Why Clubs With a Capital Reserve Study Still End Up With a Special Assessment

The board meeting goes like this. The reserve study comes back from the consultant — a handsome 20-year document, maybe ninety pages, with photographs of the roof and a schedule showing $14 million of component replacements between now and 2046. Someone moves to accept it. The motion carries. The binder goes on the shelf, the treasurer notes that the club "has a current reserve study," and everyone feels the capital question has been handled.

Three or four years later, the same club is drafting the letter to members explaining a special assessment.

We've watched this sequence play out at clubs across South Florida, and the frustrating part is that nobody did anything obviously wrong. The study was professionally prepared. The board accepted it in good faith. The failure is quieter than negligence: the club treated a needs inventory as if it were a funding plan, and those are different documents. The study tells you what will wear out and roughly when. It says nothing about whether your dues structure, your entrance fee flow, and your operating results will produce the cash to pay for it. That second question is the one that determines whether an assessment is coming, and at most clubs nobody owns it.

The industry data backs up how common this gap is. In the 2025 Club Board Perspectives Study from GGA Partners and the National Club Association, 61 percent of clubs report having conducted a capital reserve study — yet nearly 60 percent either have no dedicated capital reserve at all or commingle it with maintenance funding, and roughly half still lean on special assessments as a capital funding source. Read those together: a majority of clubs have the study, and a majority have no mechanism that actually funds it. The study and the assessment are not opposites. At many clubs they are sequential.

Why funding "to the study" still comes up short

Here is the part that doesn't show up in the executive summary, and that we rarely see boards discuss. Even clubs that dutifully fund the study's recommended annual contribution tend to land short, for two structural reasons baked into how these studies are built.

First, the escalation assumption. Most studies inflate future replacement costs at a smooth 2.5 to 3 percent per year. Anyone who has bid a clubhouse kitchen, a roof, or a paver project since 2021 knows construction costs did not politely follow that curve — and in coastal Florida, where insurance-driven code requirements keep tightening, the gap compounds. A study that is five years old is not 15 percent stale; on some components it can be 40 percent stale.

Second, and more fundamental: the study prices replacement in kind. It assumes the 4,000-square-foot fitness center gets replaced by a 4,000-square-foot fitness center. No club board in history has done that. The pool becomes a resort pool with a kids' zone. The casual grill becomes the new social hub, because that's what the membership survey demanded. The study, correctly, never budgeted for aspiration — it budgeted for maintenance of what exists. So the real capital need is the study number plus the ambition premium, and the ambition premium is usually funded by exactly the emergency mechanism everyone was hoping to avoid.

The three numbers a treasurer should actually track

If the reserve study lives on a shelf, these three numbers should live on one page, updated quarterly, in front of the finance committee.

The first is the funding ratio: capital income this year divided by the study's required annual contribution. Take everything that is legitimately capital income — capital dues, the capital portion of entrance fees, dedicated transfers — and divide it by what the study says this year's contribution should be, re-escalated to current construction costs, not the consultant's original assumption. Below 1.0, you are not underfunding "a little." You are compounding a deficit that will present itself, with interest, as a single ugly number in a future board packet.

The second is the deferral backlog: cumulative dollars of study-scheduled work now past its scheduled year. Every project the study slotted for a prior year that hasn't been done goes on this list at today's cost. This number only moves one direction if nobody watches it, and it is the single best predictor of a special assessment we know of. A club can have a positive funding ratio and still be accumulating backlog because the money is being spent on unscheduled wants rather than scheduled needs.

The third is net available capital as a percentage of operating revenue. Club Benchmarking's long-running framework puts the sustainability threshold at roughly 12 percent — clubs generating net capital below that level are, in their language, capital starved, whatever the balance sheet appears to say. This is the number that catches the subtler failure mode: an operating deficit quietly consuming the capital stream before it ever reaches a reserve. Your capital dues can be perfectly calibrated and still be funding last summer's F&B losses.

None of these three requires new software or a consultant. They require a treasurer willing to present them even in years when the answer is uncomfortable — especially in August and September, while next year's budget is still soft enough to fix.

Where this doesn't apply

Two honest caveats. A club heading into a full master-plan renovation is about to reset its asset base anyway; obsessing over funding ratios against a study that's about to be superseded is wasted effort — do the study after the renovation, when the 20-year clock restarts. And an assessment is not always a failure. For a discrete, transformational project — the kind that changes what the club is — a one-time assessment can be the fairest way to share cost across the generation of members who voted for it. The assessment that signals broken finance is the one that pays for a chiller, a roof, or a seawall. Nobody should be surprised by a roof.

What we'd advise

Stop asking "do we have a current reserve study?" at the annual meeting and start asking "what was our funding ratio last year, and what's the backlog number?" If your club has the study but can't produce those two figures inside of ten minutes, you don't have a capital plan — you have a very well-documented list of future emergencies. Assign the three numbers to the treasurer, put them in every finance committee packet, and re-escalate the study's costs annually even if you only commission the full update every five years. The clubs that avoid the assessment letter aren't the ones with the thickest binder. They're the ones where somebody kept score between binders.

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