DECISION-MAKING, P.2

 

The board, unprepared for the controversy, rescinded the first requirement, but tensions between staff and management remained. Now, says a former board-member, "You write someone up for something, and now they'll go to the union, claiming racism. The situation is polarized."

The lesson: If shareholders complain about something, don't leap into action without first taking a moment to consider its consequences. In this case, instead of a ban, the board might have suggested to the staff that it be sensitive to shareholders' concerns and curtail non-English when it seemed appropriate. On the other hand, a practical rule, properly explained, can usually succeed. Few could argue against the safety rationale behind the radio requirement.

Insurance Required

Can a board, for everyone's financial safety, require apartments to carry personal homeowners' insurance? All the experts say, "Yes, of course." But many boards don't touch it.

"How do you monitor it?" asks Barbara Strauss, executive vice president at York International Agency, an insurance broker. "The buyer may have given you his policy at closing, as you require, but how do you know that they have kept paying the premiums?"

"The requirement is not that difficult to pass. But it does become a tracking problem," agrees Irwin Cohen, the principal in A. Michael Tyler Realty, which represents a number of co-ops that have such a rule. "You just have to put procedures in place to be sure they renew the policy every year."

In one co-op, Strauss reports that the building deals with the issue by obtaining the policy itself and paying the premium, which it then charges back to the shareholders.

At 110 Riverside Drive, a 169-unit co-op on Manhattan's Upper West Side, the board instituted a homeowner-insurance requirement with a workable supervisory provision. The rule requires a minimum of $60,000 property coverage, of which $10,000 is for improvements and betterments and $1 million is for liability insurance. The board had an insurance broker give a presentation to the shareholders about the losses an owner could sustain without such coverage, and convinced an overwhelming majority of the shareholders to support the policy. As for enforcement, the board requires that every March, owners must provide proof that they have renewed coverage for the coming year. The two-building Towers on the Park condominium at 110th Street and Central Park West likewise requires unit-owners to carry homeowners insurance.

The lesson: Communicate the necessity. You can avoid controversy by making residents realize it's in their best interests.

Open Sesame

If democracy is about transparency, then open board meetings are just another part of democracy, right? Not if you views co-ops and condos as corporations dealing with sensitive personal matters that the public at large has no business knowing. But what if residents accuse you of acting improperly behind closed doors, of making reckless decisions that fit into personal agendas? "If you've got nothing to hide," they say, "open up the meetings."

That was the charge at one Manhattan building on the Upper East Side, where a board member who is also an attorney reports that a dissident group insists the board open up its meetings or face a lawsuit. "We are in the right," he notes with a tone of self-righteousness. "So I say, ‘Bring it on.'"

Right or wrong here is not cut-and-dried. Some argue that open meetings are a plus and that privacy questions can be easily addressed. "This [co-op or condo apartment] is usually a person's biggest investment, so if they want to attend, I think they should be able to," says attorney Steve Wagner, a partner in Wagner Davis. "If there are personal financial issues or other private matters, the board can go into an executive [confidential] session. What are the possible downsides if you reserve the right to go into executive session?"

He adds that by making them transparent, the meetings lose their appeal to outsiders: "I find that once they are opened up, nobody [outside the board] comes to them."

Others insist it is cumbersome having an open meeting with closed portion. "When should it be closed?" asks Weinstein. "You need to do it when you're discussing potential litigation or contract negotiations, or when you're considering firing someone or are examining a shareholder's finances. The list could go on and on." In addition, he notes, discussion within the board is legally confidential; once an outsider is present, that protection is lost.

Some professionals offer this compromise: an open section where general matters are discussed, followed by a closed session.
The lesson: A new policy may seem like a no-brainer until you start looking at the issue more closely. Knowing the pros and cons of a choice to switch to open board meetings, for instance, can help sell your decision to the homeowners and thus reduce or eliminate controversy and bad feelings.

Adapted from Habitat October 2007. For the complete article and more, join our Archive >>