We were close to going belly up. I didn’t know it at the time, but our building finances were in bad shape. And no one else seemed to know it either. I didn’t think there would be problems when I bought into 140 East 56th Street, a 166-unit condominium built in 1951. It was supposed to be my home away from home, a one-bedroom apartment that my wife and I could spend time in when we weren’t at our house in Pleasant Valley, New York. We moved in soon after my retirement from IBM where I spent 36 years doing almost everything I could: I started out fixing computers and ended up as senior manager responsible for software support and services for a computer-aided design products (called CAD for short).
I honestly never thought about the board or the management company when I started living there. But then a couple of things tweaked my interest: construction work on the front of the building seemed like it was going to go on forever, and the condo had received multiple shutoff notices from Con Ed for common area electricity. That made me feel like someone was not paying the bills.
At the first general meeting I attended, I voiced my thoughts about the two subjects and also requested that I be allowed to see the financials. Access was denied and the managing agent, who seemed to be running things, said, “Don’t worry. We’re in great financial shape.”
I decided I needed to get more involved. Sitting in the hallway, complaining, doesn’t get the job done. I ran for the board in my second year living in the building and was elected. Two days after that, I became president and started digging into the operations of the condo. It wasn’t a pretty story. It was fairly grim, actually. After just 90 days, we fired the management company, which didn’t seem to be interested in correcting the course of the ship.
In my two years in the building, there had been little movement on the renovations, and the money spent, -in the end, $500,000,- seemed to be going out to different contractors and little was being done in return. I was finding that, as I peeled the onion, the odor was getting stronger. When we looked into the work that had been done, there were many questions that had no logical answers (bills being paid twice, for instance). It was obvious the management company had been running the building - and it wasn’t a good management company. The previous board bore some responsibility as well: nobody here had been questioning the expenditures.
I’m a hands-on guy. I’d never been a board president before, so I joined the New York Association of Realty Managers and took some of their classes. I read real estate books. I looked at real estate publications. I wanted to find out all the things that should be on my radar screen.
After that, I worked with our architect and the contracting company we hired to make sure that the front-end renovation was completed. Just as that was finally being finished, we got a notice from the union that the condo owed over $110,000 in back benefits from 2002-2007 as well as interest and penalties. My main question to the union: if you haven’t been receiving your money over five years, why haven’t you complained before now? So, we worked out a payment plan where the penalties (but not the interest) were absolved.
Then we had a less dire problem: the former managing agent had signed a contract with AT&T to put an antenna on the roof - – but we didn’t get a deal that was commensurate with the other buildings in the area. We couldn’t do anything at that point but decided when the contract came due, we’d either get rid of them or they’d start paying us the going rate.
Finally, there was the staff. I tried to give them incentives to work harder and smarter by using the yearly bonuses as leverage; the size depended on how productive they were. And if they didn’t like it – well, maybe this wasn’t the right career path for them.
The lessons I’ve learned? If you live in a co-op or condo, you must try to build a cohesive team that looks out for the good of the building. You need to study the finances. Somebody has to ensure that the management company is doing the right thing. If you’re not on top of these folks, you could be in trouble. Question everything.
Always remember: you need to put some business sense into what you’re doing. Money is being spent that isn’t yours, so you’ve got a responsibility to spend it wisely. n