The Meter is Running
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It's important to explain to residents why the board does what it does.
AUTHORSteve Greenbaum, Charles H. Greenthal Management
The fallout. We manage a co-op that had a 3.5% maintenance increase before COVID hit in 2020. Basically it was because of the rise in real estate taxes, but people were not happy. This building has a ground-floor commercial lab, a dentist and a restaurant, and with the pandemic they just stopped paying. Those stores probably account for about 20%, 30% of the income of the building. Meanwhile, we had to put extra staff on, and we had to buy more cleaning supplies and protective gear. So maintenance increased 3% again, and we had to have a large assessment to cover the shortfall from the stores.
Back to the future. At this building we used to have town-hall meetings before the annual meeting to go over income and expenses. We really educated the shareholders as to where their money goes. It was early in the widespread use of Zoom, but we decided to use it. Back then it was pretty cutting edge to have a town-hall meeting with everyone logging on instead of showing up in person, and navigating Zoom was challenging.
We sent out the budget, the financial statement and how we got to our numbers in advance. We asked people to email any questions that they had. At the meeting we went over expenses line by line, supplying bar graphs and pie charts. When you look at the expenses on a chart or graph, you really find that there’s not that much discretionary spending. We had to explain to everyone that we didn’t know what the future would be for these stores, so we didn’t include their shortfall in the maintenance. If things go back to normal and they start paying again, we can stop the assessment. You can never roll back maintenance.
Education, education, education. There used to be a television commercial with a guy selling suits who said, “An educated consumer is my best customer.” When you have transparency, communication and education, I think people have a better appreciation for what their role is as a shareholder — and a better understanding of where their money is going, what their board does, what the managing agent does, and how the building is run.