Don’t let the taps run dry in your community housing scheme

Community Housing Schemes should as a matter of urgency be making sure that they have a secure water supply system that is independent of the municipal infrastructure.

That’s the word from Andrew Shaefer, MD of leading property management company Trafalgar, who says: “South Africa is a seriously water scarce country as it receives about 40% less than the world average rainfall. It also has a much higher water usage rate and, sadly, loses about 40% of its potable water every year to leaks, wastage, and illegal connections.

“This situation is being exacerbated by climate change impacts and lack of infrastructure maintenance, as vividly illustrated by the Day Zero scenario in Cape Town in 2018, the flood damage in KwaZulu-Natal during 2022, and the ongoing water restrictions and interruptions in large parts of Johannesburg and Pretoria.”

Recently, he notes, the Department of Water and Sanitation also warned that the supply situation in Gauteng can only really be expected to improve in five years’ time, when the second phase of the Lesotho Highlands Water Project is due to come on stream and increase the amount of water in the Vaal system. 

“Meanwhile, loadshedding is making the water situation even more difficult for many community housing schemes when there is no power to pump water to their reserve tanks even when there is water available.

“Consequently, we strongly suggest that all estates, Sectional Title (ST) schemes, and retirement villages that do not already have a backup water supply should take practical steps as soon as possible to ensure that residents have access to water even when the municipal taps run dry.”

Schaefer says such steps could include:

• Installing additional water storage tanks to extend the time that the complex can go without municipal supply;
• Installing a solar pump or pumps so that water can be supplied from a borehole during municipal outages, if the complex has one;
• Drilling and equipping a borehole if the complex doesn’t have one; and
• Installing rainwater storage tanks and solar pumps, especially in complexes that have extensive roof areas.

“In ST schemes it could reasonably be argued that any of the steps should now be considered a necessary or non-luxurious improvement, but before going ahead the Trustees will still have to follow the procedure set out in Prescribed Management Rule 29 (2). This provides for the Trustees to give owners 30 days’ written notice of what they intend to do, including details of the proposed project, the reasons they consider it necessary, what it will cost and how it will be paid for.

“Within that 30-day period, any owner can request (in writing) a meeting to discuss the proposal and if that happens, the Trustees have to call a Special General Meeting (SGM) and seek to get a special resolution passed before the project can proceed.”

As for the financing needed to implement a backup water supply system, he says, this should ideally come from the scheme’s own Reserve Fund. “However, if this is not possible, Section 4 of the Sectional Title Schemes Management Act (STSMA) empowers the body corporate to borrow any money required to perform its functions, including the restoration, maintenance, and enhancement of value with the scheme. 

“Such loans are available from Trafalgar Financial Services*, for example, and enable ST schemes to ‘lock in’ the price of a particular project and avoid the risk of material and labor escalations over time, while also retaining the savings in their Reserve Funds for emergencies and future maintenance.”

However, says Schaefer, before taking out a loan, the Trustees will need to get the consent of the owners in the scheme via a special resolution, and the minutes of that meeting will need to show the details of the loan amount, the agreed repayment period and the special levy schedule showing each owner’s obligations as regards the repayment.

“In addition, we would recommend that any scheme requesting a loan for a larger scale project should also appoint a professional project manager, whose fees can be incorporated in the finance agreement. This professional assistance will protect owners by ensuring that the scope and expected cost of the work is accurately determined, that the project is completed on time and the scheme receives good quality work and the proper guarantees.”

*Trafalgar Financial Services is a registered credit provider (NCRCP2678).