Residential Estate Industry Journal REIJ 6 ARC Journal 2019 | Page 51

directors, is taking decisions for the good of all.’ Although the discussion with Jeff and Andrew ranged across topics as diverse as wildfires, the removal of invasive alien vegetation, and the estate’s relationship with the local municipality and communities on the borders of the estate, they both pointed out that all of these concerns are significant in its financial planning process. ‘These things are all part of it, because we assess every single aspect of the estate, and that’s where we’re coming from,’ says Andrew. ‘It’s about continuous training, continuous evaluation of our programmes, and continuous evaluation of where we are, St Francis Links — Clubhouse and where we’re going. ‘It’s like maintaining an asset: if you don’t PLANNING PROCESS like sustainable water and electricity supplies maintain it, it’s going to cost you so much Both management and the board of directors – even though these costs remain contained, more later – so what we do is we pre-empt involve themselves in the estate’s annual since their water and electrical consultants that by doing the planning and the evaluation scenario planning process. ‘Things change, have been involved with the estate since and the training before it becomes a problem.’ and this makes you re-evaluate your 25-year inception. BOTTOM LINE plan,’ says Jeff. One example: energy supply. The estate is currently studying various Both Jeff and Andrew made the point, though, Clearly, as St Francis Links demonstrates, options for offsetting the rising costs of that management’s tasks include keeping a well-conducted, well-maintained financial electricity. a continuous watch on trends in everything reserve study exercise will strengthen the from tourism (‘When Cape Town went into standing of your estate, and having an For its financial projections, though, the St drought, we saw a drop in tourism – and if appropriate, Francis team works on a 10-year basis. the rand goes weaker, trips will turn domestic, reserve fund will meet many of the legal, judiciously managed capital and might even grow’) to fibre to the home professional, ‘We start over every year: we kick a year out, (‘We watch what’s happening, ask around. It’s of your homeowners association, and also put in the replacement costs for the 11 th year, all about the backbone, and if the Eastern enhance the resale values of the individual and modify our requirements accordingly,’ Cape’s not geared for it, it makes no sense for properties on your estate. says Jeff. us to factor it in. Yet!’) CONTINGENCY These trends will inform decisions management will have to take in the future requirements includes deciding the size of the – and therefore inform its planning for its contingency amount required to cover ad hoc financial reserves. a holistic view of the fiduciary responsibilities that estate’s Taking and expenses, or increases in the specifications of ‘It’s a continuous evaluation of where you are items like security technologies. and what’s happening internationally, and ‘We used to work on a 25% contingency, but whether there is a better way of doing things we’ve actually been able to reduce that to – because we have limited resources, and it’s 10%,’ says Andrew. ‘Because there are so many up to us to make sure that we utilise those risks involved, the size of the contingency resources to the maximum,’ says Andrew. depends on how often you evaluate it: if you Jeff makes the point that St Francis Links is monitor it closely, you can reduce it.’ ultimately in the business of community. LIMITED RESOURCES in its ‘We have to make decisions based on the costs of good of the entire estate – and fortunately consultants required for studies into things everyone on our team, every one of our St Francis operational Links makes budget for provision the St Francis Links — 17th par 3 51 INDUSTRY JOURNAL . . . stfrancislinks.com