HOA reserve fund investment strategies can mean the difference between building community wealth and watching inflation erode purchasing power. With current inflation averaging 3-4% annually and many reserve funds earning less than 2% in traditional savings accounts, communities are losing 1-2% of their purchasing power each year—translating to tens of thousands in lost value for typical communities.

Professional reserve fund investment isn't about speculation or high-risk strategies—it's about prudent financial management that preserves capital, provides necessary liquidity, and generates reasonable returns that protect against inflation while supporting long-term community goals. This comprehensive guide provides proven strategies that successful communities use to optimize reserve fund performance while maintaining the safety and accessibility required for capital project funding.

Understanding Reserve Fund Investment Principles

The Foundation: Safety, Liquidity, and Return

Reserve fund investment strategies must balance three critical principles, with safety and liquidity taking priority over maximum returns due to the specific nature of community association financial obligations.

Safety: Capital Preservation Above All: Reserve funds represent community assets designated for specific future expenditures, making capital preservation the paramount concern. Investment losses can force emergency special assessments or defer critical maintenance, making safety the non-negotiable foundation of any reserve fund investment strategy.

• Principal protection: Investment vehicles that cannot lose original investment amounts
• Institutional stability: Banking and investment partners with strong financial ratings and insurance coverage
• Diversification principles: Spreading risk across multiple institutions and investment types
• Regulatory compliance: Following federal and state requirements for municipal and association investments

Liquidity: Access When Projects Require Funding: Reserve funds must be available when major component replacements become necessary, requiring investment strategies that provide predictable access to funds without penalties or market risk.

• Project timing alignment: Matching investment maturities with anticipated component replacement schedules
• Partial liquidity options: Ability to access portions of invested funds without affecting remaining balances
• Emergency access provisions: Maintaining liquid reserves for unexpected component failures or emergency repairs
• Seasonal project coordination: Aligning investment schedules with optimal construction and replacement timing

Return Optimization: Growing Reserves Within Safe Parameters: While safety and liquidity take priority, generating reasonable returns helps reserve funds grow and maintain purchasing power against inflation over time.

• Inflation protection: Investment returns meeting or exceeding inflation rates preserving purchasing power
• Compound growth benefits: Reinvesting earnings to accelerate reserve fund accumulation
• Tax efficiency: Minimizing investment-related taxes that reduce net returns
• Cost-benefit analysis: Evaluating investment management costs against potential return benefits

Understanding complete HOA reserve fund management principles helps boards integrate investment strategies into comprehensive financial planning.

Risk Assessment and Community-Specific Considerations

Different communities have varying risk tolerance levels and investment needs based on their specific circumstances, requiring customized approaches to reserve fund investment strategy.

Community factors affecting investment approach:

• Reserve fund balance size: Larger balances justifying more sophisticated investment strategies
• Component replacement timeline: Immediate needs requiring higher liquidity vs. longer-term planning horizons
• Board expertise and comfort level: Investment experience and risk tolerance among volunteer board members
• Professional management involvement: Access to investment expertise through management companies or advisors

Risk tolerance assessment criteria:

• Financial stability: Communities with strong cash flow and member payment history can accept longer-term investments
• Emergency fund adequacy: Separate emergency funds allowing reserve investments with longer maturity periods
• Member demographics: Affluent communities typically having higher risk tolerance and financial sophistication
• Governance stability: Consistent board leadership supporting long-term investment strategies

Legal and regulatory considerations:

• Fiduciary duty compliance: Board obligations to invest prudently and in community best interests
• Governing document restrictions: Investment limitations or requirements specified in community bylaws or declarations
• State law requirements: Municipal investment laws that may apply to homeowners associations
• Professional liability protection: Appropriate insurance coverage for investment-related decisions

Safe Investment Options for Reserve Funds

High-Yield Savings Accounts and Money Market Options

High-yield savings and money market accounts provide the foundation for reserve fund investment strategies, offering FDIC insurance protection while generating competitive returns in the current interest rate environment.

High-Yield Savings Account Features and Benefits: Current market leaders offer 4.5-5.5% APY on savings accounts with minimal balance requirements and complete liquidity, representing significant improvement over traditional bank savings rates of 0.1-0.5%.

• FDIC insurance protection: $250,000 coverage per depositor per institution protecting principal
• Complete liquidity: Immediate access to funds without penalties or restrictions
• Competitive current rates: 4.5-5.5% APY from online banks and credit unions
• Low or no fees: Minimal monthly fees with reasonable balance requirements

Money Market Account Advantages: Money market accounts typically offer slightly higher rates than savings accounts while providing check-writing privileges and debit card access beneficial for project payments.

• Enhanced interest rates: Often 0.1-0.3% higher than comparable savings accounts
• Check writing privileges: Direct payment capability for contractors and project expenses
• Debit card access: Convenient access for authorized board members and management companies
• FDIC insurance coverage: Same $250,000 protection as savings accounts

Online Banking Optimization Strategies: Online banks consistently offer higher rates than traditional brick-and-mortar institutions due to lower overhead costs, making them attractive options for communities comfortable with digital banking.

• Rate comparison platforms: Regular monitoring of competitive rates across multiple institutions
• Relationship banking benefits: Potential rate premiums and fee waivers for larger deposit relationships
• Service quality evaluation: Customer service responsiveness and online platform functionality
• Integration capabilities: Compatibility with accounting software and financial management systems

Certificate of Deposit Strategies and Laddering

Certificates of deposit provide guaranteed returns with FDIC insurance protection while offering higher rates than savings accounts in exchange for fixed maturity commitments.

CD Ladder Construction and Management: CD laddering involves purchasing certificates with staggered maturity dates, providing regular liquidity opportunities while maximizing interest earnings through longer-term commitments.

Basic CD ladder example:

• Year 1: $50,000 in 1-year CD at 4.8% APY
• Year 2: $50,000 in 2-year CD at 5.1% APY
• Year 3: $50,000 in 3-year CD at 5.3% APY
• Year 4: $50,000 in 4-year CD at 5.5% APY
• Year 5: $50,000 in 5-year CD at 5.7% APY

As each CD matures, proceeds can be reinvested in a new 5-year CD, creating annual liquidity while maintaining optimal interest rates.

Advanced Laddering Strategies:

• Barbell approach: Combining short-term (1-2 years) and long-term (4-5 years) CDs for flexibility and yield optimization
• Project-specific timing: Aligning CD maturities with anticipated major component replacement schedules
• Interest rate environment adaptation: Adjusting ladder structure based on expected interest rate trends
• Institutional diversification: Spreading CDs across multiple banks to maximize FDIC coverage and reduce institutional risk

CD Selection Criteria and Optimization:

• Rate comparison analysis: Evaluating rates across multiple institutions and CD terms
• Call provision evaluation: Understanding early redemption options and potential rate changes
• Penalty structure assessment: Comparing early withdrawal penalties if unexpected liquidity needs arise
• Automatic renewal policies: Understanding default renewal terms and rate adjustment procedures

Treasury Securities and Government-Backed Investments

U.S. Treasury securities offer the highest level of safety for reserve fund investments while providing competitive returns and favorable tax treatment.

Treasury Bill, Note, and Bond Options: Different Treasury security types provide various maturity options supporting reserve fund liquidity needs and investment objectives.

• Treasury Bills (T-Bills): 4-52 week maturities providing short-term parking for reserve funds
• Treasury Notes: 2-10 year maturities offering higher yields for longer-term reserve components
• Treasury Bonds: 10-30 year maturities appropriate for very long-term reserve planning
• Treasury Inflation-Protected Securities (TIPS): Inflation-adjusted principal providing purchasing power protection

Current Treasury Rate Environment (as of 2025):

• 3-month T-Bills: 4.8-5.2% yield
• 1-year T-Bills: 4.6-5.0% yield
• 2-year T-Notes: 4.4-4.8% yield
• 5-year T-Notes: 4.2-4.6% yield
• 10-year T-Notes: 4.3-4.7% yield

Treasury Investment Benefits for Reserve Funds:

• Ultimate safety: Backed by full faith and credit of U.S. Government
• Tax advantages: State and local tax exemption on Treasury interest income
• High liquidity: Active secondary market allowing sale before maturity
• No credit risk: Elimination of institutional failure concerns

Treasury Investment Implementation:

• TreasuryDirect platform: Direct purchase from government eliminating broker fees
• Broker-assisted purchases: Professional management and advisory services
• Treasury fund alternatives: Mutual funds investing in Treasury securities providing professional management
• Ladder strategy application: Creating Treasury ladders similar to CD strategies

Advanced Investment Strategies and Portfolio Management

Bond Fund Investment and Fixed-Income Strategies

For communities with larger reserve balances and longer investment horizons, bond funds and fixed-income strategies can provide enhanced returns while maintaining conservative risk profiles.

Government Bond Fund Options: Government bond mutual funds and ETFs provide professional management and diversification while maintaining focus on high-quality, government-backed securities.

• Short-term government funds: 1-3 year average maturity providing stability and liquidity
• Intermediate government funds: 3-7 year average maturity offering higher yields with modest duration risk
• Treasury-only funds: Exclusive focus on U.S. Treasury securities for maximum safety
• Government-sponsored enterprise funds: Including Fannie Mae and Freddie Mac securities for slightly higher yields

Investment-Grade Corporate Bond Considerations: High-quality corporate bonds can provide additional yield over government securities while maintaining conservative risk profiles appropriate for reserve fund investment.

• AAA and AA-rated bonds: Highest-quality corporate securities with minimal default risk
• Diversified corporate bond funds: Professional management across multiple industries and issuers
• Short to intermediate duration: Managing interest rate risk while enhancing yield potential
• Credit analysis requirements: Understanding corporate credit quality and ongoing monitoring needs

Duration Management and Interest Rate Risk: Bond investment duration affects sensitivity to interest rate changes, requiring careful management to balance yield enhancement with principal protection.

• Duration matching: Aligning bond duration with reserve fund investment horizons
• Laddering strategies: Spreading bond investments across various maturity dates
• Interest rate environment analysis: Adjusting duration based on expected rate movements
• Professional management benefits: Utilizing experienced bond managers for complex duration strategies

Alternative Investment Vehicles and Specialized Programs

Some communities may benefit from specialized investment programs designed specifically for municipal entities and non-profit organizations.

Local Government Investment Pools (LGIPs): Many states offer investment pools specifically designed for municipal entities, including homeowners associations in some jurisdictions.

• Professional management: Experienced investment professionals managing diversified portfolios
• Higher yield potential: Often providing returns exceeding money market rates while maintaining high liquidity
• Institutional safety: Strong regulatory oversight and conservative investment policies
• Cost efficiency: Low management fees due to pooled investment approach

Community Development Financial Institution (CDFI) Programs: CDFIs sometimes offer deposit programs for community organizations providing competitive returns while supporting local community development.

• Mission alignment: Supporting community development while earning competitive returns
• FDIC insurance coverage: Many CDFI programs providing full insurance protection
• Relationship benefits: Enhanced services and local community support
• Social impact consideration: Contributing to community development beyond investment returns

Credit Union Investment Programs: Community-focused credit unions often provide specialized services and competitive rates for homeowners associations and non-profit organizations.

• Membership requirements: Understanding eligibility and membership criteria
• Enhanced services: Personalized service and community focus
• Competitive rates: Often exceeding traditional bank offerings
• Expanded FDIC coverage: Some credit unions offering extended coverage through specialized programs

Professional Investment Management and Advisory Services

Larger communities with substantial reserve balances may benefit from professional investment management services providing expertise and ongoing portfolio optimization.

Investment Advisory Services for Associations: Specialized financial advisors understand community association needs and regulatory requirements while providing professional investment management.

• Fiduciary responsibility: Professional advisors operating under fiduciary standards ensuring community best interests
• Customized portfolio construction: Investment strategies tailored to specific community needs and timelines
• Ongoing monitoring and rebalancing: Professional oversight ensuring continued strategy alignment
• Regulatory compliance expertise: Understanding legal requirements and restrictions affecting association investments

Fee Structure Analysis and Cost-Benefit Evaluation: Professional management services must justify their costs through enhanced returns, risk management, and administrative efficiency.

• Management fee comparison: Typical fees ranging from 0.5-2.0% annually depending on services and portfolio size
• Performance measurement: Comparing managed portfolio returns to self-directed alternatives
• Service value assessment: Evaluating advisory services, reporting, and administrative support
• Breakeven analysis: Determining minimum portfolio size justifying professional management costs

Selection Criteria for Investment Professionals:

• Community association experience: Specific expertise with HOA and non-profit investment requirements
• Regulatory compliance knowledge: Understanding fiduciary duties and legal restrictions
• Fee transparency: Clear, reasonable fee structures with no hidden costs
• Performance track record: Documented success managing similar portfolios and client relationships

FDIC Insurance Optimization and Risk Management

Maximizing FDIC Protection Through Strategic Account Structure

FDIC insurance provides crucial protection for reserve fund deposits, but standard coverage limits require strategic planning to protect larger reserve balances.

Standard FDIC Coverage Limits and Categories: Understanding FDIC insurance categories helps communities structure deposits for maximum protection coverage.

• Single ownership accounts: $250,000 per depositor per insured institution
• Joint accounts: $250,000 per co-owner per insured institution
• Revocable trust accounts: $250,000 per unique beneficiary per insured institution
• Irrevocable trust accounts: $250,000 per beneficiary per insured institution

Multi-Institution Deposit Strategies: Communities with reserve balances exceeding $250,000 should diversify deposits across multiple FDIC-insured institutions to maximize protection coverage.

Example deposit strategy for $1,000,000 reserve balance:

• Bank A: $250,000 high-yield savings account
• Bank B: $250,000 money market account
• Bank C: $250,000 certificate of deposit
• Bank D: $250,000 treasury money market fund

This strategy provides complete FDIC protection while maintaining competitive returns and liquidity options.

Reciprocal Deposit Programs and Extended Coverage

Specialized banking programs can extend FDIC coverage beyond standard limits while simplifying account management and administrative requirements.

Certificate of Deposit Account Registry Service (CDARS): CDARS allows communities to make large deposits through a single institution while automatically spreading funds across multiple banks for extended FDIC coverage.

• Extended coverage: Up to $50 million FDIC insurance through network participation
• Single institution relationship: Simplified administration through one primary banking contact
• Competitive rates: Market-rate CDs across multiple institutions
• Automated management: Network handling deposit placement and maturity management

Insured Cash Sweep (ICS) Programs: ICS programs provide extended FDIC coverage for demand deposit and savings accounts through automated deposit distribution.

• Demand deposit protection: Extended coverage for checking and operational accounts
• Money market options: Higher-yield savings alternatives with extended insurance coverage
• Real-time access: Immediate availability despite multi-bank deposit structure
• Professional management: Bank handling deposit allocation and rebalancing

Program Evaluation Criteria:

• Coverage limits: Understanding maximum protection available through specific programs
• Fee structures: Evaluating costs associated with extended coverage programs
• Rate competitiveness: Comparing program rates to direct deposit alternatives
• Service quality: Assessing customer service and administrative support quality

Risk Diversification and Institutional Analysis

Beyond FDIC insurance, communities should evaluate institutional strength and diversify deposits to minimize concentration risk and maximize financial stability.

Bank Financial Strength Analysis: Evaluating banking partner financial stability provides additional security beyond FDIC insurance protection.

• CAMELS ratings: Bank examination ratings assessing Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk
• Tier 1 capital ratios: Measuring bank financial strength and regulatory compliance
• Asset size and stability: Understanding bank size, market position, and growth stability
• Regulatory compliance history: Reviewing any regulatory actions or compliance issues

Credit Union Evaluation Criteria: Credit unions provide alternatives to traditional banking with member-focused service and often competitive rates.

• NCUA insurance coverage: Understanding National Credit Union Administration insurance protection
• Financial strength indicators: Evaluating credit union capital ratios and financial performance
• Membership requirements: Understanding eligibility and ongoing membership obligations
• Service capabilities: Assessing technology platforms, customer service, and account management options

Geographic and Economic Diversification: Spreading deposits across institutions in different geographic regions and economic markets can provide additional protection against regional economic disruption.

• Regional economic diversity: Avoiding concentration in single metropolitan or economic areas
• Bank market focus: Understanding primary market areas and economic dependencies
• Regulatory environment variation: Different state banking regulations and oversight approaches
• Relationship management: Balancing diversification with manageable banking relationships

Tax Implications and Optimization Strategies

Understanding HOA Investment Tax Treatment

Homeowners associations face unique tax considerations affecting investment strategy selection and return optimization.

HOA Tax Status and Investment Income Treatment: Most homeowners associations qualify as tax-exempt organizations under IRC Section 528, but investment income may still be subject to taxation depending on specific circumstances.

• Exempt function income: Money collected and spent for exempt purposes (maintenance, repairs, administration)
• Non-exempt function income: Investment income and other revenue potentially subject to taxation
• De minimis exception: Small amounts of investment income often excluded from taxation
• Professional tax consultation: Complex tax rules requiring specialized expertise for optimization

State and Local Tax Considerations: Investment income tax treatment varies significantly by state, requiring location-specific analysis and planning.

• State income tax exemptions: Some states providing full or partial exemptions for association investment income
• Local tax implications: Municipal taxes potentially affecting investment returns
• Tax-exempt investment options: Municipal bonds and other vehicles providing tax-advantaged returns
• Professional guidance requirements: State-specific tax consultation ensuring compliance and optimization

Tax-Advantaged Investment Options

Certain investment vehicles provide tax advantages that can enhance after-tax returns for homeowners associations.

Municipal Bond Investments: Municipal bonds issued by state and local governments often provide tax-exempt income for association investors.

• State-specific exemptions: Bonds issued within the association's state potentially providing state tax exemptions
• Credit quality evaluation: Understanding municipal bond credit ratings and default risk
• Yield comparison analysis: Comparing tax-exempt yields to taxable alternatives on after-tax basis
• Professional management options: Municipal bond funds providing diversification and professional oversight

Treasury Security Tax Benefits: U.S. Treasury securities provide federal tax obligations but exemption from state and local taxes.

• State tax exemption: Treasury interest exempt from state and local income taxes
• Effective yield enhancement: State tax exemption increasing net returns for associations in high-tax states
• Simplified tax reporting: Federal reporting requirements without state tax complications
• Professional consultation: Understanding specific state tax treatment and optimization opportunities

Investment Timing and Tax Planning: Strategic investment timing can optimize tax consequences while supporting reserve fund objectives.

• Income recognition timing: Managing when investment income is recognized for tax purposes
• Loss harvesting opportunities: Realizing investment losses to offset gains where appropriate
• Professional coordination: Working with tax professionals to optimize investment and tax strategies
• Annual review and planning: Regular evaluation ensuring continued tax efficiency

Technology and Investment Platform Solutions

Digital Investment Platforms and Automation

Modern technology offers sophisticated tools for managing reserve fund investments while reducing administrative burden and improving performance monitoring.

Online Investment Platform Benefits: Digital platforms provide professional-grade investment capabilities accessible to volunteer board members and professional managers.

• Automated rebalancing: Technology-driven portfolio adjustments maintaining optimal asset allocation
• Performance monitoring: Real-time tracking of investment performance and goal progress
• Integrated reporting: Automated reporting for board meetings and member communications
• Mobile accessibility: Smartphone and tablet access for convenient portfolio monitoring

Robo-Advisor Services for Conservative Portfolios: Automated investment services can provide professional portfolio management at reduced costs while maintaining conservative risk profiles appropriate for reserve funds.

• Algorithm-driven allocation: Computer models optimizing asset allocation based on risk tolerance and objectives
• Automatic rebalancing: Systematic portfolio adjustments maintaining target allocations
• Tax-loss harvesting: Automated strategies optimizing tax efficiency where appropriate
• Low-cost structure: Management fees typically lower than traditional advisory services

Integration with Financial Management Systems: Investment platforms should integrate with existing accounting and financial management systems for streamlined administration.

• Accounting software connectivity: Direct data integration reducing manual entry and errors
• Financial reporting automation: Integrated investment reporting within comprehensive financial statements
• Audit trail maintenance: Complete documentation supporting audits and regulatory compliance
• Multi-user access controls: Appropriate access levels for board members, management, and financial advisors

Performance Monitoring and Reporting Tools

Effective investment management requires ongoing monitoring and regular reporting to boards and community members.

Investment Performance Metrics and Benchmarking:

• Total return calculation: Including interest, dividends, and capital appreciation in performance measurement
• Risk-adjusted returns: Evaluating performance considering risk level and volatility
• Benchmark comparisons: Comparing portfolio performance to relevant market indices and peer groups
• Cost-adjusted analysis: Evaluating net returns after all fees and expenses

Reporting and Communication Systems:

• Board reporting formats: Clear, concise reports for board review and decision-making
• Member communication: Annual or semi-annual investment summaries for community transparency
• Performance trending: Long-term performance analysis supporting strategy evaluation and adjustment
• Professional consultation reporting: Integration with advisory services for comprehensive analysis

Understanding HOA board meeting management helps ensure proper investment oversight and decision-making processes.

Creating Investment Policy and Governance Framework

Investment Policy Statement Development

Formal investment policies provide clear guidance for investment decisions while protecting board members from liability and ensuring consistent approaches across different board compositions.

Essential Investment Policy Components:

• Investment objectives: Clear statement of goals including safety, liquidity, and return priorities
• Risk tolerance guidelines: Specific parameters for acceptable investment risk levels
• Prohibited investments: Clear identification of inappropriate investment types and strategies
• Diversification requirements: Guidelines for spreading investment risk across multiple vehicles and institutions

Governance and Oversight Procedures:

• Board approval requirements: Which investment decisions require board approval vs. management authority
• Monitoring and reporting standards: Frequency and format of investment performance reporting
• Professional advisor utilization: When and how to engage investment professionals
• Policy review and update procedures: Regular policy evaluation ensuring continued relevance and effectiveness

Implementation and Compliance Framework:

• Documentation requirements: Record-keeping standards for investment decisions and performance
• Audit and review procedures: Internal and external review processes ensuring policy compliance
• Exception handling: Procedures for situations requiring deviation from standard policy guidelines
• Training and education: Board member education ensuring understanding of investment policies and procedures

Fiduciary Responsibility and Legal Compliance

Board members have specific fiduciary duties regarding reserve fund investment requiring understanding and compliance with legal obligations.

Fiduciary Duty Standards:

• Prudent investor rule: Standard requiring reasonable care, skill, and caution in investment decisions
• Loyalty obligations: Acting solely in community best interests without personal benefit
• Due diligence requirements: Appropriate investigation and analysis before investment decisions
• Documentation standards: Maintaining records supporting investment decision-making processes

Legal Compliance and Risk Management:

• State law requirements: Understanding specific state laws affecting association investment authority
• Professional liability insurance: Appropriate coverage protecting board members from investment-related claims
• Professional consultation standards: When legal or financial professional advice is required
• Member communication obligations: Transparency requirements regarding investment strategies and performance

Frequently Asked Questions

Q: What's the safest investment for HOA reserve funds? A: FDIC-insured savings accounts, money market accounts, and U.S. Treasury securities provide maximum safety. High-yield savings accounts currently offer 4.5-5.5% APY with complete liquidity and principal protection.

Q: How much can we invest in CDs without affecting liquidity? A: Generally, no more than 60-80% of reserve funds should be in CDs, maintaining liquid reserves for unexpected needs. CD laddering can provide higher yields while ensuring regular maturity dates for liquidity.

Q: Can HOAs invest in stocks or mutual funds? A: While not prohibited, stocks and equity mutual funds involve principal risk inappropriate for most reserve fund investments. Conservative bond funds may be appropriate for larger communities with longer investment horizons.

Q: How do we maximize FDIC coverage for large reserve balances? A: Spread deposits across multiple FDIC-insured institutions ($250,000 limit each) or use reciprocal deposit programs like CDARS or ICS that can provide coverage up to $50 million through network participation.

Q: Should we hire a professional investment advisor? A: Communities with reserve balances exceeding $500,000-1,000,000 may benefit from professional management. Evaluate advisory fees (typically 0.5-2.0% annually) against potential return enhancement and administrative benefits.

Q: Are there tax implications for HOA investment income? A: Most HOA investment income may be subject to taxation depending on association tax status and income levels. Municipal bonds and Treasury securities may provide tax advantages. Consult tax professionals for specific guidance.

Q: How often should we review our investment strategy? A: Review investment performance quarterly and strategy annually. Major changes in interest rates, reserve fund balances, or component replacement timing may require strategy adjustments.

Q: What's the best way to handle investment income - reinvest or transfer to reserves? A: Generally reinvest investment income to accelerate reserve fund growth through compounding. However, transfer to reserves if needed to meet reserve study requirements or funding goals.

Need professional guidance on HOA reserve fund investment strategies? Contact 1hoa for consultation on investment policy development, banking relationships, and portfolio management that optimizes returns while ensuring safety and liquidity for your community's capital project needs.