“What’s So Special About a Special Levy?” and Other Assessment-Related Questions, Answered!

If you’ve ever been part of an unexpected special levy, you know there’s not a whole lot “special” about it – aside from the specially-painful headache that can come along with the process! The term “special levy” might be a new one to you, but in reality, it’s simply a fresh coat of linguistic paint on the term “special assessment,” which is how the process has been referred to here in Alberta for years. 

Still need a bit more info on what special levies are and how they might affect your condo corporation (and larger condo community)? No problem. We’ve once again been granted the opportunity to pick the brain of Dustin Gutsche – Catalyst project manager, engineer extraordinaire, and expert on all everything condo-related – as we’ve worked to shine a spotlight on the notion of special levies and highlight what you need to know about them. So, without further ado, let’s jump right in.

Assessing Special Levies: Five Key Points

Starting from the Ground Floor: What is a Special Levy?

The first thing to know about special levies – as we mentioned up-front and Gutsche reminded us when we spoke to him – is that there’s really nothing distinguishing them from special assessments apart from a brand-new fancy-pants name. That detail may be all some folks need to hear, but if you don’t quite know what special assessments are in the first place, it probably won’t do much to help you out! Luckily, that’s where Gutsche’s expertise comes in handy. 

“Special levies are basically collections imposed on condo owners by the condo corporation in order to meet the operational or project maintenance needs of the condo community in the event that the reserve fund is unable to cover the costs needed,” Gutsche outlined for us. “The board of directors can approve a special levy for unexpected or urgent repairs,” he continued, “to cover shortfalls in the operating funds, to increase the reserve fund balance to match the reserve fund plan requirements, to cover the cost of a judgment against the corporation, or for any purpose provided in the regulations – or, lastly, if the owners vote by special resolution with a 75% majority to approve a capital improvement.”

That sure seems to provide a whole series of opportunities for special levies to take place across a wide range of scenarios – but don’t worry. Condo corporations don’t exactly have carte blanche to simply reach into your pocketbook whenever they want a bit of extra green. Instead, there are four specific boxes condo boards need to tick in order to move forward with any sort of special levy process, all geared toward building accountability and ensuring special levies are used only in particular, necessary situations. 

1. Special Levies Must State Their Purpose

The first hurdle any board resolution to approve a special levy must pass is a clear statement of purpose. A condo corporation can’t simply issue a special levy for nebulous reasons – instead, a little bit more focus and communication is necessary. 

“The requirements for the resolution of the board must be included in a letter to owners for the special levy,” Gutsche clarified on the subject. “Additionally, any funds not spent from the special assessment collections must be added to the reserve fund of the corporation.” This last point is especially important given that special levies are typically leveraged when the reserve account has been found lacking in funds for a crucial and unavoidable maintenance project. By earmarking any incidental monies for deposit into the condo’s reserve fund, it should hopefully help set the corporation up for financial stability again heading into the future, providing a foundation that ideally allows the board to avoid repeating the special levy process again – at least in the foreseeable future. 

2. The Total Amount of the Levy Must be Detailed 

Any special levy must include the total amount of funds being sourced from condo owners, Gutsche explained in outlining the second stipulation associated with the collection process. This straightforward stipulation works to increase accountability in the process and ensures that the sum total of any moneys collected are accurate and can be answered for. 

3. The Method Used to Calculate the Division of Cost Between Owners Must Be Disclosed

Typically, the costs associated with a special levy are divided up evenly amongst owners by unit factors – but that’s not always necessarily the case, Gutsche qualified. In some instances, there are very specific levies that are entirely necessary, but only stand to directly benefit a particular group of owners or units. For example, when considering a special levy aimed at providing a needed modification or upgrade to a condo building’s elevator system, Gutsche outlined, costs may be divided so that owners on the first floor with direct outside access from their units may pay a smaller amount than those other residents living on the second floor and up, given that they simply never have reason to make use of the elevator in the first place. These sorts of uneven cost divisions are the exception rather than the rule, but they do occur, which is why disclosure of expense breakdowns is a mandated part of the process. 

4. The Special Levy Must Note the Date the Levy is Due

Finally, Gutsche concluded, any special levy issued in Alberta must also stipulate the date the levy is due to be paid – or dates, if payment has been phased out into installments.

Once all these requirements have been met, a condo corporation may issue a special levy – a bittersweet victory, given that it means a major problem is about to be solved or a big improvement is about to be made but at a relatively unexpected cost to owners in the condo community. Have further questions about special levies? Contact us at Catalyst Condo Management and we’ll be happy to chat – and thanks, Dustin Gutsche, for once again taking the time!