Updated: Sep 6, 2021
Neighborhood projects are an essential aspect of a Homeowners Association's responsibilities, particularly in pursuing the HOA and community’s shared goals.
You might ask, what are those shared goals? The answer is simple – fostering an improved communal spirit while maintaining and raising property values.
But to be effective, the HOA needs to understand how to prioritize projects and understand the differences between HOA maintenance and capital investments.
Aquity Management Group is happy to share our experience with you in the form of advice on the 7 best neighborhood projects for HOAs.
HOA Maintenance vs. Capital Investment
HOA maintenance and capital investments deal with community assets and fall under the umbrella term of neighborhood projects. But there are key differences, and understanding them is vital to plan and finance your HOA neighborhood projects effectively.
To protect current community and homeowner assets, HOA maintenance involves a combination of preventative care, regular repair, and the necessary replacement of those assets. The aim is to restore or preserve the asset's original condition according to standards that have been set (i.e., continued compliance with local legislation and HOA policy) and to halt and prevent further deterioration.
Ultimately, the goal with neighborhood projects relating to HOA maintenance is preservation rather than improvement. As these are ongoing functions, HOA maintenance projects will be funded by the HOA’s operating funds.
On the other hand, capital investment is any neighborhood project intended to increase asset value rather than merely preserve it. As such, it involves improving on the asset's original condition and typically helping extend its intended lifespan (also referred to as expected useful life). This means capital investment neighborhood projects often involve upgrades rather than performing the minimal necessary replacement.
Because capital investments involve larger budgets than HOA maintenance, funding comes from the HOA reserve fund. Careful planning and conducting reserve studies, perhaps together with your HOA management company, help determine the necessary amounts to collect and set aside for this fund in anticipation of capital investment projects.
Prioritizing Neighborhood Projects
There are many ways to approach the prioritization of your neighborhood projects as an HOA.
One of the most important is to keep a finger on the pulse of your HOA's finances. Regularly auditing your budget ensures your HOA fees will satisfactorily cover your ongoing operating costs. It also ensures setting aside enough to maintain your reserve funding.
At times, you might find it prudent to temporarily forego aesthetic capital investments in favor of HOA maintenance.
Conducting reserve studies will be an essential aspect of prioritizing neighborhood projects, and you should aim to keep your study as updated as possible. This allows you to plan for and adequately prioritize future capital investments.
Neighborhood Maintenance Projects for Your HOA
Below are some of the best neighborhood projects that fall under HOA maintenance.
Regular, especially seasonal landscaping, is one of the most critical neighborhood projects your HOA needs to spearhead.
This should include pruning trees a