A guide to capital improvements in Pennsylvania

What are capital improvements?

Capital improvements are substantial projects that add, upgrade, or significantly improve community property, such as building a new clubhouse feature or replacing an outdated amenity with a major upgrade.
 

Capital improvements vs. repairs and replacements

Capital improvements generally add something new or substantially upgrade community property, while repairs and replacements address existing common elements.

Capital improvements might include building a new HOA clubhouse feature or adding a playground, while repairs and replacements typically address existing common elements, such as repaving an HOA-maintained road or replacing worn pool equipment.
 

Pennsylvania HOA capital improvement laws

Pennsylvania’s Uniform Planned Community Act directly affects how applicable associations approve, fund, and disclose major community projects:

• Capital expenditures: After the board approves a capital expenditure, it must promptly provide notice to all unit owners. Owners may reject the expenditure within 30 days after the board’s approval by a majority vote, or a larger percentage if required by the declaration (68 Pa.C.S. § 5303(b)).
   
• Additional improvements: An association may be able to add new improvements to shared community property, such as a new amenity or facility, as long as the project is allowed under the declaration and Pennsylvania law (68 Pa.C.S. § 5302(a)(7)).
   
• Capital improvement fees: An association may impose a capital improvement fee when a unit is resold or transferred, subject to statutory limits and exceptions (68 Pa.C.S. § 5302(a)(12)).
   
• Use of capital improvement fees: These fees must be kept in a separate capital account and may be spent only on new capital improvements or the replacement of existing common elements, not operation or maintenance expenses (68 Pa.C.S. § 5302(a)(12)(ii)).
   
• Reserve disclosures at resale: A resale certificate must disclose the association’s reserves for capital expenditures, including any amounts designated for specific projects, as well as proposed capital expenditures for the current and next two fiscal years (68 Pa.C.S. § 5407(a)(4)-(5)).

Pennsylvania HOA laws and governing documents can change. Boards should work with qualified Pennsylvania counsel when planning a major project or deciding how it will be approved and funded.
 

Typical capital improvements in Pennsylvania

Capital improvements for Pennsylvania HOAs can take many forms depending on the size, needs, and goals of the community.

Examples may include:

• Building a new clubhouse or community center
   
• Adding a new swimming pool
   
• Constructing pickleball, tennis, or basketball courts where none previously existed
   
• Creating new walking trails or outdoor gathering spaces
   
• Adding a new playground or dog park
   
• Installing electric vehicle charging stations
   
• Adding a new gated entry or community access system
   
• Building new parking areas
   
• Adding permanent shade structures, pavilions, or other outdoor amenities
   
• Constructing new accessibility features that were not previously part of the property

How to fund capital improvements

1. Use your reserve funds

   Reserve funds typically have restrictions around what they are used for. Your governing documents should provide clear guidelines on when and where they can be spent. A current reserve study can help the board confirm whether the project was anticipated, how much has been set aside, and whether using those funds could leave the association short for other upcoming repairs.
    

2. Collect a special assessment

   If your reserves are insufficient to pay for what your community or building needs, this may mean levying a special assessment, an additional HOA fee that helps finance the project's cost. While a special assessment allows the community to avoid taking on debt, it is also often unpopular with owners.
   
   Large, unexpected assessments can create hardship for residents, who may challenge the decision if they believe the assessment was not properly adopted or communicated. Before imposing a one-time special assessment on your community, check your governing documents and consult with your legal counsel to support compliance with Pennsylvania association laws.
    

3. Association loans

   An association loan can spread the cost of a major project over several years, which may be more manageable than a large one-time assessment. For communities managed by FirstService Residential, our affiliate company FirstService Financial can help explore financing options and support the application process.

Capital improvement tips for HOA board members

Planning capital improvements for Pennsylvania HOAs goes more smoothly when boards take a practical, step-by-step approach.

• Start with the governing documents: Before the board commits to a project, confirm what the association is allowed to do and whether owner approval is required.
   
• Understand the total cost: Look beyond the initial price tag and consider what the improvement may cost to maintain over time.
   
• Choose funding carefully: Compare the impact of using reserves, collecting a special assessment, or financing the project before deciding which option fits the community best.
   
• Compare vendors thoughtfully: Look for qualified contractors with relevant experience and a clear understanding of the project scope.
   
• Build in some flexibility: Major projects do not always go exactly as planned, so leave room in the budget and timeline for reasonable changes.
   
• Keep homeowners informed: Share the purpose of the project, expected cost, funding plan, and major updates so residents understand what is happening and why.
   
• Keep records: Document approvals, contracts, payments, and major decisions so the association has a clear project history.
   
• Think beyond completion: Consider how the improvement will affect future property maintenance needs and long-term budgeting once the work is finished.

About FirstService Residential

FirstService Residential supports Pennsylvania communities with local expertise and dedicated service. Our teams assist with communication, maintenance coordination, financial management, documentation, and 24/7 customer care, all designed to simplify life for board members and residents alike.

To learn how FirstService Residential can support your association, contact our team today.

This information is provided for general informational purposes only and is not intended to constitute, and should not be relied upon as, legal, regulatory, financial, or operational advice, or as a representation or guarantee of any specific services, capabilities, or outcomes. Property management needs, regulatory requirements, market conditions, and available services vary by jurisdiction, property type, and community. FirstService Residential provides services through locally based affiliates and associates, and services and results may vary by community, region, contractual terms, and applicable law.