From reserves to resources: How Arizona HOA boards can plan with confidence

Serving on an HOA board in Arizona has never been an easy role. Board members are making decisions that shape the financial stability, physical integrity, and long-term desirability of their communities. They are navigating rising costs, evolving legislation, aging infrastructure, and increasingly engaged homeowners who expect transparency and strategic leadership. The responsibility is significant, and so is the opportunity to lead well.

In a state where more than two million residents live in community associations, the ripple effect of every board decision extends far beyond the meeting room. Budgets influence property values. Reserve planning impacts future generations of homeowners. Governance choices shape trust within the community.

That reality makes one thing clear: reactive leadership is no longer enough. Experience, proactive planning, and ongoing education are essential. As Arizona communities continue to grow and mature, boards must look beyond today’s operational needs and focus on building financial resilience and sustainable strategies that will serve their associations for decades to come.

To better understand what Arizona boards should be prioritizing right now, we spoke with Megan Donnelly, a longtime community management leader with 14 years in the industry and 12 with FirstService Residential. A Valley native, Megan brings both professional expertise and deep local perspective to the evolving realities facing Arizona associations.
 

Essential tips for Arizona HOA boards: An interview with Megan Donnelly

Q: From your perspective, why is this such a critical moment for Arizona HOA boards?

"Arizona communities are feeling pressure from every direction. Inflation has increased the cost of nearly everything associations rely on: insurance, landscaping, utilities, materials, and labor. At the same time, legislative changes have shifted how associations address delinquencies, directly affecting cash flow and financial stability.

Meanwhile, resident expectations continue to rise. Homeowners want well-maintained amenities, responsive communication, and thoughtful long-term planning, all without significant assessment increases. That balance is difficult, but it’s also where strong governance makes the greatest difference.

Industry data from CAI reinforces what we see every day: homes in Arizona community associations are generally valued at least 4% higher than comparable homes outside of associations. That premium reflects the impact of proactive planning and sound financial management on long-term property values."

Megan Donnelly, Regional Director
  

Q: What challenges do you see most often when communities come under new management?

"Two things come up repeatedly. First, boards want financial clarity. Many are frustrated by unexpected add-on fees for routine services like mailings or copies. They want to understand their monthly costs and plan confidently without surprise charges.

Second, manager turnover is a concern. Community management can be demanding, and consistency matters. Boards want assurance that their manager is supported by a broader leadership structure and not operating “on an island.” Depth of resources, mentorship, and operational backup make a measurable difference in service continuity and board confidence."

Q: Reserve funding continues to be a major topic. Why is it so difficult for boards to stay ahead?

"Reserve funding is often the most uncomfortable, and most important, conversation a board will lead. No one wants to raise assessments. But delaying modest, strategic increases can quickly create a funding gap.

Once a reserve gap exists, it can be nearly impossible to catch up without a significant special assessment or deferred maintenance, or both. Each carries financial and reputational consequences.

Education is critical. Boards need current reserve studies and clear financial modeling to make confident decisions that protect the community five, ten, or twenty years from now, not just through the next budget cycle. Long-term thinking requires courage, but it ultimately provides stability."

Q: How have legislative changes affected board decision-making in Arizona?

"Recent legislation has increasingly focused on protecting delinquent owners, which can limit an association’s ability to quickly recover unpaid assessments. When delinquencies rise, the financial burden does not disappear. It shifts to the rest of the community.

That reality makes financial planning, reserves, and expense forecasting even more important. Boards need ongoing education and trusted partners to help them understand how these laws affect their association’s operational and financial health."

Q: Looking ahead, what should Arizona boards be planning for now?

"Water conservation is at the top of the list. Arizona’s long-term water outlook requires proactive planning, not short-term adjustments. Boards should be working closely with their landscape professionals to evaluate plant selection, turf areas, and overseeding schedules.

Projects like turf removal, irrigation upgrades, or converting to low-water‑use landscaping require upfront investment. Starting to plan and save now reduces the financial strain later. Many cities, including Scottsdale and Phoenix, offer conservation programs and rebates that can support these efforts, but boards need time and planning to take advantage of them."

Q: What should boards ask their management company to ensure they are supported long term?

"Boards should ask about leadership support and internal resources. Your community manager should not be the only point of contact. Ask who supports them behind the scenes such as accounting, compliance, legal guidance, and executive leadership, and how escalation works when issues arise.

It is also important to create an environment of open feedback. Strong partnerships are built on communication and mutual trust. When boards and property management companies operate as strategic partners, everyone benefits."

Why this matters for residents and communities

Boards that plan proactively protect property values, maintain amenities, and reduce the likelihood of sudden financial shocks. Whether a community is located in Scottsdale, Phoenix, Peoria, Tucson, Sedona, or Flagstaff, the fundamentals remain consistent: transparency builds trust, planning builds resilience, and informed leadership builds stability.
 

Practical takeaways for boards

• Review reserve studies regularly and communicate findings clearly to residents.
   
• Plan for gradual assessment increases rather than reactive special assessments.
   
• Evaluate water use and landscape strategies with long-term conservation in mind.
   
• Ask management partners about leadership depth and internal support resources.
   
• Prioritize education to stay ahead of legislative and regulatory changes.

A final thought

Community association leadership is not about perfection. It is about stewardship. Boards that invest time in planning today give their communities stronger financial footing, more strategic options, and greater confidence tomorrow.

Contact FirstService Residential today to learn more.

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.