Capital Improvement Projects

A capital improvement is not defined under California law and case law has been inconclusive in providing guidelines for associations to follow with what is and is not a capital improvement. This can be confusing for community association directors who are seeking to comply with governing documents that place restrictions on board authority to complete capital improvements, such as a spending cap or member approval requirement.

Throughout the community association industry, capital improvements have been explained as (1) a substantial, discretionary addition to the common area, (2) a voluntary significant upgrade to common area materials, or (3) discretionary material alterations to the appearance of the development. While they are not legal definitions, they can provide guidance to community association boards as to what can trigger the requirement to apply the restrictions within the governing documents.

If your documents do not limit capital improvements, it is likely within the board's discretion to proceed with them.