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HOA reserve fund management: Guiding principles for boards
Many HOA boards take pride in balancing their annual budgets and meeting day-to-day operational expenses, but long-term financial health requires a broader perspective. While landscaping, maintenance, insurance and utilities are essential to maintaining the community today, reserve funding is what protects the community tomorrow. When reserve funds are overlooked, underfunded or managed without a clear strategy, associations can find themselves facing difficult choices, including deferred maintenance, deteriorating assets or unexpected special assessments for homeowners.
In an environment marked by rising construction costs, inflationary pressures and aging community infrastructure, proactive reserve fund management has never been more important. Board members have a fiduciary responsibility to safeguard the association’s financial future, ensuring that funds are available when major repairs, replacements and capital projects inevitably arise. Yet many communities continue to struggle with determining how much to save, where to hold reserve funds and how to balance safety, accessibility and growth.
A strong reserve strategy begins with understanding future obligations through a comprehensive reserve study and then aligning funding decisions with those long-term needs. From there, boards must make thoughtful decisions about protecting association assets, maintaining appropriate liquidity for planned and unexpected expenses, and generating reasonable returns without compromising their fiduciary duties. The most successful associations recognize that reserve management is not simply about earning interest or accumulating cash. It is about creating a disciplined framework that supports financial stability, protects property values and promotes confidence among homeowners.
Our article, HOA reserve fund management: Guiding principles for boards, outlines the guiding principles every HOA board should consider when managing reserve funds. By following a structured approach built on protection, liquidity and return, associations can strengthen their financial resilience, reduce the likelihood of special assessments and position their communities for long-term success. With the right planning and banking strategy, reserve funds become more than a savings account. They become a powerful tool for responsible stewardship and sustainable community growth.
Jeff Barnett Managing Director Business Services, First Citizens Bank As Managing Director for First Citizens Bank, Jeff leads the strategic growth and management for the Community Association Division of First Citizens. Jeff utilizes his 26 years’ experience in the financial sector to provide first-rate service to community association management companies and their associations. He leads the teams that collaborate with community associations daily to secure their deposits and obtain financing for community projects. Over Jeff’s tenure, he was instrumental in leading significant growth in commercial deposit and lending relationships and was the Market President in San Diego, prior to moving to Colorado. Jeff has served on the Board of Directors for the National Investor Relations Institute, The Poway Center for the Performing Arts as well as the CONNECT organization in San Diego. Before entering the workforce, Jeff was proud to serve his country for six years as an active-duty Marine involved in Desert Storm and Desert Shield in the Gulf War. First Citizens Bank’s Community Association Banking business is a national leader in providing individualized service, customized technology, smart savings solutions and operational efficiency for homeowner associations (HOA) and community association management companies nationwide. The business’ banking solutions include operating and reserve accounts, certificates of deposit, money market accounts, online banking, payments services and HOA loans. First Citizens Bank helps personal, business, commercial and wealth clients build financial strength that lasts. Founded in 1898 and headquartered in Raleigh, N.C., we provide a unique legacy of strength, stability and long-term thinking that has spanned generations. For more information on Community Association Banking, see www.firstcitizens.com/CAB. First Citizens Bank, Member FDIC Credit is subject to bank approval. This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation. First Citizens Bank and its affiliates are not responsible for the products, services and content for third party vendors. Any and all third-party trademarks, logos, and service marks referenced herein remain the property of their respective owners.