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Habitat Magazine Business of Management 2021

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ARCHIVE ARTICLE

With Great Power Comes Great … Opportunity

The German philosopher Friedrich Nietzsche believed that if a calamity doesn’t kill us, it will make us stronger. Here are the stories of a pair of properties that endured two of mankind’s most dreaded calamities – fire and flood – and came through the ordeals stronger and healthier than ever. It wasn’t easy, it wasn’t always pretty, and it wasn’t cheap. In one case, it was tragic. But these stories should serve as a reminder to all boards that nothing is impossible.

A Deadly Sunday

The Strand, built in 1989, is a 43-story brick tower that shoots into the sky at the corner of Tenth Avenue and 43rd Street in the Hell’s Kitchen section of Manhattan. The 300-unit condo’s proximity to the Times Square theater district has made it a magnet for actors, playwrights, and other creative types. Because of its materials and construction, the building is officially classified as “fireproof,” with apartments designed to contain fire for up to three hours – ample time, theoretically, for firefighters to arrive and extinguish any blaze. But Sunday, January 5, 2014, was a day that had no use for theories. A resident of the Strand’s 20th floor returned from shopping that chilly winter morning to find his apartment on fire. The resident fled without closing the door, allowing oxygen to feed the blaze. A Christmas tree in the apartment provided fuel for the flames, which the fire marshal would declare electrical in origin. With smoke and panic spreading throughout the building, many neighbors headed for one of the two stairwells, even though emergency procedures advised residents to remain inside their apartments during a fire.

Eighteen floors above the blaze, Daniel McClung, a 27-year-old playwright, and his husband Michael Cohen smelled smoke and heard cries of “Fire!” and “Get out!” They scooped up their dogs,Schooner and Georgia, and raced for a stairwell. On the way down the stairs they were overcome by the acrid smoke gushing up. McClung and both dogs died. Cohen wound up in intensive care. It took firefighters nearly two hours to extinguish the flames.

Bill Ragals, a retired attorney, has been president of the Strand’s board since 2004. Nearly three years after the fatal fire, it’s apparent the “what-ifs” of that day are still with him. “This building is fireproof,” Ragals says. “If the door to the apartment on the 20th floor had remained closed, end of the story.” But that was just the beginning of the story.

The Road Back

It took two years to sort out all the insurance claims. Meanwhile, all eight apartments on the 20th floor had to be restored to “as-built” status, meaning the building was responsible for basic restoration, but not for any modifications made by the unit-owners. Extensive water damage on the lower floors had to be repaired, as did smoke damage on floors 20 through 43. Scorched portions of the building’s exterior had to be cleaned, repaired, or replaced. Since the building’s insurance covered virtually all of the multi-million-dollar claims, the board did not have to levy anassessment or raise common charges. “Our management company, FirstService Residential, and our staff worked like the devil to bring this place back – for however long it took,” Ragals says.

One surprising thing the board learned during the ordeal was that many unit-owners did not carry homeowner’s insurance. Unlike many buildings, the Strand’s bylaws do not require it. A vote by a two-thirds supermajority of unit-owners is needed to add an insurance requirement to the bylaws, and the nine-member board mounted a vigorous campaign to implement the change. “It didn’t pass, it didn’t gain traction,” Ragals says. “That’s something I couldn’t believe.” He was in for a similar shock when unit-owners failed to approve a proposed smoking ban that would have grandfathered in current residents. “I feel frustrated because I think homeowner’s insurance is something everyone should have, and second-hand smoke is bad for your health,” Ragals says. “I thought these would be things people would want. It’s unfathomable to me.”

He was in for yet another surprise. Determined not to let history repeat itself, the board hired a disaster preparedness company to educate residents on proper procedures in emergencies. In the summer of 2014, notices were circulated about the presentation. Given the recent tragedy, Ragals was hoping for a big turnout. “Eighteen people showed up!” he says. “I was aghast and extremely disappointed. That spoke of apathy – or maybe the belief that it won’t happen again.” But the board members were too busy to waste time dwelling on these setbacks. They expanded the health club and upgraded it with state-of-the-art equipment. The board had also signed a contract to install a cogeneration (combined heat and power) system before the fire. “It’s now installed and running,” Ragals says. “There are significant benefits. It runs 24/7, and is available as a backup in the event of a blackout, so we’ll always have light in the common areas, flushing toilets, one functioning elevator, and pumps to get water to our roof tank. The system, which runs on a truck engine powered by natural gas, will pay for itself in four or five years with the help of a grant from NYSERDA [the New York State Energy Research and Development Authority].”

Looking back, Ragals is both surprised by how quickly the building recovered from calamity, and aware that no individual could have done it alone. “We restored order in short order,” he says, “and the key was our staff and our contractors. People worked overtime to make sure everything was working.” He offers special kudos to property manager Jennifer Granda, resident manager Luis Ruiz and his staff, the contractor Proline Finishing, and the engineer Gene Ferrara of JMA Consultants. “Thanks to them,” Ragals says, “we’re back to being the premier building we were before the fire.”

No More Fear of Flooding

Water, water everywhere. That could be the mantra of the 137-unit Brooklands complex, which opened in 1927 on the wedge of land formed by the confluence of the Sprain Brook and the Bronx River in the Bronxville section of Yonkers, just north of the New York City line. All that nearby water has shaped the destiny of these three brick-and-stucco, neo-Georgian buildings, which converted to a co-op in 1954 and have been repeatedly bedeviled by floods and near-floods. The two most recent, in 2007 and 2011, inflicted $8 million in damages and finally pushed the board to address a chronic problem that’s tied to geography, history, politics, and the vagaries of ever more unpredictable weather.

First, a bit of history. A few years after Brooklands became a co-op, master builder Robert Moses laid down the Sprain Brook Parkway. To avert flooding, Moses erected a 12-foot-tall, 400-foot-long concrete wall between the brook and Brooklands. As with so many of Moses’s visions, this one proved myopic. The wall was destined to be breached by repeated floods, with disastrous consequences for Brooklands.

Kerry Smith, a Brooklands shareholder since 2006, joined the board shortly after the flood of 2007. As he oversaw the job of rebuilding the ravaged property, he preached to his fellow board members that the time had come to take steps to prevent future flooding, rather than continuing to react after the fact. The board responded by hiring the hydrologic engineer Leonard Jackson to survey water activity on the property during storms. Jackson concluded that the best solution would be to build a new retaining wall, adjacent to and four feet taller than Moses’s inadequatewall.

After a battle with neighboring communities and a torturous approval process with assorted bureaucracies, work on the new wall finally began in the summer of 2014, three years after the most recent flood. The wall and related projects were completed in the summer of 2015, at a total cost of more than $2 million, which was covered by loans and an assessment. The board also refinanced its mortgage, saving $200,000 in interest per year, and converted one of its two boilers from oil to natural gas. (The other was decommissioned.) “We’re elated because we’re physically protected and there’s no way we’ll ever be flooded again,” says Smith, who retired from the board as president in May of this year. “The rest was formalities – repaving driveways and parking areas, replacing the entire internal stormwater runoff system, which had been neglected. We also had to install new pumps so we could eject stormwater from the property.”

But the saga of Brooklands is not finished yet. The co-op has sued Westchester County and the state Department of Transportation, claiming they were aware that the original retaining wall was inadequate and did nothing to improve it. The board is also working to parlay the new wall into major savings on insurance premiums.

“We’re technically in a flood zone,” says Kevin Murphy, a consultant who succeeded Smith as president of the Brooklands board. “We’re in the final stages of getting the city of Yonkers to sign off on engineering paperwork so that we can apply to get out of the flood zone – which will reduce our insurance bill dramatically. We’re going to get that done.” Settling the lawsuits and winning a reduction in insurance costs is, in Murphy’s view, “icing on the cake.” The “cake” is that Brooklands’ shareholders no longer dread the next flood. “That fear is gone,” Murphy says. “Our two goals were the safety and security of the shareholders, and the financial security of the co-op. We’ve exceeded those expectations.”

The proof is in the closings. Brooklands was once shunned by brokers, who whispered, understandably, that the property was “flood-prone.” Since the board brought in Jim Flaherty of Douglas Elliman as property manager last summer, the new wall has proven a boon to sales. “We’re getting buyers from midtown Manhattan because our prices are realistic,” says Murphy. “We’ve used Douglas Elliman’s management expertise and their brokers to promote the property. We’re finally seeing the payoff of our torture.”

Both Murphy and his predecessor believe that teamwork is the key to dealing with calamity. “If there’s a point to be made for other boards,” says Smith, “it’s this: get experienced people on your board.” “Learn a lesson from us,” Murphy adds. “You can’t just have neighbors sitting on the board. We had an insurance expert, a lawyer, a banker, and I’m a CPA. But we didn’t do this by ourselves – we had the support of terrific professionals. The other point is: don’t give up.”

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