Residential Estate Industry Journal 3 - Page 57

INDUSTRY FOCUS PAGE 55 sustainability Water and Real Estate – Making the Connection For decades residential real estate developers and managers have worked within a given set of relationships between themselves, the municipality as service provider, the state as regulator and the investors whose primary interests they serve. That set of relationships has been based on a robust set of assumptions, so the decision-making process has become routine and institutionalised. But what happens if the core assumptions change? Let us examine some of those core assumptions so that we understand the implications of any change that might happen. Arguably the absolute foundation of any real estate development is the assumption that the municipality will provide five basic services – roads, electricity, water, sanitation and refuse removal. This means a routine decision-making process each time a new development is launched, much like a checklist. This changed when Eskom crashed and suddenly the assumption of assurance of supply (AoS) – the guarantee of a given quantum of energy delivered to a given entity at a given time and at a given price – was found to be flawed. After initial anger and then turmoil, adaptive responses came in the form of standby generator sets. So it is the AoS assumption that is critical to the raft of municipally delivered services that enable development to occur in the first place. Now let us apply the AoS assumption to water. Here there are two major elements to be disaggregated – potable water and waste water. AoS for potable water is the guarantee of a given volume at a given pressure and a given quality at a known price at a specific time and place. We know that certain elements of this are no longer happening. For example, the homeowners’ association (HOA) of an estate located in Madibeng, a municipality known to be dysfunctional, pays the monthly water bill, but this does not get passed onto Rand Water, so the water pressure gets cut. Nothing the HOA can do will change this, because the bottleneck is the dysfunctional municipality. Another example is the excessive chlorination levels in water from a municipality. The reason for this is the overloading of a bulk water plant that was never designed to convert sewage effluent into potable water. This bulk water plant cannot meet the legal specification for biological parameters, so those running the plant compensate by overchlorinating. While this kills the bacteria, it also creates a new health risk in the form of elevated levels of trihalomethane, a carcinogenic by-product of the decay of chlorine. In short, the attempt to manage one risk creates a new set of risks in an increasingly complex domino effect. Yet another example is the management of sewage. A residential golf estate processes its own sewage, but is also under pressure to source alternative water for irrigating its fairways and greens. Next-generation technology now enables a very sophisticated plant to be installed that recovers all of the water from the sewage stream to be used safely as irrigation water. Advancements in disruptive technology include financing, so that this solution can be financed as operational expenditure rather than capital expenditure. This has major benefits for a residential estate where the words “special levy” typically trigger anger and consternation. In short, the AoS aspects that used to underpin the entire relationship between the developer, the municipality and the investor have changed. This has left a vacuum in which HOAs are increasingly expected to replicate the core INDUSTRY FOCUS PAGE 55 sustainability Water and Real Estate – Making the Connection For decades residential real estate developers and managers have worked within a given set of relationships between themselves, the municipality as service provider, the state as regulator and the investors whose primary interests they serve. For example, the homeowners’ association (HOA) of an estate located in Madibeng, a municipality known to be dysfunctional, pays the monthly water bill, but this does not get passed onto Rand Water, so the water pressure gets cut. Nothing the HOA can do will change this, because the bottleneck is the dysfunctional municipality. That set of relationships has been based on a robust set of assumptions, so the decision-making Another example is the excessive chlorination process has become routine and institutionalised. levels in water from a municipality. The reason for this is the overloading of a bulk water plant that But what happens if the core assumptions change? was never designed to convert sewage effluent into Let us examine some of those core assumptions the legal specification for biological parameters, so that we understand the implications of any so those running the plant compensate by change that might happen. Arguably the absolute overchlorinating. While this kills the bacteria, it foundation of any real estate development is also creates a new health risk in the form of the assumption that the municipality will provide elevated levels of trihalomethane, a carcinogenic five basic services – roads, electricity, water, by-product of the decay of chlorine. In short, the sanitation and refuse removal. This means a attempt to manage one risk creates a new set routine decision-making process each time a new of risks in an increasingly complex domino effect. potable water. This bulk water plant cannot meet development is launched, much like a checklist. Yet another example is the management of This changed when Eskom crashed and suddenly sewage. A residential golf estate processes the assumption of assurance of supply (AoS) – its own sewage, but is also under pressure the guarantee of a given quantum of energy to source alternative water for irrigating its delivered to a given entity at a given time and fairways and greens. Next-generation technology at a given price – was found to be flawed. After now enables a very sophisticated plant to be initial anger and then turmoil, adaptive responses installed that recovers all of the water from the came in the form of standby generator sets. So sewage stream to be used safely as irrigation it is the AoS assumption that is critical to the water. 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