RESERVE FUNDING
TRENDS IN RESERVES AND RESERVES MANAGEMENT
Reserve studies and reserve funding practices have evolved significantly over the past decade as community associations confront aging infrastructure, rising replacement costs, and increasing expectations from owners, lenders, insurers, and regulators. Reserve planning is now widely recognized as a strategic financial tool that supports risk management, asset preservation, and long-term community sustainability. This section examines the key trends shaping reserve management today. They include aging infrastructure challenges; sustainability and energy efficiency investments; curb appeal and project staging considerations; emerging technologies and analytical tools; expanding statutory, lending, and insurance requirements; and the integration of fire hardening, wildfire mitigation, and flood-proofing into planning decisions. TRENDS: AGING FACILITIES AND INFRASTRUCTURE Much has been written about the impact of aging residents and how their communities are adapting to meet a graying demographic. The same type of evolution also is underway with the association’s phys- ical components. In Breaking Point , a report prepared by the Foundation for Community Association Research, nearly half (40%) of those surveyed considered deteriorating infrastructure a top-ranked concern. For example, an association built in the late 1970s is approximately 50 years old as of 2026. With reserve studies having a prospective term of 30 years, this 1970s-era community now has component maintenance obligations for items projected to be between 40–70+ years old. A 1970s-era communi- ty’s funding obligations may look entirely different from a component inventory of a community asso- ciation built in 2020. This expanded component list might contain infrastructure items that are starting to show signs of failure such as storm drain systems, domestic water systems, irrigation piping, and electrical systems. There may be safety issues with retaining walls or balconies and cantilevered deck- ing areas requiring further inspection by engineers or other specialists to augment the reserve study. Research shows homeowners and residents are more receptive and supportive of major infrastruc- ture repairs when they can learn in advance about the scope and costs of the project from experts like the engineers and contractors with specific knowledge of the damage and how to fix it. They are more willing to authorize assessment increases and agree to allocating a larger portion of the association’s budget to reserves.
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