Navigating Special Levies: A Guide to Strata Council Funding Decisions
In a recent column, Tony Gioventu, executive director of the Condominium Home Owners Association, addresses a common dilemma faced by strata owners: the approval process for special levies, particularly in the context of major repairs like roofing replacements. This issue has gained prominence as strata councils increasingly propose blended funding resolutions that combine contingency funds with special levies.
Understanding the Funding Options
Gioventu responds to a query from Don and Jenn in Surrey, whose strata council has planned a roofing replacement for their townhouse complex. Over the past five years, the council encouraged significant contributions to the contingency fund to avoid special levies. However, the notice for the annual general meeting includes a resolution for 50% contingency and 50% special levy funding. The owners note that approving 100% contingency would leave at least $200,000 in the reserve fund, require only a majority vote as part of the depreciation report, and fulfill the promise of avoiding special levies.
Gioventu clarifies that the options available to owners depend on the type of vote required. If a resolution involves solely a majority vote item, it can be amended at the meeting. However, in cases of blended approvals with a levy, a 3/4 vote is necessary. Strata corporations are not permitted to make substantial amendments with a 3/4 vote at a general meeting, a rule designed to protect owners who may be absent, have issued a proxy, or are potential buyers relying on Information Certificates.
The Impact of Unwillingness to Use Reserve Funds
Gioventu highlights a growing trend: the reluctance to utilize large blocks of reserve funds is becoming more common, often leading to defeated resolutions and delays in planned construction. This can have cascading effects, including impacts on timelines, contractor bids with 30-day expiry clauses, insurance coverage, and workforce availability. He emphasizes that strata corporations with successful reserve funding typically approve annual majority resolutions for projects under planning, as outlined in their depreciation reports.
To mitigate such issues, Gioventu advocates for proactive measures. Annual updates on upcoming projects can support owners in decision-making at meetings, both for funding and planning purposes. He strongly recommends information meetings for depreciation planning and financial modelling. These sessions do not require formal notice and allow councils to take informal straw votes to gauge owner preferences before issuing meeting notices.
Practical Advice for Strata Owners
Gioventu's insights underscore the importance of understanding strata governance and financial planning. Key takeaways include:
- Review meeting notices carefully to identify the type of vote required for resolutions.
- Engage in information meetings to stay informed about depreciation reports and funding strategies.
- Consider the long-term implications of funding decisions on construction timelines and costs.
By fostering transparency and communication, strata councils can help owners navigate complex funding decisions and avoid unnecessary special levies. For further guidance, owners can contact Tony Gioventu at tony@choa.bc.ca or refer to additional resources on strata management.
