You've just been elected to the board. You had moved into the co-op one year ago and had been "recruited" by Chuck, one of the board members who said, "We're always looking for fresh blood because some of us have been serving so long we're burning out." On a positive note, Chuck added: "It is a lot of fun and you seem like someone who enjoys being actively involved."
That is true, and you are also someone who likes to take charge, prefers the sense of community in a co-op, and, above all else, wants to protect his investment and improve the value of his home. So Chuck was right to seek you out. You are prime board material.
But as candidate-turned-senator Robert Redford asked at the end of the film, The Candidate, once you are elected, "What do I do now?" What's your job and how can you do it effectively?
No matter how many board members serve - the figure can range anywhere from five to fifteen, depending on the size of your property and the requirements of your bylaws - there are always four officers: the president, vice president, treasurer, and secretary. The bylaws of the corporation lay out the basic duties, which were once succinctly outlined by the late Charles Rappaport, longtime president of the Federation of New York Housing Cooperatives & Condominiums:
The President "represents the cooperative and speaks for the cooperative. The president signs contracts after they have been approved by the board, is a signatory on all financial depositories and other cooperative documents requiring the president's signature...The president chairs both board meetings and members' meetings...Between board meetings the president has the power to make decisions that cannot wait for a board meeting..."
The Vice President "shall act in place of the president when the president is absent and [perform] such other duties as the board may decide...This is a good training ground for an individual to become president...The vice president should be familiar with the duties and responsibilities of the president..."
The Treasurer "is considered second to the president in responsibility. As the chief financial officer, the treasurer is responsible for knowing where the money comes from and where it goes. He oversees the investment of reserves and free cash. The treasurer is a cosigner on all financial accounts. The treasurer is in contact with the managing agent and accountant...Where board policy requires that all bills be approved by an officer before they are paid, it is the treasurer who gives approval for payment... The treasurer works closely with the managing agent and the accountant in preparing the annual budget...The treasurer must be in contact with the accountant who prepares the annual audited statement of the cooperative's finances..."
The Secretary "is the keeper of the corporate records...One of the most important duties is to keep minutes of all board and member meetings...The secretary attests to certain legal documents and places the corporate seal on those documents, as required. The secretary keeps the membership records up to date, issues stock or membership certificates, and notes in a record book all transfers of ownership. The secretary sends out notices of board and membership meetings."
"Some of these duties are assumed by the managing agent," explains Robert Tierman, a partner in the law firm of Litwin & Tierman. "For instance, the secretary typically doesn't handle transfers, except in small buildings. The managing agent does. The officer, in that case, is responsible to see that the agent carries out the duties. The manager may be designated assistant secretary. These are guidelines for what an officer is required to do. The extent to which a board follows them varies wildly from board to board."
Those are the facts. What an officer makes of his role, though, is more a question of personal style, interpretation, and dedication. An officer can do the minimum or go to the max. Filling the posts is the job of the board members after the annual election. Defining them is up to the individual officer.
The president is the leader, the chairman (or chairwoman) of the board, the big boss. If he is skillful, he can get a lot done by consensus. If he is heavy-handed, he can get a lot done through the force of his personality. If he is wishy-washy, the building can flounder. Ideally, he or she should be an experienced board member, with good leadership and organizational skills.
That could be a portrait of Michael Savino, who has been president for "about five years - though it doesn't seem that long." Savino is an activist leader. And there is a lot to be active about at his Manhattan cooperative at 175 West 92nd Street/180 West 93rd Street. Built during the 1940s, the 90-unit building has two entrances and a wide diversity of people, from young and old to singles and families. The sponsor still owns 25 to 30 percent of the units, so there are a high percentage of rentals.
Savino was attracted to the changing neighborhood, and felt the building itself was "No. 1," with large, high-ceilinged apartments. The board members who interviewed him equally impressed him. They were efficient and knowledgeable, sharing with him their plans for capital work at the property, including an elevator upgrade. After moving into the building, Savino became a "director in training," serving as a nonvoting "observer" on the board. "I felt it was a good way to learn about what it entails to be on a board," he recalls.
Within a year, Savino was a full-fledged board member - and president to boot. "I wanted to serve because I have a financial interest to protect, and felt I had particular skills that would be useful."
Those skills epitomize what a good board president is all about. Savino, like all effective presidents, cultivates communication. That is important since the president is responsible for maintaining close contact between meetings with the other directors, the professionals and staff, and the residents.
In addition, the president must know how to lead by listening. "I cannot stress enough the importance of listening and being available to the owners," Savino says. "You have to be responsive, especially if the owners are angry, while at the same time you have to protect the boundaries of the board members' privacy. There's no formula for it."
Using an agenda and a deft hand, the president must run the meetings. He must identify the issues facing the building and be prepared to discuss them at the monthly gathering. He should be involved in crafting the agenda. A good monthly meeting should not exceed two to three hours. Developing a meeting style is also the responsibility of the president.
Savino runs his co-op's two-and-a-half-hour monthly get-togethers smoothly, with an emphasis on the casual. "This is a fairly laid-back board," he says. "A lot gets done in between meetings, via e-mail. We don't stand on procedure," although the board does have an agenda, prepared and distributed in advance. There are honest differences of opinion, he adds, but it is rare for the board not to reach a consensus.
A good president like Savino will constantly seek out answers, and separate individual from group interests. In making decisions, for example, Savino's guiding principle is to ask himself, "Is what I'm doing in the best interests of the corporation?" He adds: "When one shareholder wants us to let a restaurant open up and another says that it will be loud and noisy and opposes it, who is right? They both have valid claims. So I ask, 'What is in the corporation's best interest?'"
The best president will also be able to work with professionals, sharing knowledge in a give-and-take manner. "Michael is very involved but he's not one to nit-pick," observes Steve Greenbaum, director of management at Mark Greenberg Real Estate, the property's manager and also the holder of unsold shares. "He is extremely bright and has a breadth of knowledge, from financing to decorating. As a leader, he grasps the issues and can outline them succinctly. He also understands his role, the role of the managing agent and the super, and he's very open to suggestions."
THE SHADOW PRESIDENT
Myrna Solstein may have never heard of Finley Peter Donne but if she had, she would defy him. The early 20th century writer once noted that, while the presidency of the United States is the highest office of the land, the vice presidency is "the next highest and the lowest...it's a kind of a disgrace. It's like writing anonymous letters." As it goes with the U.S., so it goes with co-ops and condos. The vice president's role is to be a shadow president, assuming the duties of the senior officer when he is unavailable.
Maybe so, but Solstein, a vice president at her Queens co-op for years, has made her office into something more that an elegant understudy. She is, in longtime manager Lynn Whiting's words, a "goodwill ambassador to the building." Whiting, director of management at Argo, adds: "I've known Myrna for 13 years. She's very active in the building and very concerned about the quality of life. Most vice presidents are not as involved as she is, which is why she's a good vice president."
Typically, the vice president substitutes for the president in his or her absence. The person in this position conducts meetings and presides over the meetings when the president chooses to stand down from the chair to take a position on an issue under discussion. The V.P.'s post is a good training ground for future presidents.
Consequently, the vice president should be kept informed about programs, agendas, and policies to be prepared in the event of an emergency where he or she must chair the meeting. For continuity's sake, the V.P. should be encouraged to participate in the inner circle of the decision-making process. He or she should be as aware of the issues and actions as the president in the event of an emergency.
Whiting notes that Solstein is an unusual - and unusually effective - vice president because of her high degree of involvement in many aspects of the community. "Although she has very strong opinions, she has a good working relationship with everyone. She is all for promoting unity in the building."
Solstein, 70, started her co-op life on the other side of the residential fence, doing battle with the sponsor at her building's conversion to cooperative status in 1985. "I was the head of the tenants' association," she recalls. "We didn't want the place to go co-op. It was not kept up properly; we needed new windows, a new heating system, and there were a lot of problems we wanted taken care of [before allowing conversion]."
Solstein certainly knew the issues, having lived in the 1,050-unit, five-building property for 47 years. The Jackson Heights structures, the Gardens 75th Street Owners Corp., were built in 1949. She was an "unofficial" member of the seven-member board from 1985, serving as the head of the admissions committee where she would interview potential owners as well as renters. Being both an owner and renter herself - she owns one apartment and rents a stabilized unit that she kept at the conversion - gives her a unique view. Explains Whiting: "She doesn't have an 'us versus them' perspective; she always looks out for everybody." That includes the sponsor, who still has two seats.
In 1990, she expanded her role when she was elected to the board and assumed the vice presidency. She has been actively involved in a host of projects: window repairs, patching leaks, upgrading the elevators, painting the hallways and doors, putting in new mailboxes, and adding new lighting. "We basically have a new [property] now," she says.
KEEPER OF THE BOOKS
From scrutinizing small purchases and bids for major repairs to smoothing out financial differences of opinion between shareholders, the treasurer serves as the board's fiscal point person. The ideal treasurer should have the ability to work with numbers and read and understand an annual report, research or interpret research about investments, and perform meticulous bookkeeping.
Usually the treasurer is someone with a financial background - or at least a head for figures, a person like Tarek Tabbara, whom manager David Khazzam calls "one of the best treasurers" he has ever worked with. "He was recruited [at The Howard Owners Corp., 500-unit cond-op in Rego Park, Queens] because he is very strong financially," notes the manager. "He's straightforward, no nonsense, and knows finances. He commands the respect of the board and the rest of the owners."
A treasurer should be able to work with numbers, which describes Tabbara to a "t." Tabbara, a CPA, moved into the cond-op in 1999 and two years later, the five-member board drafted him. They were seeking an expert and they found one. "They were looking for someone with a good financial background," he says. "Most of them had good business sense, but they wanted someone who could analyze the financials." Tabbara is very meticulous, on average devoting between five and ten hours a month to board business.
In reading documents, a good treasurer must also act as the first line of defense against corruption, incompetence, and error, questioning, as Tabbara does, anything that seems out of the ordinary - and even, for that matter, some things that may seem ordinary. One of the first things he did when he took over was to request a more detailed accounting of the bills from his managing agent. The move was second nature to Tabbara, whose day job is accountancy.
"I wanted to see what was spent and where. I looked at copies of the invoices, who paid them, who authorized them." He had reason to be concerned, too: when he joined the board in 2001, the building was getting "past due" water bills totaling several hundred thousand dollars. "It was pretty scary," he admits. "You always have new challenges - things like the real estate tax hike and skyrocketing insurance rates - and you have to deal with ongoing capital maintenance problems. But this was different."
Working together with manager David Khazzam, vice president at PRC Management, Tabbara resolved the problem and took the shadow of bankruptcy out of the picture (the city had "screwed up," says Khazzam, and "did not properly bill us"). Nonetheless, crafting an accurate payment plan was a challenge well suited to Tabbara's abilities.
Although not indicated in the bylaws, there are safeguards a good treasurer should follow:
Segregate Duties. The person who writes the checks should not be the person who signs the checks or does the bank reconciliation. The board should very carefully segregate the different duties of those involved with the money. It may not always be possible, but the board should try to have as many people in the review process as practical.
Require Check-Signing Rules. Every check over a certain predesignated amount should also require two signatures. It is better to make it a routine that everything has two authorizations. That diminishes the likelihood of something going wrong. Keep track of those controls, too. If there are signature cards at the bank for check-signing privileges, be certain they are current.
Have Regular Reviews. The most important way to keep track of the money is to have periodic reviews, usually every month, during which the projected expenses are compared to the actual costs, spending patterns are tracked, bills are checked, and the managing agent offers a financial report. Get as many people involved in those reviews as practical. Bring in the treasurer, the manager, the accountant, even the super. At such a review, the group should discuss variances between the actual and projected costs of the budget. That discussion should keep you on track financially so that your property has enough money to pay bills.
Tabbara feels a treasurer is only as good as the people who work with him: the manager, the accountant, the building staff, and, of course, his fellow board members. "That can make or break you." Although he never served on a board before, Tabbara views such duty as "very critical. As a director, you want to be doing all you can to preserve the shareholders' funds and money. It is very important."
A secretary's exact role may depend on the bylaws, but, in general, he is responsible for many of the record-keeping and organizational duties on the board of directors.
"The secretary helps a building to have institutional memory," explains John Young, secretary of his Upper West Side co-op. "You have the minutes, but you also have to have it between the ears. And I have the longest memory of anyone here. There are quirky things about the building and its policies and you need a way to review it and say, 'Oh yeah, this is the way we addressed it and why.'"
Young, 68, has been living at the 36-unit 355 Riverside Drive for 40 years now, and has watched many changes in the luxury building, which was built in 1922 and converted to co-op ownership in 1984. Apartments have been combined, families have moved in and out, and the board has undertaken various capital projects, including the most recent, an elevator upgrade.
Young was first elected a director in the fall of 1990, serving, he says, "because it's a small building and there are just so many shoulders that the work can fall on." He was president for three years, and after that stepped down. He returned in the fall of 1999, this time as secretary. He had no previous experience for the post, but used the instincts he had honed as a trial lawyer - he'd jot down notes to himself just as he did in court - and also, he adds with a laugh, "I'm pretty good at word processing."
The duties of the secretary include recording the minutes of all board and/or shareholder meetings. The minutes should include a summary of the discussion, the resolutions, how the board voted, and the attendance and duration of the meeting. The content of the minutes could have serious legal implications for a co-op or condo board so all board members should read the minutes thoroughly. Young feels it is important to recount what happens but not go into excessive detail. "It is the record of your corporation. It is not a verbatim record - I don't take shorthand - but it is essentially a summary of points. Anyone who is buying into the building can take a look at our minutes and see what are our concerns, what are our problems."
He adds: "I don't see myself as [just] a secretary. I don't like to be pigeonholed. My general feeling about living in a co-op is you have to be cooperative; that's the name of the business."
However you define your role, the bottom line, as board president Michael Savino points out, is that the job is about taking responsibility. "Each board member has to accept deep personal responsibility. Even if the lawyer says a contract is fine, I take the time to review it. The lawyer can't read your mind and know what your issues are. You shouldn't just accept what he tells you. You should ask why."
For veep Myrna Solstein, however, the issue of roles is both less and more clear-cut. To her, it is all part of the co-op experience. "Don't ask me why I serve," she notes. "I've lived her for 47 years; I know everything that goes on." A retired office furnishings decorator, she says that all she learned about the property, she learned on the job. "Basically, you use your head; you learn what you have to learn. And there's a lot to learn."