Tellico Village 2026 Reserve Study – Executive Summary

This Executive Summary accompanies the 2026 Tellico Village Reserve Study, which provides a 30-year plan for maintaining and replacing major shared assets owned by the Property Owners Association.

A Reserve Study estimates the remaining useful life and replacement cost of key community assets and determines how much should be set aside each year to fund those replacements. The updated Study organizes assets into functional categories that group similar types of property and equipment. This structure allows for consistent forecasting and replacement planning across departments and facilities.   While the Reserve Study does not contemplate new amenities, once acquired, applicable replacement costs are added to the study.  The goal is to prevent large special assessments and ensure that future residents share fairly in the cost of maintaining Village infrastructure and amenities.

While the Reserve Study offers a long-term replacement roadmap, it is only one part of our overall financial planning. The annual operating and capital budgets capture other funding needs not reflected in this study—such as road resurfacing, major capital construction, debt service, and operating repairs. Reading the Reserve Study in tandem with the 2026 Adopted Budget will provide the most accurate picture of the Village’s financial outlook.

Key 2026 Reserve Study Highlights
• Effective Date: January 1, 2026
• Projection Period: 30 years (through 2055)
• Reserve Fund Starting Balance: $18.44 million
• 100% Funded Level: $23.9 million for 2026
• Percent Funded: 77%, based solely on assets included in the Reserve Study.  When factoring in near-term cash needs for projects such as the Tanasi rebuild, Water/Sewer upgrades, and other capital commitments, the effective funding level will differ.
• Annual Reserve Contributions: $4.64 million, held flat for the initial 15 years.  These contributions are designed to cover the long-term replacement of funded assets—not all of the POA’s broader cash or capital requirements.
• Inflation Assumption: 3%
• Interest Earnings in Model: 0% (for simplicity; actual investment income is earned and budgeted as part of the operating budget)
• Total Future Replacement Cost (30 years): $83.7 million, compared with approximately $395.7 million in the 2023 study (the prior total included roughly $312 million in assets that are now classified as zero-funded and excluded from this update).
• No Special Assessments are projected within the 30-year period.

Water/Sewer vs. Non-Water/Sewer Reserves
In the 2026 Reserve Study, assets are classified by department, with Water/Sewer assets clearly identified as part of the W/S system.  These assets will be evaluated separately for funding and long-range planning purposes. 
• Water/Sewer Reserve (W/S) – Covers vehicles, meters, equipment, and infrastructure that support water distribution and sewer collection systems, including pump and lift stations.
• Non-Water/Sewer Reserve – Covers community facilities and amenities such as recreation and golf assets, docks, HVAC systems, roofs, painting, vehicles, and other building components (not entire structures).

This evaluation approach ensures that user fees collected for water and sewer services are dedicated solely to utility assets, while amenity assessments support all other POA operations and facilities. 

Zero-Funded Assets
Some assets are classified as zero-funded, meaning they are excluded from reserve funding because of their long life, funding source, or the Board’s policy choice. Approximately $312 million in assets previously covered by the 2023 study are now zero-funded in the 2026 update.

Examples include:
• Roads and parking lot base structures
• Underground pipes
• Building structures (not components)
• Golf fairways and greens
• Long-lived hardscape such as sidewalks and curbs
• Large capital projects such as the Tanasi Clubhouse rebuild and Water/Sewer infrastructure upgrades

These assets remain part of the Village’s long-term maintenance responsibility and will be addressed through best-practice preventive maintenance management, future funding strategies, partnerships, or targeted capital allocations.

How the Reserve Study Fits into Broader Planning
The Reserve Study tells us what we should plan for—the ideal replacement funding for existing assets.
The Village’s cash flow analysis and operating budget tell us what we can realistically afford—incorporating all near-term spending, revenue, debt, and surplus goals.

Combining both perspectives ensures:
• Predictable and sustainable annual reserve contributions
• Adequate liquidity for short-term and long-term needs
• Alignment between strategic priorities, resident expectations, and financial capacity

Looking Ahead
The 2026 Reserve Study provides a clear roadmap for maintaining Tellico Village’s extensive asset base responsibly and transparently.  Although the POA’s funded position appears strong within this document, major near-term projects will temporarily reduce available balances. Our ongoing goal is to strengthen funding levels over time and move closer to fully funding all covered assets as current projects conclude.

Questions and Feedback
This Executive Summary directly precedes and introduces the 2026 Reserve Study, which follows in full.  Residents and stakeholders are encouraged to review the complete study and submit questions or comments through the Reserve Study Q&A Portal. Responses will be compiled and published to help the community better understand how reserve planning supports Tellico Village’s long-term financial health.