Over 50 years ago, when George Crethan first became involved with Queensview, a 726-unit limited equity co-op in Long Island City, he wasn't even living there. A civic-minded man with a background in advertising, he got interested in the property when he discovered that it was trying to raise money for an onsite nursery school. Bake sales and other fundraising ideas were bandied about, but none could bring in the kind of money needed. Crethan came up with the idea to start a "Welcome Wagon."
"For a $2 fee, we would deliver milk or beer or laundry," Crethan recalls. The idea took off and the nursery school opened in the spring of 1951. Crethan moved in soon after and has lived there ever since.
When people talk about the success of cooperatives they often wax poetic about what that means — about the cooperation it takes to form a community and to live together in relative harmony and how everyone relies on each other for the betterment of the property. To a large extent, this is true, but sometimes it doesn't take into account the actual relationships among shareholders and their feelings about being part of a larger group and a larger ideal. It is not just the financial commitment to each other, but the personal one. Ask yourself this question: if suddenly given a chance to make a big windfall on your investment, would you cash it in to move elsewhere?
Limited equity co-ops were set up as ideals, homes in which middle-income families could afford to live in New York City. With caps placed on shares and waiting lists maintained by city agencies, it was fair housing at fair prices. Queensview was one of the first. But, as all good things must come to an end, so did the era of limited equity co-ops. Given a 25-year tax exemption and, then, a 10-year extension of that, the co-ops all had to decide what to do when that time ended. Should they go to "open market" rates, allowing shareholders to sell their own units to whomever they choose? Or should they continue as limited equity?
Queensview was the first to go through this process, known as reconstituting. They were thus the first, and eventually only one of a few, to decide to keep their limited equity status and not go to open market. For Crethan and other long-term board members, it was about staying true to the community.
"Queensview was planned and built by civic-minded people and it was always intended to be a non-profit development for middle-income people," notes William Henick, chairman of the board and a resident since 1951. "There is a great shortage of that today and we wanted to maintain our objective to provide it."
"There was a small segment of the shareholders that felt this was the time to reap the harvest, to rake in the big bucks, but the majority wanted to keep the property affordable for the average Joe — the school teacher, the printer, the baker," says board president Alexander Santora, a former deputy fire chief for New York City. (The board has both a chairman and a president. Since they are self-managed, giving some of the president's duties to a chairman alleviated a bit of the pressure.)
More than 90 percent of the shareholders voted to stay a limited equity co-op. In doing that, shares were capped at $3,000 and the waiting list was continued. But now, rather than being maintained by a city agency, the board retained control of the list. Another limited equity co-op on Grand Street tried to do one without the other — capping prices but allowing shareholders to find buyers. After several years fighting shareholders that were not following the cap limits, the Grand Street co-op eventually went to open market.
"Electricity has gone up; labor costs have gone up; everything has gone up," says Crethan. So, how can a limited equity property survive today without tax breaks? The answer: with a good, active board and community.
While much of New York City's subsidized housing has experienced financial woe after financial woe, Queensview has amazingly stayed aloof from it. Howard Schechter, a partner in Schechter & Brucker, has represented the property for the past 20 years. He says the board's sophistication and its strong planning and financial skills have made it successful. He cites First Rochdale as an example.
"When deregulation occurred, it separated generators of electricity from deliverers. Energy service providers [ESP] stepped in to contract with customers and with the generators,
essentially being the middlemen. Queensview was very active in forming First Rochdale, an ESP consisting of a number of co-ops that got together to use their buying power. This board has always been prudent and done what they had to do." Queensview also was a founding member of the Coordinating Council of Cooperatives.
In addition to running a tight ship and saving money where it could, the board instituted a flip tax on units that reverted back to them. In reality, it amounted to an equity increase. When older units are sold back to the co-op at $3,000 per share, new shareholders buy in at $3,750 per share, so the board gets to keep $750 to put into a reserve fund. Currently, says Crethan, they have about $3 million in the bank.
But that can't go on forever. Eventually, probably years down the road, all the units will be at the $3,750 mark. Further equity increases would insure that this date gets pushed further back and would start a new round of funding, but this may not be a permanent solution. Maintenance has gone up tremendously at Queensview, admits Crethan, but it is still very reasonable: $415 for a one-bedroom; $525 for a two-bedroom; and $625 for a three-bedroom.
The biggest concern for board members is the age of the property. Going into its second half-century now, the roofs and windows have been replaced but there may be much more work to be done down the road. The boilers, for instance, are still originals. Henick, a former life insurance underwriter who also did a stint in property management, says that, as wise as they have been on some things, they have been prone to a pay-as-you-go philosophy. He's leery of that.
"We should be doing much more preventive maintenance and really finding out what the useful lives of some of our systems are. If, for example, we find out the boilers only have five more years, we should start putting away money for that now."
The future, he predicts, will eventually involve increases in maintenance and in the equity. Will it involve shucking the whole idea, though? The three old-timers don't think so and they're sure to do all they can to prevent it.
"We've seen what's happened elsewhere when other properties have gone to open market and we like what we're doing here," says Santora. "It's pretty sound."
Crethan, often referred to as a "walking archive" of Queensview, agrees, though he'll be cheering more from the sidelines now. After 28 years of service, he has recently retired from the board. It's been worth it. "I've got a lot of memories of this place. It's a beautiful place to live. And we'll keep fighting to keep it that way."