A co-op in Lower Manhattan is facing a revolt from shareholders who are demanding more transparency and fairness in the maintenance and assessment process, as well as the sale of the commercial space. (Print: Rebel Yell)
When I moved to my Lower Manhattan co-op, artists welcomed me to the building by hanging their paintings on my bare walls, canvases of all sizes that years later I continue to enjoy, and appreciate.
But as the area became more popular and property values rose, many of my talented neighbors packed up and headed to New England or New Mexico. Or Brooklyn. Their once open, light-filled lofts were chopped into classic fours by investment bankers, hedge fund managers and global monetary somethings or others.
As a result, today my co-op includes shareholders with a wide range of income levels. Still, the retired teacher could have invested well and the hedge-funder could be over leveraged. Regardless, our 93-year-old building can no longer be maintained by patching problems or by delaying repairs and upgrades to keep expenses low. While no one is happy about the seemingly endless and increasingly costly projects, some are taking it personally.
In my building, revolution was in the air.
The storming of our Bastille occurred at the last annual meeting. Ordinarily, the event is uneventful. The board lets us know in advance how much money we spent, how little money we have left, which projects are coming up and how big the assessments might be.
But this year, the meeting kicked off with a surprise. A pair of shareholders who clearly were tired of paying their share of our expenses declared it their mission to speak for neighbors who they assumed were financially struggling. As shareholders looked right and left hoping their neighbors didn’t think they were being spoken for, the rebels insisted the board take into account income inequality when considering future projects. Some of us, we were told, suffer financial distress from building work while the rest of us are rolling in dough and unfazed by added expenses.
As with most revolutions, this one came with demands. The first was that the board hire a consulting firm to map out the next five years of projects, costs, assessments and maintenance increases so that shareholders could budget ahead of time. The irony that the cost of such a plan would require another assessment was lost only on those suggesting it. And while we haven’t paid for a five-year plan, we certainly know what’s coming down the pike.
Shareholders are reminded before, during and after every annual meeting that facade inspections happen every five years — and inspectors will find more to repair and replace every time. Nine years ago we were told, for the first of nine times, that the building’s original wiring needs to be replaced within 10 years. (That’s next year.) Five years ago, we were assured that our wonky elevator would have to be replaced in 10 years. (Five years to go.) And since Local Law 97 was passed in 2019, we’ve been told that we’ll have to refit the building for electric heat by 2029 or face thousands of dollars in fines. (That’s in four years.) It’s doubtful that even the most expensive, computer-modeled plan could foresee sudden mechanical breakdowns, new city regulations and unexpectedly colossal cost increases that occur because of, say, insurance hikes, severe weather or a global pandemic.
Next, the board was challenged to raise money without increasing maintenance or calling for assessments. How, I wondered. A bake sale? A co-op Groupon? No. It was time, the rebels said, to sell the commercial space.
If we had an annual meeting drinking game, selling the commercial space would merit chugging a beer. The issue comes up every year and every year is quickly and overwhelmingly rejected. This time we were told that the co-op could really, really use the money. (Chug. Chug.) But we were assured by the rebels that the one-time cash infusion would be well worth the loss of reliable income from our long-term gallery tenant — who had lent us space for this meeting — and the loss of control of our entire first floor and part of our basement. No problem, we were informed. A well-worded agreement would prevent any future owner from renting to restaurants or delis or grocery stores, smoke shops or nail salons. “We will insist the space be let only to…” wait for it... “a gallery.” And yet when asked how such restrictions might negatively affect the sale price, no answer was given.
Finally, the board was told that it must consider income disparity when collecting maintenance and assessments. It seems one of the rebels thought it was ok not to pay on time because the delinquency of those perceived to be financially disadvantaged was only a small part of our operating budget.
Without responding, maybe because they were too stunned to speak, the board made its customary handful of announcements and, after agreeing to survey shareholder opinion about the commercial space (chug), adjourned the meeting. Shareholders filed out shaking their heads. Any minds that were open to the revolution at the start of the meeting were now closed.
But I still had questions. The next day I asked a realtor if he’d ever heard of a co-op offering sliding scale maintenance or assessments. I had to repeat my question twice for him to be clear he heard me correctly. Of course not, he said. That’s ridiculous. Owning a co-op is not like renting an apartment. It’s just like owning a house. When something breaks, you have to fix it. Or you have to sell.
That night I distracted myself from co-op drama by tuning into National Geographic’s docuseries about people who live near the Arctic Circle. Their lives couldn’t be more different than mine in Manhattan, but owning a home is the same in both. “These places take constant maintenance,” said a longtime polar resident, “Any homeowner knows that no matter where you live when you buy it, the chores [and expenses] will come.”