Welcome to The Club

Homeowners often hear terms like “reserve project” and “capital improvement” at board meetings or in budget discussions—but the difference between the two has real implications for your dues, special assessments, and even your voting rights.Let’s break it down in plain language.

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What Is a Reserve Project?

A reserve project is the repair or replacement of something the HOA already has and is responsible for maintaining.

Think of it this way:
It’s not new—it’s planned upkeep.

Examples:

• Replacing a worn-out roof
• Resurfacing streets
• Repainting buildings
• Replacing a pool pump or clubhouse HVAC

These projects are:

• Anticipated (they show up in the reserve study)
• Gradual wear-and-tear items
• Funded over time through your monthly dues

Why reserves exist

HOAs conduct a reserve study to estimate the remaining life and future cost of major components. Based on that, they collect money little by little so homeowners aren’t hit with large, unexpected bills later.

✔️ Ideally, reserve projects should not require special assessments if the association is properly funded.

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What Is a Capital Improvement?

A capital improvement is something new or an upgrade that goes beyond simply repairing or replacing what already exists.

Think of it as:
Adding, enhancing, or materially upgrading the property.

Examples:

• Installing a new recreational amenity where none existed
• Adding security gates or cameras
• Upgrading landscaping to a significantly higher standard
• Converting a standard pool into a resort-style facility
• Adding solar panels to common area facilities

These are:

• Not included in the original reserve plan
• Discretionary (not always required)
• Often more expensive and sometimes controversial

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Why Capital Improvements Are More Complicated

Unlike reserve projects, capital improvements come with legal and procedural hurdles—and for good reason.

1. They often require homeowner approval

Many governing documents and state laws require a vote of the membership if:

• The cost exceeds a certain percentage of the annual budget, or
• A special assessment is needed beyond board authority

This is because:
👉 Homeowners are being asked to fund something new, not just maintain what already exists.

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2. Funding is not pre-planned

Reserve projects are funded through years of contributions.
Capital improvements are usually not pre-funded, which means the HOA must:

• Use surplus operating funds (if available), or
• Reallocate reserves (sometimes restricted), or
• Levy a special assessment, or
• Borrow money (loans)

Each of these options may require:

• Board approval
• Membership approval
• Legal review

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3. There are fiduciary duty concerns

Board members have a legal obligation to act in the best interest of the association.

With capital improvements, they must consider:

• Is this necessary or just desirable?
• Is it financially responsible?
• Will it benefit the entire community fairly?

Spending large sums on non-essential upgrades without proper process can expose the HOA to:

• Owner disputes
• Legal challenges
• Claims of mismanagement

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4. State law adds another layer

Depending on your state (including California), there are often statutes that:

• Limit how boards can spend funds
• Require member votes for certain expenditures
• Regulate special assessments and loans

These laws are designed to:
✔️ Protect homeowners from unexpected financial burdens
✔️ Ensure transparency and fairness

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Why All These “Hoops” Exist

From a homeowner’s perspective, the extra steps for capital improvements can feel frustrating—but they serve an important purpose:

They protect you financially

You shouldn’t be surprised with large expenses for projects you didn’t agree to.

They ensure fairness

All owners share in the decision-making for major changes that affect property value and community character.

They promote transparency

Boards must clearly explain:

• The purpose of the project
• The cost
• How it will be funded

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The Bottom Line

• Reserve Projects = Planned replacement of existing components
  → Funded over time, generally no vote required
• Capital Improvements = New or upgraded additions
  → Often require votes, special funding, and stricter oversight

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A Final Thought for Homeowners

When you hear about a large project in your community, a good first question to ask is:

👉 “Is this a reserve project or a capital improvement?”

That one question will tell you:

• Whether it was planned
• How it will be funded
• And whether you have a say in approving it

Understanding this distinction helps you stay informed—and better prepared—for how your HOA operates and how your money is used.

The Club is going to be a hopping place this year with lots of projects on the horizon. Here are just a few:

Asphalt repairs

Parking lot curb paint striping

Security Cameras

4′ Fencing replacement, perimeter of common area

New janitorial, gate maintenance and pest control contracts

More sidewalk trip hazard work

Just replaced: Spa Heater

Install an awning to protect pool equipment

Board meetings are very informative and we would love to have you join in. There is a homeowner forum where any homeowner is welcome to speak on topics relavent to the community. The Regular Session Board meeting will now begin at 11:00 a.m. – still on the 3rd Thursday of the month, in the ballroom. We look forward to seeing you there!

Monthly HOA dues will increase from $155 to $165 beginning January 1.

If you pay through your bank’s bill pay, please be sure to update the payment amount to avoid late fees due to short payments. If you are enrolled in auto-deduction (the HOA pulls the payment from your account), no action is needed—your payment will be updated automatically.

Thank you for your attention to this update.

The HOA Activities and Social Committees are currently planning an exciting calendar of events for 2026 — and we’d love your feedback!

Please take a moment to fill out the Resident Survey available in the clubhouse lobby, and drop it in the wooden collection box located next to the office door.

Your input will help the committees design events that everyone can enjoy to the fullest!