BEST PRACTICE
. . .
Financial
The world is changing faster than any of us can comprehend.
So how can homeowners associations and estate managers
plan for the future? And what is reserve funding, anyway?
RESERVE
PLANNING
for
estates
I
t might seem obvious for any well-managed
estate to hold financial reserves that’ll
buffer it against future challenges in
maintenance costs, replacement of
assets, and even changes in social and
climatic conditions, but the sad truth is
that many don’t – or if they do, they rely on
arbitrary figures like multiples of their monthly
levies (typically, five times), which have no basis
in the challenges they may face.
The reserve fund isn’t a legislative requirement
St Francis Links — 4th par 3
for HOAs in South Africa (as it is in sectional
title schemes), but having one makes sense in
assessment,’ says Andrew. This includes a entail everything from installing a new water
careful look at things like resources (water treatment plant to the purchase of a truck to
This is why the management of St Francis and electricity supplies, sewerage and grey deliver water to individual construction sites
Links, the Eastern Cape residential estate water), asset maintenance (moveable as well in order to ensure that builders didn’t waste
and Jack Nicklaus signature golf course, takes as immovable property), the environment precious potable water.
reserve planning far beyond mere financial (the effects of climate change being the big projections. challenges here, of course), and community But, thanks to actions taken in the light of
(safety and security, real world and cyber annual analyses designed to reveal ‘exactly
crimes, etc.). where we are’, St Francis Links is mostly self-
today’s climate of uncertainty.
In an exclusive interview, company CEO and
director of golf, Jeff Clause, and financial
officer
Barton,
and
company
emphasised
secretary,
that
their
Andrew
reliant as far as water is concerned. And,
WATER SUPPLY
thanks to careful planning for this unforeseen
financial According to Jeff, the developers weren’t situation, it’s achieved this (and all its other,
reserve planning forms part of a holistic aware – when they opened for sale to home originally unplanned, capital expenditures)
exercise that’s repeated every year, and that owners in 2006 – that the estate would, for without ever raising any special levies. ‘If
delivers projections (and investments) that example, need to invest in a complete water you want to hear a dirty word, just mention a
look as far as 25 years into the future. treatment programme within a period of special levy,’ says Jeff.
‘It’s about planning through continuous risk little more than a decade. Or that this would
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INDUSTRY JOURNAL