It was 2013 and River Terrace had reached middle age. At the time, that was the best way to think about this 432-unit Washington Heights co-op, says Mark Hines, the current board chairperson. He compared the property to “a tired old person who had laid off the gym for a good five to ten years,” and then, suddenly had a heart attack. That was five years ago, and the board of directors had just announced a maintenance increase of 22 percent. “Here’s your yoga moment,” Hines says. “Change everything about your diet, do exercise.” And, when Hines finally got involved, that’s essentially what happened at the cooperative that, at one time, had been called the “Jewel on the Hudson.”
The End of Complacency
Mark Hines grew up in River Terrace, a Mitchell Lama co-op on Riverside Drive West between 155th and 158th Street, facing the Hudson River. His father had served on the board, and Hines remembers hearing his parents talking about board business and building strife as a child. “I didn’t want any part of that,” he says, but what he would carry with him was the special sense of community in which he grew up. In 1990 Hines left for Princeton. After graduating with a degree in computer science, he traveled and then worked on Wall Street for five years, “enough to see what it is and become disgusted and decide that it’s not really how I wanted to lead my life,” he says. After marrying and settling in Hoboken, Hines focused on creative arts and music production and started his own company. When children came along, he knew that he wanted them to grow up at River Terrace. He put his name on the waiting list for an apartment, and when one became available in 1999, the Hines family moved in.
“I came back happy and complacent,” he says. “I was not active in the community outside of being a cheerful community member.” But the place was showing signs of age, and Hines started getting nudges from old-timers, people who had known him when he was growing up. “You should join the board,” they were suggesting, but, in recalling his father’s experience, he says: “It didn’t seem like anything I wanted to be involved in. It seemed like work and a lot of arguing. I didn’t want to have anything to do with it.” Then his father weighed in. “Listen, there are things that are not right,” Hines remembers him saying. “You need to get on your job, man. You need to read these reports. You need to become clear about what’s going on, and then you need to do something about it.” That, says Hines, “ended the period of my complacency.”
A Clash of Philosophies
“I was around nine years old when my family moved to River Terrace,” says Lawrence Fowler, who was board chairperson when Hines’ complacency came to an end. “The place was talked about as a community. We weren’t just moving to a better apartment, we were coming to a community.” Fowler has served on the board as chairperson during two periods: first during the 1980s, and then again for six years before Hines joined the board (Fowler’s final two terms ended in 2017). “I got on the board in the first place because our neighbors, as well as my family, made it very clear that part of the freight you must carry is to be a board member and be actively involved,” Fowler explains.
He saw the symptoms of deterioration at River Terrace but couldn’t quite get to the cure. “There was a clash of philosophies,” Fowler says. Costs were increasing, but so was finger-pointing. “As a self-managed building, it all comes down to money,” he says. Discontent grew as cash shrank. Shareholders had experienced maintenance increases from 2009 through 2011, and assessments from 2005 through 2008. When the board announced another increase of 22 percent to begin in 2015, spread out over three years, the community grew angry, suspicious, and vocal. “People thought they were not being heard, so what do they do?” says Fowler. “They don’t speak more eloquently, they just speak louder.”
At the urging of his father, Hines began attending board meetings and reading reports. He was shocked at what he found. First, there was a deficit of nearly $500,000. Second, board meetings weren’t just negative, there was “really bad behavior. It wasn’t just the information I was finding out,” he recalls. “It was how the meetings were run, how information was shared, how board members treated each other. So many things were wrong.” At an annual meeting, Hines listened as the accountant explained the deficit, repeatedly pointing to fixed costs, in particular oil. “This was annoying me,” Hines says. “I understand it is an accounting principle, but we needed to unfix it. If oil decides to go up X amount every year, we will die.”
So, in 2013 Hines stepped up and got elected to the board, serving as vice president under Fowler. River Terrace was about to learn that with Mark Hines it now had a change agent in its midst. Hines found lots of things that weren’t the way they should be, but he was driven by one major concern – he wanted to be able to provide the same experience to his children that he had when he grew up in River Terrace. “How do I protect that?” Hines asked himself. “My children won’t be able to have it if this is what’s going on, that’s for sure.”
The first thing he did after he became vice president was to confront the toxic environment. “I’m going to be the one that stops everything,” he said at the time. “I’m not going to be the victim of it.” Hines insisted that the culture had to change so that the focus would be on solutions, not blame. When people wanted to take sides, Hines steered the conversation elsewhere. “It’s not politics right now,” Fowler remembers Hines saying, “Let’s identify the problem. Let’s look at what our options are, and let’s make an informed decision.”
But it’s hard to get rid of politics, especially with a vocal and well-connected community. “I got a call from city council member Mark Levine’s chief of staff,” says Fowler. A number of shareholders who had complained about the 22 percent maintenance hike had contacted his office. “You have an increase, and they’re hot to trot,” Fowler recounts. People had put out missives with some information that was correct, some that was not. “We said, ‘Let’s put the facts out there. Let’s talk about the history, the existing situation, and our plan.’” So the board put together an extensive analysis of the co-op’s current situation and its plan to rectify it, and distributed the report to all shareholders. What it revealed was a co-op suffering from many problems that, when totaled, could sink any housing corporation. There was the arrears issue; a trajectory of rising fuel costs; stalled and now outdated capital projects; an unpaid loan from the New York City Housing Development Corporation (HDC); and a questionable commitment to self-management. There was also an ever-increasing deficit projected for the next three years if maintenance was not raised.
The Fix: A Checklist
On paper, the plan is more a justification for a maintenance increase than a roadmap for the future. And it’s easy to oversimplify the steps River Terrace has taken because the list doesn’t include the background noise from the community. Each accomplishment meant that the familiar way of doing business would be different. Among the accomplishments: Management Change. After a lifetime of being self-managed, River Terrace changed course and hired a management company, Metro Management. That step was huge. “We were one of the last self-managed properties in the Mitchell-Lama system,” says Fowler. Despite the ego investment in this, he adds, “I think we had plateaued in terms of what we could do on an island.” Notes Hines: “Now we had a team.” River Terrace began to get timely financial reports.
Collecting Arrears. Back-office support provided by the new management team became crucial in collecting arrears. “Before,” Fowler says, “our manager was chief cook and bottle-washer. That is a lot heaped on that plate.” The back office freed the onsite manager to respond to resident and building concerns.
HDC Loan Revisited. River Terrace received a $8 million loan from the HDC in 2008 to undertake a long list of capital projects and to pay off its existing mortgage of $2.2 million. “The reality was that there were a lot of stalled projects in the co-op,” says Hines. “HDC was entirely frustrated with us, and I understood this.” So he and Fowler rekindled the board’s relationship with the agency and had weekly conference calls. He wanted to re-prioritize the projects. “These energy things have got to be at the top of the list,” he told the HDC. Rising energy costs and a reliance on oil were two of River Terrace’s biggest problems, and Hines wanted to tackle that. In a remarkable display of lender flexibility, the HDC agreed.
Fuel Switch. There had been a suggestion to switch from oil to natural gas before the start of River Terrace’s deficit years, but the push had died due to the cost. Cogeneration and solar power had also been proposed. “Every one of these solutions took a novel approach,” Hines remembers. While there was no blueprint on how to do it, natural gas seemed the most doable to Hines. Doable with a bunch of catches, that is.
The co-op had learned that there would be a $2 million price tag to bring gas to the building. They didn’t have the money, so they combined political pressure with community activism and also reached out to neighboring buildings. They created a community coalition that convinced Con Edison to bring gas to their area. By joining forces, the buildings avoided individual hook-up charges. Energy Upgraded. Now, with change in the air, alternative energy solutions were put on the table again. The board hired an energy consulting firm that led it through the maze of incentives and credits. The result is a combined solar and cogeneration system. Those fixed oil costs are a distant memory.
“I definitely thought this was going to be the worst thing I ever did,” says Hines. “But the combination of the board growing together, the community growing with the board, and the board taking on way better tools in terms of managing” has made the experience positive.
When his two-year term ends in 2020, will the change agent run for re-election? “If I get a year off, can anybody get me to do this again?” Hines says. “I don’t know about that. We’ll see if I make it out to 2021.”