You’ve been on the board a long time. Do you think there is more board work today than a decade ago?
Ten years ago co-op life was way different than it is now. There may have been less work, but I’m not sure people did it. When I first came on the board, we dealt with a lot of minor shareholder matters that really should have been dealt with by the managing agent. And a lot of the issues that we’re facing now were in the background then, like Local Law 11 and energy efficiency.
When I ran for the board part of my speech was that I wanted us to do long-range planning for capital and major maintenance items. After I got elected, we started to do that. We got into more detail with our engineer and managing agent about the age of the building’s systems and when they might need to be replaced, and then we coordinated that with our financial planning. This is what I’m most proud of.
What kind of financial planning do you mean?
We go out five to 10 years for all the major systems and major maintenance issues, put a cost on them, and then correlate that with our financial needs. We have a really good treasurer who’s good at financial planning. We’ve never had an assessment in the building other than assessing for the tax abatement refund.
And we have a flip tax. So between that and refinancing our mortgage from time to time, we’ve been able to do a lot — gas conversion, elevator, windows, replacing our chiller and cooling tower, and replacing all the risers that feed our fan core-unit system. We have money now in reserve to deal with potential gas shutdown issues, to renovate our common areas in the next year or two and do the roof. Last summer, we thought that interest rates were at or near their lowest, but we didn’t want to refinance until our prepayment penalty expired. We were able to lock in the low rate of 2.95% and refinanced in March. We also established a $1 million line of credit.
What’s been the biggest financial or economic surprise for you?
The biggest surprise is the cost of compliance with city mandates. If you go back eight years ago and look at Local Law 11 compliance costs, it’s orders of magnitude higher today because of increased regulations. The gas inspection is a gigantic unknown because a tiny leak can result in the whole building being shut down and a whole lot of extra work. And with Climate Mobilization, the rules keep changing. I mean, we thought we were really brilliant when we converted to gas about eight years ago, but now you’re supposed to go all-electric.
Do you increase your maintenance each year or only when needed?
Yes to both questions, because it’s needed every year. We’ve never deferred maintenance increases because they might be unpalatable to people. We show shareholders the budget and the projections, and at every annual meeting we do an extensive presentation, which describes the extent to which costs are fixed — real estate taxes, salaries and benefits constitute a huge majority of the expenses. So even though people don’t like it, they understand.
So people get along for the most part?
Not counting the occasional threatening letters that the collection attorney has to send, there’s only one case where we had some serious legal involvement with a shareholder. In any co-op, I’d say 3% of shareholders are a pain in the neck. The rules in our co-op are pretty clear, and we follow them consistently. When there are conflicts, we try to deal with them respectfully and not confrontationally.
Board president (11 years)
445 E. 86th St.,
Upper East Side, Manhattan
Years of board service: 19
Year built: 1963
Operating budget: $3.9 million
Current assessment: No
Maintenance increase: 2.15% in 2022
Property management: Halstead Management
Accountant: Prisand, Mellina, Unterlack & Co.
Attorney: Daniel Wohlfarth