Carol: Can a co-op’s managing agent delay applying any of the STAR program credits to the shareholders and use them instead to pay the property tax?
Steve-Inwood: Well, if I can read behind the lines, it sounds like your co-op has insufficient funds. Take, for example, the STAR credit. The 2013/2014 one is not ready yet, so you must be talking about the 2012/2013 one. That credit was for the previous year (2012/2013). It is usually credited to the shareholders January through June, or January 2013 through June 2013 in this case.
Sometimes there are processing delays outside the control of management necessitating a February–June or March–June payout, for example.
While not getting the STAR credit by this time is a concern, not having funds to pay real estate taxes should be even more alarming. Many properties (mine, for example), save up ahead of time and pay off the real estate taxes in June for the entire year (not just the payment due at that time). This gives the property interest while saving up each month, a discount when paying and a working capital buffer in case of true emergencies.
By the way, be careful if you assess the STAR or co-op credits back to the corporation. If you only assess those who receive the credits, you may be inadvertently treating the shareholders unequally and opening yourselves up to legal action. I would suggest finding out how much cash is coming in, where the funds are going, and making the hard choices necessary to put the financial footing of the property back on track.
Carol: I am not sure if the co-op is using the credits to pay the property taxes. I will check the BBL on the DOF site.
m: A co-op can opt to assess the STAR credit. However, they must also assess those who don’t receive STAR for the same amount.
Special Meeting of Shareholders
Denise: I’m a first-time poster and new board member seeking advice. It seems the shareholders have had enough of the president and vice president, who have managed to run our co-op into financial and operations peril. In response, the shareholders have gathered roughly 60 percent of the shareholders to hold a special meeting to dissolve the current board and elect an entirely new one. Per the bylaws and NYS BCL, the letter (with original signatures) was sent to the secretary, who’s also the treasurer and vice president. There are seven members on the board, including myself. Would the board have to vote to have the special meeting or is this the decision of the secretary? What if the vote fails – can the shareholders take the board to court and “force” the meeting? Any thoughts, including personal experiences, would be appreciated.
C/CS: Though you haven’t shared your bylaws, it’s highly unlikely a vote would be required. The board (or its chief executive) is simply obliged, on accepting the petition, to call the special meeting. However:
1) Expect the validity of signatures, and the viability of the petition, to be challenged. There are no time limits set for resolving such a challenge.
2) Similarly, there is (usually) no time limit set for how soon the board president must call the special meeting.
3) Though your bylaws almost certainly constrain the special meeting to the agenda set forth in your petition, such meetings are often hijacked by boards and modified to suit the officers’ own interests.
4) If you already have 60 percent of shareholders’ support, consider “action without a meeting.” Scan your bylaws and you may find you can bypass the special meeting and election process entirely. If the option is available, that’s the route I’d take to avoid most of the headaches and delays mentioned above. You’ll still find opposition, but you’re in for a fight either way, and this route could give you control far quicker, with much less collateral damage.
vp: Read your bylaws and follow the directions. We needed a certain number of shareholder signatures. According to our bylaws, the meeting would have to be called for one specific reason. We drafted the petition to include exactly what we wanted to discuss. Had no trouble getting the needed signatures.
Stay businesslike, and away from personal opinions or slights.
Collect the e-mail addresses of shareholders and start communicating. As a group (only takes a few), sending out businesslike e-mails to discuss problems will not only prompt the board into action, but the last thing your management company and board want is an e-mail trail of the problems. It only takes a few to lead, but you have to stay professional. Most shareholders don’t think of their co-op as a business; rather, it’s a financial investment.
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