sections would also need to be replaced,
requiring budgets from the CRF. The actual rates of failure and budgets necessary will need to
be determined. Type 'M' copper piping (common in the 70's to present) is thin-walled piping
which is found to develop problems with pinhole leakage. In addition, the wall thickness of the
new piping was reduced over time as a cost-saving measure. In the case of type M, we budget for
100% replacement in a fairly short timeframe starting with the hot water and recirculation lines,
dependent on performance and date of installation. For piping installed in the early 80's, a 15 to
20 year service life can be expected for the hot water system. For piping installed in about 1990,
when the wall thickness was even less, the service life is closer to 10 to 15 years, and in some
extreme cases, pipe replacement has been needed in less than 10 years.

For type 'L' copper piping, which has a thicker wall, an allowance is included for replacement
of the hot water recirculation lines then the hot water supply lines and finally the cold water
supply lines, over a significantly longer time period. More unusually, there may be galvanized
steel piping which starts to corrode once the zinc coating is consumed, leading to obstructed flow
and pressure drop. Hot water piping deteriorates more rapidly than cold water piping. For
galvanized piping, 100% replacement is included.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
66
Backflow preventer gauges, controllers and isolated valves are all expected to be replaced out of
the operating budgets, assuming periodic maintenance.

Domestic Hot Water Storage Tanks:

Domestic hot water tanks store hot water to ensure there is adequate supply in times of high
demand. Storage tanks tend to require replacement with deterioration of the liner and/or
corrosion of the tank body, leading to obstructions and leakage. Repairs such as re-lining interior
concrete surfaces are often able to prolong the service life of the tank. Small tanks (120 gallons
and less) should be replaced from operating budgets.

ELECTRICAL SYSTEMS

Electrical Distribution:

Insulation used on distribution wiring tends to become brittle with age and is expected to crack
and split. Connections tend to deteriorate where subject to increased heating or stress from
thermal movements. Power surges related to the utility service or lightening strikes can hasten
deterioration. Maintenance including electrical thermography and local repairs is expected to be
completed as part of the operating budget. This should be completed at least every three years,
and more frequently for systems incorporating aluminium wiring. Once aged, portions of the
system are expected to require replacement from the CRF. An allowance for a phased program
of replacement is included. Further monitoring and evaluation will be necessary to establish the
actual scope of work and rate of replacement which will be necessary.

Buried electrical supply lines, typical of townhouse complexes, are subject to aging of the
wires leading to brittle cracking and splitting. Connections tend to deteriorate. Phased
replacement should be budgeted in the CRF.

Transformers:

Transformers tend to fail abruptly once aged. This can be related to deterioration of insulation.
Oil filled transformers should be scanned as part of the routine electrical thermal scans. Some
transformers are owned by the local utility (generally pole mounted units, or those located in
vaults owned by the utility).

Outlets and Switches:

Local devices including electrical outlets, switches, and mechanical switchgear are assumed to
be replaced as required as part of the operating budget, or in conjunction with programs of
interior finish renewal or equipment replacement. If there is aluminium wiring, then connections
to receptacles and switches should be checked regularly to see if contacts are deteriorating. This
should be an operating expense.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
67
Light Fixtures:

Light fixtures tend to require replacement as the associated finishes fade and deteriorate, as
electrical insulation embrittles and cracks, with corrosion if exposed to exterior moisture, with
vandalism, or if desired for aesthetic reasons. The discretion applied to the timing for light
fixture replacement, and the quality of materials that are available varies considerably. Programs
that are expected to be appropriate given the apparent quality desired are estimated.

Local repairs including replacing ballasts, bulbs, switches or timers are assumed to be
managed as part of the operating budget. Light fixtures in stairwells and service rooms are
assumed to be replaced as-needed from operating budgets, as these are generally not included in
any aesthetic upgrade plans.

Intercom and Card Access Systems:

The intercom system will require replacement when

excessive repairs become necessary, replacement parts become unavailable, or newer
technology is desired. Individual card access readers will require replacement as required from
the operating budget. Complete renewal of the system will be required when the system becomes
obsolete, and/or when an upgrade to an alternate technology is desired.

Closed Circuit Security Systems:

Closed circuit security systems continues to evolve rapidly, making existing systems obsolete,
and impractical to repair. We make allowances for expected replacements.

Electric Heating:

Electric heating cables provided to prevent freezing pipes or for de-icing surfaces are expected to
eventually fail and require replacement from cracking of the covering and wire. Local electric
heaters provided for space heating isolated areas are assumed to be repaired or replaced as
necessary as part of the operating budget.

Telephone and Cable Television Systems:

Allowances for replacement of telephone communication wiring or coaxial cable are generally
not included in the CRF. While future re-wiring may be desirable to meet technological
advances, this could be considered an upgrade that may not be appropriate to finance through the
CRF. Ownership of these systems can be a complex legal issue, they are generally not
considered common elements, but rather the property of other parties. As business and
technology continues to evolve, it is possible that replacements will be completed in conjunction

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
68
with other service agreements, or become unnecessary altogether if alternate wireless systems
become available.

Emergency Generator:

Some components are expected to wear or deteriorate over time. Batteries are expected to be
handled out of operating budgets. Major overhauls become necessary requiring tear down to
renew seals, valves, bearings and other components. The actual scope of work will need to be
identified based on monitoring and further evaluation. Due to limited use, a generator can have a
long service life, and obsolescence usually drives replacement.

Emergency Batteries:

Batteries provided for emergency power tend to lose effectiveness as they age, or associated
parts may become unavailable. Local replacements tend to be completed on an as-needed basis
as part of annual maintenance, so that CRF budgeting may not be necessary. The exception
would be central battery systems or AC to DC inverters, in which case, we include a CRF item.

FIRE SAFETY

Egress:

Unless specific problems are detected, fire safety components related to egress are assumed not
to require general replacement or upgrading within the time frame of this study. This includes
fire separations around exits, exit doors with associated hardware, stairwells with guards and
handrails, exit signs, and emergency lighting. Ongoing maintenance from operating budgets is
assumed to be completed to keep these components in acceptable condition. No audit or design
check was completed to confirm that these meet current code requirements unless otherwise
noted.

Separations:

Unless specific problems are detected, fire safety components related to fire separations are
assumed not to require general replacement or upgrading within the time frame of this study.
This includes structure fire protection, wall and floor fire separations, suite doors with associated
hardware, fire stopping and smoke sealing at penetrations (if provided), fire dampers at ducts or
pipes. Local repair and replacements as part of the operating budget are assumed to be completed
to keep these components in acceptable condition. No audit or design check was completed to
confirm that these meet current code requirements unless otherwise noted.

Detection:

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
69
Detection systems include the fire alarm system, smoke and heat detectors, signalling devices,
and associated wiring. In conjunction with annual testing completed as part of the operating
budget, local repairs and replacements are required. These activities are expected to lead to
renewal of some devices. However, advances in fire alarm and detection technology tend to
result in systems becoming obsolete. Once compatible replacement parts are no longer
manufactured, it becomes difficult to continue to maintain the system. In addition, advances in
fire safety may lead to upgrading being necessary. A general program of renewal is expected to
become necessary

The actual scope of the renewal will need to be identified. It is normally expected that many
components could be salvaged, particularly those renewed as part of operations. Components
which may be salvaged are expected to include wiring, and some devices. Some manufacturers
are requiring replacement of all end-devices and wiring when their system is installed. Whether
or not this is a long-term trend is unknown. Until more information is available, we only budget
for replacement on a case-specific basis.

Suppression:

Suppression systems include sprinkler systems, the standpipe, and associated pumps, valves, fire
hoses and cabinets. These systems are not subject to regular use. Unless problems with
deterioration are detected, the base piping for these systems are assumed not to require
replacement within the term of this study. Local problems with corrosion which may develop are
assumed to be addressed as part of annual repairs associated with the operating budget. If general
problems with internal pipe corrosion were to be detected, changes to the CRF plan would be
required. Air compressors, small pumps, sprinkler heads and other small components are
generally assumed to be managed from operating budgets.

Valves tend to require replacement as a result of seizing or developing leakage as seals age.
Sprinkler heads have occasionally been recalled by certain manufacturers. However, since this
cannot be predicted with any certainty, we have not included repair budgets associated with
potential recalls. If such costs are incurred, they likely can be paid from the CRF and would be
addressed as part of future updates of the study. Fire hoses and fire extinguishers are assumed to
be repaired or replaced as required as part of operations. As fire hoses age, they can deteriorate
and develop leaks. In some instances, local replacement occurs in conjunction with annual
inspection and testing as part of the operating budget so that CRF budgeting is not necessary.
Where there are a substantial number of hoses that may require a larger program, we include a
budget for replacement unless there is evidence that this will be managed from operations.

Fire pumps boost pressure so that there is adequate water to fight a fire at upper levels of the
building. Jockey pumps act to maintain pressure within a sprinkler system. Pumps eventually
require replacement due to impeller erosion, bearing and/or seal failure. While maintenance
repairs might defer replacement, this is eventually becomes impractical. Jockey pumps should be
managed out of operating budgets. Fire hydrants can be owned by the local municipality, or by

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
70
the Corporation. We generally assume that hydrants located within the property lines of the
complex are the responsibility of the Corporation.

AMENITIES

Common Area Fixtures:

Common area fixtures such as faucets, sinks, water closets, etc. are expected to be repaired or
replaced as part of operations, or in conjunction with interior finish renewal programs.

Swimming Pools and Hot Tubs: Swimming pool and hot tub equipment can deteriorate by
corrosion or other mechanisms, depending upon factors such as the degree of maintenance and
chemical balance of the water. Replacing filters, pumps, heaters and chemical treatment systems
is usually necessary as part of the operating budget prior to a program of renewal under the CRF.
There are various options for renewing the swimming pool or hot tub basins. The selected
option and timing of work will depend upon the quality of finish desired by owners. Options may
include local repair and re-coating or general replacement with a new liner or specialty finish.
Further review and analysis may be necessary for the Board to select an appropriate solution. A
repair that is expected to be appropriate is assumed.

HARD SITEWORK

General Comments:

Repairs to exterior site finishes are required to maintain safe conditions and an aesthetically
pleasing environment. The scope and timing of work varies according to owner expectations, and
the extent to which repairs and replacements are completed as part of operations. We attempt to
judge the extent to which maintenance activities are likely to maintain acceptable conditions, and
assume that a reasonably diligent program will be provided.

Repair and replacement programs related to site finishes need to be carefully coordinated with
other programs. Work that requires removal of site finishes (such as underground roof deck re-
waterproofing) or which may risk causing damage should be completed in advance of site finish
renewal.

Asphalt Pavements:

Asphaltic concrete pavements deteriorate as a result of loads from vehicles, oxidization with
exposure to ultraviolet light, and embrittlement from age. Asphalt paving can also fail if the sub-
grade materials are inadequate and/or are allowed to become excessively wet as a result of poor
drainage or failure to seal cracks. Treatments available to address deteriorating pavement include
sealing cracks, overlaying with asphalt or replacing the asphalt.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
71
Testing would be necessary to more accurately establish the appropriate scope of future repair or
replacement. Unless significant problems are detected, local crack sealing and patch repair to
defer replacement are assumed to be managed as part of operations. In the absence of visible
distress, we assume that general asphalt and sub-base replacement can be avoided in favour of
less costly options involving an overlay.

Concrete Curbs and Walkways:

Concrete elements can deteriorate with sub-base heaving, long term exposure to weather, and
impact damage. However, assuming adequate concrete quality was provided, some areas may
not require repair or replacement within the time frame of this report. Some repairs and
replacements are expected to be completed in conjunction with other site work such as re-paving.
An allowance is included in the CRF if costs for this work are expected to become excessive.

Unit Pavers:

Unless general problems with deterioration are detected, unit pavers are not expected to
deteriorate within the time frame of this study. This assumes that there is adequate sub-base
drainage and concrete quality. Local areas of settlement or damage which occur can normally be
addressed by local replacement and re-setting as part of operations or in conjunction with other
repairs. If costs for this work are expected to become excessive, an allowance is included in the
CRF.

In situations where unit pavers are a dominant part of the site finishes, such as unit drives and
roadways, a different strategy may be adopted. In such cases, Owners often choose to replace
unit pavers for aesthetic reasons as colors and patterns become “dated”. Maintenance of larger
areas also tends to result in a patchwork appearance as original pavers may no longer be
available from the manufacturer. In these cases, Reserve allowances for full replacement can be
considered.

SOFT SITEWORK

Landscaping:

Annual plantings and local replacement of dead items is expected to be managed as part of the
operating budget. However, with age, trees and shrubs can become overgrown, root structures
may become too large at areas, and planting beds may lose nutrients. If landscape maintenance is
inadequate to address these problems, a general program of renewal may become necessary.
Judgement is used to determine whether this needs to be included. The scope and budgets for
these types of programs vary, only an expected order of magnitude budget can be established
pending landscaping design.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
72
Landscape Irrigation System:

Landscape irrigation piping can fail due to aging, plastic embrittlement and stress from thermal
expansion/contraction and ground movements. Localized replacement of damaged sprinkler
heads and piping is assumed to be handled from the operating budget as part of normal
maintenance.

Wrought Iron Fencing:

Wrought iron fences are generally not expected to require replacement within the time frame of
this study providing local repairs and painting are diligently carried out to address problems with
rust. Iron fences with a factory vinyl coating are generally not expected to require replacement
within the term of this report.

Chain Link Fencing:

Chain link fencing will require replacement when it corrodes, the linking becomes excessively
worn, or it sustains physical damage. With vinyl coated fencing, the vinyl on the post/rails tends
to shrink/crack and expose the underlying steel.

Masonry Landscape Walls:

Brick or stone masonry landscape walls deteriorate over time. These walls often deteriorate more
aggressively than building walls as a result of increased exposure to rain water, ground water
wicking, or cracking from shallow foundations that allow movement.

Retaining Walls:

Retaining walls can be vulnerable to gradual overturning, particularly if not properly engineered
to resist pressures applied by the earth and frost. In our experience, there are no standard
construction guidelines, and these structures are often built without an adequate structural design.
Deterioration can also occur with exposure to rain and ground moisture, and with freezing.
Timber retaining walls provide a limited service life. Unless problems are detected, concrete
retaining walls are assumed not to require replacement within the term of this study. For other
retaining walls, we allow for replacement after a long service life, but this is really impossible to
predict, as the ties and drainage system which define the service life are fully concealed from
view.

Parking Structure Concrete Deterioration:

Parking structures can deteriorate aggressively, primarily from the effects of vehicles depositing
de-icing salts, moisture and other corrosive materials. When exposed to these elements, steel

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
73
reinforcing contained within concrete elements can begin to corrode. This leads to concrete
cracking and spalling, requiring repair to restore structural integrity. A pro-active repair and
maintenance program is required to avoid general problems with structural deterioration. This
requires prompt repair and replacement of waterproofing systems to protect the structure. Local
repairs are expected to be managed as part of operations. General waterproofing replacement
must be timed to occur before performance degrades and allows widespread leakage. Only
limited structural repair would thereafter be expected to be necessary. Concrete deterioration
would typically occur at cracks and joints which may have been exposed to excessive leakage or
corrosion prior to repair.

Parking Garage Traffic Deck Protection Systems:

Traffic deck waterproofing systems include a flexible waterproofing membrane covered by a

traffic surface to resist wear and tear. Construction joints and cracks usually require special
treatment to allow the membrane to stretch across them with movements. With age, membranes
can become less flexible and split, allowing leakage. The wear course is subject to deterioration
from vehicles. Areas may erode away or crack. Asphaltic systems are vulnerable to softening
from petroleum spills or leaks, and other hazardous pollutants. Expansion joints require special
treatment to maintain a watertight seal. Sealants, looped
joints, or rubber glands can be used. The magnitude of movements that occur can lead to
problems with seal failure. For garages that experience leakage problems, it is often advisable to
upgrade to a more reliable joint seal to avoid costly structural deterioration that can occur.

WASTE DISPOSAL SYSTEMS

Garbage Compactor:

Garbage compactor systems eventually require replacement when ongoing repair as part of
maintenance is no longer practical.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
74
APPENDIX D
Reserve component data sheets

Reserve Component: Vinyl flooring on balcony

B1011
Physical description Number 54 units x 60 SF/unit
Properties Sheet applied vinyl on wooden-frame.
Potential deterioration Sun exposure leads to fading of PVC and could lead to brittleness after long
term wear and tear. Cracks in vinyl membrane could allow water to seep in
and produce leaks to the interior, causing damage to the wall assembly and
decay of the balcony structure.
Condition analysis Deterioration: No signs of deterioration
Current maintenance: Vinyl flooring inspected in 2008
Overall Condition: The balconies are in good condition
Drip edges are well formed and deep.
Life cycle analysis Date of Acquisition 2007
Normal Lifespan 25 years (This estimate is by industry standards)
Effective Age 4 years
Remaining Life span 21 years
Unit quantity and cost Unit Quantity 3,240 SF
estimates for Unit Cost Estimate $8.00/SF
replacement Current replacement $25, 920
cost estimate
Estimated year of 2033
replacement
Preventive maintenance Periodic inspections of balconies every 2 years allow repairs to be made
before decay of wooden structures creates a need for larger scale repairs.
Residents should be advised to clean balconies to prevent clogs and
blockages that lead to moisture build-up or ponding that increases
probability of water seepage.
Unit quantity and cost Unit Quantity NA
estimates for Unit Cost Estimate NA
maintenance
Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance There are no suggestions for predictive maintenance since no visible
deterioration was detected during the visual review
Reserve Component: Cladding
B2011
Physical description Number 22,000 SF
Properties Stucco clad with acrylic finish
Potential deterioration Over prolonged exposure to the elements, there may be cracks, staining or
vegetation growth. There may also be corrosion of stucco stops and control
joints along with the delamination of finish coat.
Condition analysis Deterioration: No signs of deterioration
Current maintenance: Vinyl siding was replaced in 2009 due to fading and
the loss of aesthetic appeal.
Overall Condition: The vinyl siding is without visible cracks or defects.
Life cycle analysis Date of Acquisition 1980, 2009
Normal Lifespan 50 years (This estimate is by industry standards)
Effective Age 20 years
Remaining Life span 30 years
Unit quantity and cost Unit Quantity 22,000 SF
estimates for Unit Cost Estimate $6.90/SF
replacement Current replacement $16,865 (10% contingency)
cost estimate
Estimated year of 20642
replacement
Preventive maintenance Inspection of condition of cladding every year. Replace external sealant
every 10 years. Clean vinyl surfaces with non-pressurized water once every
3 years.
Unit quantity and cost Unit Quantity Contingency
estimates for Unit Cost Estimate $18.25/LF
maintenance
Current maintenance $20,000
cost
Frequency of Once per 5 years
maintenance
Estimated year of 2017
maintenance
Predictive maintenance There are no suggestions for predictive maintenance since no visible
deterioration was detected during the visual review

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
76
Reserve Component: Balcony railings
B2021
Physical Description Number 1200 LF
Properties Metal guardrails fastened directly through the
membrane to the surface of the balcony.
Potential Deterioration Water may leak through the junction between the guardrail base and the
membrane directly into the underlying wooden frame. This may cause
decay in the wood, leading to severe deterioration of the frame itself.
Guardrails may also be loose at the junction between the balcony surface
and the wall surface after prolonged use.
Condition analysis Deterioration: No signs of deterioration
Current maintenance: None by the strata
Overall Condition: Guardrails are in good condition. No water
seepage into underlying structures nor loosening
at the junctions.
Life Cycle Analysis Date of Acquisition 2007
Normal Lifespan 25 years (This estimate is by industry standards)
Effective Age 4 years
Remaining Life span 21 years
Unit Quantity and Cost Unit Quantity 54
Estimates Unit Cost Estimate $1200
Current replacement $30,800
cost estimate
Estimated year of 2033
replacement
Preventive maintenance Periodic inspections of the strength of guardrails or guardwalls every 2
years allow repairs to be made to prevent accidents. Inspections of water
entry through membrane should also be done at least every 2 years.
Residents should be advised to report any loose , corroded or unstable
guardrail to prevent accidents.

Unit quantity and cost Unit Quantity NA

estimates for Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance There are no suggestions for predictive maintenance since no visible
deterioration was detected during the visual review.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
77
Reserve Component: Exterior windows
B2022
Physical Description Quantity 150 units
Properties The exterior windows are installed in the living
rooms and bedrooms of the owners' suites. The
windows are double glazed with PVC frames.
Potential Deterioration The seals of the exterior windows may deteriorate over time, compounding
the low energy efficiency already given by the low efficiency windows.
Constant exposure to water can also cause oxidation to metallic parts
around windows. Dirt in window sills also make closing difficult.
Condition analysis Deterioration Dirt in window sills and distortion of frame.
Current maintenance None
Remarks Some visible deterioration
Life Cycle Analysis Date of Acquisition 2008
Normal Lifespan 25 years (This estimate is by industry standards)
Effective Age 4 years
Remaining Life span 21 years
Unit Quantity and Cost Unit Quantity 150 untis
Estimates Unit Cost Estimate $400/unit
Current replacement $64,800
cost estimate
Estimated year of 2021
replacement
Preventive maintenance Regular washing of windows and sills.

Unit quantity and cost Unit Quantity 4,200 SF

estimates for preventive Unit Cost Estimate $130/MSF
maintenance Current maintenance $500
cost
Frequency of Yearly
maintenance
Predictive maintenance Due to the aging of the building, the window frames have become
distorted and some windows on the fourth level were difficult to close.
Hence, we recommend the replacement with double layered windows to
increase energy efficiency in future.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
78
Reserve Component: Balcony Doors
B2031
Physical Description Quantity 54 openings
Properties Glass and wood balcony doors.
Potential Deterioration Glass may become brittle on balcony doors after prolonged use. Hinges
may rust and doors may not open properly. Splinters can occur after
prolonged use and could affect door operation along with aesthetics.
Depending on the building and its foundation, there may be changes in the
doorframe depending on changes within the building's elevation. This may
lead to difficulties operating the door itself.
Condition analysis Deterioration: No signs of deterioration
Current maintenance: Periodic cleaning by owners
Overall Condition: Wood and glass are in good conditions, there is
no major deteriorations seen.
Life Cycle Analysis Date of Acquisition 2007
Normal Lifespan 20 years (This estimate is by industry standards)
Effective Age 0 years
Remaining Life span 20 years
Unit Quantity and Cost Unit Quantity 54
Estimates Unit Cost Estimate $250/opening
Current replacement $14,000
cost estimate
Estimated year of 2032
replacement
Preventive maintenance Periodic inspections of hinges, glass and wood may lead to early detection
of problems. Doors can also be painted every 3-5 years to maintain appeal.
Unit quantity and cost Unit Quantity NA
estimates for Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance There are no suggestions for predictive maintenance since no visible
deterioration was detected during the visual review.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
79
Reserve Component: Front Double passage doors
B2032
Physical Description Quantity 1 unit
Properties Glass and aluminum front entrance doors.
Potential Deterioration Stainless steel doors generally require minimal maintenance. Hinge pins
may wear and doors may not open properly. Depending on the building
and its foundation, there may be changes in the doorframe depending on
changes within the building's elevation. This may lead to difficulties
operating the door itself.

Condition analysis Deterioration No signs of deterioration

Current maintenance Periodic cleaning by owners
Overall Condition No major deteriorations were found.
Life Cycle Analysis Date of Acquisition 2000
Normal Lifespan 25 years (This estimate is by industry standards)
Effective Age 4 years
Remaining Life span 21 years
Unit Quantity and Cost Unit Quantity 1
Estimates Unit Cost Estimate $1,200/opening
Current replacement $1,200
cost estimate
Estimated year of 2033
replacement
Preventive maintenance Little maintenance is needed for stainless steel doors other than periodic
cleaning.
Unit quantity and cost Unit Quantity NA
estimates for preventive Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance There are no suggestions for predictive maintenance since no visible
deterioration was detected during the visual review.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
80
Reserve Component: Roof drainage
B3011
Physical Description Quantity 800 LF
Properties Painted steel with metal frame guards.
Potential Deterioration Long term exposure to the elements can cause gutters to rust, especially
when the protective layer of paint deteriorates. Furthermore, failure to
clean gutters properly can lead to clogs and flooding. Water buildup in the
gutters due to clogs may also lead to gutter collapse. Insects, weeds and
other vermin may breed in the stagnant water of the gutters.
Condition analysis Deterioration Some rusting and clogging.
Current maintenance None
Remarks There are some visible deteriorations that need
to be addressed.
Life Cycle Analysis Date of Acquisition 2008
Normal Lifespan 20 years (This estimate is by industry standards)
Effective Age 4 years
Remaining Life span 16 years
Unit Quantity and Cost Unit Quantity 800 LF
Estimates Unit Cost Estimate $10/LF
Current replacement $12,000
cost estimate
Estimated year of 2021
replacement
Preventive maintenance Regular cleaning of gutters, removing leaves and debris will prevent further
problems.
Unit quantity and cost Unit Quantity NA
estimates for preventive Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance Due to the current condition of the gutter, cleaning, along with an
inspection by a roofing company is recommended.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
81
Reserve Component: Membrane roof
B3012
Physical Description Quantity 8,600 SF
Properties The flat roof is made up of cast in place concrete
slab. The roof is covered with a 2 ply SBS
membrane with overlapping seams.
Potential Deterioration The membrane roof is constantly exposed to the elements. Over time,
cracks may appear as the seams separate due to the shrinkage of the roof.
This may lead to water penetration of the roof.
Condition analysis Deterioration No cracks or other visible deterioration.
Current maintenance None
Remarks No visible deteriorations that need to be
addressed.
Life Cycle Analysis Date of Acquisition 2008
Normal Lifespan 25 years (This estimate is by industry standards)
Effective Age 4 years
Remaining Life span 21 years
Unit Quantity and Cost Unit Quantity 8,600 SF
Estimates Unit Cost Estimate $5.5/SF
Current replacement $50,800
cost estimate
Estimated year of 2040
replacement
Preventive maintenance Roof inspections should be done twice per year, once in spring to assess
winter damage that may have occurred and in the fall to prepare for
upcoming winter conditions. Debris removal may also be necessary to keep
drainage clear.
Unit quantity and cost Unit Quantity 2,400 SF
estimates for preventive Unit Cost Estimate $28.01/MSF
maintenance Current maintenance $67.22
cost
Frequency of 1-2 times/year
maintenance
Predictive maintenance No specific maintenance of deficiencies identified.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
82
Reserve Component: Corridor walls
C3012
Physical Description Quantity 4,000 SF
Properties Walls painted with latex paint
Potential Deterioration Paint may fade over long periods of time.
Condition analysis Deterioration Some peeling paint
Current maintenance None
Remarks No major deteriorations that need to be
addressed.
Life Cycle Analysis Date of Acquisition 1980
Normal Lifespan 8 years (This estimate is by industry standards)
Effective Age 5 years
Remaining Life span 3 years
Unit Quantity and Cost Unit Quantity 4,000 SF
Estimates for Unit Cost Estimate $2.50/SF
replacement Current replacement $10,000
cost estimate
Estimated year of 2022
replacement
Preventive maintenance Cleaning should be performed yearly with necessary restorations.
Unit quantity and cost Unit Quantity 4,000 SF
estimates for preventive Unit Cost Estimate $72.55/MSF
maintenance Current maintenance $290.20
cost
Frequency of yearly
maintenance
Predictive maintenance No specific maintenance of deficiencies identified.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
83
Reserve Component: Corridor floors
C3021
Physical Description Quantity 1,500 SF
Properties Carpet flooring
Potential Deterioration Through prolonged usage, carpet may be damaged, stained or worn
Condition analysis Deterioration Normal wearing consistent with age
Current maintenance Routine vacuuming
Remarks No major deteriorations that need to be
addressed.
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 20 years (This estimate is by industry standards)
Effective Age 5 years
Remaining Life span 15 years
Unit Quantity and Cost Unit Quantity 1,500 SF
Estimates for Unit Cost Estimate $5.50/SF
replacement Current replacement $8,250
cost estimate
Estimated year of 2022
replacement
Preventive maintenance Carpet defects should be noted during deep cleaning. Restorative cleaning
once per year/ 2 years may help maintain carpet condition.
Unit quantity and cost Unit Quantity 1,500 SF
estimates for preventive Unit Cost Estimate $25.39/MSF
maintenance Current maintenance $38.10
cost
Frequency of Once per year
maintenance
Predictive maintenance No specific maintenance of deficiencies identified.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
84
Reserve Component: Elevator
D1011
Physical Description Quantity 1 unit
Properties Hydraulic elevator, the cab itself and the
electrical and mechanical sections of the
elevator.
Potential Deterioration Elevator cab may be damaged by moving large objects in and out.
Vandalism, in addition to wear and tear are the main causes for
deterioration for the elevator cab. Conveying components are subject to
electrical and hydraulic failures as the equipment ages.
Condition analysis Deterioration Some stains and scratches in cab. Other
conveyance components have no major signs of
deterioration
Current maintenance None
Remarks No major deteriorations that need to be
addressed.
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 50 years (This estimate is by industry standards)
Effective Age 20 year
Remaining Life span 30 years
Unit Quantity and Cost Unit Quantity 1
Estimates for Unit Cost Estimate $80,000
replacement Current replacement $80,000
cost estimate
Estimated year of 2042
replacement
Preventive maintenance Preventive maintenance may include motor rewinding or replacements, or
replacement of control devices. However, major programs of rehabilitation
and modernization are generally expected to become necessary due to
increasing frequency of failures and/or external obsolescence ,making
replacement parts difficult to find.
Unit quantity and cost Unit Quantity 1
estimates for preventive Unit Cost Estimate $1982.57
maintenance Current maintenance $1982.57
cost
Frequency of Yearly
maintenance
Predictive maintenance No specific maintenance of deficiencies identified.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
85
Reserve Component: Plumbing fixtures
D2011
Physical Description Quantity Two 2-piece washrooms
Properties Two piece washrooms including toilet and sink.
Potential Deterioration The plumbing fixtures will wear out over time due to spills, impact damage
and traffic. Improper maintenance of bathroom fixture can also lead to
microbial growth on the surface, as well as frequent clogs. Over time, the
aesthetics will be affected by the various deteriorations.
Condition analysis Deterioration No major wear and tear seen other than chips in
the ceramic sink.
Current maintenance Daily cleaning
Remarks Some visible deterioration
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 25 years (This estimate is by industry standards)
Effective Age 15 years
Remaining Life span 10 years
Unit Quantity and Cost Unit Quantity Contingency
Estimates Unit Cost Estimate $1,000
Current replacement $1,000
cost estimate
Estimated year of 2027
replacement
Preventive maintenance Regular cleaning of bath room fixtures. Plumbing fixtures should also be
inspected regularly. Minor servicing may also be required annually.
Unit quantity and cost Unit Quantity 4
estimates for preventive Unit Cost Estimate $25.18
maintenance Current maintenance $100.72
cost
Frequency of Annually
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
86
Reserve Component: Water distribution
D2021
Physical Description Quantity Contingency
Properties The domestic water distribution system includes
piping and valves. The piping used is mostly type-
M copper piping.
Potential Deterioration Over time, as the building ages, there could be seizing and leakage of
valves. Impurities in the water and currents may lead to corrosion, pitting
and erosion and/or embrittlement of piping.
Condition analysis Deterioration Some visible rusting on copper piping.
Current maintenance None
Remarks Some visible deterioration
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan Building life (This estimate is by industry
standards)
Effective Age 20 years
Remaining Life span (40 years)
Unit Quantity and Cost Unit Quantity Contingency
Estimates Unit Cost Estimate $200,000
Current replacement $200,000
cost estimate
Estimated year of 2042
replacement
Preventive maintenance Piping and valves should be inspected annually. Depending on clogs and
deterioration, valves may need replacement.
Unit quantity and cost Unit Quantity Contingency
estimates for preventive Unit Cost Estimate $25.50/valve
maintenance Current maintenance Contingency
cost
Frequency of Contingency
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
87
Reserve Component: HVAC Boilers
D3021
Physical Description Quantity 1 unit
Properties Hot water boiler rated at 1000MBH
Potential Deterioration Like the water heater, boiler interior components are prone to corrosion
and other forms of deterioration due to the high temperatures and
impurities in the water. Heat exchangers, tubes and pipes may also suffer
cracking, erosion or clogging due to deposits in the water accumulating
over long periods of time. Vents may also corrode with the passage of
moist air.
Condition analysis Deterioration None visible
Current maintenance None
Remarks No visible deterioration
Life Cycle Analysis Date of Acquisition 1992, 2002
Normal Lifespan 25 years (This estimate is by industry standards)
Effective Age 10 years
Remaining Life span 15 years
Unit Quantity and Cost Unit Quantity 1
Estimates Unit Cost Estimate $49,100
Current replacement $49,100
cost estimate
Estimated year of 2031
replacement
Preventive maintenance Yearly inspections of boiler tanks and cleaning when necessary.
Unit quantity and cost Unit Quantity 2
estimates for preventive Unit Cost Estimate $540
maintenance Current maintenance $1080
cost
Frequency of Yearly
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
88
Reserve Component: Sprinklers and standpipes
D4011
Physical Description Quantity Contingency
Properties Wet pipe sprinkler system
Potential Deterioration Sprinklers must be inspected and maintained on a regular basis. Piping that
supplies water to the hoses and piping supplying the sprinklers may
develop leaks at the joints.
Condition analysis Deterioration None visible
Current maintenance None
Remarks No visible deterioration
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan Building life (This estimate is by industry
standards)
Effective Age 20 years
Remaining Life span 40 years
Unit Quantity and Cost Unit Quantity Contingency
Estimates Unit Cost Estimate $20,100
Current replacement $20,100
cost estimate
Estimated year of 2052
replacement
Preventive maintenance These components generally last the life of the building. However, yearly
inspections of sprinklers and piping is recommended.
Unit quantity and cost Unit Quantity Contingency
estimates for preventive Unit Cost Estimate $400
maintenance Current maintenance $400
cost
Frequency of Yearly
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
89
Reserve Component: Lighting Fixtures
D5021
Physical Description Quantity 40 fluorescent fixtures in total over 1300SF
Properties T12, standard 40W lamps per 1000SF
Potential Deterioration Fluorescent light bulbs may deteriorate with multiple on-off cycles. Lamp
end discoloration may occur over time. Faults in ballast may produce
humming sound. Furthermore, lighting may flicker at the end of life when
cathode coating runs out.
Condition analysis Deterioration None visible
Current maintenance None
Remarks No visible deterioration
Life Cycle Analysis Date of Acquisition 1980, 2003
Normal Lifespan 25 years (This estimate is by industry standards)
Effective Age 5 years
Remaining Life span 20 years
Unit Quantity and Cost Unit Quantity 40 fixtures over 1,300SF
Estimates Unit Cost Estimate $2.5/SF
Current replacement $3,250
cost estimate
Estimated year of 2032
replacement
Preventive maintenance Inspect lighting fixtures and make suitable replacements when needed.
Unit quantity and cost Unit Quantity Contingency
estimates for preventive Unit Cost Estimate $150/Ea.
maintenance Current maintenance Contingency
cost
Frequency of Yearly
maintenance
Predictive maintenance Low energy consumption lamps, 32W T8 fluorescent lamps recommended
for replacement in future.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
90
Reserve Component: Intercom system
D5031
Physical Description Quantity 1 unit
Properties Enterphone intercom system
Potential Deterioration Intercom systems may suffer electronic malfunction when power supply is
disrupted by loose connections or by wiring damage due to wildlife.
Condition analysis Deterioration None visible
Current maintenance None
Remarks No visible deterioration
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 40 years(This estimate is by industry standards)
Effective Age 20 years
Remaining Life span 20 years
Unit Quantity and Cost Unit Quantity 1 unit
Estimates Unit Cost Estimate $23,000
Current replacement $23,000
cost estimate
Estimated year of 2032
replacement
Preventive maintenance Visual inspection of intercom system, check power and battery supply and
clean control components. Check all locks and lock releases are working
properly. A replacement of the intercom system would be desired when
technology becomes obsolete or when excessive repairs are needed.
Unit quantity and cost Unit Quantity NA
estimates for preventive Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of Yearly
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
91
Reserve Component: Fire detection system (Alarm)
D5032
Physical Description Quantity Contingency
Properties Fire detection system is controlled by an
addressable fire control panel. The system
utilizes smoke and heat detectors in conjunction
with sprinkler flow detection.
Potential Deterioration Dirt, dust or other contaminants may affect smoke detectors over time.
Deterioration may decrease fire detection system sensitivity.
Condition analysis Deterioration None visible
Current maintenance None
Remarks No visible deterioration
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 15 years (This estimate is by industry standards)
Effective Age 5 years
Remaining Life span 10 years
Unit Quantity and Cost Unit Quantity 1
Estimates Unit Cost Estimate $20,000
Current replacement $20,000
cost estimate
Estimated year of 2024
replacement
Preventive maintenance The visual inspection alone may not detect inherent problems. Testing and
calibration may be required for the smoke and heat detectors according to
manufacturer's specifications. Battery checks can be performed at set
intervals. Advancement in fire alarm technology may lead to systems
becoming obsolete. Hence, upgrading is necessary when there is a lack in
spare parts.
Unit quantity and cost Unit Quantity NA
estimates for preventive Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
92
Reserve Component: Furnishings
E2021
Physical Description Quantity 3 pieces in 1 room
Properties 2 sofas, 1 coffee table in amenities room
Potential Deterioration Furniture is subject to wear and tear over time, affecting aesthetic appeal.
Condition analysis Deterioration None visible
Current maintenance None
Remarks No visible deterioration
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 30 years(This estimate is by industry standards)
Effective Age 20 years
Remaining Life span 10 years
Unit Quantity and Cost Unit Quantity 3
Estimates Unit Cost Estimate $1,200
Current replacement $3,600/room
cost estimate
Estimated year of 2032
replacement
Preventive maintenance Inspections and cleaning to be performed on a weekly basis.
Unit quantity and cost Unit Quantity NA
estimates for preventive Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
93
Reserve Component: Fitness Centre
F1041
Physical Description Quantity An assortment of equipment
Properties A small sized fitness centre with threadmills,
cycling machines and weights machines.
Potential Deterioration Facilities are subject to wear and tear, leading to mechanical or electronic
failures.
Condition analysis Deterioration None visible
Current maintenance None
Remarks No visible deterioration
Life Cycle Analysis Date of Acquisition 2005
Normal Lifespan 30 years(This estimate is by industry standards)
Effective Age 7 years
Remaining Life span 23 years
Unit Quantity and Cost Unit Quantity 1
Estimates Unit Cost Estimate $2,500/room
Current replacement $2,500
cost estimate
Estimated year of 2035
replacement
Preventive maintenance Inspections and cleaning to be performed on a weekly basis. Replacements
performed as needed.
Unit quantity and cost Unit Quantity NA
estimates for preventive Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
94
Reserve Component: Mailboxes
F1042
Physical Description Quantity 60 units
Properties Stainless steel 54 mailboxes in the lobby.

Potential Deterioration Deterioration mostly concerns aesthetic appeal lost over time.
Condition analysis Deterioration Scratches and some corrosion on mailboxes.
Current maintenance None
Remarks No significant deterioration
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 50 years(This estimate is by industry standards)
Effective Age 20 years
Remaining Life span 30 years
Unit Quantity and Cost Unit Quantity 60
Estimates Unit Cost Estimate $100
Current replacement $6,000
cost estimate
Estimated year of 2042
replacement
Preventive maintenance Inspections and cleaning to be performed 1-2 times per year.
Unit quantity and cost Unit Quantity NA
estimates for preventive Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
95
Reserve Component: Storage room
F1043
Physical Description Quantity 54 units
Properties There are 54 storage lockers within the storage
room, each assigned to an owner. The storage
room is generally unfinished.
Potential Deterioration Deterioration such as wooden splinters, peeling paint due to wear and tear
mostly concerns aesthetic appeal lost over time.
Condition analysis Deterioration Some wooden splinters
Current maintenance None
Remarks No significant deterioration
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 50 years(This estimate is by industry standards)
Effective Age 10 years
Remaining Life span 40 years
Unit Quantity and Cost Unit Quantity Contingency
Estimates Unit Cost Estimate Contingency
Current replacement $8,100
cost estimate
Estimated year of 2052
replacement
Preventive maintenance Inspections and cleaning to be performed 1-2 times per year.
Unit quantity and cost Unit Quantity NA
estimates for preventive Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
96
Reserve Component: Asphalt parking lots
G2021
Physical Description Quantity 7,200 SF
Properties Outdoor parking garage with asphalt paving

Potential Deterioration Long term wear and tear causes erosion of asphalt. Asphalt paving is also
especially susceptible to softening from petroleum leaks or spills.
Condition analysis Deterioration Asphalt eroded in some areas. No visible
deterioration of concrete bumpers.
Current maintenance None
Remarks A total of 50SF asphalt damaged across multiple
areas
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 30 years(This estimate is by industry standards)
Effective Age 15 years
Remaining Life span 15 years
Unit Quantity and Cost Unit Quantity 6,000 SF
Estimates Unit Cost Estimate $4.00/SF
Current replacement $24,000
cost estimate
Estimated year of 2027
replacement
Preventive maintenance Inspections and cleaning to be performed 1-2 times per year.
Unit quantity and cost Unit Quantity 50 SF
estimates for preventive Unit Cost Estimate $1,100/MSF
maintenance Current maintenance $55
cost
Frequency of 1-2 times per year
maintenance
Predictive maintenance Repaving of the damaged asphalt.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
97
Reserve Component: Irrigation sprinklers
G2051
Physical Description Quantity 500 SF
Properties Automatic 6 inch full circle sprinklers covering an
area of 500 SF
Potential Deterioration Paint and debris may get lodged in sprinkler valves, obstructing normal
flow. Sprinkler piping can fail due to aging, plastic embrittlement and
stress from thermal expansion/contraction and ground movements.
Condition analysis Deterioration No visible deterioration
Current maintenance None
Remarks No significant deterioration
Life Cycle Analysis Date of Acquisition 2002
Normal Lifespan 20 years(This estimate is by industry standards)
Effective Age 10 years
Remaining Life span 10 years
Unit Quantity and Cost Unit Quantity 500 SF
Estimates Unit Cost Estimate $1.50/SF
Current replacement $1,200
cost estimate
Estimated year of 2022
replacement
Preventive maintenance Inspections, cleaning or lubrication of valves can be performed as needed.
Unit quantity and cost Unit Quantity NA
estimates for preventive Unit Cost Estimate NA
maintenance Current maintenance NA
cost
Frequency of NA
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
98
Reserve Component: Sanitary drainage distribution
G3021
Physical Description Quantity Contingency
Properties Sewer system branching to the main municipal
service. Cast iron piping and P-traps.
Potential Deterioration Over time, deterioration of the substrate, settling of the ground and water
penetration will lead to breakage or corrosion in the piping system.
Condition analysis Deterioration Rusting on outside of pipes
Current maintenance None
Remarks No significant deterioration
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan Building life (This estimate is by industry
standards)
Effective Age 20
Remaining Life span 40
Unit Quantity and Cost Unit Quantity Contingency
Estimates Unit Cost Estimate $24,000
Current replacement $24,000 (Contingency)
cost estimate
Estimated year of NA
replacement
Preventive maintenance Flushing of all risers and main lines should be performed every 1-2 years.
Unit quantity and cost Unit Quantity 2 pumps
estimates for preventive Unit Cost Estimate $60/pump
maintenance Current maintenance $120
cost
Frequency of yearly
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
99
Reserve Component: Rainwater drainage
G3031
Physical Description Quantity Contingency
Properties The rainwater drainage system consists of catch
basins and sump pumps draining water away
from the downspouts
Potential Deterioration Over time, debris may accumulate in rainwater drainage system leading to
clogs and water saturation. Large amounts of water saturation may result
in basement flooding or instability in the ground surrounding the building.
Condition analysis Deterioration None
Current maintenance None
Remarks The rainwater drainage system has been
rerouted from draining into the sewers in 1995.
Life Cycle Analysis Date of Acquisition 1992
Normal Lifespan 60
Effective Age 20
Remaining Life span 40
Unit Quantity and Cost Unit Quantity 1
Estimates Unit Cost Estimate Contingency
Current replacement $20,000
cost estimate
Estimated year of Contingency per 20 years
replacement
Preventive maintenance Catch basins should be inspected yearly and cleaned if necessary. Sump
pumps should be inspected and replaced if deemed necessary.
Unit quantity and cost Unit Quantity 1 pumps
estimates for preventive Unit Cost Estimate Contingency
maintenance Current maintenance $60
cost
Frequency of yearly
maintenance
Predictive maintenance None suggested

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
100
APPENDIX E
Assumptions and qualifications

Preamble

This report is subject to the assumptions and qualifications outlined below and otherwise set out
elsewhere in this report. Use of this report by any reader constitutes acceptance of these
assumptions and qualifications. The conditions outlined below and elsewhere in this report. The
acceptance of this report also constitutes acceptance of responsibility for payment of the fee
balance and any due costs to ABSSEI.

Common property conditions

The determination of the physical condition of the common properties is solely based on a visual
review of a representative sampling of all common properties in readily accessible locations after
discussion with strata corporation representatives and a review of documentation provided by the
strata corporation. No invasive testing or excavations were carried out on the site for the
purposes of this report. Similarly, none of the equipment is disassembled, operated or subjected
to any sort of functional testing. The physical inspection does not constitute a "technical audit"
since extensive, comprehensive testing was not included in the scope of work.

Building Codes

The visual reviews were not conducted to determine whether common property construction
meets or exceeds building code requirements and thus this depreciation report is exempt from all
recommendations regarding build code requirements.

Cost estimation for common properties

All cost estimates are performed in future year dollars. The estimates presented are solely
intended for budgetary or planning purposes and not accounting for tender use. Actual costs will
vary depending on a variety of factors. Most importantly, the estimates assume economies of
scale and small operations will incur higher costs when performed individually. Miscellaneous
costs such as consulting services and certain contingency allowances unrelated to building
components are not included in the budget estimates. Cost estimates for actual projects should be
developed in greater detail, accounting for owner contingency, permit fees, engineering fees etc.
Construction costs may fluctuate, varying based on the time of year, contractor availability and
other factors. These cost estimates must be updated over time and confirmed by competitive
tender before any contracts are awarded. The cost estimates do not include allowances for site-
specific access requirements or environmental concerns. Generally, replacement costs are based

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
101
on like-for-like with a similar component except in face of building code modifications or
external obsolescence.

Remaining useful life of common properties

Determination of the remaining useful life is based on the condition of the common properties
assessed through a visual review and on the average lifespan of the same component by industry
standards, Poor maintenance, insurable losses such as earthquakes, fires and floods can shorten
the life of an asset. These unforeseen events are not accounted for in our calculation

Funding Models

The funding models for this depreciation report is calculated based on a 30-year horizon,
beginning within the current year. A report performed in 2012 projects funding until 2042. The
projected period is stationary and does not shifts. Hence, in year 1, 2013, the projections will be
valid for 29 years. The funding projections does not extend past 30 years and accuracy is only
estimated by a +/- 30% error within the prescribed period of 30 years. Renewals and major
maintenance projects occurring beyond the 30-year projection time frame are not considered in
the given funding models.

Services Not Included

The agreed compensation for services rendered in preparing this report does not include fees for
follow-up consultations and/or attendances to arbitrations or mediations, if any. Additional fees
will have to be negotiated if personal appearances are required in connection with this report.

Currency

Unless otherwise noted, all estimates are expressed in Canadian currency.

Report Distribution, Third Party Liability

This report is intended sole and exclusive use of the strata corporation. Possession of a copy of
the report shall not authorize use of the report for any purpose other than that noted in the
agreement and / or report. This report shall not be distributed or communicated to unauthorized
third parties in whole or in part without prior written consent of representative of the client as
noted here in. Any liability, if any, of ABSSEI is limited to the strata corporation only.
Notwithstanding anything herein to the contrary, the strata corporation will forever
indemnify and hold ABSSEI along with its employees harmless from any claims by third parties
related in any way to this report.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
102
Information Provided by Third Parties

This report, its analysis and conclusions required information from various sources. Such
information was believed to be reasonably reliable, accurate, and true. ABSSEI shall not be
responsible for the accuracy of any information used in this report that has been obtained from
any source. No independent verification of factual data presented to ABSSEI has been
undertaken by ABSSEI.

Modifications

ABSSEI reserves the right at any time to alter statements, analyses, conclusions or value
estimates, if additional facts pertinent to this report are discovered at any time. ABSSEI is not
responsible for any unauthorized alterations or distributions to the report. The report must not be
abstracted and must be used in its entirety.

Measurements and exhibits

The sketches, maps and photographs in the report are included solely for the purpose of assisting
the reader in visualizing the assets and may not be to scale. All components assessed herein are
assumed to be completed according to the architectural, structural, mechanical, electrical plans
provided, unless otherwise noted. Any variation in land or building areas from those considered
in the depreciation report may alter the estimates and in turn, the required funding. No legal
survey, soil tests, engineering investigations, detailed quantity survey compilations, nor
exhaustive physical examinations have been made. Accordingly, no responsibility is assumed
concerning these matters or other technical and engineering techniques, which would be required
to discover any inherent or hidden condition of the property.

Legal Concerns

The author is highly qualified in matters concerning the depreciation report itself but otherwise
not qualified in legal affairs and does not purport to give legal advice. It is assumed that:

1.) the legal description as well as the registered survey as stated herein is that which is recorded
by the Registrar of the requisite Land Titles Office and are assumed correct;
2.) title to the property is good and marketable;
3.) rights-of-way, easements or encroachments over other real property, are legally enforceable.

The distribution of cost and other estimates in this report apply only under the programme of
utilization as identified in this report. The estimates herein must not be used in conjunction with
any other forms of valuation or depreciation reports and may be invalid if so used.

The report is based, unless otherwise stated, on there being full compliance with all applicable
federal, provincial and local environmental regulations, laws and restrictions. Moreover, it is

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
103
assumed that all required permits have been or can be obtained or renewed for any use
considered herein. It is also assumed that the subject property is maintained and managed
pursuant to prudent and competent ownership and management.

Environmental Concerns

ABSSEI personnel are not qualified in aspects of surveying and environmental assessment.
Unless otherwise stated in the report, it is assumed that the subject assets are not affected in any
way by any adverse environmental conditions. ABSSEI personnel are not qualified to detect
potentially hazardous materials and/or substances which may adversely affect the value of the
property. Hence, ABSSEI shall not be held responsible for past or present, legal or physical
deficiencies that may be found.

Furthermore, ABSSEI personnel are not qualified to comment on environmental issues that may
affect the market value of the property. These environmental issues include but are not limited to,
the pollution or contamination of land, buildings, water, groundwater or air. Unless expressly
stated, the property is assumed to be free and clear of pollutants and contaminants including, but
not limited to, moulds or mildews or the conditions that might give rise to either. ABSSEI and its
assignees expressly deny any legal liability relating to the effect of environmental issues on the
market value of the property assessed.

Physical Concerns

ABSSEI shall not be held responsible for any costs incurred to investigate or correct any
deficiencies of any type, which may be present in the real estate and/or real property described
herein. It is assumed that there are no patent or latent defects in the subject improvements, that
no objectionable materials are present and that the improvements are structurally, mechanically
and electrically adequate and in need of no immediate repairs unless expressly noted within this
report.

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
104
APPENDIX F

Replacement expenses by year

Class Component Current
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cost
B1011 Vinyl flooring on balcony $25,920 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
B2011 Cladding and sealants $2,000 $2,000 $0 $0 $0 $0 $0 $0 $0 $0 $0
B2021 Balcony railings $64,800 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
B2022 Exterior windows $64,800 $0 $0 $0 $0 $0 $0 $0 $0 $0 $92,231
B2031 Balcony Doors $54,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $76,859
B2032 Front Double Passage Doors $3,200 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
B3011 Roof gutters/drainage $12,000 $0 $0 $0 $0 $14,038 $0 $0 $0 $0 $0
B3012 Membrane roof $33,600 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
C3011 Corridor walls $10,000 $0 $0 $0 $11,249 $0 $0 $0 $0 $0 $0
C3021 Corridor floors $8,250 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D1011 Elevator $200,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D2011 Plumbing fixtures $1,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D2021 Plumbing distribution $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D2022 Domestic water heaters $26,400 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D3021 HVAC Boilers $49,100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D4011 Sprinklers and standpipes $20,100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D5021 Lighting fixtures $3,250 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D5031 Intercom systems $23,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D5032 Fire detection systems $20,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
E2021 Furnishings $3,600 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
F1041 Fitness centre $25,500 $0 $0 $0 $0 $29,831 $0 $0 $0 $0 $0
F1042 Mailboxes $5,400 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
F1043 Storage room $8,100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
G2021 Asphalt parking lots $24,000 $0 $0 $0 $26,997 $0 $0 $0 $0 $0 $0
G2051 Irrigation sprinklers $750 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
G3021 Sewers and drainage $24,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
G3031 Rainwater drainage $2,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc 01 Engineer's report $20,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc 02 First depreciation report $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc 03 Later Depreciation reports $2,500 $0 $0 $0 $2,500 $0 $0 $2,500 $0 $0 $2,500

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
106
 Replacement expenses by year
Class. Component Current
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
cost
B1011 Vinyl flooring on balcony $25,920 $0 $0 $0 $0 $0 $0 $0 $0 $0 $54,610
B2011 Cladding and sealants $2,000 $2,960 $0 $0 $0 $0 $0 $0 $0 $0 $0
B2021 Balcony railings $64,800 $0 $0 $103,747 $0 $0 $0 $0 $0 $0 $0
B2022 Exterior windows $64,800 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
B2031 Balcony Doors $54,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
B2032 Front Double Passage Doors $3,200 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
B3011 Roof gutters/drainage $12,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
B3012 Membrane roof $33,600 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
C3011 Corridor walls $10,000 $0 $15,395 $0 $0 $0 $0 $0 $0 $0 $21,068
C3021 Corridor floors $8,250 $0 $0 $0 $13,737 $0 $0 $0 $0 $0 $0
D1011 Elevator $200,000 $0 $307,891 $0 $0 $0 $0 $0 $0 $0 $0
D2011 Plumbing fixtures $1,000 $1,480 $0 $0 $0 $0 $0 $0 $0 $0 $0
D2021 Plumbing distribution $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D2022 Domestic water heaters $26,400 $0 $0 $0 $0 $0 $47,545 $0 $0 $0 $0
D3021 HVAC Boilers $49,100 $0 $0 $0 $0 $0 $0 $0 $95,642 $0 $0
D4011 Sprinklers and standpipes $20,100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D5021 Lighting fixtures $3,250 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
D5031 Intercom systems $23,000 $0 $0 $0 $0 $0 $0 $0 $44,802 $0 $0
D5032 Fire detection systems $20,000 $29,605 $0 $0 $0 $0 $0 $0 $0 $0 $0
E2021 Furnishings $3,600 $0 $0 $0 $0 $0 $6,483 $0 $0 $0 $0
F1041 Fitness centre $25,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $53,725
F1042 Mailboxes $5,400 $7,993 $0 $0 $0 $0 $0 $0 $0 $0 $0
F1043 Storage room $8,100 $0 $0 $0 $0 $0 $14,588 $0 $0 $0 $0
G2021 Asphalt parking lots $24,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
G2051 Irrigation sprinklers $750 $1,110 $0 $0 $0 $0 $0 $0 $0 $0 $0

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
107
G3021 Sewers and drainage $24,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
G3031 Rainwater drainage $2,000 $0 $0 $0 $0 $0 $3,602 $0 $0 $0 $0
Misc 01 Engineer's report $20,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc 02 First depreciation report $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc 03 Later depreciation reports $2,500 $0 $0 $2,500 $0 $0 $2,500 $0 $0 $2,500 $0

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
108
--END OF REPORT--

--ABSSEI--
NOTES

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
110
NOTES

Absolute Building Science

Strata Engineering Inc.
File No. 201212DR001
111