By David Ford-Coates, Western Alliance Bank

Every community association eventually faces the same uncomfortable moment of realizing the pool looks tired, the roofs are aging faster than a ski bum in the Colorado sun and the asphalt resembles a topographical map of the Rockies.

Then comes the million-dollar question (sometimes literally) - should the association phase the project over several years or obtain funding and tackle it all at once?

From an HOA lender’s perspective, the answer is rarely one-size-fits-all. Much like reserve studies, board meetings and owners replying-all to community emails, things can get complicated quickly.

The Case for Phasing Projects

Phasing capital improvements can feel financially responsible and politically safer. Instead of one large loan or special assessment, the association spreads costs over time and addresses projects in manageable chunks.

This approach often works well when:

• Reserve contributions are healthy

• The infrastructure still has useful life remaining

• The community wants to minimize borrowing

• Projects are operationally independent

For example, replacing clubhouse furniture this year, resurfacing tennis courts next year and repainting buildings after that may be perfectly reasonable.

The challenge? Construction costs rarely decrease over time. Inflation, labor shortages and material pricing have turned “waiting until next year” into a surprisingly expensive strategy. A project that costs $2 million today may easily cost significantly more three years from now.

There is also the “Swiss cheese community” problem, which is when projects are phased too aggressively associations can end up with half new, half aging infrastructure. Nothing says “consistent community aesthetic” quite like brand-new roofs sitting above parking lots that resemble lunar craters.

The Case for Financing the Entire Project and Getting it Done Now

Financing allows associations to complete large-scale improvements immediately while spreading repayment over time. In many cases, this creates stability for both the association and homeowners.

From a lender’s perspective, financing often makes the most sense when: 

• Deferred maintenance is compounding

• Multiple components are failing simultaneously

• Construction efficiencies exist by bundling projects

• The association wants predictable payments instead of repeated special assessments

There are also operational benefits. Completing projects at once can reduce contractor mobilization costs, minimize resident disruption and avoid years of ongoing construction fatigue.

Let’s be honest, nobody wants to explain for the fourth consecutive summer why the pool, clubhouse parking lot and front gate are all still under construction.

Financing can also preserve property values. Communities with visible deferred maintenance tend to experience buyer hesitation, increased owner frustration and insurance challenges. Well-maintained communities simply compete better in the marketplace. This is especially important in a buyer’s market.

So, Which Option Is Better?

The real answer lies in balancing financial capacity, project urgency and owner tolerance.

An association should ask:

• Is the deterioration accelerating?

• Will delaying increase overall project costs?

• Can reserves reasonably support phased work?

• Would financing create more long-term stability?

• How will owners react to ongoing disruption versus predictable loan payments

In many cases, the smartest approach could be a hybrid strategy. Finance critical infrastructure projects while phasing cosmetic or lower priority improvements over time.

For example, an association may finance roofing, siding and drainage repairs immediately while delaying clubhouse upgrades or amenity enhancements.

A Lender’s Perspective on Board Decision Making

One of the biggest misconceptions about HOA lending is that financing signals financial weakness. In reality, many well-run associations use loans strategically to preserve reserves, avoid large special assessments and complete projects efficiently.

Strong communities plan proactively. They evaluate reserve studies carefully, communicate transparently with owners, and analyze total project cost.

The goal is to protect the long-term health of the community, and sometimes that means accepting a loan payment today to avoid much larger costs tomorrow.

After all, deferred maintenance has an uncanny ability to become emergency maintenance at the least convenient possible time, usually right after the board finally thought things were calming down.

As every HOA professional knows, nothing says “good morning” quite like discovering the roof replacement project you delayed for three years has now evolved into an interior water intrusion project.

David Ford-Coates is Senior Vice President of HOA & Special District Banking for Western Alliance Bank. Member FDIC.