Time value of money?
I am sorry, but that is a typical self serving response by people who do not wish to take responsibility and wish to push things off into the future, just look around you today and see how well that opinion has done for people. Only a person with short term goals and little to no foresight would favor an IO loan (either personal or corporate)... Suck up the few extra dollars, add some to it, pay it bi-weekly (regardless of what they say, you can do it)and amortize that debt paying less interest and on a shorter term... that’s value... not paying someone interest and receiving nothing in return...

You are going to pay about 5% interest only I assume? How much is that a year that you are paying to the bank without amortizing any of your debt? now, what could you do with that amount of extra money every year if you were debt free? roof deck, gym, amenities, reserves, lower maintenance, etc...

I apologize if I appear a bit opinionated about this subject, I am opposed to working against your financial stability nd freedom...

Best
~AR

I completely agree with AR. As president of a financially sound building, currently with no mortgage, we have a policy against IO loans for individual shareholders and our board would not consider an IO loan for the building if and when we need one.

At current interest rates, you are certainly going to be paying out more in interest than you will be receiving on your investments, so there is no time value to be found there.

Tell the board they should reconsider and rework that loan for one that amortizes...

And do consider a fully amortized, no ballon payment, loan. That is what we have in our building. It was setup before I bought but it was a nice feature. A fully amortized loand will increase shareholder value

Has anyone found any lenders offering refinancing of underlying mortgages (self-liquidating) under 5% APR for 20-30 years

Not sure what the current rate(s) are but can't believe underlyings are below 5%. Check out Josh Rhine @ Meridian Capital. Don't have the # with me but they are in lower Manahattan.

Now that there has been opinions presented that are against interest only underlying building mortgages, are they any pro opinions?

And for those who gave opinions, what are your compelling arguments for these opinions.

Thanks!!!!

Jay... Here is a hypothetical scenario (there are several I can give.. but this comes to mind first):

The building refinances a 2 Million dollar loan interest only - 30 yr Am with a 1o year balloon.. this means that your monthly payment is $9166.67 for 120 months = $1,100,000.04 in interest that you paid and you still owe 2,000,000… So, in essence, it cost you a million dollars to do nothing other than push a 2 million dollar debt into the future…
NOW…
Refinance 2,000,000 at the same 5.5% with the same 30 year Am, but fully amortizing the loan.. your payment now is 11,355.78 per month (note that it is only about 2K per month difference) .. at the end of the same 10 year period, your remaining debt is about 1.6 million. If you add to the principle or pay it biweekly you can then cut it in half..
Here’s my point… Year ten… Your debt is less, equity is more and the value of your stock is worth more.
Year 20-30 when your debt free, your worth even more. Your way, the only way the stock value would increase is to count on the real estate market index and inflation to boost the value of the edifice… this way, you get the best of both.


~AR

So folks want a balloon mortgage, e.g.; interest only, to then stiff the owners five years hence.

In effect the board is proposing to have five years of freebies (lower monthly maintenance rates) and then when they leave, they want the residents who remain in the building to pay for their less than honest fiscal policies.

Quite frankly, any board that proposes to employ interest only mortgages for “n” years has abrogated its fiscal responsibility.

Co-op must have an axiom, pay as you go. There will always be capital expenditures, so if one pays for past capital expenditures in the future (balloon mortgage) what will finance the capital expenditures in five years? Will it be another balloon mortgage?

Inevitably, the residents in ten years will be faced with a mortgage market that refuses to lend anymore, the building will have at-risk facilities that demand immediate relief via high value capital expenditures with no money to fund the work. Next the building will be deemed uninhabitable….unless of course the residents pay off all outstanding mortgage balances in one fell swoop, by underwriting their pro-rata share of the outstanding co-op debt via personal mortgages.

Yes a very ugly picture, but one that can become a reality in due time.

My view is that any board that floats interest only mortgages has abrogated its fiduciary responsibility and thus should be deposed or sued for breach of fiduciary responsibility.

I’ll bet none of these folks has obtained an engineering study for capital expenditures for the building as required by the AICPA.

Just to give ya a swag….try this for size.

Using the “swag” number $40,000 per unit, this is the estimated capital expenditures most buildings are facing over the next fifteen years for capital expenditures outside unforeseen emergencies. If you can’t believe me, then ya need to do your own homework and tell us all what it is. So, if the co-op has 100 units, the estimated capital expenditures over the next fifteen years is $ 4,000,000; not adjusted for inflation which should bring it closer to $5,000,000.

Sure you can argue whether its $30,000 a unit or $50,000 a unit, but regardless it is a “big number”. So is the assessment program organized to bring these funds into the coffers? Bet not!!

So can ya pay off the balloon mortgage and do required capital improvements? I don’t think so?

But go ahead live cheaply today and stiff future owners.

After reading SK’s comments, I second her/his views.

As the value of the building declines due to delayed or deferred capital improvements and as the credit burden increases, the crossover occurs and the co-op maxes out its credit rating and worthiness.

This is no different sadly than folks maxing their credit cards. Then, there is no more credit and the image of debt overwhelming the individual is truly a tragedy.

What if as SK poses, an emergency occurs and there are no funds. What will you do? The inevitable is that residents receive emergency assessments in thousands of dollars payable in ninety days to extract the co-op from its filthy debt ridden mire. Hundreds won’t hack it, thousands is more like it. It may even be $15,000 or $20,000 a unit due within ninety days. Who has such pocket change?

What does the board say to the irate shareholders then? We didn’t know!!

Very sad indeed!

Amen SK...

They can always hope for a bailout package in 10 years!

~AR

We are within a few years of a ballon mortgage and have started discussing assessments to pay a portion of the outstanding balance down upon it coming due.

I'd suggest that you DO NOT consider a self liquidating mortgage as the prepayment penalty; usally the Yield Maintenance Formula, is a killer if you ever need to refinance.

I'd recommend a 10 year balloon with a 25 or 30 year amortization schedule. You are paying interest on money without gettting any benefit of a reduction of priniciple. The goal is to get rid of the mortgage not have it for life.

Most people think that having a mortgage is a tax deduction. This is crazy. Think about it... You give the bank $100 in interest and the Gov't gives you back $30. Does this make sense? If so send me $100 and I'll give you $30 back. Mortgages are nothing more than Ponzi schemes..

I believe it is better to pay off the mortgage and permanently reduce the maintenances then to carry a mortgage for 50 years and never pay a penny towards the priniciple.

Good Luck...

The roof deck and replacement are two seperate things regardless of timing.
Both items are a capital improvement as per IRS; however, I do not believe the roof deck qualifies for a j-51 (I could be wrong on this).

~AR

“A rent increase for work performed in the common areas of a building is permitted only if the work qualifies as a ‘major capital improvement’ ” as defined by the state’s Division of Housing and Urban Renewal.

To qualify for such an increase, Mr. Dobkin said, the improvement must be buildingwide; it must be for the benefit of all tenants; it must be for the operation, preservation and maintenance of the structure; and it must be deemed depreciable under the Internal Revenue Code.

“Before an increase can be allowed” by the division of housing, Mr. Dobkin said, “tenants must be given an opportunity to review and comment on the owner’s application.”

Acceptable grounds for opposing an application for a major capital improvement include that the work was incomplete or shoddy, that the owner failed to apply within two years of completing the installation or that there is a buildingwide rent reduction for an uncorrected existing violation, he said.

“The installation of wall-to-wall carpeting, covering the entire expanse of the common area, which is or was carpeted, may qualify for an M.C.I. increase if an owner can show that the useful life of the old carpeting has expired,” Mr. Dobkin said.

Although the Division of Housing and Community Renewal has not established a specific “useful life” for carpeting, an owner may satisfy the requirement by submitting the manufacturer’s specifications for the expected lifetime of the old carpeting and “before” and “after” photographs.

ST... You lost me...
What does DHCR have to do with it?

Are we talking about a Coop or Rent regulated apartment building?

Nevertheless, I assumed the aim and focus of the inquiry was for tax purposes and not raising a regulated rent via an MCI application.

Did I miss something?

~AR

Yes. read carefully - this is a coop question. is a roofdeck considered a capitol improvement so tha tyou may deduct costs form the profit when you sell your apartment.

DHCR has lots to do with it according to what i posted. stop think read.

ST –

Although all the information you posted is correct in its context... DHCR has nothing to do with the sale of an apartment, the taxes paid or anything having to do with the posters question.

The posters inquiry, although vague, indirectly questions the tax consequences, if any on a possible capital improvement.. The only factor that would effect this would be, or could be the details behind the roof deck such as if it was assessed for or not, if it is for all residents – 100% of the time and is it permanently affixed to the roof… The answers to these questions effect the valuation of the stock. How, can be viewed on the annual financial statements provided by the Accountant.

Now, just to ensure that I was not misinterpreting, or misunderstanding anything, I ran this question and your response by my in house CPA & Attorney, who were both puzzled by your response. Consequently; and with all due respect, possibly you can enlighten us as to how and why what you are talking about has anything to do with a cooperative sale? I would like to learn this.

~AR

is it very very simple. when you sell your apartment and make a profit you can deduct all capitol improvement contributions over the years you ghave lived there - things that the coop has paid for like a new roof - from the capitol gains basis. very simple. this includes capitol improvements that the coop has made. like a new roof, pointing, windows, etc. However, a roof deck might be a grey area. how can you not understand what I am asking??

Unfortunately I do not believe you know what you’re saying… Now you state something different and at the same time pose that you’re asking a question??

What you most recently wrote is common sense and not the issue, or the area of misconception.

The question I had for you is what the heck does the useful life of carpeting, DHCR and MCI rent increases have to do with it? According to your posts DHCR has some say in this and the useful life of carpeting and the possible rent increase a landlord may take has some effect on all this… maybe you did not realize what you cut and pasted?

A roof deck, and its qualification as a capital improvement was addressed in my last post.

The original poster BAJ should have also clarified his question so this off beat dialogue wouldn’t have gone this far… nonetheless, I apologize to the readers who have followed this!

~AR

AR oh for god's sake - you are like my passive agressive sister - you cant just answer the question and keep attacking the well-meant person trying to get a 100% answer. - I mean did you check withthe IRS? Who did you check with ? If you are not sure then just be a strong person and say so and stop trying to attack people. It is not helpful.

FORGET the DHCR posting. (actually if you read it you will see how it defines Capitol improvement and a deck may just be a luxury item - that is the entire reason it was posted. )

Hello - the dryer should be no more than 25 cents for each 7 minutes . Do not use the machines aht wont let you elect by the 7 minute blocks.

All your washing machines, and i mean all - should be front loading.

anyhow PLEASE get proposals from other companies. For the good of your building.

Yes, of course, We have proposals from HiRise,Automatic Indutries, Spincycle, Hercules, and Coinmac. Waiting to hear from Sebco. SDI didn't want to bid and Mac Grey never called back. Coinmac is our current vendor.

So yea we are not just going to one vendor

WE have them land are very happy with the operation.
I believe our dryers are metered at 45 minutes.
We have the card system and don't use coins.
How many units in your building? Coinmach will negotiate on contract terms.
I can give you a lot of info if you go further with them.

this guy may work for Coinmach. i find that i completely dry a large load of laundry at 28 minutes. NOT 45. That is when you fry your clothes as over-drying can create cause considerable wear and tear. 45 minutes is EXCESSIVE. VERY IMPORTANT - GET DRYERS THAT OFFER 7 MINUTE INTERVALS AT 25 CENTS PER INTERVAL.

I agree that there should be $0.25 meter rates, though the vendors I've talked to all want to only give 5 minutes for $0.25 ($1.75 wash) I know everything is negotiable

Question is how good are the dryers? I know that in a new 60K btu/hr ADC dryer I can dry a set of sheets in 15 minutes. Will the LG driers work as well? ON the same or less gas?

Some of the responses have misunderstood your question. I think your answer is in the specs. If an ADC dryer puts out 60K BTU/hr, compare that with what the LG puts out - same BTU rating should give you the same drying power and the same gas consumption.

FYI, we changed our laundry rooms a couple of years ago. The triple loader washers were LG - beautiful washers but we eventually had to replace them with Maytag because of reliability problems with the digital control system. Maybe the newer models have overcome the problem but it would not hurt to ask your vendor.

"This guy" doesn't work for Coinmach. "This guy is the President of a co-op with 100 units in Manhattan and has extensive experience negotiation with laundry companies.
We haven't had one individual complain about fried clothes.
Try drying your clothes on "permanent press" or "delicates".

by fired clothes I obviously mean over-dried clothes. it is not great for them. why waste all the electricity an money overdrying eveyrthing? 18 minutes does it.

because the building will pay for electricity and water, the machines must be the most energy efficient out there. Here is what Consumer Reports likes in LG's ( yours should be comparable - oh yes and do NOT pay more than 25 cents for a 7 minute cycles and no 5 minute cycle. Just negotiate and they should renovate your laundry room for free. tiles on floor, etc.

LG Allergiene WM2688H[WM]A
Front-loading models
$1500

78
95
LG WM0642H[W]
Front-loading models
$900

78
95
LG WM2016C[W]
Front-loading models

I see the conversation is going sideways here... To answer your question, LG is very reliable and efficient.
LG Corporation is on the fast trac to being a #1 manufacturer (I purchased LG for my personal washer & Dryer)

And no, I do not have stock in the company!
~AR

Check your proprietary lease. For our co-op, each shareholder (whether it's me or the sponsor) is required to keep their apt clean and free of interlopers. If the board determines that the shareholder isn't taking care of the apt, the board can clean the apt (and hire an exterminator) and charge the owner.

So read the contract!

bedbugs are not about being clean. they are not related to dirt. that is a misconception. in rental apartments, the landlord must pay to get rid of them - the coop is the landlord - so...?

You're right -- and I didn't intend to imply that the two were related. What I meant to write was that our proprietary lease requires apartments to be both:

A) Clean, and

B) Free of pests.

Same rules apply. Same answer, too: It's in your own proprietary lease. You can't take someone else's word for it, just look it up yourself. It's that easy.

We hired a jewel of a superintendent (non-union) through a recommendation of our HVAC vendor. Yes, we asked several of our vendors: electrical, plumbing, HVAC, etc.

Questions:
1-What is the benifit of a non-Union Super?
2-If we already have a union Super (and staff), can we (we like our present super, in the future) change?

You answered your own question. What is the benefit of a union super??? We have been non union for 20+ years with no problems other that the super having a family and needing more rooms/benefits.

I have great success with Graigs List for non union employees, or if you place an ad in the weekend NY Times, you will also get at least 200 resumes to filter through.

It's an arduous task, but well worth it. plan on reading 200-400 resumes, interviewing 20, re-interviewing 3-5, final 2... perform your background checks, then hire...

There are many good workers seeking positions right now so you should not have any problem.

~AR

They have a jobs board

http://nycsta.org/

If the leak came from a co-op pipe, then the co-op is responsible for the damages. (If you want to double-check, look at your by-laws or proprietary lease.) The property manager must notify your insurance carrier immediately of the leak and say that the co-op may file a claim to cover damages. Then the co-op should move as swiftly as possible to clean the apartment.

Notify your own insurance carrier.

Yes, the co-op is required to clean and then repair any damage.

But one’s lease may stipulate that the co-op need only repair the floor, but that any improvements, such as carpeting is the onus of the resident and thus the resident’s insurance carrier.

Most likely the problem took place on the 1st floor. This may be a warning (depending on the age of the building and other problems in apartments below) that the main lines should be cleaned on a periodic basis to prevent similar problems in the future.

Harvey and other respondents are right!

AdC

ADC.just curious as to why you think the problem comes from the first floor? The unit where the water came up through his sink in 2. Beneath him is a duplex on first floor and basement, and that unit is the only one that has a bathroom on this line--two in fact, basement and first floor. The reason I'm interested in your reference to the first floor, and it may have no bearing on the flood issue, but that first floor unit has a very problematic shareholder with lots of OC, arrears, etc. We are taking very serious steps with her, and wonder if there is some "housekeeping" issue down there that could have caused this line to back up. There are many cats and dogs being harbored there. Any thoughts?

There a few reasons for a backup that causes water to flow back into a toilet or sink.

Typically the water needs to be from somewhere, usually above the sink that experiences the flood. But, except for opening a faucet the apartments above are not the cause of the blockage.

So the blockage is either below the sink that experiences the backflow or adjacent. In our building, the kitchens are back-to-back and so the adjacent apartment can be the cause of the blockage and outflow as has occurred when some folks operated their sink disposal units and did not use a sufficient supply to water to flush the materials onto the waste line. This caused an impairment to the flow and caused water to backflow into the adjacent kitchen sink.

In the case of other buildings, with a single sink per floor emptying into a waste stack, the impairment needs to be below the sink that experiences the backflow. This is probably the case in your building.

Impairments could be anything, e.g.: accumulation of waste (a waste dam), pipe collapse downstream, insufficient waste flow, e.g.: undersized waste pipe (if folks illegally attach washing machines)

You'll need to check your Proprietary Lease, but most leases explicitly state that the coop is *not* required to repair or replace any damaged furnishings, rugs, wallpaper, or the like. That's covered by the shareholder's own insurance. The coop only needs to repair floors and to repair and replaster walls and ceilings.

An excerpt from our own lease's Paragraph 4(a), "Damage to Apartment or Building":

"Lessor [the coop corporation] shall not be required to repair or replace, or cause to be repaired or replaced, equipment, fixtures, furniture, furnishings or decorations installed by the Lessee [shareholder] ... nor shall the Lessor be obligated to repaint or replace wallpaper or other decorations ...."

This sounds harsh, but actually makes sense. Why should the entire coop corporation be on the hook for massive damages if a shareholder decides to paper the walls with priceless medieval tapestries, and they are destroyed in a flood? The coop is obligated to restore the structural integrity of the apartment; the shareholder's insurance policy takes care of the rest.

Ah, realign duties of the others to include that of the porter that will be laid off.

You can't just get rid of a porter and expect the other porter(s) to pick up his work load! The Union won't stand for that, you have to show cause that you don't nned the services of that Porter. I thought you Board Members were smarter then that!!!

What's wrong with affordability/ cost control as the reason?! You have the financials to prove it. Only thing I can say is to offer as part time work.

You can't just get rid of a porter and expect the other porter(s) to pick up his work load! The Union won't stand for that, you have to show cause that you don't need the services of that Porter. I thought you Board Members were smarter then that!!!

Carol, We too are trying to cut expenses. We have about 90 units -- live in Super, two porters.. (not counting doormen) We think we may be able to do with one porter and the Super.

We are also looking at the perks that were given to the Supers over the years (by generous BM who we finally got rid of) -- but are not part of the Union contract. Such as: We pay the Supers electic, phone/cell and cable bills. Our new board canceled a $500 monthly parking perk for the Super. One Super abused the electric perk, and we capped it at 300 a month,,, which is still too much.
We have people in the building who have lost there jobs, are canceling Cable and are probably not going to run thier AC full time this summer. There are over 9 apartments for sale -- with no buyers. So the old theory that without these perks, we cant keep a good super -- is out the door.
Would like to hear from others on this subject...HG

This isn't about building staff, but here's an idea that may interest some of you.

We try to build a "neighborly" spirit in our coop. We posted a note telling residents to see our bulletin board for our "Ways to Cut Costs and Save Money" flyer. It has bullet point tips on finding bargains, using less electricity, shopping, etc. It also invites residents to submit tips that we'll post on more flyers. We've received many. Residents say they find them very helpful and have seen tips they never would have thought of.

Here's a surprising one. When you buy a roll of stamps in the P.O., count them before you leave. I bet few people think of doing this. The claim is that rolls often don't have a full 100 stamps. I bought a roll recently and it only had 86! That's a $5.88 shortage on 42-cent stamps. I went to the clerk who sold me the roll and let him count. He gave me 14 more stamps. Quality control on stamp packaging obviously isn't what it should be!

Hg please let know what building your in, I wouldn't what a good Super to go and work there! The world is all in the same boat, and your blaming the Super because people are losing their jobs and you have apartments that are not selling? Get real!

Anonymous, We have 90 units, and have over ten SH in the building who have lost thier jobs or clients... and are cutting back: no more Cable TV, high electric bills... We also, within the last three months, have ten apartments on the market, that are not selling.

Except for your email, there was an intellegent discussion on how to save money. We have no intention of fireing anyone, but if cutting back on the Supers perks, (which add up to close to $1000 month) will help us keep a porter or help a SH,,,than the board will have to make hard decisions.

Perks dont make or keep a good Super. As for keeping a good Super, our present Super was living with his famlily in a basement with no healthcare etc.... he has landed in heaven. Our last three "good Supers" who got all the perks,,,abused thier postion and were fired for lazyness, stealing and one, because the SH were afraid of him -- and demanded that he be fired ....etc.

If you dont have a good ideas, please dont join this discussion. These are serious times, and we are all making sacrifices...

Our Board is meeting with the union rep this week. We have considered cutting some of the super's perks, ie electric, gas, phone and parking and we will definitely confirm if these are all included in the union contract since they were granted prior to our coop becoming union.
We have deployed many cost saving suggestions- dual fuel, thermostat controls, efficient light bulbs and fixtures, hall window replacement etc. Our current board is managing to a budget and longer term capital improvement plan. The critical task at hand is managing the maintenance staff. We have started to review their work schedules, generate task lists and logs to ensure we are getting the most for our current investment.

Carol,

We would very much like to hear what the Union rep says... We too are looking a the perks that have been given out over the years. Two years ago we did away with an outragous $500 monthly parking perk for the Super ... Our MangAgent and certain BM's said that this was "Industry Standard" -- we did the research and discovered that within 20 blocks of our coop, with the exception of buildings with garages -- we were the ONLY building giving this expensive parking perk... Lesson: Take what the MangAgent and Union says with a gain of salt.

Carol, As to the Parking Perk,,, We canceled a $500 garage parking perk for the Super two years ago.. We were told by our MangCompany (who no longer is our MC) that this was "Industry Standard", we took 20 block survey of the surrounding coops -- and discovered that WE were the only ones giving this "Industry Standard" perk. Buildings with garages do give free parking to the Super... As for the phone/elect... In the past this has been abused, and for one Super we put a cap on the Elec bill (he ran his three A/C units 24/7) and had to do the same with the PH bill (called all his family in Europe every day) for another... We have been told that we cant get good Supers without these perks... again Not True... our present Super lived in a tiny apat with no perks and did not even have health care at his last job -- and cant believe his luck. We have too may SH who have hit hard times, and eveyone has to pull in.

Carol,,, We too want to look into our staffing, overtime and perks... Would be very greatful if you could share your findings with us... We have a live in Super (who we like), with an office down stairs. It seems extravagant in these times, to pay his electric (esp in summer) cable, and personal phone bills -- not to mention a hefty Xmas bonus.

Our old M/Company tried to talk us into a Parking perk, but since most of the SH cant afford parking, we considered this (and extra $5000 per year) extravagant. And if asked, our Super would prefer the money.

We have 485 units.

We have two live-in superintendents (senior and assistant).

We have a maintenance staff: 8 AM to 8 PM, M-T-W-T-F, and 8 AM to 4 PM, S-S

We have a porter staff: 8 AM to 11 PM, M-T-W-T-F, and 8 AM to 8 PM, S-S

We have doormen: 24 x 7, at least two 7 AM to 9 PM, M-T-W-T-F, and two 7 AM to 7 PM S-S

We have a contracted security staff: 24 x 7 for our upper and lower garage, and our rear (delivery) door. Most often there are five on duty during the hours 7 AM to 7 PM and three overnight.

= = = = = = = = =

Yes we have a bleak economy and the near term is bleak. Our panache is that we are a luxury building and we are not considering any retrenchment in services, amenities or staff.

= = = = = = = = =

Our residents expect and receive a high level services and quality of life that we feel would be diminished by staff reductions. As our building ages, additional “fix-it” projects emerge on a daily basis, thus staff resources continue unabated. Plus, our maintenance staff will perform such repairs as a new trap under a sink, a new flush valve for the toilet, snaking a drain line, new hose from the water supply to the toilet, repair windows and window mechanisms, replace standard faucet washers, repair apartment door bells (mechanical), bedroom door lock, bathroom door lock, etc. The first thirty minutes of a “repair” call is free except that the resident pays for any parts. After thirty minutes, we assess a nominal fee per half hour.

Of note is that some residents are chary of climbing a stepstool or ladder and will ask a member of the house staff to replace a defective light bulb.

= = = = = = = = =

Yes, we have expended millions for capital improvements: pool overhaul, façade maintenance, terrace maintenance, window and terrace door replacement, recreation deck upgrade, garage parking deck overhaul, much larger emergency generator, elevator system total overhaul, driveway repaving, roof fan replacement, new air handlers for public spaces, new mailroom with larger mailboxes and parcel lockers, lobby redecoration, automated digital controls for central HVAC and heating, as well as control of new fresh water pumps and tanks, etc.

= = = = = = = = =

And, we retired the original mortgage without ever refinancing, extending or taking a second mortgage.


= = = = = = = = =

And by comparison with nearby co-ops (in our neighborhood) we are one of the lowest cost co-op residences, with substantially more amenities than other buildings with a lesser number of "perks".

= = = = = = = = =

But you need to do what you need to do. So, let me not be seen to be chastising your building and the decisions that are being faced. Rather, just offering a view.

There are many ways to cut costs without diminishing services. I would not suggest cutting essential services, and you would be doing so by virtue of cutting an employee because no one will pick up the slack.

SK seems to understand this. I admire and applaud his management and Board for a job extremely well done.

I have learned that there are differences however in how I must manage a Park or 5th avenue Coop, a SoHo Coop and an UES Coop, etc.. Every building has its own personality and Character that must be recognized and built on. And every building I go into I can spot many areas to build on and/or save money... I say this only to bring out a point...


There are lists of just energy savings alone that can add up to thousands (see REAPConsultingLLC.com), cut down on overtime hours* & have a lower paid staff member perform tasks that the higher paid staff would do, then have them concentrate on areas that will net a larger impact on the building, be more proactive in your management style to deflect or minimize future expenditures and liabilities.

*if they are nonunion employees, then cut out overtime pay all together and add time to the natural workday if possible.. create tasks lists, schedules, reports & logs to include more work in less time, thereby maximizing your current investment. (I just realized you wrote that they are union!)

For 5 - 49 unit buildings, the amount of staff you currently have appears tight but adequate for the amount of units. Eliminating one will definitely impact your coop negatively.

Just a few broad spectrum ideas:
Buy services (cable, internet (even a wireless building wide network, electric gas with sub metering, etc..) in bulk and either pass the savings along to the residents or have the Coop net the difference (which will eventually pass through anyway)

It may sound silly, but adding services such as a gym, etc.. can add value, and people who would be paying elsewhere would now pay less of a membership fee to the Coop for the service (win-win)

Pre-purchase fuel; or, if the building is dual fuel, lock in on gas and hedge the market pricing with your oil so your always ahead...

5 Contingent buildings can share a single boiler in the summer for hot water, and 2-3 on mild winter days rather than have all 5 running.. this is an easy project to do...

You have to ask yourselves what are your long term and short term financial and building wide/resident goals, then make a plan to get there...

Best
~AR

Whenever we think we have saved all that we can, newer technologies provide new venues.

For instance, a digital/automated HVAC, hot water and heating control system is saving us bundles in natural gas. And don’t forget good boiler maintenance is the first place to start.

Last year we installed new more efficient chiller towers for our central site cooling system. The replacement was part of our regular capital improvement program, but we did not delay as the savings are nearly paying off the upgrades

LED prices have begun to decline and we are beginning to experiment with LED bulbs and fixtures. Our aircraft warning lights atop the building were onerous to replace when they failed and expensive to maintain. New (albeit expensive) LED lights have been installed and have a ten year useful life, saving electrical costs and maintenance team costs.

We raised the ambient temperatures in our hallways such that we occasionally, as opposed to always, run the HVAC air handlers for the hallways. Similarly we lowered the temperatures in our hallways for the winter, but the fact that the hallways are well isolated from the outside air, we are saving the air handler costs as well.

We always operate one of three huge central plant heating boilers in the summer for domestic hot water. But now we are obtaining estimates to install a condensing boiler for domestic hot water during the non-heating months. Early estimates show payback within a year or so and reduced natural gas costs (as well as reduced boiler maintenance costs) thereafter.

Yes we have a health club restricted to residents only (it is small). We buy about $10,000 in new equipment each year, to retire and replace a third of the equipment each year. The health club is open from 4 AM to 2 AM. It is unstaffed, and under our inhouse video surveillance, I don’t know why it’s not 24 x 7. The health club users collegially select the equipment that we purchase and the fee is $100 a person per year, adults only (correct per person per year).

For some areas of the building, e.g.: community room, card room, children’s play area, management offices, board room, health club, concierge/doorman area in lobby and outer lobby we are installing split system heat pump to permit more granular controls of the heat and cooling and time of day in each areas, to reduce the air handler 24 x 7 burden and cost.

Many public areas now have motion detectors to activate lighting. This includes compactor chute room on each floor (21), laundry room on each floor (21), mail room (yup), community room, children’s play area and card room.

Elevator cab lighting has been reduced to nice “mood” lighting. Yes, the "numbers" are visible.

Of course we went to CFL bulbs in all hallway fixtures years ago.

In about another year or so, we believe LED light bulb costs will be substantially lower and we plan to adopt more LEDs.

My only word is to check your union agreement. It may not allow you to cut your workforce unless there is a way to show that because of services not provided, mechanization or other forms of improvements, a member of your workforce is redundant. I don't know what your super does, but I think the handyman may be the redundant person. Three porters for five buildings seem a tight workforce.

AdC

Maybe you should consider selling your apartment and let your neighbors enjoy the flip tax instead of pushing to live in squalor.

Ultimately the Board is the overseer and responsible for mang of the building.

We noted a jump in our payroll and discovered that our new MangAgent stopped the practice of using non-union workers (yes, its legal) for overtime and holidays.

Regular workers are paid substancially more than part-time, non-union. Its easier for the MangAgent because they dont have to process the paperwork, keep a list of non-union workers or be responsible for contacting and scheduling. But it is their job to help us find every way to save money.

No one wants to live in squalor, but we do want to be able to afford our apartments, and discussing ways to cut cost -- is a valuable trade of information. Carol, did you meet with the Union and could you share your findings.

VP

Our firm has a substantial practice in J-51 applications. You may contact me or Michele DuJardin from my office if you have any questions. Please note that not all buildings nor all projects are eligible for J-51 tax benefits.

Paul Korngold
212-687-3747

I second Paul Korngold at Tuchman, Katz, Weiss et al. I have been using them for many years and have nothing but praise for thier work.

GP raises some interesting points. I would note, however, that if Board members are corresponding among themselves using e-mail, you have exactly the same problems with these e-mails being subject to discovery in a lawsuit. The distinction between intra-Board and Board-to-shareholder e-mail is artificial.

Not that I suggest abandoning e-mail; quite the contrary. Just follow some common-sense guidelines:

* Treat e-mail exactly as you would a letter. Recognize that everything you write may ultimately be read by an opposing attorney in a lawsuit.

* Use only your personal account for sending e-mail.

* Don't use "It's only e-mail" as an excuse for writing illiterate gibberish. (This is good policy in general.)

I have a building where there was a similar problem.
I had someone come in and seal up the complaining apartments behind the stove, sink, dishwasher, heat risers, molding gaps, etc.. he also poisoned and used steel wool (not brillo). In addition, every basement hole was filled with poison and then sealed; all garbage and open food MUST be removed ASAP from the areas.... In addition to this, I purchased the sonic plugins for several apartments.. they did work very well.

You will get a foul odor for several days, but that is a good thing, because the smell and the mice will soon be gone!

note: many people state that the plug-ins do not work well, it is because the mice get used to the sound. The frequency must be changed every few months for them to remain effective.

Smaller note: Typically and as a rule of thumb, if you have mice, you do not have rats and visa versa… for some reason they do not like to cohabitate. If you do have both, there is a greater problem.

~AR

Actually, the reason they don't cohabitate is that rats eat mice.

I've always found that the best weapon against both is the oldest weapon against both: If there's a cat around, you do not get mice or rats. You may find one out in the open early on -- likely with its head bitten off -- and after all, all the other rodents get the message. Works every time.

A cat lives in the unit where there is a problem-what's up with that? I can't get a cat, I'm allergic. How can the exterminator get to the holes behind cabinetry? Ripping it out and renovating is not an option for me. They have done all the things you mentioned except for the plug ins. I guess I will try that. And maybe we need to find a new exterminator to get a fresh pair of eyes on the problem?

Another pair of eyes is always a good idea. Very odd that the cat you mention apparently doesn't go after the mice -- maybe it's old, blind, etc.? That happens.

Hypoallergenic cats exist, but they're very expensive so that's not option for most people. Less expensive are cat-allergy medications, but unless one is a dyed-in-the-wool cat-lover (definitely not me, by the way), that's an awful lot of trouble, expense and dedication.

The most reassuring thing I can offer is that the board is facing a warrant of habitability issue, not to mention most likely NYC Dept. of Health issues, and is responsible for fixing the problem. If the only way to fix it is to rip out and replace the walls, then that's at the board's expense.

If your board is balky, get in touch with Dept. of Health. Rats and mice have spread pandemics, and NYC history is full of localized outbreaks related to rodents. This is a serious issue that goes beyond one building, and the board has to step up its game.

JB, I am on the Board and the other members are aware of the situation. If I present them with ripping my kitchen cabinets out to get to the walls and fill all holes, I'm wondering who pays for what? There's the demo work, then the patching and then I would need carcasses and cabinets for the cabinets, new sink, washing machine, countertops etc. We're looking at a $10K cost here for new half a kitchen and I think that would be my expense. I just don't have that kind of $$ to take that expense on. And a cat is not an option--my dog would not like that one bit.

"The unit below me will not let our exterminator in" - If the unit below you has mice, they need to have an exterminator visit!

Pest control is the problem of the whole co-op, and shareholders who refuse to cooperate are in the wrong. Check your by-laws, but I'm willing to bet the co-op board has the right to force them to let an exterminator in.