SUMMARY OF 8. Difference Between Assessments, Levies and Contributions
There is confusion related to the misuse of reserve fund specific terms by stakeholders be they lot owners, lenders, engineers, planners, etc. This confusion has serious implications for condo | strata finances. Many writers interchangeably use terms and/or follow the boards | councils’ misuse of terms.
This report provides answers to the following questions: What terms are best suited to describe strata monies? What are the permissible special monies to include in reserve fund planning? What are the implications for strata finances?
Erroneous reserve fund planning typically inflates the opening balance of a reserve fund by including special levies, but more importantly, this misrepresents special levies in thirty (30) year projections.
Reserve fund planning is based on the fiscal-year opening and closing balances only. Monies making their way in-and-out of the reserve fund during the fiscal-year are not easily accountable for and complicate reserve fund planning.
Once a depreciation report has been acquired and a scheduling of expenditures formulated, the approval requirement for expenditures from the reserve fund is 50 percent of a vote at an AGM, compared to special levies’ 75 percent approval requirement.
Providing boards | councils with realistic numbers that they can plan around without surprises benefits all stakeholders.