Dear Tony: Our strata council entered into a contract to change all of our lighting in common areas to LEDs to increase light levels and reduce the cost of electricity.
They did not obtain the authorization of the owners at a general meeting, and have declared there will be no additional expense, as the contractor has agreed to be paid through the energy savings until the contract balance is paid out over the projected two years.
Council claims it can simply allocate this expense under the operating funds budgeted for Hydro and did not require the approval of the owners. Is this correct?
Our council has a bad history of expensing building upgrades or material purchases through the budget without informing the owners, at the expense of reduced maintenance and servicing that our building highly needs at this time.
How do we force this into a meeting before this contract proceeds? Many owners are questioning the logic of this decision to spend $79,000 on an upgrade that includes $4,500 in new outdoor light fixtures at a time when our insurance costs are continuing to increase and strata fees this year will go up by 35%.
Ingrid F.
The annual operating budget is for expenses that occur once a year or more frequently, while the contingency reserve fund is for expenses that occur less than once a year.
When a strata corporation approves its annual budget, it is authorizing and instructing the strata council to proceed with those expenses based on the designations that have been created.
Under your budget, Hydro is listed as a utility and there is no indication in either the budget or minutes that the owners agreed to or authorized the expenditure of any savings from reductions in energy costs to a contractor for new components or lighting upgrades.
While the annual budget may have a reduced cost, those calculated savings are still money paid by the strata corporation to the contractor, which requires the authorization of the owners.
In addition, the Strata Property Act requires a three-quarter vote approval for the acquisition of assets over $1,000, such as the new exterior light fixtures. A strata corporation can amend its bylaws to authorize spending higher amounts without the approval of owners, but that still requires the approval of owners at a general meeting.
To address this issue, 20% of your owners can sign a petition demanding that a special general meeting be called. They can propose a resolution to either approve the upgrade and allow the work to be done or to stop the work.
The strata corporation must hold the meeting within four weeks of receiving the demand, which is extended by 60 days under the emergency orders. The resolution on the petition must be the first order of business.
Strata corporations can anticipate several energy-upgrade requirements by their local governments and the province in the next three to five years. Major construction that requires building permits will trigger mandatory upgrades, as well as changes to the building code for existing structures across the province.
Conversion to LED lighting certainly offers one of the best returns on upgrades. The savings in many medium to larger buildings with extensive common areas and underground parking garages easily reach full cost recovery of the upgrade within 18 to 24 months, as well as the long-term savings in the annual operating budget.
A short-term approval of contingency funds to drastically reduce operating costs is well worth investigation. The process is simple and usually requires little alteration on-site, depending on the age of your fixtures. However, the project does require the approval of your owners at a general meeting.
LED upgrades also increase light levels for public areas such as parking garages and lockers where security is a higher priority, reduce heating loading in hallways and reduce long-term maintenance cost, as lamp life is much longer.
The development of a variety of lamp light and colour levels also makes a welcome improvement for hallways and common rooms.
The Condominium Home Owners Association, in partnership with B.C. Housing, has developed a helpful guide on lighting energy upgrades to assist property owners considering LED conversion. Send me an email at tony@choa.bc.ca for an easy download link.
Tony Gioventu is executive director of the Condominium Home Owners Association
