The Emergency Levy That Wasn't an Emergency
Cedar Hollow is a 48-unit bare-land strata in Kamloops. At the March council meeting, the treasurer reports that the contingency reserve fund (CRF) sits at $61,000 - about 22% of the operating budget. That same week, a geotechnical engineer reports that the retaining wall along the north property line has begun to tilt; repair is estimated at $140,000 and cannot reasonably be deferred past the fall rainy season. Council wants to authorize a special levy of $80,000 at the next general meeting (quorum is present), with the remaining $60,000 drawn from the CRF. One council member objects that the wall is a common asset repair and should be funded entirely from the CRF, arguing that a special levy requires a 3/4 vote while a CRF expenditure needs only a majority at a council meeting. The strata manager is asked to advise before the notice package goes out.
1. Advise council on the correct approval thresholds for (a) the $60,000 CRF draw and (b) the $80,000 special levy. Identify the vote required for each and who must approve it.
Read the worked answer
CRF draw - (a). Under the Strata Property Act, expenditures from the contingency reserve fund require approval by 3/4 vote at a general meeting, not a council majority. The council member's premise is wrong: council cannot authorize a CRF draw of this size on its own. The exception is an emergency expenditure - unanticipated, necessary to prevent significant loss or damage to persons or common property - which council may approve by majority (with the strata manager/administrator's concurrence where required), subject to later ratification. A wall that an engineer says will fail within months is arguably unanticipated, but the safer course is to put the question to the general meeting rather than rely on the emergency route; document the engineer's report either way.
Special levy - (b). A special levy also requires a 3/4 vote at a general meeting (unless the bylaws have been amended by unanimous vote to lower it, which Cedar Hollow has not done). The levy must be calculated on unit entitlement and the resolution must state the purpose and total amount.
Practical sequencing. Combine both into one general meeting: one 3/4 resolution authorizing the special levy, a second 3/4 resolution authorizing the CRF withdrawal. Do not split approval between council and the owners - that is the error the objection invites.
2. The treasurer proposes instead to raise the monthly strata fees by 40% for one year and skip the special levy, arguing this avoids the 3/4 vote. Is this lawful, and what should the manager say?
Read the worked answer
No - not as a workaround. Operating fund budgets are approved annually by majority vote at the annual general meeting, so council could propose a higher budget and let owners vote. But a 40% one-year increase designed to accumulate $80,000 is effectively a levy in disguise, and it has three problems:
- It is not a reserve-fund contribution. Money collected through operating fees for a capital repair must still be accounted for and spent through the proper CRF/special levy mechanism; commingling capital funds in the operating account is a financial-management failure.
- It is regressive against the wrong base. Special levies are allocated by unit entitlement; operating fees are typically allocated the same way, so the math may be similar - but owners are entitled to a clear, purpose-stated resolution, not a budget line that hides a capital project.
- It creates a precedent risk. If the wall fails before the funds accrue, the strata has neither the money nor an approved levy, and council may be exposed for failing to act on the engineer's report.
The manager should say: a fee increase is lawful only as a genuine operating budget decision, and it cannot substitute for the 3/4 vote a special levy requires. Recommend the combined-meeting approach from the prior answer, and note that if owners reject the levy, council must still address the safety risk - potentially through the emergency expenditure route with documented justification.