The Cheapest Board Member in the Room: What I Got Wrong About HOA Reserves
When I first joined my HOA's board of directors, I had one mission: keep the monthly assessments down.
I thought I was the hero. Every budget meeting, I was the guy pushing back on increases, looking for places to trim, proud that our dues were lower than the community down the road. I genuinely believed I was protecting my neighbors' wallets.
I was doing the opposite.
It took me a few years — and a few painful capital projects — to understand that a board obsessed with keeping assessments low is one of the most dangerous things that can happen to an HOA. That mindset doesn't protect owners. It quietly sets them up for a five-figure special assessment they never saw coming, usually at the worst possible time.
If you've followed this series — from RFPs and bid leveling through risk mitigation and closeout — every one of those topics assumes one thing: that the money to do the project right actually exists when you need it. Reserve planning is where that money comes from. So let's talk about it.
The Real Job of a Board: Funding the Future
Here's the shift that changed how I serve: a board's job isn't to keep assessments as low as possible. It's to make sure the community can pay for what it will inevitably need — roofs, paint, concrete, asphalt, fences, mechanical systems — without panic, without scrambling, and without punishing whoever happens to own a unit the year the roof finally fails.
Every one of those components has a lifespan. The roof doesn't care that you kept dues flat for a decade. It will wear out on its own schedule. The only question is whether you've been quietly setting money aside the whole time, or whether you're going to hand your neighbors a surprise bill.
Forward-thinking boards put money away today for projects that are years away. That's not being aggressive with people's money — that's the entire point of the association.
1. Get a Real Reserve Study — and Update It
A reserve study is a professional assessment of every major component your association is responsible for: what it is, how long it will last, what it will cost to replace, and how much you should be setting aside each year to be ready.
This is not a back-of-the-napkin estimate from a board member. Hire a credentialed reserve specialist, get a full study, and update it on a regular cycle (many associations do a full study every 3–5 years with lighter updates in between). Costs change. Component conditions change. A study from 2015 is not protecting anyone in 2026.
Fix: Treat the reserve study as a living document, not a one-time box to check. Budget for the study itself as a recurring expense.
2. Know Your Percent Funded — and Stop Fearing It
The number that matters most is your percent funded: how much you have in reserves versus how much you should have based on the study. Under roughly 30% is generally considered weak and high-risk for special assessments. Above 70% is strong.
For years I treated a fat reserve balance as money we "weren't using." That's backwards. A well-funded reserve isn't idle cash — it's the difference between calmly approving a roof replacement and emergency-voting a $12,000-per-door special assessment.
Fix: Put percent funded on every budget meeting agenda. Track it like you'd track any other measure of the community's health, because that's what it is.
3. Fund on Purpose — Don't Just Set Dues by Feel
Once you have the study, fund toward it deliberately. That usually means annual contributions to reserves that actually track the study's recommendations, and modest, predictable assessment increases over time rather than flat dues followed by a brutal spike.
Owners can handle a small, explained increase each year. What they can't handle — and what destroys trust in a board — is years of artificially low dues followed by a special assessment nobody budgeted for.
Fix: Tie your annual reserve contribution to the study's funding plan, and communicate the "why" to owners every single year so increases never feel arbitrary.
4. Understand Your Funding Options Before You Need Them
When a big project lands, boards generally have three levers: reserves (what you've saved), a special assessment (a one-time charge to owners), or an association loan (financing the project and repaying over time). Healthy reserves let you lean on the first. Weak reserves force you into the second or third — usually under pressure, usually more expensive.
Fix: Know which lever you're relying on before the project is urgent. The board that planned ahead gets to choose. The board that didn't gets whatever's left.
The Bigger Point
I'm not proud of how I started on my board. I thought keeping dues low made me a good steward. It made me a liability. The communities that thrive aren't the ones with the lowest assessments — they're the ones whose boards had the discipline to fund the future on purpose.
A strong reserve is what makes every other good decision in this series possible. It's what lets you run a real RFP instead of taking the cheapest bid out of desperation. It's what lets you hold retainage and walk away from a bad contractor. It's what protects the next board, and the next owner, from inheriting a problem you could have funded away a dollar at a time.
Keep dues honest, not artificially low. Your community will thank you — even if it takes them a few years to understand why.
Sitting on a board wrestling with whether to raise dues or defer a project?
Drop a comment with the reserve question that's keeping you up at night, or DM me and I'll walk you through how to read your reserve study and percent funded without needing a finance background.
Next up in the series: how to actually read a pay application without a finance degree — including the line items most boards approve without ever questioning.
Sean Davis, PMP | Civil Engineer | Owners Representative for HOAs & Community Managers | Current HOA Board Member (12 years) | DHA Construction Management | Broomfield, CO
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