New York's Cooperative and Condominium Community

Habitat Magazine Insider Guide



Here Comes the Sun

Dolores Chainey sits in her apartment on the 18th floor of one of Lindsay Park's seven 22-story buildings smoking a Benson & Hedges, watching Montel Williams, and giving the property manager of the 2,702-unit Mitchell-Lama the once-over.


"What you doing about the parking lot?" the longtime board president asks over the tip of her glasses. Not waiting for Jay Silverberg, president of Zenith Management, to answer, she moves on in with a barrage of other concerns, casting suspicious glances at him no matter how he responds. "What about the laundry room?"

"Paperwork is getting done," Silverberg says.

"What paperwork? Why haven't I seen it?"

"It's…" starts Silverberg. Chainey interrupts, pointing the cigarette at him.

"When? Tomorrow? You going to get it to me tomorrow? How come I can't get a copy?"

Silverberg sighs and tells her he'll get her a copy the next morning. They tackle a number of other topics in similar fashion. "She's a tough cookie," he says later. She's had to be. For that matter, so has he. The last manager, a younger man than Silverberg, resigned after getting bleeding ulcers. This development could do that to you.

Lindsay Park is a massive piece of property to manage. More than 10,000 people live in the 14-acre site in Williamsburg, Brooklyn. It has a 74-person maintenance staff, three Olympic-sized swimming pools, three children's pools, dozens of laundry rooms, a number of parking lots, 28 elevators, and commercial buildings with two supermarkets, a restaurant, and a number of doctors' offices. The board of directors consists of 21 members.

"Lindsay Park is a city. It's larger than some of our towns in upstate New York," observes Stanley Dreyer, the property's attorney and a partner in Gallet Dreyer & Berkey. His firm and its predecessor have represented Lindsay Park for about 35 years. One-quarter of the file space in his office is dedicated to the property. "It is also a microcosm of New York City," he adds. "Problems you have there you have here."

And Lindsay Park has certainly had more than its fair share of problems. Actually, since Day 1, nothing has gone quite as planned.


Lindsay Park opened in the late 1960s, but construction was not fully completed for nine years. During that time, developer Stanley J. Harte made no payments on the underlying mortgage of $42 million, so when control was finally given over to the corporation, they were already millions of dollars in the hole. As a Mitchell-Lama property, Lindsay is a limited equity cooperative, meaning that units are sold for around $3,000 to $6,000 per apartment, which is then returned to the shareholder once he or she leaves. Because the housing is designed for low- to middle-income families, there are strict financial requirements for purchasers and a waiting list overseen by the Department of Housing Preservation and Development (HPD). Given the limited equity status, there was little chance from the get-go that the property would be able to make up for the lost years. A large onetime assessment could not be passed.

"The buildings opened one at a time and the developer retained control until the last one was finished," recalls Dreyer. "Shareholders were permitted to have a tenants' council, but they acted purely in an advisory fashion. They really had no say. The compounding of the problem caused by the developer's failure to pay either on the interest or principal ensured that there was no way of catching up."

Not long after control was given to a functioning board, with financial problems already swamping the fledgling group, the physical plant started having some shakes, as well. There were roofing problems, plumbing problems, and all the other misadventures in construction involved in a project this size.

Chainey recalls a surprise she got on Thanksgiving Day in the early 1970s: "I was preparing my Thanksgiving turkey and was just pulling it out of the oven when the ceiling fell down on top of my turkey." The accident helped spur her into action. The former beautician joined the board and was elected president in 1979. The daughter of a soldier, Chainey brought a tough-mindedness and no-nonsense approach to her role.

"I lived here. I liked it here. I saw that there was a lot not being done and I felt that there was a lot that I could do," she explains. "I'm a worker, and that's what was needed," she says.

She had her work cut out for her. In addition to the ballooning $42 million debt, the developer had, not surprisingly, given sweetheart deals to the two supermarkets occupying the property's commercial space with automatic renewal and no increases. Also, there was the surprise of a mysterious $5 million water and sewage bill: another thing the developer had paid nothing on. On top of that, some shareholders refused to pay their maintenance on a regular basis, so that arrears were lurching into hundreds of thousands of dollars a month.

Now, arrears was something she could sink her teeth into. Under rules developed by the board and the co-op's attorneys, a zero-tolerance policy was instituted. When a shareholder was just 15 days overdue, the attorneys started the eviction process. If the money was not paid by the court's due date, a marshal removed the shareholder and his possessions from the apartment and the locks were changed. It became a monthly event.

Maintenance is due by the first of each month, with a grace period to the tenth day. If not paid by then, a $25 late fee is imposed. If not paid by the seventeenth or eighteenth day, reminders are sent out by management. On the twenty-fifth day, the attorneys are given the names and addresses of owners and then they send out three-day notices. If the shareholder still does not pay by the court-assigned date, usually within six months of the first notice, he or she is evicted.

The end result of this policy was a huge reduction in the arrears list. About 35 to 40 shareholders are guilty now, roughly one-tenth of those in the past. (For more on this policy, see "Hotline: Collections, by Chainey," Habitat, August 1996.) The board's most recent update of its tough policy is to publish and post a list of delinquent shareholders in each building, by name and amount. In doing this, Chainey is at odds with attorney Dreyer, who disagrees with the move. But the board does have the support of HPD, which oversees the property. Chainey says the action is about getting things done and not being quiet when there is an issue.

"When people call me, they know that I'll do something about their problem," she notes. "Night or day, they do and I try to take care of it. And if the people who work for you aren't good, clomp them on the head and make them good."

Maybe that's advice the district attorney should hear. Not long after Chainey started trying to fix arrears, the development got another surprise. Their management company, Elm Management, was facing the D.A. on charges of taking kickbacks. Though Lindsay Park was never linked to any wrongdoing on the part of management, it was just one more example of bad luck. The one positive in all this was that the board retained Silverberg as manager.

Silverberg had started at Elm working in the back office and became involved with Lindsay Park when Elm president Arnold Zabinsky asked him to attend shareholder meetings. As it turned out, Silverberg was about the only one in the office who could handle Chainey. "You have to learn to stand up to her," he notes. "You also have to pick your fights. The last guy let her walk all over him."

After working for Elm for a number of years, Silverberg burned out and left to open his own business — a bagel shop in, what would turn out to be, a rough section of Long Island. "It was a bad idea," he admits, now, with a laugh. His brief stint in the bagel business lasted only one day, and he sold the shop. Learning of this, Zabinsky asked him back. Elm was close to losing the account.

Silverberg rejoined Elm in 1995, but he says he kept the relationship at arm's length. When Elm finally fell, the next company found out what Elm had long known: this was a tough piece of property. The new agent dropped the co-op quickly and Silverberg picked it up. With approval from HPD and the formation of his own firm, Zenith, he took over full-time duties in 1999.

The only legal matter that was caused by Elm's activities was that one contractor who had done work for Lindsay Park had to make a payment to the fund created by the D.A. From that fund, Lindsay Park is entitled to about $60,000, but so far only a partial payment has been made to the property. "We were fortunate," says Dreyer.

HPD continues to oversee the property. So the logical question would be: where were they during the rough years? "We've been aware of the problems for many years but it was always going to be addressed later," says Julie Walpert, an assistant commissioner at HPD. Policy dictates that an HPD agent work directly with the property and review its finances. If it is discovered that the current finances of the property aren't sufficient to meet ongoing needs, the board can apply to increase carrying charges, which Lindsay has done over the years.

The first one helped boost debt service payment from $600,000 to $900,000. Another moved it up to $1.2 million, where it currently sits. Forgetting the arrears created by the developer's gaff for a moment, payment on the original $42 million loan, at six percent interest, should be $2.4 million a year. Lindsay Park was covering only half of that.

Despite these problems, capital improvements were made at the property in the 1980s with the help of funds that the city was able to procure. But given the age of the property, more funds were going to be needed going forward. But where were they to be found?


Last year, with the help of Walpert, Lindsay Park was able to get a $6 million grant to fund improvements at the property. Included in that would be a $3 million elevator project and $1 million in park and walkway improvements. Any further use of the funds must get HPD approval. However, there were two hitches to the grant: one, the city would consider it a loan, unless all the work is completed within five years. If the capital improvements are made before that deadline, then the loan becomes a grant and need not be repaid.

The second condition was that Lindsay Park needed to pay off the $5 million water and sewage bill. To do that, attorney Dreyer and accountant Richard Montanye, of Marin & Montanye, arranged a loan from Amalgamated Savings Bank. In the process of working out these loans, Lindsay Park received yet another unpleasant surprise. A small piece of property that the co-op owned, of which they were unaware, had been accumulating real estate taxes totaling $120,000. The New York City Department of Finance had the lot listed as commercial. As part of their subsidy, Mitchell-Lama properties are sheltered from paying full real estate taxes — they pay a fraction of what a market-value co-op does, but they must pay full taxes on commercial property they own. Dreyer was eventually able to prove to the city agency that the lot had never been used for commercial purposes and the delinquency was erased.

Work on the elevators began in January and, in order to make the deadline, the contractor agreed to work on seven elevators simultaneously, one per building. The elevators should be completed in 24 to 36 months and Dreyer fully expects Lindsay Park to make the deadline.

Around the same time that this was happening, Dreyer was busy renegotiating the commercial leases. Having set a uniform expiration date for all of them of November 2001, all the leases were wiped off the books and the contracts were updated to reflect current market situations. They had been operating on leases that were using rates that were 30 years old — or older. Rent was doubled and a seven-percent increase in rent is to take effect every five years for the term of the lease. The commercial properties were also made responsible for their portion of real estate taxes and given the responsibility of the maintenance of their parking lots.

"With all of this retroactive to the fiscal year," says Dreyer, "Lindsay [Park] collected a substantial amount of money and will be collecting substantially more than they ever have before." While the commercial space isn't providing full market value, Dreyer adds that it is getting as much as the area can bear.

The biggest piece of the pie still remains, however. Over 35 years, the $42 million underlying mortgage ballooned to $105 million as interest kept accumulating and compounding. An impossible figure, say those involved. To bring attention to its plight, the board stopped paying money on the debt service a few years ago. As of late April, the parties were busy trying to restructure the debt and refinance the property at a lower interest rate, from six percent to two-and-a-half percent. They hope to make a portion of it self-amortizing, as well. In doing all this, they worked backward, according to Dreyer. They are trying to arrange the debt to match what they could afford to pay. Tentatively, the answer seems to be that Lindsay Park is going to be able to split the debt, paying off $35 million until 2041, and then working out something at that time with the remaining $70 million.

"It was a brainstorm between all of us," recalls Dreyer. "It was a lot of work, but it was also fun doing it. It was intellectually challenging: can we get IRS approval? Can we make it so that it is highly beneficial with no damaging effects?"

"We really wanted to make sure Lindsay [Park] was in good physical and financial shape," says HPD's Walpert. "The ultimate solution required a continuous, joint effort on everyone's part. The professionals and the board were beyond competent. They were studious and very forward-thinking. The property is now well on its way."

After years of troubles, things would seem to finally be shaping up at Lindsay Park but, as Dreyer notes, this is a "city" and its problems are city problems.


The demographics of Lindsay Park were originally primarily white, Jewish, and African-American, with a spattering of Hispanic, says Dreyer. As the development aged and the city itself changed, the faces changed at Lindsay Park, too. For one, there are many more Asians living there now. When a shift in the makeup of a property happens like this, there can often be the impression that something illegal is going on, that somehow a certain ethnic group has found a way to circumvent the rules, according to Carol Abrams, a spokesperson for HPD. Anyone wishing to move into a Mitchell-Lama must qualify with HPD and then get their name on the waiting list. As one tenant moves out, the next person on the list moves in.

"As the demographics change, the tenancy reflects those changes," Abrams says. "People see the colors of their neighbors change and wonder what is happening. Most of the time, the people are properly on the waiting list. We have a zero-tolerance policy for illegal transfers."

Nonetheless, the changes have provided fuel for a group of dissidents known as The Coalition for the Betterment of Lindsay Park. Looking at a stack of papers with shareholders' names on them, Andrew Rodriguez, president of the coalition, points out that there are on average 100 or so Asians per building. He contends that many of them may be there illegally.

Experts admit that such a scenario is possible and that Lindsay Park is no exception. Illegal subletting is a problem familiar to most cooperative boards — one party moves in, signs the lease, and then allows someone else to live there while they live somewhere else, but for some reason, one doesn't think of this as being an issue that a limited equity co-op would have.

The assumption is naïve. While no one would venture an estimate on exact numbers of illegal sublets, industry experts say that they exist and people are aware of them. The other issue is that, according to the coalition and other attorneys who deal with Mitchell-Lamas, some tenants when moving out simply bypass the waiting list and sell their units directly to another person. Selling or subletting a Mitchell-Lama apartment is illegal under HPD regulations.

"The problem is rampant," reports Andrew Brucker, a partner with Schechter & Brucker, who represents a number of Mitchell-Lamas. He recently submitted to the HPD inspector general the phone numbers of two real estate brokers that were offering Mitchell-Lama units for sale. "Personally, I find this very upsetting. This is our tax dollars going to support low- and middle-income families and someone is selling apartments, making a profit and we're still subsidizing them. It's ridiculous."

Members of the coalition claim it is happening on a large scale at Lindsay Park; they have a dozen pages printed from a website that lists sale prices

at the property and they claim that some newspapers carry classified ads. (The source for the sale list was and was found through America Online.) If the list is to be believed, someone is selling apartments for anywhere from $30,000 to more than $269,000, far beyond the limited equity buy-in of $3,000 to $6,000. Further, the coalition, which says it gathered 200 people at its last meeting, complains that the board and management are aware of this and are doing nothing.

Silverberg says that they are doing all they can. After he was given a copy of the sale list, which is no longer available online, he turned it over to the investigative arm of HPD. Dreyer, who also saw the list, contends that the whole thing is phony. Since the financial transactions are all confidential and go through HPD, which certainly wouldn't approve of such sales, there is no way, he says, that the list could be true. Silverberg also doubts the veracity of the list. After all, if the people selling the units knew they were doing it illegally, why would they publish it and draw attention to themselves? HPD could not comment on an ongoing investigation. With regards to illegal sublets, Silverberg says that they evicted 22 illegal sublets last year and act on every one they discover.

One of the problems is that it is tough to root out those that shouldn't be there, especially if they may be good tenants. "If the person is quiet and is a good neighbor, people are sometimes reluctant to tell on them," Silverberg observes. "They may fear getting someone to move in off the waiting list that isn't as good."

Those that illegally sell or sublet are clever, he adds. Some continue to pick up their mail and bills and pay maintenance, while living elsewhere. Others slip in family members not entitled to units. While the annual income affidavit done on every shareholder helps catch some, it doesn't catch all. The affidavit asks for the names, ages, social security numbers, and incomes of all members of a household.

But there are many variables: names may be different because of marriage; other family may live there; there may be a language barrier. Some tenants may decide not, or forget, to hand in the form, which results in late fees and surcharges. If someone is over the financial level, they may either choose to pay a nondisclosure fee (50 percent of the base rent), or not hand in a form at all (surcharge plus about $200 in late fees). Senior citizens may not remember. So, non-submission or non-disclosure aren't necessarily indications of illegal activity.

Another problem with taking action against illegal sublets and/or sales is that the cost can be prohibitive, especially for limited equity properties. It can also take years to get an eviction.

"It is so hard and expensive to really enforce rules that people are getting away with this," says Brucker, who handled one case where the person admitted in court that he had paid $25,000 for his apartment. "You can pay a lot in legal fees and not be reimbursed for it. If the tenant is not problematic, boards may wonder why they should go after them."

The problem is partly political, too. Mayor Ed Koch eliminated the rule in Mitchell-Lamas that required shareholders to leave if their income was too high to qualify for an apartment two years in a row. The surcharge on excessive income remained, but it wasn't/isn't enough to discourage people from living there. So, while low- to middle-income families are supposed to be the ones living in Mitchell-Lamas, it is not rare to find a Mercedes and Lexus in the parking lots. These shareholders may have once lived legally in their units, but now it's pushing the envelope and marring the original intent of subsidized housing. And if you start action on one, you probably need to start on the others.

Given the costs, the staff needed, and potential cuts to HPD's budget with the current fiscal crisis, the answer may be that neither will get better.

Silverberg, for his part, when asked what he would do if allowed a free hand to solve the problem, enlisted the very people calling for his head.

"I really encourage residents to report illegal sublets and then to testify when it comes time to go to court," he says. "Often people report a problem but then won't testify. The other thing is that courts need to cooperate with us more. It is very difficult to get evictions on a timely basis. Usually, the sublettor knows the loopholes and how to use them. It is very frustrating."

Once word gets out that sublettors can make it in your building, he adds, it sets a bad precedent and can open the floodgates. That's why he says they pursue every one that they become aware of.


Problems with sublettors aside, Lindsay Park has come a long way in the past few years. And once the refinancing is put in place, the property will be on sound financial footing for the first time in its history. For Chainey, who answers questions about her age with, "I'm old enough to eat cornbread without getting choked," it seems a good time to make an exit. She says this is going to be her last year. The process is already underway. The board, once under the strict leadership of Chainey, is now becoming more democratic and members are finding more of their voices. Many also have talents that weren't really around before, says Dreyer. Also, whereas the tough answer to criticism may have been what the property needed once, a shift to disseminating more information to the public is happening. The first newsletter started in May.

What advice, after having survived all that she has, would Chainey give to other board members: "Just work. It's a working job. You got to stay on, stay alive and alert, and don't give up. Don't ever give up."

Dreyer feels the same way. He concludes: "The longer you're there, the more you enjoy it. You can't be with a place 20 years and not become involved. We've got funding for all the major projects coming up; the refinance will put us in solid fiscal shape. What else can happen? Your electricity goes out, the price of oil could triple. You have no control over these things. You just try and do the best you can. Will I be around to see the benefits in 2041? Probably not. But someone will get a message to me. The light at the end of the tunnel is definitely not an oncoming train."


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