AdministratorApril 10, 2022 at 10:00 am
@shebacat, I think you are overly worried about the names of accounts. The CPA names the reserve fund and has detailed requirements as to what it can be used for, as you noted.
The corporation’s ‘Unrestricted Funds’ account is probably the operating account mentioned in the CPA S.38.1, used for everyday purposes.
The special levy mentioned in CPA S.39.1 is not an account but a vehicle for raising money other than by the regular ‘contributions’ which the corporation requisitions from all owners for the running of the condominium. A special levy is a blunt instrument for raising a large sum for a special purpose not foreseen in the regular budgeting process. The funds raised by a special levy might go to support the operating account, the reserve fund, an emergency repair or a special purpose.
I was taught that the normal process for adding items to the corporation’s budget and operating portfolio is to:
- Put the expensive acquisition (such as the parkade scrubber/sweeper) before the owners at the AGM or a budget meeting.
- If the owners approve the purchase, the project can go ahead.
- On the other hand, if the owners have confidence in the board, if the item was included in the recent approved budget, no borrowing is required and funds are available in the unrestricted operating account, the board could go ahead anyway.
Having made such a capital equipment purchase, a line-item should be added to the reserve fund and plan to ensure the acquisition is maintained from the reserve fund, or depreciated and replaced after a certain time to ensure the no-longer-new equipment is replaced before it breaks down irrevocably and needs to be replaced in a hurry – by a special levy.
Not knowing the details of the final item you mentioned, ‘to replace one of the common property ground recreational facility that the developer built with a different capital improvement project’, I can’t help you much except to observe that a new project replacing the old project supplied by the developer may well be a better facility for the condominium. Spending the money from the operating fund ties in with what I was taught; the maintenance of the new project should be included in the reserve fund, as I noted above.
A caution to the above would be the size of the expenditure on ‘a different capital improvement project’. Your bylaws may require that borrowing money for such a project be subject to approval by the owners, not just approved by the board.