3.0 Management Case Study

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At-a-Glance

Project Type: Financial Planning for Insurance Premiums

Location: Denver Metro Area, Colorado

Total Operating Budget: $168,000

Insurance Premium: $102,000, ~60% of total budget

Insurance Savings: ~12-13% annually saved on financing fees

Reserve Transfer: At least 18% of operating budget

Investments: 2 CDs with staggered maturity dates, 1 reserve account

Earned Interest: =4.5% from 2022-2026

Assets: 1.5x Annual Operating Budget

Case Study Overview

Colorado Crossing is a Townhome community that, over the past several years, has demonstrated the strength of proactive planning and disciplined financial management. Rather than facing a substantial financial correction or planning a large infrastructure project, this Board’s goal was simply to preserve and build upon the community’s already strong position. That meant maintaining predictable operating expenses, growing reserves, and preparing for major costs before they arise.

With guidance from 3.0’s Community Manager, the association has effectively established a clear strategy for financial stability that is repeatable year over year.

Challenges Addressed

The association’s largest annual expense is its insurance premium, which represents over 60% of the community’s operating budget. The Management team and Board recognized that any increase in its insurance coverage, whether large or incrementally, would have a large impact on the association’s financial viability if not properly planned for.

This led to the development of the following objectives:

• Keep operating expenses predictable through stable vendor relationships

• Maintain consistent reserve contributions to build long-term financial strength

• Avoid insurance premium financing, which typically adds 12-13% in annual costs

Solutions Delivered

• Strengthening Vendor Relationships: The association built long-term relationships with its landscaping and trash removal providers — two of the largest controllable operating expenses. This approach ensured consistent service quality and predicable pricing year after year, helping to prevent cost creep that often occurs when contracts are rebid too frequently.

• Insurance Funding: By maintaining at least an 18% reserve transfer, the association created a steady cash flow of funds into reserves, allowing the wherewithal to self-fund the annual insurance premium saving at least 12-13% on financing programs.

• Banking and Investments: In collaboration with 3.0 and Western Alliance Bank, the HOA established a series of Certificates of Deposit (CDs), with staggered maturity dates. This approach took advantage of the higher interest rates at the time, ensuring we could maximize the interest earned before maturity and the cash requirements.

• Well-Maintained Property Because the property has been consistently well-maintained, the association’s insurance broker has been able to successfully keep the community within the primary insurance market. This has certainly helped mitigate sharp insurance premium increases seen across the State as many carriers have left the market in the past few years.

The Results

• The association has preserved its ability to self-fund its annual insurance premium, avoiding at least 12% of extra financing fees.

• Predicable expenses for normal operating activities, while maintaining quality service.

• Reserves funded with at 18% of the annual operating budget. (Industry standard is ~10%)

• Investment of at least 2 CD accounts with strategic maturity dates based on annual insurance renewal

• Total assets equal to 1.5x the annual operating budget

Key Takeaways

Oftentimes, the best financial outcomes are achieved through consistency and discipline. This is a model example of a community that continues to build financial fortitude through proactive, strategic management. The strategies deployed aren’t groundbreaking – just tried and true ways of managing business affairs: increase revenue steadily, invest surpluses, self-fund expenditures, and stay debt-free. The association has been running this program since 2022 and plans to continue into the future.