Skip to content
depreciation report; depreciation reports

How to Invest the Money in the Contingency Reserve Fund

By Gina Arsens, CA, CBV, CRP

Saving money is a key part of what a depreciation report is about.  The requirement to obtain a depreciation report has made the importance of saving for future repairs top of mind for Strata living.  It is estimated that Strata councils in BC will be managing a substantial amount –soon to be several billion dollars in assets.

As a result, Strata Property Regulations have been updated to define how Strata corporations can invest their savings.  Section 6.11 of Strata Property Regulations has been rewritten and effective July 16, 2014, outlines permitted investments for money held in the contingency reserve fund or collected on special levies.

Many Stratas have been putting their investments in low interest bank savings accounts, which have been at some of the lowest levels in history.  If Strata corporations can earn more than the savings rate it means that there will be less future fees for Strata owners.  Based on feedback and in order to simplify and improve the rules around investments, changes were made.

The permitted investments are easier to understand and more current to today’s environment. They are still considered to be safe investments.  Highlights of the permitted investments are:

  1. Savings or chequing account outside of BC and insured by the Canada Deposit Insurance Corp. (CDIC)
  2. Term deposit or GIC’s insured by CDIC with a fixed interest rate
  3. T-bill issued by the government of Canada
  4. Bond, debenture or other debt issued by Canada or a province or a company as long as the debt:

a)    is less than 5 years to maturity
b)    Based in Canadian dollars
c)    The debt has a DBRS rating of A or higher

  1. Fixed Income exchange traded fund, trading on a Canadian Exchange if:

a)    the fund doesn’t have securities (stocks) – just bonds or debenture or other debt
b)    The funds are in Canadian dollars
c)    Term to maturity is 5 years or less
d)    98% of the value of the holdings have a rating of BBB or higher

It should also be noted that if the Strata has invested its funds in instruments based on the past regulations, there is a grandfathering provision.

This blog post is provided to provide highlights from the regulations.  For advice and further information, please consult your investment advisor and the Strata Property Regulations.

Normac provides three-year appraisal programs with complimentary updates. 
Our industry-leading reports are prepared by replacement cost experts.

Learn more about Our Expert Team
Read more about Insurance Appraisals