New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

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ARCHIVE ARTICLE

7 Steps to Smart Decision-Making

There may not be a corner office, but being president of a co-op or condo board is much like running a business. There are endless projects to tackle, cost/benefits to calculate, people to supervise, and fires to put out. It only makes sense to borrow tried-and-true strategies from the workplace – namely, the seven steps to problem solving that many managers swear by (see box on facing page). Here are the stories of two co-op board directors who followed the seven steps – and got great results.

A Balcony Re-Boot

At Cameo House, a luxury nine-story co-op in White Plains, identifying the problem was not a challenge. It was in plain sight. The original rail-and-glass balconies at the 50-year-old building – a prized amenity in each of the 99 apartments – were deteriorating. For years, the solution had been to replace the glass and shore up the concrete balconies. But Cameo House was losing the war. “We were running out of glass, which came from Austria and wasn’t being made anymore,” says board president Stuart Levinson. “The integrity of the balconies was failing. We had spent $70,000 over two winters. It was time for a major project.”

The other board members listened to Levinson’s argument, and they agreed with his thinking. Then they listed and evaluated their options. Residents were given several options for new balcony materials, including slats, new glass, and aluminum panels. “The slats were not private enough, and the glass was out of our budget,” says Levinson. Eventually, sleek aluminum panels were chosen. “Although there was some consternation as to how our panels would look throughout the building, the overwhelming response has been very good.”

To cover the estimated $2.2 million in repairs, they decided to take advantage of low interest rates by taking out a $2 million line of credit and also imposing a four-year assessment that averaged about $100 a month for each unit. “It had to be palatable for people, since our maintenance is relatively high,” explains Levinson, adding that the board put the plan in writing and informed shareholders four months in advance to lessen the sticker shock.

As for paying back the loan, the board earmarked $10,000 from the assessment every month. “We also timed the assessment to end several months before our mortgage refinance was coming up,” Levinson says. “Instead of having to pay back the balance of the line of credit, we would incorporate that into our new mortgage, since the assessed value of the building would increase.” With reserves in excess of $1 million, there would also be ample funds in case other capital projects were needed.

The balcony repairs began in 2016, one floor at a time. New concrete was poured, balcony floors were stripped down and recoated, sturdy aluminum railings were installed along with the aluminum panels. “With a 10-year warranty on the coating and a forever guarantee on the railings, we’re set for the foreseeable future,” Levinson says. “I would say 90 percent of the residents are extraordinarily happy, and the other 10 percent are the people whose balconies haven’t been done yet. We’re not on time, but we are on budget.”

As Levinson sees it, it is a board’s responsibility to try to make as many people as happy as possible. “To do that, you’ve got to know your audience and what you can and can’t do,” he says. “We primed shareholders for the inevitable, gave them visuals of the new balconies, and explained that the project was in their interest because their apartments would be worth more. White Plains is growing, and we didn’t want to be a broken-down building in the middle of this renaissance.”

While the Cameo House board didn’t follow the seven steps to the letter, it did in spirit. “Stuart was methodical, thorough, and patient,” says Carol Dreher of Garthchester Realty, which manages the property. “He guided the ship through the process and kept people calm because he was so open and transparent.”

However, Levinson, an executive at a printing business, admits he stumbled a bit when it came to monitoring and evaluating the project. “I should have put penalties in the contract in case of delays,” he says, “especially with a project of this size. [At my printing business] we try avoid problems by having procedures in place. It’s a little different from being board president, but having a system certainly helped.”

Listing the Options

At The Edgewater, a 22-story co-op on the Upper East Side of Manhattan, the problem wasn’t bricks and mortar. It was a failure to communicate. “Nothing ever went out from the board to shareholders except on the day of the annual meeting,” says Tom Greenbaum, the board president, adding that the board didn’t listen to others because there was also no system in place for residents to take their concerns to the board. Greenbaum, a former business consultant who headed his own company for 50 years, hoped his experience would help him improve communication.

Greenbaum joined the board as treasurer in 2013, and he immediately started brainstorming. He held quarterly 90-minute “House Committee” meetings in his apartment, where shareholders could air their grievances and suggest remedies. He got an earful: the basement laundry room closed at 8:30 P.M.; doormen often failed to open the front door or handle packages; the super, enforcing an old rule requiring workmen to wear long pants and long sleeves, wasn’t letting staff into the building if they failed to comply; groundskeepers didn’t remove plants in front of the building quickly enough when they died.

“I would write everything down and take the results to the board and give them a list of options,” Greenbaum says. That resulted in a decision to make some changes. Employees took a refresher training course. Workers were allowed to go sleeveless in summer, and the landscaping service was ordered to plant only ivy and evergreens instead of annuals. The laundry room remained open 24/7. The board decided to monitor and re-evaluate this last change. “We didn’t know if people would really use the laundry room at night, so we tried it out for a month, and it worked,” Greenbaum says. “After that, we put in a security camera so people would feel safe.”

Since Greenbaum became president last May, he’s been working to ensure even better communication. There’s now a suggestion box in the mailroom – in chartreuse, so it stands out. He holds monthly “Popcorn with the President” get-togethers at which shareholders can meet board members and ask questions. He also distributes a quarterly newsletter with updates on the latest developments, such as the board’s recent decision not to install a gym after it was determined the building didn’t have adequate space.

“Instead of waiting for problems to occur, this board is identifying and addressing them before they have time to fester,” says Joe Laspina, vice president/director of operations at Maxwell-Kates, who manages The Edgewater. “It’s a better system for getting things done.”

While Greenbaum believes that listening, writing everything down, and having clear objectives are all just good business practices, he says there’s another crucial step that highly effective problem solvers should take. “With any project, there has to be one person appointed to run the show,” he says. “Otherwise, it will never get done.”

The Seven Steps

1 Identify the problems.
Be clear about what the problem is. Keep in mind that people may have different views of what the problems are.

Cameo House: The 99 balconies were deteriorating, and the Cameo House had to decide on the fix.

2 Understand everyone’s interests.
This requires active listening. Set aside your own opinions and seriously consider other viewpoints.

Cameo House: The shareholders needed their balconies maintained, and the board had to do so in a cost-effective manner.

3 List the possible options.
This is the time for brainstorming. In addition to obvious solutions, get creative and think outside the box.

Cameo House: Shareholders were offered several choices for new balcony materials. Concurrently, the board began to figure out how to pay for the project.

4 Evaluate the options.
Honestly assess the pluses and minuses of each.

Cameo House: Incorporating resident feedback, the board reviewed architectural drawings of different configurations, then had sample prototypes made.

5 Make a decision.
All things considered, what is the best move? Will combining several options yield a better result?

Cameo House: The board decided on an aluminum balcony panel, took out a line of credit, and imposed a four-year assessment.

6 Document the agreement.
Put it in writing, which will also help you work through the details and implications.

Cameo House: The board put this plan in writing, and informed shareholders four months in advance of the assessment.

7 Agree on monitoring and evaluation.
Set a timetable to reassess the solution and make arrangements for the future in case circumstances change or other problems arise.

Cameo House: Board president Levinson kept people informed as the project progressed. One oversight, he says, was failing to impose penalities for project delays.

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