New York's Cooperative and Condominium Community

Habitat Magazine October 2020 free digital issue

HABITAT

ARCHIVE ARTICLE

Turning Points

The residents of Turner Towers have always cared about their property, even when it started life as a luxury rental in 1926. Its genesis can be tied to the opening of a Brooklyn subway connection to Eastern Parkway in 1923. As real estate prices soared, several buildings were constructed between Grand Army Plaza and Washington Avenue. One of them was Turner Towers, a 15-story apartment building topped by four penthouse suites, a four-story water tank, and an observation kiosk. The property was expected to cost $7 million to construct and would be the tallest multifamily structure in Brooklyn and the third largest in the United States. Its owner and builder was the Turner Brothers Construction Company.

Those who eventually lived there had reason to care: it was a beautiful building overlooking the lovely Prospect Park. According to a history prepared by former board president Andrew Smith, "It occupied 200 feet on Eastern Parkway and had a depth of 180 feet. Originally, the building totaled 183 apartments with more than 1,400 rooms, including 300 bathrooms. Many apartments had three different exposures. Inside the apartments, the living rooms had unusually high steel-beamed ceilings (10 feet, 6 inches), permitting alteration 'to suit the whim of the tenant.'

"The apartments also had ornamental steel cabinets which covered the radiators, an extra sink and plenty of cupboards in the butler's pantry, mail chutes, fire tower stairs with two exits from each apartment; guest closets in the foyer and ample closets throughout the halls, including cedar-lined closets. All bathroom and kitchen fixtures were purportedly constructed in solid bronze with a French hand-wrought design. Each apartment had central lighting and side brackets. The woodwork was painted an ivory color and the doors in walnut. The public halls were distinctively wide and were lit with lanterns."

DEEP-SEATED TROUBLES

The building's beauty hid deep-seated troubles, which came and went with every change of owner. The total cost of construction came in at $6 million. "The Turner brothers poured about $2 million of their own funds into the building, but they were only able to secure a first mortgage of $1.9 million," writes Smith in his history. "But they were still $2 million short, so expenses had to be reduced while the building was under construction and the debts owed by the building were not paid. Specifically, the plumbing system appears to have suffered from the financial squeeze more than anything else. The plumbers took out liens of more than $190,000 for unpaid plumbing bills in November 1927. To prevent bankruptcy, Turner Towers was placed in custody of the Equity Division of the Brooklyn Federal Court in December, but Samuel Turner remained in charge of the building. To cover immediate expenses, Turner took out a second mortgage of $572,000.... In a foreclosure action in May 1930, Turner Towers was sold for $350,000 above the mortgages to the Beverwyck Holding."

Tenant activism, a hallmark of the building, first appeared at about this time. "From the beginning, tenants with baby carriages were required to use the service elevators," writes Smith. "In September 1928, dogs had been outlawed on the passenger elevators due to complaints by some tenants. Specifically, a chow dog jumped on a passenger in the elevator and frightened her. A dog-owner, James W. Samuel, head of the St. George Health Service and purportedly a member of a royal Russian family, took Turner to court."

Turner Towers went through a succession of owners until, in more recent times — a little over 20 years ago, in 1980 — it was heading towards ruin, with its landlord near bankruptcy. The neighborhood had gone downhill, and so had the building. "This was a wonderful, beautiful building that was about to become a slum," recalls attorney Arthur Weinstein, who handled the property's conversion and is still its corporate counsel. The building was rent-controlled and the income "could not maintain the building. Landlord after landlord had failed to turn it around. The roof, the plumbing, and the facade were all failing, and there was no money to properly repair them."

Recalls Smith, who began living there in 1981: "The property was in very bad shape. The first day in our apartment, I was cleaning the windows — they looked like they hadn't been cleaned in ten years — and the panes fell out, falling 11 stories."

In 1980, the residents took charge, undertaking a tenant-sponsored conversion of the property, whose owner had filed for bankruptcy. "The tenants got together and convinced Lincoln Savings bank to advance them $300,000 for the costs of co-op conversion and to maintain the building during the co-opping process," says Weinstein. "The former landlord was happy to leave with $5,000 in his pocket."

It was rare, it was unusual — Weinstein says there have been less than 100 in the past two decades because "they are so hard to do" — and it was born out of a particular operating philosophy: that the residents must, in Benjamin Franklin's memorable phrase, "all hang together or we shall all hang separately." Observes Weinstein: "The one ingredient that made Turner Towers a success was the love of the tenants for this building. Without the real commitment from those volunteers, it couldn't have happened. They wanted to make it a home." That communal philosophy was both good and bad. Good, because it meant the owners took charge. Bad, because they treated the property more as a home than a business. "One of the great things about it being tenant-controlled was that if something goes wrong it's our fault," Smith says. "It was about us making the choices that affect us."

OWNERS IN CHARGE

A 15-member board was set up to be representative of everyone's concerns; as a 15-headed monster, it also made it hard to get things done. The situation was complicated by what some have dubbed the board's "renter's mentality": a refusal to raise maintenance or look at the long-term needs of the property.

"There was no realization of how much work was required to get the building in shape," Smith says. "There was no sense of treating the building as a business. When financial problems came along, the board refused to increase maintenance; 90 percent of our income was from the maintenance, so the building started to go into debt to maintain the building and pay staff salaries, not for major capital improvements, which would have made more sense."

"From the beginning, the building was underleveraged," adds Aaron Polak, the building's current president. "When you have a sponsored conversion, the sponsor goes and borrows and repairs the infrastructure so he can better sell apartments. That never happened at Turner Towers. Repairs were done in dribs and drabs when things reached a crisis."

The co-op was kept partially afloat by an unusual 25 percent flip tax, which brought in extra income during good times and resales, as the market went into an upswing in the 1980s. "Sales prices went up," Smith recalls. "When I bought, they had ranged from $8,000 to $15,000. Today, they average $350,000 to $400,000. As a result, you get a different class of people: more lawyers and doctors. I couldn't afford to buy here now."

The property was in disrepair and the influx of new, younger owners in the 1980s led to changes. The new owners — who replaced the elderly, rent-controlled, and fixed-income residents — had invested significantly more dollars in their apartments and wanted to see capital improvements. They were more amenable to maintenance increases.

Additional money was raised when a banker in the building renegotiated the mortgage, playing two lenders off against each other to get the best rate. The co-op refinanced, collapsing two existing mortgages into one for about $5 million with a 6.25 percent interest and a $3 million line of credit, tied to LIBOR (currently, that means a 4 percent interest rate).

Additionally, the board had to cope with contractor issues. Work was bid out but corruption was widespread. Marvin Gold, president of Marvin Gold Management, the property's longtime manager, later admitted that his agents solicited kickbacks, inflating the costs of construction jobs performed at the building. Just as significantly, that work was poorly done. (The board later sued Gold and the contractors and also retrieved $30,000 from the Manhattan district attorney's kickback restitution fund.)

The co-op also let serious arrears problems — $300,000 and increasing every month — grow worse. Recalls Smith: "People would not pay maintenance because there was a leak from above and they wanted the board to fix it. They would withhold maintenance. And the board, full of nice people, refused to foreclose." The catch-22 was that the arrears depleted the operating expenses, so repairs could not be made.

BOARD AS BUSINESS

Such problems led to changes on the board as it became more activist and involved, treating Turner Towers primarily as a business and secondarily as a home. During the reigns of three different presidents — Smith, Susan Cooke, and Polak — the board instituted new operating policies. For one, the manager was more closely supervised. In addition to the contract, the board prepared a two-page rider listing performance standards, based on what past managers had failed to deliver. "We had been burned in the past," explains Polak, "so we knew what we wanted."

A new committee system was also set up. "People who want to do specific projects sit on committees," Polak notes. "They narrow down the options for the board, rather than having 15 people sitting around discussing everything. Our average meeting last year went from over two hours to under an hour. A ton of work is done in between."

In fact, the current board requires preparation between meetings, a relatively new idea at Turner Towers. Polak insists that proposals and agenda items be submitted in advance so that discussion can be expedited and decisions more quickly reached. "People can read and digest the information before the meeting and be ready to discuss it."

The board has also put in place an incentive program to get more from their new superintendent, who was hired last year. "Every time he can demonstrate a reduction in expenses, he gets a bonus," explains Polak. "Every quarter, the management committee meets with the super and reviews finances. He just finished one quarter and got a bonus."

Over the last three years, the co-op has also undertaken extensive capital improvements — repointing work, terra-cotta replacement, elevator modernization, and selected plumbing repairs — funding them with income from the refinancing, the line of credit, and the flip taxes. The work is currently supervised by Marge Louer, chair of the capital improvement committee.

Bottom line, the co-op's philosophy hasn't substantially changed. It is still about community, but it has taken on a new slant: that the community is a corporation as well as a home. "There is more of a sense that we are running a business," says Smith. Adds Polak: "I liked the way the building was going under Andy and Susan; I just wanted to get where they were going faster. I'm very results-oriented. I always want to keep pushing, so that when you walk into this building you say, 'Wow, what a great place.'"

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