Opinion: Righting the Ship

At the last board meeting, the board voted to accept the 2025 Reserve Study.

In the 2026 budget we all just received by mail, we’ll be increasing our payments into the Reserve Fund by the exact amount recommended by the Study.

This is great news, an important step toward regaining our financial health as an HOA, but some owners might be upset about the 10% increase in our fees. I have nothing to say, right now at least, about the overall budget, but in this post I want to emphasize that the part of the budget increase that’s due to the increase in the Reserve Fund transfers is absolutely necessary, not just for our future, but for our present.

1. Most condominiums in America are only now beginning to reach old age. The law that enabled them to exist is only 60 years old. We’re only now beginning to reach the age where the constructed infrastructure –the pipes, the roofs, etc.–of the first generation of condos is beginning to wear out. Those HOAs that didn’t save up their money during their first 40 years to pay for the expenses expected during the next 40 are now in trouble.
2. We have been one of those HOAs. As reported in this analysis done by the Engineering and Reserve Committee in 2024 (which I will once more ask the board to distribute to all the owners), we only put 53% of the recommended amounts into the fund for the ten years from 2014 to 2024.
3. This has led to wild speculation (to the point of spreading misinformation and conspiracy theories) about the causes of our reserve fund inadequacy: everything from wasteful spending to financial skullduggery. But none of the non-mandatory spending we did added up to anything close to what we failed to pay during those ten years. And if your only evidence for financial crime is that the money must have gone somewhere, then you really need to read the 2014 Reserve Study and then compare it with the budgets for the next ten years after that, and you’ll see very clearly where the money went (or didn’t go).
4. The false narratives about the fund are a form of denial: we’re hoping that there’s a villain we can blame for the fund’s poor state, some way of fixing things that doesn’t involve anything painful for us. But the math is the math. You can’t save up only half of what you’re supposed to be saving, and then decide someone must have stolen from the fund.
5. The 2025 study recommends larger-than-inflation increases to the transfers for the next five years, in order to make up for what we failed to put into the fund in the past. Then the increases drop back down to the predicted inflation rate.
6. The 2024 board actually got off to a good start in this respect. Even before the 2025 Reserve Study existed, their 2025 budget increased the reserve fund transfer by about 10% over the 2024 budget.
7. And again: kudos to the 2025 board for continuing this effort.

This is important not just for our future, but for our present. An inadequate fund means:

• The possibility of being surprised by assessments. Some owners say they’d prefer assessments to increased HOA fees, but here are some reasons why assessments should be avoided. Preferring them is in some ways another instance of denial: essentially, you’re hoping (against the math and the engineering and the physics) they will never happen.
• Potential lowering of our property values. More and more, banks are looking at an HOA’s reserves when calculating the risk factors of mortgages.
• Ultimately increased expenses. Repairing things that break catastrophically is much more expensive than keeping them maintained. And when you’re short of money, you’re constantly tempted to put off maintenance or cut corners on repairs.

A final reason to keep the Reserve Fund adequately funded is simple ethics. The wearing down of infrastructure today is a current expense, even if the invoice won’t arrive for some years. If I vote not to fund my share of that future payment, I’m essentially stealing from those future owners. I’m living high in the now by spending their future money!

For those of us planning to live here the rest of our lives, it’s even more non-sensical: we’re essentially stealing from ourselves! We’re absconding with our own retirement funds.

We might debate various aspects of the 2026 budget, but the reserve fund transfers are the one component we should all agree on.