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Former board member describes three different terms
The author gives his first-person account of spending 15 of the last 19 years serving on co-op and condo boards. He offers his experience and insights gained from serving on three different boards in three different buildings.
Jack A. Napes is the pseudonym of a long-time board member. His story is true, but all names have been changed to protect his identity.
Why would I spend 15 of the last 19 years serving on the board of my co-op or condo? Enlightened self-interest? Perhaps masochism, hubris - but probably a combination of all three. Whatever the reason, it's been a chaotic ride, and it occurred to me that others might be able to benefit from what I've learned - especially from my many mistakes.
I've lived in three buildings over the past 20 years - two co-ops and a condo - and served as president at two of them and everything but president at the other. While they had very little in common with each other, I think some of the lessons learned can apply to everyone...and are ignored or forgotten at one's own peril. Here is my story.
MY LIFE IN HELL
I considered myself lucky to have found the modest one-bedroom apartment in the building I'll call the Gradgrind. It needed a lot of work but, by New York standards, it was reasonably affordable. I soon found out why - the 24-unit building had been neglected for years and had been purchased by a group of tenants from the previous owner for about $70,000 (for comparison, I paid about the same amount for my place). The situation in my apartment line was not bad, but in other units, things were not good: in the largest apartments, for example, unchecked water leakage had rotted some of the massive wooden beams to a fraction of their size.
I continued to live in my rental apartment while doing a gut rehab of the new place. I was drafted onto the board immediately and was in the unusual position of being on the board at one location while still living somewhere else.
There were three distinct groups at the property: those who bought when the building was sold; those who remained as rent-controlled tenants; and those, like me, who paid market value.
This was a recipe for unmitigated misery. It's not hard to see that renters and shareholders often have mutually exclusive interests; this is a problem that plagued co-op conversions for years. But to make things worse, there was, if anything, greater dissonance between the insiders and the market-raters. The result was an economic instability and internecine warfare that I wish never to experience again.
The board president, an insider, was several months in arrears; another insider claimed to be a renter rather than a shareholder. Many insiders, having obtained their apartments for almost nothing, wished to economize further and spend as little as possible on the building's crumbling infrastructure. Conversely, most newcomers, having paid market value, were eager to preserve their investment by making much-needed repairs. The renters, of course, wanted to keep paying their bargain $200 a month.
It's important to keep in mind that this was not a case where the yuppie invaders wanted to jack up the maintenance and gold-plate the lobby, a circumstance all too common and equally repellent to me. My income at the time was quite modest, and even those better off than I were not exactly candidates for Park Avenue. But there was a mindset at work amongst most of the insiders that framed every issue in the context of class warfare, which in my view blinded them to the real needs of the building. They constantly claimed that the newcomers' plan was to raise the maintenance so high that the insiders would be forced to move out and that only "rich people" could afford to move in (this from one woman, among others, whose apartment had been purchased for her by her parents!).
The details escape me now, years later, but at some point one of the insiders became president. He was intelligent and wanted to do the right thing. There was just one problem - he did not suffer fools gladly. This was my first major lesson in board politics (any politics, really): no matter how right you may be, if you are unable to disguise your contempt for your opponents, you will rarely achieve your goals, because people may try to stop what you're doing just to spite you, even if it's not to their best interests.
Compounding the problem was the fact that the president's wife was the board treasurer. A person of greater rectitude you could not find; but I came to learn that a concentration of power in one household is not a good idea. This woman was so upright that she paid some taxes the building may not have owed. Her opponents mercilessly pilloried her for it.
You might ask, "Where were our managing agent and lawyer during all of the sturm und drang? The answer: looking for an escape route. When I arrived on the scene, the building was in litigation with its just-dismissed agent. During the six years I lived there, we had four more agents. The building was small to begin with, and I can only imagine what we were like to work for.
With lawyers, it was much the same. Our first lawyer, somewhat imperiously (though I believe correctly) dismissed by the new president, was extremely uncooperative about giving us our records. The new lawyer was very good, but was driven away by the incessant phone calls from paranoid board members (who also couldn't understand why our legal bills were so high). Things settled down a bit after a while, and his successor stayed on for a while and was still there when I left.
OUT OF TOUCH
Having been a rental tenant myself for many years, I have nothing against renters, per se. But I learned that renters and shareholders do not mix, especially in a small building. You need every bit of maintenance income you can get, and you need to have as large a pool of potential board members as possible. And of course renters' repair costs are a constant drain on the building's finances.
Some of the rent-controlled tenants were elderly people on fixed incomes; I was sympathetic to this, even though I was frustrated that one woman refused an offer to move to a smaller and more manageable unit in the building in exchange for a substantial amount of cash - the building could then sell the larger place and reduce the need to increase the maintenance.
But I drew the line at crack dealers. Incredibly, one market-rater who sided with the insiders fought hard to prevent the building from buying out renters whose courtyard area was littered with crack vials, and who were not even the people whose names were on the lease. It galled me that our lawyer told us that the courts would never permit an eviction; but I was incensed that this person would act against her own interests for the sake of some convoluted political ideology.
After a few years on the board, election time rolled around once again. I had worked pretty hard on a number of issues. Although I was perceived, correctly, as being an ally of the president and his wife, I was not anathema to my opponents in quite the same way they were. There were eight candidates for seven slots, so although my reelection was not in the bag, my odds were pretty good. I confess that I would have been happy not to run, as the constant conflict was wearisome; but my election would prevent at least one undesirable person from being elected, and I still had plenty of projects to work on.
As with many co-ops, voting shares were allocated by apartment size and floor height. My apartment line was the smallest, and I was on a low floor. My allies and I met to figure out how to get enough votes for each of us, but there were too many question marks. In the end, I finished eighth out of eight. Even though I was glad of the break, I took it very personally, and I learned another important lesson: lose touch with your constituency at your own risk.
A LIFE IN HEAVEN
My wife subsequently became president of the building, but a growing family forced us to move to a larger apartment in a different building. The Folger, as I'll call it, was very similar to the Gradgrind in that it was also a 24-unit, six-story masonry building constructed nearly 100 years ago. But the two places could not have been more different.
The Folger had been a co-op since the 1920s, and had been self-managed for quite some time. There were no renters, and the building was in excellent repair. There was no factionalism to speak of, and no significant conflicts.
We moved in just after a board election. A year later, I was asked to run for the board and was also asked to be president. I was raring to go and immediately tried to develop a list of unfinished business from the previous regime, along with a set of priorities for new projects. For some reason, I had great difficulty getting across my ideas and ran into resistance, even from the people who had asked me to serve in the first place.
While there was none of the vicious infighting that had characterized the Gradgrind, I had a number of run-ins with a few of the board members. I remember one incident in which the treasurer asked me to sign a blank check at the end of a meeting (our rules required two officer signatures for each check). The treasurer seemed to be in a real hurry, to my thinking, suspiciously so. With the experience of the Gradgrind minefield and, with what I thought was common sense in the back of my mind, I refused to sign the check, in front of all the other board members.
That turned out to be a mistake, because the treasurer took my apparent lack of trust personally and became something of a nemesis for the rest of my term. This was a third major lesson to be learned: past experience doesn't always apply, and the folkways of one building may be very different from those of another.
At the Folger, the atmosphere was much more laid back than at the Gradgrind. A level of trust had built up over the years that had been totally lacking at my former residence. While I still believe it is unwise to sign blank checks, I now know I should have just signed the check and spoken to the treasurer about it later, out of the hearing of others. I would then have learned that the check was the weekly paycheck for the janitor, and that it was often difficult to get another officer's signature in a timely fashion. The treasurer was simply trying to be more efficient.
Unfortunately, this episode had the effect of causing our mutual mistrust to spiral downward, to the point where I suspected the treasurer of some sort of malfeasance. As I looked into the financial records further, I became more and more disturbed. I was in a fix - here I was, the new guy, on the verge of accusing a longtime and well-respected shareholder of, at best, incompetence and, at worst, theft of funds.
Luckily, I resisted the impulse to go off half-cocked. Again, it later became clear that some of the building's self-management methods were a bit loose, to say the least, but were not the result of self-dealing or criminal intent.
All in all, after I got my bearings, I was able to get a fair amount of work done in a reasonably harmonious fashion. As experienced board members were at a premium I ended up on the board frequently, in various positions.
The Folger prides itself on keeping maintenance low. One way it is able to do that is by self-management, and also by steering clear of the potential pitfalls of large legal expenses. I was shocked to learn that not only did the building have almost zero legal costs, but it didn't even have a lawyer. In fact, during the 10 years I lived in the building, I don't think we spent even $5,000 on legal bills (at my former place, it had been about $15,000 a year - and counting).
In the middle of some board project or other, I would often reflect on how well things worked, and how this would have been impossible to achieve at the Gradgrind. I couldn't imagine owners at my former residence having the political will to self-manage - it would take a maturity and a selflessness that just weren't there.
I loved living at the Folger, and would be there still were it not for a personal upheaval in my life. I found myself in need of new lodgings and was fortunate enough to find an affordable apartment in a large condo. In the course of making the purchase, my lawyer and I concluded that the building had excessively high legal costs and disturbing levels of receivables. After attending a candidates' night before an upcoming board election, and reading a year's worth of board minutes, I was even more concerned about the way the building was run.
I considered looking elsewhere, but was persuaded by people I knew in the building that things were getting better. I resolved to buy and try to help make things get better, if I could.
Soon after I moved in, I learned of a local political issue that seemed to pose a threat to my new home. So I became active, along with some other concerned residents, in an effort to remedy the situation. We did not succeed, partly because of what we felt was indifference on the part of the board. As a result, several of us subsequently ran for office and won. When it came time to elect officers, I ended up president. "Excellent," I thought. "Most of us have worked together before - it should be relatively easy to achieve consensus and get things done."
I was spectacularly wrong. People who had worked hard and in relative harmony for a cause now began to scrap like street urchins over the most trivial issues and failed to do much of substance. (I'm sorry I can't provide more details about this sorry state of affairs, but I have to work with these folks through the end of my term without them discovering who I am.) Believe me, we're about as dysfunctional as can be without actually coming to blows.
I'm reminded of a photograph of George Steinbrenner I once saw in which a sign behind his desk said, "Lead, follow, or get the hell out of the way." Most of my colleagues are incapable of doing any of these. It pains me to think that I should agree with Steinbrenner on anything, but this board has driven me to that point.
The thought must have occurred to you that maybe there's something wrong with my leadership. Believe me, that occurs to me daily. But I'm flummoxed as to what to do. Anything that might bear fruit is either too time-consuming or is just too much to stomach. After all, this isn't my full-time job, even if it does feel like it most of the time. I've got to have a life, don't I? It's pretty dispiriting to think that I have to spend precious time basically kissing the behinds of these pinheads just so I can get something done for the building.
So what are my final words of advice? First, don't ever be deluded into thinking consensus will be easy to achieve. Second, as an owner or shareholder, don't squander your votes on people who aren't willing to work hard. Third, in order to motivate lazy and stupid people to work productively, you have to... well, I don't know the answer to that one yet. Talk to me in a year and maybe I'll have a clue.
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