Special Levy Ahead? How Better Planning Can Reduce the Surprise

Few phrases get the attention of strata owners faster than:

"Council is proposing a special levy."

For many owners, the immediate question is simple.

Why wasn't this included in our strata fees?

The answer is not always poor planning.

Infographic explaining how BC strata corporations can prepare for major repair costs, review Contingency Reserve Fund funding, identify potential special levy needs and reduce financial surprises through better planning.

Special Levies Have a Legitimate Role

A special levy allows a strata corporation to raise money from owners for a specified purpose.

In most circumstances, a special levy calculated using the normal contribution formula requires approval by a 3/4 vote at an annual or Special General Meeting. The resolution must identify matters including the purpose, total amount, each strata lot's share and when payment is due.

Special levies can be part of a legitimate financial strategy.

In fact, BC's depreciation-report rules specifically allow long-term cash-flow models to include special levies and borrowing alongside CRF contributions.

So When Does a Levy Become a Problem?

Usually when it is a complete surprise.

Consider the difference between these two situations:

"We have known for several years that the roof will likely need replacement around this time. The CRF will cover most of the project, and we now need a levy for the remaining amount."

And:

"The roof has failed. We need $600,000. Payment is due shortly."

The project may be the same.

The owner experience is very different.

Planning Creates Time

Good financial planning helps council identify potential funding gaps before a project becomes urgent.

That creates options.

Council may be able to increase CRF contributions gradually, schedule a levy further in advance, divide payments into instalments, adjust project timing where appropriate or consider other funding alternatives.

Not every option will suit every strata.

But having options is almost always better than having an emergency.

Communication Matters Too

Owners should understand what the project is, why it is required, how the cost was estimated, how much existing funding is available and how the proposed levy was calculated.

A large number without context can create resistance.

A clear explanation gives owners something meaningful to evaluate.

Special Levies Should Not Be a Financial Planning System

A strata that occasionally uses a planned levy is not necessarily financially unhealthy.

A strata that repeatedly relies on unexpected levies for predictable expenses should probably take a closer look at its budgeting, CRF strategy and depreciation report.

The objective is not necessarily zero special levies.

The objective is fewer financial surprises.

Next week: Even a good budget can run into trouble if some owners do not pay their share.

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