New York's Cooperative and Condominium Community
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New maintenance worries for short buildings
Capital repair laws are of concern to co-op and condo boards. One peculiarity of Local Law 11 of 1998 is the way that it does not apply to buildings under six stories. This article describes the way the law works, why ignoring capital repairs has become so risky, and what boards can do to protect themselves.
Carole Ferrara knew the building – old and deteriorating – had problems, even if the board didn’t. She managed a six-story, 14-unit Greenwich Village co-op whose parapet walls were leaning slightly outward. Every year, Ferrara, the principal in Carole Ferrara Management, would strongly recommend to the board that something be done to fix the situation. The reply would always be “Next year,” or “Let’s paint the hallways and put the carpeting in.” No wonder, too: the manager estimated that it was a $300,000 job and, to the board members, “if it’s not broken, don’t fix it, and if I can’t see it, it’s not broken.”
The board’s laissez-faire attitude changed, however, when the building’s insurance company took a look – and threatened to cancel the co-op’s policy if the work wasn’t done. “Sometimes it’s a pleasure to have a nudge from an insurance company or a mortgage lender,” Ferrara says. “None of us likes to spend money unless we have to. Because of the cost, very few buildings take the preventive maintenance route.” Yet here’s the paradox: if this Greenwich Village building had been just one-story taller, it would have had no choice. Under Local Law 11 of 1998, the co-op would have had to file a report by a licensed architect or engineer, detailing the condition of the property, and taken steps to correct any hazards. “It is strange, isn’t it?” says Howard Zimmerman, president of Howard Zimmerman Architects. “You’d think it hurts just as much to get hit by a brick from the third story as it does from the thirtieth.”
Nonetheless, buildings that are under six stories don’t have to worry about government-mandated preventive maintenance. Or do they? The government has been getting tougher with its Local Law 11/98 inspections and, in some cases, it is even redefining what constitutes a six-story building.
A Falling Brick
Local Law 10 was passed by the city council in 1980, following the death of a Barnard College student who had been hit by a falling piece of masonry from a Manhattan building. The law required inspections and written reports by architects or engineers of the front facades of any building over six stories in height. There were a number of categories, of which “unsafe condition” was the most serious.
Why were buildings under six stories exempt? Although some have speculated that it is because six-story buildings allow for easy visual inspection from the ground by owners, a more likely theory, proposed by a veteran architect, is that the city was watching out for its own interests. In 1980, says the architect, a great number of the buildings six stories or under were owned by the city. The Department of Buildings (DOB) has no official comment on the exemption.
Local Law 10 created a lot of work for a lot of architects, engineers, and contractors, and some argue it did its job well. “We’re 25 years into Local Law 10,” says one architect, “and anything that is dangerous is long gone. It’s the smaller buildings that really cause the problems now rather than the bigger buildings.”
But when a sidewall of a building on Madison Avenue collapsed in 1997, the city council revisited the issue and passed Local Law 11 in February 1998, which incorporated and expanded the requirements of Local Law 10/80. The two major changes: inspections had to include all facade walls (except those within 12 inches of an adjacent building), and the “precautionary” and “ongoing maintenance” categories were eliminated. There are now three categories: “safe,” “unsafe” and “safe, with a repair and maintenance program.” (An ongoing maintenance program is one that is regularly monitored by an architect or engineer, who prepares monthly reports on the building.)
In addition, the owner has to sign off on the inspection report along with the signature of the filing engineer or architect. “Now the building owner can’t say he never saw the report,” says Zimmerman. “He’s accountable.” In addition, the professional can no longer file a report on the same condition for the same building for two consecutive filing periods.
The law was one move in a “get tough” policy begun by the DOB in the late 1990s. “Although the buildings department would probably deny it,” says an experienced architect, “in the old days, I suspect they would only review a report if the ‘hazardous condition’ box was checked. Otherwise, it went into the ‘non-hazardous’ pile. The buildings department will say they looked at everything, but you never got them calling you a month later saying, ‘Hey, I need clarification on this point.’ They were only interested in hazardous conditions because that was what triggered a violation. Now, they accept it for filing, and you’ll get a call or a letter from the buildings department a month later asking you to make clarifications. So they are definitely reading them.”
“Local Law 11 has changed the way the buildings department has viewed reports,” agrees Doug Cutsogeorge, an architect with Cutsogeorge, Tooman, & Allen. “They are much more proactive in reading and commenting and double-checking on conditions that there are some questions on.”
The six-story restriction was amended, ever so slightly, as part of what some see as an incremental expansion of coverage. A story was defined as any floor level “having at least one-half of its floor-to-ceiling height above the lowest grade level adjacent to any one of its exterior walls...Regardless of building height as indicated on the Certificate of Occupancy, or...building height as measured from the curb level, a critical examination shall be conducted at least once every five years of all parts of, and any appurtenances to, all exterior walls of the building whose height is greater than six stories above the lowest grade level adjacent to such wall.”
According to Paul Brensilber, a principal in Jordan Cooper & Associates, a management firm, that change has resulted in the city “sending out violations for buildings that think they’re under six stories. Guess what? They may not be exempt now.”
The city, which denies it is sending out violation notices for newly faux six-story buildings, has made an estimate of how many new seven-story buildings have been added to the mix: 2,000. According to Jennifer Givner, a spokeswoman for the Department of Buildings, in 1980, there were 10,000 buildings that were covered under Local Law 10/80; by requiring all four sides and 50 percent above-ground basement/cellar areas in Local Law 11/98, that number has grown to 12,000.
“Property owners are responsible for knowing the rules and regulations governing their property,” notes Givner. “If they have any questions they should call the department. We are not sending out inspectors to check on how many stories you have.” If you file once, you are put in the system and sent a reminder letter for the next inspection cycle. Failure to file will cause the building to receive a DOB “hazardous violation.” The owners have 30 days to file a report or else face hefty fines from the Environmental Control Board.
Brensilber says that his company is looking for solutions for small buildings caught in this bind, working with “companies that seem to bridge the market between relatively high-end guys and the guys who seem to work out of the back of their truck.” He says Jordan Cooper & Associates is negotiating deals to perform scaffold drops (required by Local Law 11) and any subsequent work that needs to be done. “We’re being very proactive about this,” he notes. “There are solutions for every building. You’ve just got to look for them.”
Those who ignore capital repair issues do so at their own risk. Marc Landis, the co-op president at a co-op consisting of five brownstones at 329-337 West 85th Street in Manhattan, says his board started a half-a-million- dollar capital repair job “out of necessity. The facade had not been maintained properly prior to the period when we brought in new management. There were a number of old wooden windows that had rotted away and it didn’t seem to make sense to us to replace the windows without repairing the problem that surrounded the windows. Rather than tackle it piecemeal, we did it all. And, as with any renovation on a property 130 or 140 years old, you’re going to find things we euphemistically call ‘field conditions’ – things were in worse shape than we anticipated.”
Buildings that have done the work find there are benefits. Long-term planning is ultimately less costly, notes Ferrara, the manager. “My feeling is if you do some of the work, as time goes by, you wouldn’t be put in as bad a position.” You should do pointing but you don’t, because $30,000 seems like a lot of money when there are no leaks. “Then, ten years go by and you now need brick replacement instead of pointing. A $30,000 to $50,000 job becomes a $90,000 one.”
Still, funding even a $30,000 project can seem like an impossible task for a small building. “Even before you think about what you want to do, you’ve got to think about how you’re going to pay for it,” says Beth Markowitz, president of Merlot Management. “That’s important in any building, but the finances are different in a 40-unit building and a 200-unit building.”
“Cash is the biggest problem they face,” agrees Cutsogeorge. “Take a typical brownstone; it’s got a 600-square-foot roof. To put a new roof down is $2,400 to $2,500. They can’t afford to hire a professional like me to advise them. My fee is going to cost as much as or more than the repair itself. I can’t specify a roofing system and provide construction administration for $5,000 let alone $2,500.”
Cutsogeorge warns that without professional guidance, the job can go astray. “A lot of people put coatings on brick walls. That’s really not a good thing to do. Once it’s done, you’ve backed yourself into a corner. You can’t remove a coating very easily and the bricks can’t breathe. You have a manufacturer that says ‘I have a new product where it can breathe; it has a better perm rate (for permeable). Therefore, this product will get you what you need – it’ll let the water out, but it won’t let any water in. And contractors will buy this product. But I’ve never really found one that lives up to its advertising.
“So now this contractor, who wants to do the best thing for the building, says, ‘Hey, listen: this new product on the market is supposed to take care of all these problems.’ So you go and coat the brick and, then, you find six years later that it doesn’t really work. The bricks are spalling and you have a problem. Smaller buildings don’t have access to professionals who can offer them the information they need in order to make an informed decision.”
With money being the biggest stumbling block, some are finding that, with low interest rates, refinancing is a good option. A 40-unit co-op at 520-522 West 50th Street in Manhattan put off repairs for years. When leaks began sprouting in the roof and the front parapet wall, the board decided to refinance and take out a line of credit to get the work done.
“Interest rates have been low and lockout periods have been up, so fortuitously, you refinance, you take out extra cash,” says Markowitz, the manager of that property. “Even if the mortgage payment is more, you can offset that with a small maintenance increase. The West 50th Street building took out a $1.2 mortgage and a $150,000 line of credit. They raised maintenance four percent, which is nothing when you consider that, at the end of the day, we had $300,000 worth of work done to the building. It also allows them to do long-term planning. It made sense to have one large construction project rather than two or three separate ones,” she says of the year-long project. “When it’s done, we will not have to worry about any of this stuff for the next 10 to 15 years.”
Credit and Communication
Selling such a step to the shareholders is important. “Nobody wants to take out a line of credit, no one wants to spend money,” admits David Tews, the current president of 520-522 West 50th Street. “They get antsy and concerned, but things have to be done. When we had our semi-annual meeting, we let everyone know what was going on, and we had our architect come and answer questions and show pictures of what needed to be done. People are going to get upset but if you show them why you’re doing it – if you can prove that over the life of the building it’s going to improve the value of the apartments and the building – then people will go for it.”
Doing the job right the first time is equally crucial. At the West 85th Street brownstones, Landis says the board didn’t skimp on costs but refinanced and took out a line of credit. “Once we knew what we were dealing with, it was relatively simple,” he notes. “The hard part was accumulating all the necessary information to find that we did need to do this or do that. My advice would be measure twice, cut once. Really take stock of what you need to do and get a sense of your costs. Then focus on where and how you’re going to fund those costs, and once you’ve established that, you can establish your priorities and address the funding stream.”
Agrees Brensilber: “Planning right allows you to intelligently think it out and complete it before the winter months. These become manageable projects.”
In the final analysis, most professionals are optimistic about small co-ops and preventive maintenance work – even if Local Law 11/98 doesn’t apply to them. They argue that, if they can, cooperative owners will do what they must to repair their property. “The bottom line is money,” says Pamela Delorme, principal of Delkap Management. “They don’t want to spend money, but they will if they have to. I have a building in Brooklyn that is exempt, but they’re doing extensive renovations to their bricks because the brick veneer had to be removed. There was water penetration. Most boards are receptive – if there’s a problem.”
“I find that co-ops and condos are very good at doing what I would call real preventive maintenance,” observes Cutsogeorge. “They look towards doing a lifetime building repair because it’s their home. They approach it differently since it’s the only asset they own; they’re not manufacturing widgets. They take a much more aggressive stance than some other building types. I think that’s a smart thing to do. A lifetime building repair is generally much better than a band-aid repair.”
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