New York's Cooperative and Condominium Community
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An important task for boards is building a strong and healthy reserve fund – even if the methods are unpopular.
What has been your co-op’s biggest achievement during your time on the board?
Back in 2001 we had only $65,000 in reserves. This is a prewar building that needs constant repairs, which meant we were severely underfunded. We had been told by our accounting firm that ideally the reserves should be equal to at least three months’ combined maintenance, which meant increasing our reserves to $300,000. The board appointed a committee to generate ideas for raising revenue — I was actually a member — and we came up with about eight ideas, which we submitted to shareholders in a poll and had them rate in order of preference. Based on their responses, we implemented three solutions over the course of three years. We started a 1.5% flip tax, which generated $25,000 that first year. We combined two small offices in the lobby that we had been renting out into a studio apartment and sold it for $100,000. And we imposed a very modest two-year assessment, which netted about $57,000. That brought our reserves up to where we wanted in just three years.
What’s been your worst case of sticker shock?
We have these big casement windows with brass knobs and sliding fixtures on the front of the building, which we all love because they’re quite attractive and unique. Over the years they had become drafty, the paint was peeling, and they were rusting on the outside. We brought in an engineering firm to assess the situation, which determined that the exteriors were in poor condition and recommended that all the windows be replaced. This was in 2016, and we were getting quotes between $7.5 million to $10 million. We couldn’t afford that kind of upgrade, not to mention that we didn’t want to replace the windows in the first place because they’re so beautiful.
So what did you do?
We eventually hired an architect who’s very big into restoration and maintaining the heritage of older structures, who told us we could in fact restore them. For the next year and a half the entire building was shrouded in protective mesh while they did repairs, so it was kind of like living in a beehive. The windows that needed serious work had to be removed and brought back to the shop. In the end, it cost about $1.6 million, plus an additional $30,000 to install double-pane glass that provides better insulation and extra protection against drafts. Everyone was absolutely delighted.
And how are the co-op’s reserves now?
We used our line of credit with National Cooperative Bank and did a modest assessment to help pay for the windows so we wouldn’t draw down too much from the reserves. We’ve got an elevator modernization coming up in the next two or three years, and like everyone else in New York we’re about to engage in the next round of FISP facade repairs, which is going to cost a ton of money. So it’s a good thing our reserves are healthy.
Russell A. Raman
Board president (1 year)
230 E. 50th St.,
Turtle Bay, Manhattan
Years of board service: 23
Year built: 1929
Operating budget: $1.7 million
Current assessment: No
Maintenance increase: 2% in 2022
Property management: Buchbinder & Warren
Accountant: Marin & Montanye
Attorney: Smith, Gambrell & Russell
Learn all the basics of NYC co-op and condo management, with straight talk from heavy hitters in the field of co-op or condo apartments
Professionals in some of the key fields of co-op and condo board governance and building management answer common questions in their areas of expertise
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