5 Questions Every Strata Council Should Ask Before Approving a Special Levy

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Imagine receiving a notice from your strata council announcing a proposed $1.8 million repair project.

The building needs work. An engineering consultant has identified deficiencies, contractors have submitted quotations, and the council believes the project should proceed.

For a 60-unit building, a simple division would suggest an average contribution of $30,000 per unit, although actual contributions may differ depending on unit entitlement and the applicable allocation rules.

For many owners, that is a substantial financial commitment.

Some may need to refinance. Others may need to use retirement savings or arrange additional borrowing. Owners planning to sell could find themselves answering difficult questions from prospective buyers.

At the same time, postponing necessary repairs could expose the building to additional damage, higher construction costs, or safety concerns. The strata council is caught between two responsibilities: protecting the building and protecting the financial interests of its owners.

This is where special levy decisions become difficult.

A special levy may be entirely justified. In some circumstances, it may be the most responsible way to finance an important project. But the fact that a building needs repairs does not automatically mean the first proposed scope, budget, or payment arrangement is the best option.

Before asking owners to approve a major expenditure, council members should be able to answer five essential questions.

These questions are not designed to delay necessary work. They are designed to help ensure that owners understand what they are paying for, why the work is necessary, and whether the proposed approach represents a reasonable use of their money.

Depreciation Report Vancouver Depreciation Report BC

1. Do We Know Exactly What Needs to Be Repaired—and Why?

The first question sounds obvious. Unfortunately, it is often the one that receives the least attention.

A contractor may recommend replacing an entire building component. A property manager may report recurring complaints. Owners may have noticed leaks, cracking, or equipment failures. These observations are important, but they do not always establish the full cause or extent of a problem.

Consider a strata building experiencing recurring water intrusion around several windows.

One contractor recommends replacing the affected windows. Another suggests resealing the exterior joints. A third proposes a much larger building envelope rehabilitation project.

All three recommendations may be based on genuine observations. But they represent very different financial commitments.

Before approving a major special levy, council should understand whether the proposed work addresses the underlying problem or merely its visible symptoms. That may require an engineering investigation, targeted testing, or a more detailed assessment of the affected building components.

The goal is not necessarily to commission another lengthy report. It is to obtain enough reliable information to make an informed decision.

Diagnosis should come before the final repair scope

A useful engineering assessment should help council distinguish between several possibilities.

Is the problem localized or widespread?
Is the deterioration caused by age, installation defects, inadequate maintenance, or an underlying design issue?
Can a component be repaired effectively, or has replacement become the more practical option?
Are there immediate safety concerns?
Could the work be completed in phases without creating unacceptable risks or additional costs?

These distinctions matter because repair scope often has a greater impact on project cost than any other single factor.

For example, replacing an entire roofing system may be justified if the membrane is nearing the end of its useful life and deterioration is widespread. But if a relatively new roof has a localized flashing defect, full replacement may be unnecessary.

Conversely, repeatedly patching a severely deteriorated roof could be more expensive over time than replacing it. Neither option should be selected simply because it appears cheaper today.

The question council should ask is: What evidence supports the recommended repair strategy?

For major projects, owners should ideally receive a clear explanation of the problem, the proposed solution, and the reasons alternatives were accepted or rejected. A technically sound repair recommendation is the foundation of a defensible special levy decision.

2. Is the Proposed Budget Based on a Realistic Project Scope?

Once the necessary work has been identified, the next challenge is understanding the actual cost. A preliminary construction estimate is not necessarily the same as a complete project budget.

Suppose a contractor provides a quotation of $900,000 for exterior repairs. Council may assume that a $900,000 special levy will be sufficient. However, the final project may also require engineering design, tendering, permit applications, construction review, testing, access equipment, project administration, and contingency funding.

Depending on the nature of the project, taxes and other costs may also need to be considered. A construction quotation can be accurate for the work it describes while still leaving significant costs outside its scope. This is why council should ask for a complete project budget rather than relying only on the lowest contractor price.

What should a major repair budget include?

The exact items depend on the project, but council should understand the following:

Construction scope: What work is included, and what has been excluded?
Professional services: Are engineering design, tendering, inspections, and contract administration included?
Permits and approvals: Are municipal requirements and related costs accounted for?
Contingency: What allowance has been made for reasonable unforeseen conditions?
Schedule: Could delays, restricted access, or seasonal conditions affect pricing?
Taxes and additional charges: Has the budget included applicable costs beyond the base quotation?

One particularly important distinction is the difference between a contingency allowance and an unexplained increase in the project budget. A contingency is not an invitation to spend more money. It is a financial allowance for risks that cannot be completely eliminated before construction begins.

For example, a contractor repairing a concealed waterproofing system may not know the full extent of substrate deterioration until existing materials are removed. A reasonable contingency acknowledges that uncertainty. But council should still understand how contingency funds will be controlled, who can authorize their use, and how additional expenditures will be reported.

Is the lowest bid always the best choice?

Not necessarily.

Two contractors may submit very different prices because they are quoting different scopes, materials, warranties, schedules, or assumptions. One bid may exclude access equipment. Another may include it. One may allow for extensive substrate repairs. Another may price those repairs separately. One contractor may have relevant experience with occupied strata buildings, while another may be unfamiliar with the logistical challenges involved.

A proper tender review helps council compare quotations on a consistent basis.

The objective is not simply to select the lowest number. It is to understand which proposal provides the best value for the work the building actually requires.

Before presenting a special levy resolution, council should be able to explain how the project budget was developed and what uncertainties remain.

3. Have We Compared the Special Levy With Other Funding Options?

A special levy is a funding method, not a repair strategy.

Once the project scope and estimated cost are understood, council should examine how the work could be financed. The most obvious source is the strata corporation's Contingency Reserve Fund (CRF).

However, using the CRF is not always straightforward. A building may have substantial savings but also face several other major expenditures in the near future.

For example, imagine a strata corporation with $750,000 in its CRF.

A proposed repair project will cost $600,000.

At first glance, using the reserve fund may seem preferable to asking owners for additional contributions. But suppose the building's Depreciation Report identifies a roof replacement and elevator modernization within the next five years. Using most of the reserve fund today could leave the strata financially exposed when those projects become necessary.

The correct decision depends on the building's overall financial position—not simply the balance currently shown on its bank statement.

Why the Depreciation Report matters

A Depreciation Report provides a longer-term perspective on anticipated repair and replacement expenditures.

In British Columbia, strata corporations with five or more strata lots are generally required to obtain a Depreciation Report on a five-year cycle. The report includes a 30-year projection of major common property and asset expenditures, along with financial planning information.

BC Government — Depreciation Report Requirements

A useful exercise before proposing a special levy is to compare the planned project against the most recent Depreciation Report.

Was the project anticipated?
Has its estimated cost changed significantly?
Is the work being completed earlier than originally forecast?
Will the proposed expenditure affect funding available for other upcoming projects?

If the report is outdated or no longer reflects actual building conditions, council may need updated technical or financial information.

Could a different funding structure work?

Depending on the circumstances, options may include using part of the CRF, raising funds through a special levy, increasing future reserve contributions, or exploring financing arrangements available to the strata corporation. These options are not interchangeable, and their legal requirements and financial implications differ.

A larger CRF withdrawal may reduce the immediate burden on owners but weaken the building's future reserves. A special levy may preserve reserve funds for other projects but create immediate affordability challenges. Borrowing may spread payments over time but introduce interest costs, financing conditions, and repayment obligations. Council should also consider whether work can reasonably be phased.

For example, a project involving several independent areas of a property might be completed over multiple construction seasons. But phasing is not always economical.

Repeated mobilization, additional engineering work, inflation, and the risk of further deterioration may make a phased project more expensive overall.

The right question is not simply, "How can we avoid a special levy?"

It is:

"Which funding approach best balances immediate affordability, long-term costs, and the building's future obligations?"

BC Government's explanation of Contingency Reserve Funds

4. Do Owners Understand What They Will Actually Have to Pay?

A project may be technically necessary and financially reasonable, yet still fail to gain owner support. Sometimes the problem is not the project itself. It is the way the costs are communicated.

Owners need more than a total project budget. They need to understand how that budget translates into their individual financial obligations.

Equal shares are not always the correct calculation

Consider a hypothetical $1.2 million project involving 80 strata lots. Dividing the total by 80 produces an average of $15,000 per unit. But that does not necessarily mean each owner will pay $15,000.

Under BC's Strata Property Act, special levy contributions are generally calculated using the applicable statutory allocation rules, commonly involving unit entitlement. A different allocation method may require unanimous approval. The precise calculation depends on the strata's circumstances and the legal requirements.

Section 108 of the Strata Property Act establishes the principal requirements for special levies. Before owners vote, the proposed resolution must clearly identify the purpose of the levy, its total amount, the allocation method, each strata lot's contribution, and the payment deadline or instalment dates. Council should avoid presenting an average contribution as though it represents every owner's actual payment.

Instead, owners should receive accurate information about their specific obligations.

Payment timing can matter as much as the amount

Imagine two proposals for the same $20,000 owner contribution. Under the first proposal, the entire amount is due within 30 days. Under the second, payments are scheduled in several instalments aligned with the project's expected cash-flow requirements. The total cost is the same.

But the financial impact on owners may be very different. Instalments are not always practical, particularly when contractors require substantial upfront payments. However, where appropriate, council should consider whether the payment schedule can reduce unnecessary financial pressure. The communication package should also explain what happens if the project cost changes, how owners will receive progress updates, and how unused levy funds will be handled under the applicable legislation.

A clear explanation will not make a large special levy popular. But it can make the decision more understandable. And when owners understand the rationale behind a project, discussions are more likely to focus on its merits rather than confusion about the numbers.

5. Are We Following the Correct Approval Process—and Can We Explain the Decision?

The final question concerns governance. Even a well-supported repair project can create problems if the approval process is unclear or incomplete.

In British Columbia, a special levy generally requires approval by a three-quarter vote at an annual or special general meeting when contributions are allocated under the usual statutory rules.

A different allocation method can require unanimous approval. The resolution must contain the information required by section 108 of the Strata Property Act. These requirements matter because owners are being asked to authorize a specific financial obligation. Council should therefore ensure that the proposed resolution accurately reflects the project being presented.

What if the project is urgent?

Not every building problem can wait for the next AGM. A serious safety issue, active water intrusion, or another condition threatening significant damage may require immediate attention.

However, emergency spending authority, CRF expenditure approval, and special levy approval are not identical legal processes. Council should distinguish between the authority to undertake urgent protective work and the authority to collect additional money from owners.

For an urgent project, obtaining advice from the property manager and, where necessary, a qualified strata lawyer can help clarify the appropriate process. The important point is that urgency should not lead council to assume ordinary approval requirements no longer matter.

Documentation protects the decision-making process

Council should retain the records that explain how the decision was reached. These may include engineering recommendations, project estimates, tender comparisons, funding analyses, meeting minutes, and owner communications. This documentation can be valuable long after construction is complete.

A future council may need to understand why a particular repair method was selected. A prospective buyer may want to know whether the project addressed the original deficiency. Owners may ask why the final cost differed from the initial estimate. A clear record allows the strata to explain its decisions using evidence rather than recollection.

Good documentation does not guarantee that everyone will agree. It does make the decision more transparent and easier to evaluate.

What If Owners Vote Against the Special Levy?

This is one of the most difficult situations a strata council can face. Council may believe a project is necessary, but owners may be unwilling or unable to approve the proposed funding.

The appropriate next step depends on why the resolution failed.

Perhaps the scope was not adequately explained.
Perhaps owners wanted additional quotations.
Perhaps the payment schedule was unrealistic.
Or perhaps the project was necessary, but the available information did not establish why it had to proceed immediately.

Rather than treating a failed vote as the end of the discussion, council should identify the unresolved questions.

A revised proposal may require better cost information, a different funding approach, additional engineering advice, or a clearer explanation of the consequences of postponement.

For necessary repairs, the strata corporation's legal maintenance obligations remain relevant even when owners disagree about funding. Council may need professional legal guidance on the options available in its specific circumstances.

The goal should be to return to owners with a proposal that addresses the reasons for concern without compromising the building's safety or long-term condition.

The Five Questions Worth Bringing to Your Next Council Meeting

Before finalizing a special levy proposal, council should be able to answer:

What evidence confirms the problem and supports the recommended repair scope?
Does the proposed budget include the full project cost and reasonable allowances for uncertainty?
Have we compared the levy with the CRF, long-term capital requirements, and other practical funding options?
Does every owner understand their actual contribution and payment obligations?
Does the resolution comply with BC requirements, and can council clearly explain how the decision was reached?

These questions will not eliminate the cost of maintaining a building. They can, however, help prevent owners from approving an expensive project without understanding the work, the alternatives, or the financial consequences.

A Good Special Levy Starts With Good Information

Special levies are sometimes portrayed as evidence that a strata corporation has failed.

That is not necessarily fair. Even well-managed buildings occasionally require major expenditures that cannot be funded entirely through existing reserves.

What matters is how the strata responds.

A responsible council does not simply look for the cheapest option or the fastest approval. It seeks reliable technical information, develops a realistic budget, evaluates funding consequences, and gives owners a clear basis for deciding.

When those steps are taken seriously, a special levy becomes more than an unexpected bill. It becomes a documented decision about protecting a shared investment.

Before committing to a major repair project, strata councils often need a clearer understanding of the building's condition and future capital requirements.

ENGIPRO provides Professional Engineer (P.Eng.)-prepared Depreciation Reports, Building Condition Assessments, and Engineering Investigations for strata corporations across British Columbia.

Whether your council is evaluating a proposed repair, reviewing upcoming capital expenditures, or investigating a recurring building issue, an independent engineering assessment can help establish the technical information needed for informed financial decisions.

Contact ENGIPRO today!

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