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Annual Proposed Budget Approval Process at an AGM

Here is a good summary of what can happen at an AGM based on the AGM package review process:

Condo Smarts: Sorting out fact from fiction of strata’s annual budget


In summary:

  1. The Annual General Meeting (AGM) package is critical for a review of both less than one year or repeated every year operating expenses, and more than every two fiscal-year or never to happen reserve fund major repair and replacement expenditures.
  2. As most AGMs occur after the fiscal-year end, the AGM package includes a review of the actual and approved budgets for the last fiscal-year, and the proposed annual budget for the current fiscal-year.
  3. The operating expenses are reviewed to determine the amount of revenue required to match them befroe the end of the fiscal-year. The Repair and Maintenance line item is reviewed to make sure that it is for non-reserve fund expenditures only. The operating surplus is reviewed to make sure that it is large enough to cover the Insurance Premium so that financing fees and borrowing from the reserve fund are avoided.
  4. Assuming that a Depreciation Report (DR) has been acquired, then any reserve fund expenditure that is mentioned in the DR’s component inventory is now on the same 50 percent simple majority resolution vote basis as operating fund expenses. 3/4 votes are no longer required to spend monies out of the reserve fund, nor separate 3/4 votes resolution for a 3/4 special levy strictly administered in a separate fund.
  5. While the AGM package deals with two fiscal-years, the strata council has undertaken its annual reserve fund planning during the annual budget meeting at the latest.  It has reviewed actual versus approved reserve fund expenditures; quotes and inspections acquired during the fiscal-year; scheduled future reserve fund expenditures at least for the the next five fiscal-years until the next DR to determine what investment vehicles to invest the reserve fund monies that remain after each fiscal-year’s required liquidities have been established.
  6. Once both the operating and the reserve funds have been reviewed, the strata council is ready to write its AGM package, its proposed budget, and its 50 percent vote, and 3/4 vote resolutions, if any.
  7. No resolution is required to have owners send monies to the reserve fund as part of their strata fees. There is a line item for this in each proposed budget.
  8. A 50 percent simple-majority resolution is needed to repay the operating fund for DR planned, and approved at last AGM, if reserve fund expenditures were accounted for either through the Repair and Maintenance line item, or borrowed from the Operating Surplus.
  9. A 3/4 resolution vote may be required to undertake a reserve fund expenditure that was not mentioned in the DR’s component inventory.
  10. A 3/4 resolution vote may be required to undertake a 3/4 special levy for a current fiscal-year surprise project. With active strata council reserve fund planning and REIC CRP DRs, these should never happen again.
  11. A strata corporation may pass a 50 percent simple majority vote resolution to have monies drawn from the reserve fund during a fiscal-year, if these expenditures were approved at the last AGM. The strata council would draw out the monies from the reserve fund once the final invoice has been reviewed and recorded in a strata council meeting minutes document.
  12. The process is iterative and occurs every fiscal-year over the life of the development.

About Author: Jean-François

With experience gained in construction, project management, field reviews, inspections, report writing and as strata president, J.-F. has cross-industry expertise guaranteeing that you will participate in a process geared to improving the corporation's finances and to setting the condo | strata board | council's planning to stand the test-of-time.

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