The Meter is Running
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Promises made on the campaign trail need to take reality into account.
AUTHORVik Shingwani, First Management
Promise kept. We manage a co-op on the Upper West Side that had a change on the board about four years ago. The new board members ran on a promise that they were not going to raise maintenance. They lived up to their promise, but they put off physical work on their capital side and also on the operating side, which is where the major budget shortfall took place.
Heads in the sand. Every year we have prices going up, and since the pandemic we’ve seen costs going up even more. The co-op’s board members couldn’t foresee these pandemic issues, but against the advice of their accountant, attorney and managing agent, they decided not to raise maintenance for years. Last year the state imposed a new rule that if you want to keep receiving the co-op and condo tax abatement, you have to pay your employees prevailing wages. This board decided to pay prevailing wages, which was another whammy on the budget because it was unexpected.
The reckoning. So we had a meeting with the board and the accountant, and we explained that the building has over $100,000 in payables, but unfortunately we don’t have any money. And once the board felt comfortable with doing a town-hall meeting with all the owners, we did that. And I think that was the best thing — helping the owners understand what the costs are, how they’re unavoidable. So there wasn’t much backlash over the decision to raise the maintenance by double digits, put in a capital assessment to cover mandatory facade repairs and also doing an assessment to cover the shortfall over the past few years. I was very shocked by that because I honestly thought there would be a rebellion at that town-hall meeting.
The biggest takeaway for boards is to listen to your professionals. I’m not suggesting that you do whatever they say, but at least listen to the advice of your professionals. That’s what you’re paying them for.