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An Epic Battle at the Brooklands Co-op

 

 

The great French novelist Honoré de Balzac did not have a high opinion of bureaucracies or the people who work in them. “A bureaucracy,” he wrote, “is a giant mechanism operated by pygmies.”

After two vicious floods and an epic battle with municipal, county, state, and federal bureaucracies, the board of directors and the professionals at the Brooklands co-op in Bronxville could be excused for sharing Balzac’s dim view of bureaucracies and bureaucrats. Miraculously, they do not. This is the story of why – and also a story of what your board can expect if it’s ever forced to go up against the giant governmental mechanism known as a bureaucracy.

Beginning at Brooklands

To begin at the beginning: the Brooklands complex – 137 apartments in three mid-rise, brick-and-stucco, neo-Georgian buildings – was erected in the 1920s on a triangle of land at the confluence of the Bronx River and the Sprain Brook in the Bronxville section of Yonkers. Over time, the Bronx River Parkway and the Sprain Brook Parkway were built alongside those waterways, adding concrete to the complex’s watery eastern and western borders. The complex converted to a co-op in 1954, and a few years later, as part of the Sprain Brook Parkway’s construction, master builder Robert Moses erected a 12-foot concrete wall to keep the Sprain Brook from overflowing its banks. As he did with so many of his other projects, the visionary Moses failed to see the future clearly.

The inadequacy of the wall became apparent when Hurricane Agnes hit in 1972 and the Brooklands property suffered a catastrophic flood. The New York Department of Transportation (DOT), which owns the retaining wall, approved adding 30 inches to its height. It would prove to be an inadequate Band-Aid.

Flood waters engulfed the property in 2007 and again in 2011. The first disaster was caused by a one-two punch of melting snow and torrential rains that caught the co-op by surprise. It wiped out all three elevators, both boilers, all electric meters and transformers, 96 automobiles, and all 24 ground-level apartments. Luckily, no one died. The second flood was compliments of Hurricane Irene; this time, timely storm warnings allowed the co-op to remove automobiles and evacuate shareholders.

The two storms inflicted a total of $8 million in damages – $3 million more than the corporation and shareholders were able to collect from various insurance policies.

It was after the first of the two storms that Kerry Smith, a retired magazine publisher and a shareholder since 2006, joined the Brooklands board and got busy dealing with the disaster, trying to convince his fellow shareholders that they needed to prepare for future flooding.

“I tried to get order out of chaos,” Smith, now president, recalls of the first rebuilding effort. “It took two years to rebuild the garden apartments. That’s too much time. Partly it was because the architect/project manager was from New Jersey, and he wasn’t here to do even week-to-week supervising. The contractors hired unskilled people to do the work. No one was in charge. The shareholders were in an uproar.”

To meet the shortfall, the board increased maintenance gradually by nearly 50 percent. It also took out a $3 million line of credit to repair common areas.

As the work crawled toward completion, Smith kept thinking about the future. At his urging the board hired an experienced hydrologic engineer, Leonard Jackson, who spent two years surveying water activity on the property during storms. After rejecting several options, Jackson said the best solution would be to add another four feet to the original flood wall. The cost, Leonard projected, could be anywhere from $1 million to $3 million. An appeal for funding from local politicians got the cold shoulder. Meanwhile, Brooklands’s property values were falling as some local brokers whispered that the buildings were “flood-prone.” It was time for the board to get creative.

 

A Kick in the Head

But all of the board members were not in agreement. Several had been dragging their feet on the proposal to augment the flood wall, arguing that the 2007 deluge counted as a “storm of the century” and that the co-op was owed a “once-every-100-year” reprieve. Then Hurricane Irene and the second devastating flood hit in 2011. Smith called the storm “a wake-up call, with a kick in the head.”

It was, he went on, “the same thing all over again. I told my fellow board members that being conservative was being reckless. I told them that we needed to call an open shareholders’ meeting. We needed to listen to our shareholders because we [had] to build this wall.”

An open meeting was called for October 4, 2011. Before, during, and after it, three foot-dragging board members resigned. They were replaced by three people who shared Smith’s sense of urgency, and eventually the need for the wall was embraced throughout the co-op. Paying for it was another issue.

One day, Smith and two co-op colleagues were walking down Fifth Avenue on the way to a meeting with the co-op’s bank, HSBC. Suddenly, a figurative lightbulb blazed above the president’s head. The board had set up a mortgage retirement trust fund before the floods, a mechanism for paying off the balloon payment on a $6 million interest-only mortgage. Would it be possible, Smith asked, to collateralize that trust fund – that is, to borrow against it?

Absolutely, responded their banker. HSBC offered the co-op a line of credit up to $1.2 million. At the same time, however, Hudson Valley Bank offered Brooklands a $1.5 million line of credit with more favorable terms, leading the co-op to eventually switch banks. The engineer’s plans and the financing were in place. Now came the fun part: going up against a group of nervous neighbors and that Hydra-headed beast known as bureaucracy.

Complex Approval

For the past 15 years, Brooklands has gotten its legal advice from the Yonkers firm of Veneruso, Curto, Schwartz & Curto. In 2003, Steven Accinelli, a Yonkers native and partner in the firm, was assigned to represent Brooklands. A veteran of land-use issues who is familiar with many of the officials in the relevant government agencies, Accinelli didn’t foresee major difficulties in winning the necessary approvals for the Brooklands project.

“The request itself is very simple,” Accinelli says. “On the face of it, all they needed was a variance to build a taller wall than the zoning laws allowed. But it triggered so many other things because of the nature of the wall and its location.”

Because the wall is on land owned by New York State, this ordeal was not going to be a strictly local one. And the wall is a short distance downstream from several residential neighborhoods near Sprain Brook. The people in those neighborhoods – fearful that the wall would cause the brook to back up onto their properties during storms – hired lawyers and an engineer to fight the project.

“They were a major, major cause of delay,” Accinelli says. During the next two years, Accinelli would come to view it as “the most complicated approval I’ve ever worked on.”

While Accinelli and the board were dealing with nervous neighbors, zoning boards, planning boards, city councils, Westchester County, the state DOT – even the Federal Emergency Management Agency – they kept getting blindsided. The county alerted them that a 48-inch cast-iron water pipe from the 19th century that carries water from a Westchester reservoir to New York City was sitting just a few feet beneath the surface of a neighboring county-owned property. Driving piles into the ground could damage that pipe, so a new plan was drawn up to dig a hole, very gently, and pour steel-reinforced concrete into it. That eventually changed as well; the final plan is to build a dirt berm over the area to serve as a wall against incoming floodwater.

Then the state demanded that the co-op put up a $300,000 surety bond or produce a letter of credit to ensure construction would continue if financing collapsed. Hudson Valley Bank agreed to offer a letter of credit, averting disaster at the eleventh hour. “Every week there [has been] a surprise,” says board president Smith.

Finally, after a two-year bureaucratic war, the co-op got its building permit on October 4. Preliminary work began before Christmas 2014.

Flirting with – and Learning from – Disaster

All experiences, especially ones as painful – and expensive – as this one, are learning experiences. And there has been no shortage of lessons for the Brooklands board, the shareholders, or the professionals.

For Accinelli, the lawyer, this was a lesson in the importance of managing expectations. “I’ve had many difficult conversations with the co-op board, trying to make them understand that this is a process, and this one was not the norm,” he says. “It was about making them understand why it’s taking so long. It also takes a lot of teamwork between my office, the board, various agencies, and the engineer.”

For boards, he offers this advice: “First, a board needs to put together a team appropriate to the task – hire the right professionals. Second, there needs to be a reality check at the start, sitting down and mapping out various scenarios. People need to have realistic expectations.”

For board president Smith, the shareholders’ wants and needs should always come first. “If you’re clear about the shareholders’ best interests,” he says, “your next step is to get a plan, debate it, rip it apart, then put it back together. And get yourself a good lawyer, one who’s not just a lawyer but also an advocate who’s going to march you through it. As Winston Churchill said, never give up.”

After such a torturous ordeal, there is surprisingly little willingness among the Brooklands contingent to join Balzac in deriding all bureaucrats as pygmies. But there is a near-unanimous feeling that bureaucracies themselves are insensitive and inefficient operations.

“I don’t want to paint these people as blockheaded bureaucrats, because they’re not,” says Smith. “But they had never been confronted with a project that cut across so many jurisdictional lines, and there is no sense of urgency in any public agency toward the individual.”

Accinelli agrees. “No matter how urgent this is to the co-op, there was not always a reciprocal sense of urgency on the part of government agencies,” he says. “Five people have to approve everything. That requires me to follow up – and that costs my client money.”

Kevin Murphy, an accountant who has been the board’s treasurer since May, says that what government agencies lack in urgency they make up for in complexity. “Never underestimate the complexity of any government agency,” he advises. “The agencies don’t talk to each other, so make sure your attorney is conversant with all government regulations. Without Steven Accinelli we wouldn’t have gotten through this mess. He knew how to bring the different agencies together. It also helps to have patience.”

Murphy’s predecessor as treasurer, Kevin Hicks, is even more succinct: “The left hand doesn’t talk to the right hand in Yonkers.”

Accinelli, who played traffic cop trying to keep the paperwork moving between the various government agencies, sometimes grew frustrated with the bureaucrats’ snail-like pace. “My client would appreciate it,” he says, “if they acted more quickly.”

Barring unforeseen surprises, the job on the Brooklands flood wall should be completed sometime in the spring – two and a half years after the board’s original request for a building permit was first submitted and denied. The operative word here is should.

“We gave up long ago on predicting when this job will get done,” Smith says. “The one thing we do know is that this wall will be built.”

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