New York's Cooperative and Condominium Community

Habitat Magazine October 2020 free digital issue

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Six Steps to Southridge Success

When Ricardo Pacheco moved into the Southridge Cooperative Section 3 in Jackson Heights, Queens, in 2003, he felt he’d found the perfect place to call home. For years, everything seemed fine. But when his retirement as an Internal Affairs sergeant with the New York Police Department loomed in 2015, Pacheco started getting an uneasy feeling.

He noticed a growing number of shareholder complaints at the 360-unit, 6-building complex. The long-entrenched board had grown complacent, people grumbled. They wondered why needed repairs at the 60-year-old property weren’t being made despite two maintenance hikes and an assessment in just two years. So when neighbors encouraged Pacheco to run for the board, he agreed.

“We had broken and rusted doors in the common areas, gates that wouldn’t open, and no alarms on the roof, and I was very concerned about safety,” he recalls. “I figured I’d go to meetings, do what I could to help improve the place, and go home.”

Pacheco did just that until 2018, when a like-minded slate of reformers took control of the board, and he was chosen as the new president. During the previous three years, the main problem he saw was “bad customer service,” he says. “A board has to listen to shareholders and address their concerns.”

Determined to fix what was broken, Pacheco and the rest of the board embarked on a journey that has yielded considerable success at Southridge, as well as valuable lessons that could help other co-op and condo boards. Here are the big ones.

 

Follow the money

Pacheco knew exactly where to start digging. “I didn’t have much board experience, but that wasn’t a deterrent for me,” he says. “Given my investigative background, I’ve found that when you ask where the money is going, everything else falls into place. So I just followed the trail.”

At the final meeting of the old board in 2018, his predecessor had vaguely mentioned a refinancing loan but refused to divulge any details. “When I got the binder from the attorney, it turned out they’d taken out $3.5 million in 2015, as well as a $1 million line of credit,” Pacheco says. But aside from paying off $1.5 million for the co-op’s mortgage and previous credit line, it was hard to track where the rest of the money had gone. What’s more, the co-op owed $300,000 in unpaid bills for water, sewerage, and taxes going back three years. “There was nothing criminal,” Pacheco says. “But there was negligence.”

(KATHRYN: PLEASE CHECK THIS “ONSITE OFFICE MANAGER” ARRANGEMENT WITH MASINO OR LASSER)

When apartments needed repairs, requests were directed to the onsite office manager, who’d been hired by the previous board and worked full-time handling day-to-day operations. The manager brought in vendors with virtually no oversight by the board – an arrangement that was ripe for abuse. “The plumber alone was getting $250 just to change a valve and was racking up thousands [in overtime pay] a month,” Pacheco says. Other overtime payments were also out of control. “When I learned a handyman was getting paid four hours OT every day, I asked him what for, and he said, ‘I cut the grass,’” Pacheco says. “I mean, how fast does grass grow?”

 

Bring in a new crew

The board hired a new attorney, Stephen Lasser, managing partner at the Lasser Law Group. A new super was also brought in, who helped hunt down new vendors. Pacheco says: “Now we’ve built a Rolodex of reliable people the super can vet, and we always get several bids for every job. It’s a much more interactive process instead of having someone telling us what to do and who to use.”

 

Reinvent the sale process

The reserves now stand at a healthy $2.5 million, thanks in part to brisk sales and flip-tax proceeds. With Lasser’s help, the new board streamlined the co-op’s share transfer process, which has helped move apartments even more quickly. Southridge, which has a diverse, middle-income mix of younger families and older residents who have lived there for decades, is a naturally occurring retirement community, or NORC, with nearly a third of its residents over age 60. As a result, there are frequent transfers of units from deceased residents to their children.

“The old board had been too hands-on and was doing the closings, but there are complicated legal questions involved, and it took them a while to understand the issues, which really slowed things down,” says Lasser, who created a standard form that clarifies when a transfer does not require board consent, which has cut down the lag time.

The board is also taking advantage of every opportunity to reap more money from sales. When a shareholder dies, the co-op now purchases the unit from the estate, renovates the apartment, and sells it at a profit – something that is permitted in the co-op’s bylaws but wasn’t being done. This has further fattened the reserves and allowed Southridge to undertake capital projects and improvements.

“We’ve already installed new key fobs, new fireplaces in the lobbies, new kids’ playgrounds, and huge water fountains, and we’ll be starting an elevator modernization project in January,” says Pacheco. “We’re doing pretty great.”

 

Get into the right management marriage

As for management, the board took its time conducting a careful search to find the right company for the job. “We spoke for over two years before they finally decided to bring us on,” says Cody Masino, vice president at David Associates, who has been managing the property for more than a year.

The lines of responsibility are now clearly drawn so the board doesn’t make the mistake of taking on too much. “Richard [KATHYRN: CHECK CORRECT NAME] has his hands full working for the best interests of the co-op, and my role is to step in and pick up the ball on things the board should not be involved in,” Masino explains.

For example, if a resident is breaking the rules and warning letters have to be sent out or fines imposed, that’s something Masino handles, rather than having the board deal with disgruntled shareholders. When people want to sell their units, Masino encourages them to deliver sales application sheets to his office, which is easy to do since the company is located nearby in Forest Hills. Whatever business has to be done, he stresses, “the proper processes are in place so that the board considers matters first, makes its decision, and then gives us the paperwork.” In short, management doesn’t make a move without the board’s approval.

 

Take care of your community

While the changes have benefited all shareholders, the board has gone the extra mile for older residents. “If a shareholder is having trouble paying maintenance fees, we try to work out a payment plan rather than playing hardball and hiring a lawyer,” says Pacheco. Southridge also rehabbed its party room so it could be used as a center for SelfHelp, a community program that provides classes, wellness workshops, and meals for older residents in need, after a nearby co-op refused to renew the program’s lease.

 

Don’t domineer

Pacheco’s take-charge style helped set Southridge aright, but it also ruffled feathers and stirred up rancor – a mistake he owns up to. “I was the boss in my police job, and before that I was a Marine, so I was used to barking orders at people,” he admits. He’s since learned it takes a village – or rather, a co-op community – to get things done. “I’ve learned to compromise and be more of a diplomat. You need everyone’s support to change things for the better.”

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