Residential Estate Industry Journal 4 - Page 51

RESOURCE MANAGEMENT • • Is the business model sustainable? Yes, an HOA is and risk could not be aggregated and analysed on a business, if you have not realised this, you need demand. The board decisions did not fully take into to, and soon. account the likely impact or outcome of a decision • • What is the development’s competitive advantage? • • Can the development continue to invest money in a volatile environment? • • Under what macro and micro conditions would the development survive/cease to be a liquid going concern? at each level. They were based on current portfolio trends in a benign environment, or even ‘gut feel’ or social pressure from the community they represented at that moment in time. All decisions have trade-offs and there are usually many choices for making a similar level of lifestyle advance • • What impact does the development have from a – some needing more or less capital. Roll all these systemic viewpoint on the society and the economic requirements of those invested in it? options up and one can turn the board question around However, a lot of this new focus and future regulation is still bedding in, some is yet to start, and often it is experimental, overly bureaucratic and subject to the law of unintended consequences. The worry is that the new post-residential crash environment may encourage box-ticking compliance only, as well as the generation of millions of pages of documentation and reports from even more powerful computing technologies, which don’t positively impact the bottom line, or even integrate with an HOA’s wider operational stack or risk. A million in the bank when the second reservoir, new security upgrade or offices should already have been built is just as dangerous. Each wave of regulation has a direct, quantifiable impact on the target operating model, profitability, and provisions feeding into the levy base of an HOA, but it also has an indirect but material impact on a wide range of factors contributing to shareholder value and ultimately the cost-to-pocket cost for living in these developments. If the industry does not ensure a balance is found, it can face the very real risk that the cost starts to outweigh the benefits. Some key take-aways The financial crisis exposed HOAs and the developers in the past, often leaving an HOA with major assets that were not previously included in its opera F67@Bf"v66F&W6W'fR26R&VwVF'0vgWGW&R&WV&RFfW7FvFR76&PVF6FVB&62BFfB'W6W72FV2FFWVFVǒFG&W72FVखG6vBvW'2B7WW'f6'WF&FW0r&VƗ6RFBFRW"v6&6v2Ǘ6V@( 27FVBb( Ćr6vR&VGV6R6FVVG2''֖Ɩ( B&V6W2( vB6&Fb6vW26F6FvF֗6R&W6W'fR6G&'WF2f FRfW'ƖfW7GRWw&FW2fW7FVBF67V&V7@FFR&VwVF'67G&G2B&6WFFRƖ֗G2`FV"VVRFWfVVC( Ф7G&vǒ&VƖWfRFC( "( "2r26F&V266&6R6FFWV7B6FvVVBvFFR7G&FVv2vVFB&VFRFFbFV6wF֗6F&w&2B6Ff7W6VB'W6W72FV2FRgWGW&R( "( "FRFFbFV66F֗6FF22WF7W'ffV6֖6ǒ&BBfFRFW20FWfVVG2&Rf&6VBF&V&R66W'fFfP&WBFV"7G&FVwBf7W2FrvƗVFGB6fV7&F2vR7F&Vp&VWfBf7BWffrv&Bf7W6VBƖfW7GPfW'7W2&&6RB( R~( fW'7W2( FRgWGW&P^( ( "( "7W'ffrFRW&fV7B&VwVF'7F&&W7G2Vfǐ7&VFrvR7G'V7GW&W2FBV&RFVFg&62V67vgFW"W"BFFVvFVFr7&6W2BV&ǒ7FvR( "( "&W&WV6FR2FR66W72FBvw&VvFbFPFFVVFVBf"'W6W72FV662&VwVF'&W'Fp2vV27G&W72FW7FrvfW&6R2Bv&@"W"G&òN( 2&'W7B77FVF6V6BwVW70WfW'FV66FRFW&Vf&RFRf6B&V7B&V7FfW2VVBFFPF66VBFW6Rf7F'2FR7G&FVv2F&V7FW7B6&R6WBf"FRVVFFBF֗6p7G27&72FRrFW&66BƖfW7GPVVG2( 2bF2vFWBWFrgWGW&RfW7F'2 VfrFWfVVBVf"gWGW&R7&6W2BVFfVB6&W7VBFRw&V6vRbFV &WWFF&FVB''W6W72FV266pB&&BF66WG2vRg&6266VगB26&VBFBFRWV7WFfR&&G2vW&PW76VFǒ&ƖG6FVB2&6FFv6( B7F&PtRC