Board Vice President, Thwaites Terrace House, The Bronx
The Stats 132-unit co-op (with three professional suites), built in 1962, with a $950,000 annual operating budget.
The Problem Approximately three years ago, we experienced a major plumbing repair problem that was caused by a waste water pipe rupturing under the terrazzo floor of our lobby. Once the floor was opened, it was discovered that the problem extended into the laundry room, as well, necessitating digging up the floor to replace the broken pipe.
The Solution We called the plumber who had worked in our building before and quickly got bids on the concrete work that needed to be done. We learned that it would be prohibitively expensive to replace the terrazzo floor and sought out the advice of the contractor. He advised covering the terrazzo with high quality durable tile. In addition, we noticed that because the pipe was slowly leaking, it had begun to undermine a major section of the terrazzo floor. As a result, the contractor first had to pack as much concrete as possible under the floor before laying the tiles and then level the surface of the floor.
In order to cut costs, we paid our super to retile the laundry roof. However, we had the contractor do the tile work in the lobby because we had to shut down one of our entrances and one of our elevators so that the tile could set properly (it was also a very large area that was beyond his scope). This particular contractor was not the least expensive but the board valued his reputation and input. He completed the job in a few days with the least amount of disruption possible. The super then did the tile work in the laundry room (during this phase of the construction, the tenants had full use of the laundry room on the other side of the building).
The Lesson It is vitally important to select the appropriate contractor and to utilize the skills of the superintendent to the building’s advantage. Although we paid somewhat more for this particular contractor, we saved by employing the super and minimized the inconvenience to the tenants.
The completed tile work received a warm response from the tenants to the extent that those living on the other side of the building wanted their terrazzo floor covered with tile as well. The board had to explain at our annual meeting that terrazzo is the better material and that we had no choice but to use tile because of the major plumbing problem.
Board President, 375 Lincoln Place, Brooklyn
The Stats 35-unit, co-op, built in 1988, with an annual operating budget of $350,000.
The Problem What started as a potentially simple roof repair for one apartment escalated into a 10-year, $1.3 million repair project in the period of about three months. A waterproofing expert diagnosed a few small leaks in one section of the roof as part of a huge, systemic failure that needed significant attention over the next five to ten years. Our $110,000 reserve fund was just a drop in the bucket. The problem was complicated by the fact that the shareholders with the original leak had been waiting for months and were getting very frustrated by the wait. In fact, they were eager to put their apartment up for sale (although not because of the leak). So we had to balance the needs of the whole building with the very personal but significant needs of these shareholders.
The Solution We engaged one of the contractors who had already given us a bid to repair the masonry and flashing around the roof area of the apartment with the original leak and to put a temporary cap on the roof (total cost: $24,000). We went to Rand Engineering & Architecture and asked them to start the evaluation process all over again, drawing up a report and then contract documents (the first engineer we used gave us a useful 18-page report, but said he didn’t have time to continue the job). We contacted National Cooperative Bank and negotiated a favorable line of credit (up to $500,000) that gave us the financial ability to begin this long project. We are distributing to shareholders an overview of the repair needs and costs, explaining that they will continue to see sizable maintenance increases and a potential increase in the flip tax percentage.
The Lessons (A) It pays to get expert opinion first, no matter how small you think the problem is. (B) Constant communication with shareholders is key. We were very good about informing the shareholders with the leak about the issues that kept delaying their repair. We met with them several times to listen to their concerns. (C) Get well-designed contract documents first. Our managing agent wasted a lot of time by just getting raw bids from contractors, making it impossible to compare (it was like apples versus oranges). The board had to spend a lot of time inserting specifics into the proposals. (D) Be flexible. Other shareholders, who also had leak problems and who wanted to put a new deck on their portion of the roof, waited months to do so. We finally told them to go ahead, put the new roof down but make it modular so it could be easily removed when we are finally able to repair the roof properly. We drew up a letter of agreement so that the shareholders know a future board will take care of the removal and replacement of the deck when the time comes.
Board President, 720-730 Fort Washington Avenue, Manhattan
The Stats Two-building, 234-unit (150 in one, 84 in the other) co-op, built in 1939.
The Problem In the fall of 2004, we had a gas leak in one of our buildings. Con Ed had to turn off the gas. Initial estimates were three to four months to upgrade our gas system to be in compliance with current Con Ed guidelines (we had been grandfathered in on many of the new codes but were informed that the grandfathering ends if the gas is turned off).
The Solution We got the project done in one of our buildings in seven weeks, and in the other one in eight weeks. Fortunately, we had a very good cash reserve position that enabled us to begin work immediately. We quickly took three bids, chose one, and started the project within a few days of the gas shutdown.
The gas was turned off at around 5 P.M. That evening, a memo I prepared was distributed to all the residents. Two days later, I held a lobby meeting with the property manager to explain everything that was to happen during this project. When the project started, I posted a daily notice on its status: what had been done that day and what was to be done the next day. To do this, I spent a few minutes each day with the job foreman and the property manager. I would then prepare the update notice and post it in our lobby. Every week, I would prepare a lengthier memo that would include more detail. That memo would be distributed to every resident.
I did this for three reasons: (1) to respect the right every resident has to be well-informed in situations such as this; (2) to show the contractor we were really staying on top of the job (for example, if he were to tell me, “Tomorrow, we will install shut-off valves in the apartments in lines A, B, and C,” the next day he would have to tell me that they did so or, if not, why not); (3) to impress upon the shareholders just how much work was being done so that they would better understand and accept the special assessment we eventually placed in order to replenish the cash reserve. When we announced an assessment, no one was surprised nor was the amount questioned because the daily notices had shown the complete scope of the project.
The Lesson The most important lesson I learned as a fairly new board president was the value of communication. I had always believed that communication between a board and the shareholders is important; this strongly reinforced that belief. I truly believe there is enormous value to this level of communication.
Peter J. Demmer
Board President, 316 West 84th Street, Manhattan
The Stats 42-unit co-op, built in 1952, with annual operating budget of $581,864.
The Problem We got hit with two major repair projects in the space of three years. First, we had a ceiling collapse in one of our apartments – fortunately no one was injured, but as a precaution, we had an engineer examine the ceilings in other apartments. His finding: there was substandard (too short) fastening throughout enough of the apartment ceilings in the structure to necessitate shoring them all up.
The Solution The $250,000 price tag would have meant an average $6,250 assessment per apartment. After much discussion, we decided to finance this job with our credit line (annual cost: about $375 per apartment) and then potentially include this in a new mortgage when it came to renewal time (at that point, five years). Last year, we completed the mandated Local Law 11 (LL11) inspections for this cycle. We had anticipated needing about an additional $50,000 to $100,000 for this work, but as it turned out, the much more comprehensive requirements of the local law inspections this cycle resulted in a (still ongoing) requirement for just over $400,000 worth of work. As we also wanted to have financing available for several building improvement projects that had been delayed because of the ceiling job, we decided to prepay the original mortgage and raise funding for both the ceiling and LL11 projects on a long-term basis. We also added another $500,000 in a short-term line that we could draw down for discretionary projects and/or emergencies.
It should be noted that we chose the financing route mainly because the majority of the work done on the two projects was of a long-term nature (ceilings – not until the next 9.5 earthquake; roof guaranteed for 30 years – our original one was 60 years old). We are replacing the roof as a long-term fix in connection with LL11, rather than doing the much less expensive patchwork that was a minimum requirement.
The Lesson We have incurred a structural increase in our maintenance charges of about $50,000 per year, which, along with fuel and tax increases, resulted in a 15 percent increase in our maintenance charges. While we know that raises our comparative level of maintenance from the lower third to a little above midpoint of similar co-ops, we continue to believe this is the right way to go. Asking for $10,000 assessments from each owner seemed excessively burdensome, especially considering the many retirees who live in our building. Recently, we have gotten some “push back” from potential buyers about our maintenance, so we may choose a different path for future work, but that remains to be seen.
Board Secretary, 84-75 Main Street, Queens
The Stats 55-unit co-op (with two professional suites), with an annual operating budget of $467,000, erected during the 1950s.
The Problem Little did our managing agents know that the backed-up toilet in their first-floor suite would lead to the discovery of a major plumbing problem that would affect everyone in our building and take two months to complete. The plumbing company responded quickly, but the snake-like device did not indicate the source of the blockage. The team returned the next day with a more sophisticated piece of equipment with a camera that detected a collapsed pipe. The pipe, actually the drain pipe that carries the waste from 18 apartments and one professional suite to the main sewer line, runs from beneath the professional suite on the ground-level floor into the area beneath the side entrance – a 70-foot hallway. Water had also been trickling down the wall of the subterranean garage – beneath the office opposite the hallway, and the plumbers knew it would be necessary to dig a trench in the hallway to determine how much of the pipe had been damaged. The plumbers handled the initial dig, and the damage was indeed extensive.
Sand that had supported the pipe had worn away over the years, and at least 30 feet of the drainage pipe had collapsed. In some spots, the pipe had eroded completely. The floor had virtually no support, and it was pointed out that had a hapless shareholder attempted to push a heavy safe through the hallway, the floor would have probably collapsed.
The Solution Luckily for us, two shareholders, Raul Tetievsky and Gaston Sanginesi, are also contractors, and they volunteered to take over the digging of the trench. As shareholders, they had a vested interest in the project, and they did much of their work gratis. They were covered with waterbugs and endured the putrid odor of the trench, but they never abandoned the project and worked tirelessly to complete it as quickly as possible.
The Lesson When dealing with a building that’s reached the half-century mark there are always surprises. We called in a licensed engineer to provide his expertise and improve the layout so that the drainpipe would have less chance of eroding or breaking. He suggested the pipes be reinforced and suspended from the sides of the trench – instead of letting the pipes rest on sand as the original contractors had done (a common practice in the 1950s). Surely without his recommendation, we might have repeated the mistakes of the past.
The project cost of approximately $40,000 included plumbing, locksmith fees, camera inspection, structural engineer’s fee, demolition, repair of the hallway floor and walls, repair of the bathroom floor and the tiles in the managing agent’s office. The co-op’s insurance covered $17,572.30.
Kudos to the plumbing company that responded to our call and pinpointed the source of the problem quickly; the engineer who provided a sound assessment and solution; and especially to our contractor/neighbors who devoted their full attention to the project, saw it through, helped us contain the costs, and did a magnificent job restoring our hallway to pristine condition. And a special “thank you” to the intrepid management team at David Associates, who oversaw the entire project while working in a stink-infested office space.