New York's Cooperative and Condominium Community

Habitat Magazine July/August 2020 free digital issue

HABITAT

ARCHIVE ARTICLE

Running on Your Record

Rory Lancman ran for office as the candidate of change. And there seemed to be a lot about his building that needed changing. Impressed by the living conditions at the Village Mall at Hillcrest in Queens, the attorney had bought an apartment there for his mother in the early '90s and later purchased one for himself. Then, in 1996, the board of the 450-unit condominium announced a 50 percent increase in common charges, accompanied by a letter that explained very little.

"The letter said, 'There's a lot of work to be done; we haven't itemized it yet, but we know it's going to be a lot, so we'll start the assessment now,'" recalls Lancman. "That was the first anybody had heard of this. It was a complete shock."

Incensed, Lancman and other residents threw their hats into the ring, running for office with pledges of more accountability and more openness. They were elected. And - despite almost annual assessments - Lancman has continuously been reelected. He is now in his eighth year as president.

The reason? Lancman delivers on his promises - the board meetings are open to the public; the roof, balconies, pool, gym, and barbecue area have all been rehabilitated; and an excessive arrears problem has all but been eliminated. "The overwhelming majority of our owners are intelligent people who want to protect their investment," he explains, "so if you take the element of surprise, concealment, and distrust out of the equation, it's just a bunch of reasonable people wondering how they're going to make the building better. That's how we've been able to move the building along, despite significant assessments and significant work that interrupts people's lives, without having our own revolution."

The Village Mall story is not unique. Lancman's board approached the job with a critical eye as to what it and its predecessors had done right - and done wrong. "You can't just sit there at the board meeting once a month and do nothing," observes Erna Lotz, the building's treasurer. "You have to ask questions, especially in finances. You have to look into them almost every day to see how the money is being spent. There was nothing like that when I came on the board six years ago. I had a lot of questions, and nobody was there to answer them."

It has been said that an unexamined life is not worth living, a saying which successful boards have taken to heart. Many boards have found that the key to successful board operations is tied to how they evaluate themselves and the job they are doing. As the annual election season approaches, it's a good time to learn some lessons from those who have succeeded in the art of self-examination.

THE FIRST CHALLENGE

At the start of each board term of office, your first step should be to evaluate your building's current needs and your own capabilities. "The biggest challenge for any board is the reality of being a board member," says Michael Savino, president of the 90-unit co-op at 175 West 92nd Street. "You always have to do more than a part-time job with fewer than full-time resources."

To achieve that, some suggest that boards create a prioritized list of projects that need to be undertaken. "What we did last year was develop a master list of projects in the building," reports Tim Daileader, the treasurer at the 88-unit 257 Central Park West at 86th Street. Over the last five years, with list in hand, the century-old 257 Central Park West property has been undergoing major renovations. The exterior was cleaned and painted, all the pipes in the walls were replaced, and the elevators are about to be upgraded. "We look at our list pretty constantly," says Daileader. "Occasionally things have flipped in importance - the elevator seems to have accelerated past the boiler [because] the boiler seems to be operating fairly well now." As issues change, the board reprioritizes.

Not setting priorities can lead to inefficiencies. Daileader recalls his experiences when he and others of a new slate took over the board four years ago in a contested election. He expected to find money being wasted. Instead, he discovered that the problem was about priorities. "They would pick a project and spend a lot of time on that single project, but while that was being done there were other things that were left undone. We really spent a lot of time reprioritizing things."

If you don't prioritize, the problems could "prioritize themselves." That's what happened at 780 West End Avenue, a 63-unit condominium on 98th Street, which began a $1.2 million facade repair project in July 2001. As Elizabeth Jensen, the current president, recalls it: "Pieces of decorative terra cotta started falling down on the street. I was vice president, I was on jury duty, and I got a call [from another board member, saying,] 'We have to put up a $45,000 street bridge. Now! You have no choice. So approve it.' That's been our focus for the last two-and-a-half years."

After you have done your review of building needs, you can start setting goals for the year. Most boards that evaluate first and set goals based on the evaluation, find they have a more realistic chance of making good on their word. In the past year, for instance, Park Chateau Owners, a 132-unit co-op in Kew Gardens, looked at its upcoming budget and found it wanting. Their new goal: search for new means of income.

"Basically, with a poor economy, the tax increase, the insurance increase, and electric, water, and fuel increases, we are looking for a lot of ways to try and decrease the need for an increase of the maintenance," says Shirley Joseph, the board president. "One of the things we looked at was refinancing, since interest rates were down."

Creating goals, Rory Lancman observes, has a lot to do with intangibles. "Our goals have been driven by very significant capital projects," he says, "and it's not just about infrastructure. When we redid the promenade deck, we had to discuss how it's going to be used and ask, 'How is it going to change the quality of life in the building, what kind of building do we have, and what kind do we want? Do we make a large children's play area or a small one? Do we decrease the barbecue grills or increase them? Do we make a walking path for seniors or not?' Those aren't just physical questions, they're metaphysical. What do they want the building to be? Do they have a vision of where it's going? Those questions have occupied us. The kind of projects we are doing are inextricably tied up with the kind of life people want to live here."

CARRY THAT WEIGHT

How you execute the tasks can make a difference in how smoothly the goals are accomplished and whether harmony or dissonance reigns. At 780 West End Avenue, the facade project went over schedule by five months but stayed on budget. Jensen attributes that to "a very good architect, Chuck DiSanto at Walter B. Melvin," who planned for all contingencies. But another factor was a decision by the board to be as conservative as possible in budgeting.

"My big concern was that I didn't want to have to go back to the owners and ask for more money," she explains. "I'd rather overestimate the costs than underestimate." To Jensen, it was a matter of credibility. "If you keep going back to people for more and more money, then the owners start to feel, 'Are we getting the whole truth, and are they going to come back for more?' Then again, we didn't want to overpay. It was a question of planning."

The pipe replacement at 257 Central Park West also went relatively smoothly, explains Daileader, because of meticulous preparation. A million-dollar project, it was brought in on budget, with only a few protests from owners who had their kitchens ripped up as workmen replaced the piping. The board created a schedule in which multiple teams performed different functions at different times: one team would open the walls; another would replace the pipes; still another would close the walls; and another would paint them.

In preparing such projects, smart boards know to ask questions of themselves and others. Daileader says the five members of his board "talk to each other a lot. We spend a lot of time thinking and working on these things. We have a conference call weekly, and we have meetings monthly, and I probably talk to one or another of the board members once a day."

Many say it helps to evaluate yourself at the end of every year. Gerald Sherwin, board president for 19 years at the 115-unit 181 East 73rd Street co-op, compares it to an annual business evaluation and adds, "My self-evaluation is on an ongoing basis. Are we moving ahead at a reasonable pace? Are we getting the service from our suppliers? The only way I can know if we're doing the best job possible is by asking those kinds of questions."

Savino says such self-evaluation, coupled with experience, can lead to a more realistic appraisal of what a board, or board member, can accomplish. "I've become more realistic about what can be demanded of myself to get something done. Before I was on the board, I thought you could pick up the phone and order something and it would be done. But I realize now that people make mistakes. Murphy's Law has a very long reach."

Boards, adds Joseph, also need to know what they don't know. "In the last few years, I learned an important lesson - that you need consultants," she notes. "The reality is that when people come to you with bids on big capital improvement items like elevators, boilers, and facade work, unless you have someone who can really guide you through that, you have no idea what you're looking at. I need someone to make sure that I'm comparing apples to apples and not apples to oranges. Contractors want to get the job, so they may not be giving you what you need. Consultants give you the bad news."

Joseph learned this from a near-miss experience. The building needed to have its boiler replaced, so the directors hired a consultant to offer advice. He talked about the boiler but also discussed another matter that the board was not even aware of: an underground oil tank.

"You realize that that's a disaster waiting to happen?" he asked the assembled board. "If that tank breaks underground, you have an environmental hazard and cleanup. And let me tell you something, you do not want a tank underground. You want to get rid of that. Now it's easy. You pump out any oil that's left, you fill it up with sand, you seal it, and that's the end of your worries. But if it leaks, it's going to cost you a lot of money to fix."

Admitting she "had not had a clue" about the potential crisis, Joseph says the incident influenced her thinking over the past two years when the board approached a string of capital projects that needed to be done. Although her fellow board members initially balked at the $20,000 to $25,000 consultant's fee for one job, the president argued for it very forcefully.

"I said, 'You know something, we really do need it. Last time we did this, we didn't have a consultant. And the contractor came back in the middle of the job and said we needed more work [for additional money]. What we ended up paying extra is what we would have ended up paying for a consultant. I don't think we're going to be saving a nickel. We've got no one telling us whether we're doing the job right or not. Because I wouldn't know a good job from a bad one - until somewhere down the road we have problems."

The board hired the consultant.

TALK TO ME

Although the annual meeting is where goals are set, plans announced, accomplishments trumpeted, and owners heard from, smart boards communicate frequently with the residents throughout the year. Remember: this is your constituency and it helps no one to keep people in the dark. Lack of information can lead to rumors, anger, and other troubles. Some projects are difficult enough without the added pressure of a disgruntled populace.

Jensen, who is a journalist, recognizes that, which is why she insisted that the board issue regular reports to the owners on the progress of the facade repairs. Even that wasn't enough, however. "I made it clear that we had to keep the owners informed all along the way, whatever happens," she recalls. "That way, owners won't feel surprised and it includes them in the process. So I felt like we were doing a good job communicating. The lesson I learned is that you can never communicate enough. We communicated with people when we had something to tell them. The owners wanted communication even when we didn't have something to tell them. They just wanted an update even when there wasn't an update."

Daileader, too, tries to go the extra mile in communicating. At every annual meeting, he offers a PowerPoint presentation of the budget, comparing projections to actual costs in a visually attractive package. "A financial report for a co-op probably doesn't clearly describe all the things that are going on. So what I try to do is match up where we are spending the money, what we're spending the money on, and how we're doing. It's more or less a report card. Money is difficult for people to understand in a co-op, so it creates a level of accountability for the board, the manager, and the building in total."

But the most transparent board has to be Lancman's. Making good on his campaign promise in 1996 to shed light on the board's activities, the new president instituted an open board meeting policy. The owners could attend, listen, and ask questions. (There is a second, closed monthly meeting at which confidential matters - such as legal proceedings, arrears, and staffing issues - are discussed.) The process has been a resounding success. At a recent monthly meeting where a new project was to be discussed with experts, over 150 homeowners attended, many asking questions directly of the professionals.

"They got the sense that there was a problem and, yes, the board was looking at it seriously," explains Lancman. When another assessment was put in place, "They understood that it was necessary, that the board wasn't pulling numbers out of a hat, and people had confidence in the process and the way the building was being run because they saw it with their own eyes. It's the board that votes but it's the owners who ask questions, and yell and scream, and do whatever they want to do.

"It's a very cumbersome process and frequently unpleasant," he adds, "because I can tell you, as the board president, I am often the target of any criticism. But I feel you have to have the process, because it's my experience that the open meetings allow better ideas and better thinking processes to emerge. As bright as the nine people on the board are, they're only nine people, and there are a thousand other people in the building, and they're bright, too. The homeowners have to believe and know that the way the board is going about its business is honest and competent, and the best way to do that is for them to be part of it."

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