PRESS RELEASE
CONGRESSMAN CHARLES RANGEL

FOR IMMEDIATE RELEASE December 19, 2007

Contact:
Emile Milne 202-225-4365
Elbert Garcia 212-663-3900

RANGEL LEGISLATION PROVIDES RELIEF TO CO-OPS

Provision would allow housing cooperatives to determine commercial rents without sacrificing tax benefits to shareholders



WASHINGTON - Thanks to the efforts of Congressman Charles B. Rangel, hundreds of housing cooperatives boards in New York City will now have greater flexibility in the rent they charge commercial tenants.

Included in a recently passed Mortgage Forgiveness Debt Relief Act of 2007 (HR 3648) is a measure that allows co-ops to determine commercial rents without the fear that the additional income would disqualify owners from deducting their proportionate share of the building's mortgage interest and taxes. Under current law, co-ops are limited to charging commercial tenants rents that do not total more than 20 percent of the building's total income from rents and cooperator maintenance payments.

Rangel was happy to see that Congress could come together to resolve such a longstanding issue.


"I am extremely pleased that the tax code will treat people who live in co-operative housing the same way as homeowners and condo owners are treated when it comes to their renting out part of their property," said Rangel, Chairman of the House Ways and Means Committee. "I hope that this will provide relief from for some from the high housing costs in New York."

Co-ops would be allowed to pass through applicable tax benefits if they meet one of three requirements:

1) If 80 percent or more of the co-op's gross income is from the tenant stockholders

2) If 80 percent of the total square footage of the building is used or for residential purposes.

3) If 90% of the costs of operating the building are for the benefit of the tenant stockholders.


Rangel thanked a number of groups, including the Council of New York Cooperatives and Condominiums, for their support and assistance in helping to tackle this issue.

"By working with advocates and industry groups, we were able to craft legislation that made sense to both sides of the political aisle," said Rangel. "Thanks to the hard work of many, the federal government will be able to provide some relief to families as they struggle with the rising living costs."

The co-op provision included in HR 3648 is part of a larger piece of legislation that was crafted as part of a response to the current subprime mortgage crisis. The legislation would provide relief by permanently excluding debt forgiven under these circumstances from tax liability. It would also help would-be homeowners secure their investments through an extension of the tax deduction for private mortgage insurance, and would ease restrictions for qualifying as housing cooperative corporations.

Amended by the Senate last week, The Forgiveness Debt Relief Act of 2007 is expected to be signed by President Bush later this week.

What does this mean for the buildings with 80 20 problems

This would defeat the development of the "farse" term cond-op. This unfairly keeps the commercial establishments in the hands of the developers (shareholders of the commercial spaces). I live in a cond-op and wondering how can we sustain ourselves in these economic times,but by increasing maintenance all the time. Where's the commercial establishment's contribution to the welfare of the building and shareholders? Money drained.

Presumably, fortuitously or hopefully, the apartment renter has homeowners insurance.

The renters file a claim with their insurance carrier.

The insurance carrier obtains reimbursement from whichever is deemed to be the culpable or culpable parties.

= = = = = = =

For instance, a renter in a sponsor’s unit, doing some “upgrades” had a workman installing hanging lights. The ceiling/floor between apartments is poured concrete.

The workman drilled into the ceiling, perhaps a bit too far, and drilled into an imbedded conduit severing the local electrical service within part of the apartment above.

In this case, the aggrieved homeowners were advised to file a claim with their insurance company. The aggrieved shareholder’s insurance company can then file against the sponsor, the sponsor’s renter and (or) the renter's workman.

Yes, the coop office ensured that before work began the workman had adequate insurance coverage in case the workman damaged the coop’s property.

you hit the core of the problem on the nail. bingo. now, the important thing is also that the coop neglected to fix the leak at first notice (from a neighbor) of sings of it. given that, who pays for what?

See if this works to view the article:
http://www.northjersey.com/

Then on right side under "real estate" there's an article:
A growing problem in our houses: mold
Dated: Sunday, December 16, 2007

Or this direct URL may work:
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjcxN2Y3dnFlZUVFeXkyMSZmZ2JlbDdmN3ZxZWVFRXl5NzIzMzQ0NQ==



As it is copyrighted, I cannot reproduce here.

Read the repairs to a unit accourding to the PL and what remedies a co-op has in cases of negligence on the part of a shareholder including sponsors.

However, there is a need to put the shareholder on notice:

After 10 business days if not fixed, the co-op may do the required repairs and charge the shareholder regardless if sponsor or not. If the leak constitutes an emergency, the co-op resolves the issue and charges back the shareholder of the unit for the problem caused by a negligent act.

This scenario may change if the leak was not considered negligence on the part of the resident. It may still be co-op responsbility if the incident was not caused by a negligent resident (shareholder or not).

The best thing a co-op does is to be proactive; try to resolve the issue before escalates by giving adequate notice and deadline and intervene if necessary.

Always copy your co-op counsel so that he/she is in the loop in the event of other problems.

AdC

it was the neglegence of the coop. the tenant was traveling.. the super was notified by tow neighbors in a 15-20 day period. . repairs were not properly or effecively undertaken. result = almost three weeks of mold and subsequent damagees. the coop is neglegent. - the question is: is the sponsor also reponsible since he is the landlord.

you said the tenant was traveling. And the leak was reported to the super by two other residents. You need to find out if the super/building had keys (access) to the apartment that was leaking. If there was no access... Then this may not constitute negligence by the building as there was NO access. You can only "break in" into an apartment with a licensed locksmith if there is an emergency. Emergency is something that is Life threatening, or Server Property damage.
Access to the apartment is Key here, as I see it anyway.

there was access. the first neighbore reported the stench of wet plaster and the second got leaked on. how does the sponsor fit into all of this?

The sponsor fits in because he/she is the shareholder (owner) of the apartment in question.

The landlord (in this case the sponsor) is responsible for the negligence of its tenant.

In other words, the chain of command is:

co-op - shareholder - subtenant.

Co-op deals with shareholder
Shareholder deals with subtenant.

Done and gone!!!

AdC

1. The co-op ALWAYS contacts the owner or landlord, in this case the Sponsor. Forget about the resident, he/she will turn your letter to his/her landlord. Therefore, the co-op through management deals with the SPONSOR.

2. If there is a minor plumbing issue, the SPONSOR is told to get a licensed plumber to deal with the deficiency, if in your policy you demand the use of a license plumber.

3. A deadline for the repairs is always set if minor and not causing major problems to others, e.g., a leaky faucet, a non-operational shut off valve, a toilet tank that runs non-stop, but you can turn the shut off valve off.

4. If you are dealing with an emergency, the co-op intervenes immediately by invoking the PL and charging back to the SPONSOR.

5. What is not negligence by way of example: an unexpected rupture of a hose under the sink that was installed appropriately, but was an obvious material failure. In this case, the co-op is responsible no matter if the shareholder is the owner of the hose.

In your case if the co-op provided notice to the sponsor when the neighbors complained, then the sponsor is responsible for not following through. However, the co-op should have earmarked the problem and instituted the PL by doing the repairs for failure on the part of the sponsor to cure the problem.

AdC

1. The AICPA has a wealth of documents for homeowners associations that will provide excellent definitions and recommendations. To some extent, I am surprised the AICPA is not quoted more often herein. Quite frankly, many cooperatives seem to ignore the good advice and recommendations of the AICPA. In my view, this is how many buildings enter treacherous waters and founder.

2. Oftentimes the proprietary lease and the bylaws have stipulations regarding the need for various reserve funs and yes there are several types of reserve funds.

3. This forum is also a treasure trove regarding reserve funds and one ought to search herein.

4. Your ousted accountant (CPA) firm should also have valuable information.

5. The CAI (Community Associations Institute) website http://www.caionline.org/ is also a treasure trove.

Ted has good advice.

Just wanted to leave you with some impressions as your statements strike different chords:

1. Flip taxes are also ways of subsidizing future shareholders.
2. If you pay for an elevator now, it has more than 15 years after it is renovated, i.e., you may sell in 3 years and you contribured to 12 more years of useful life for a future shareholder.

In other words, building reserves are not just for your term of occupancy; in fact, having reserves contributes to the overall investment and value of the property and its sellability. A potential buyer will see a building with $1 million reserve fund or reserves in better light than if the same building were to have a mere $70 K in the bank as reserves.

A reserve plan should be ideally supported by a replacement plan. At least, this will help shareholders see the value of builidng reserves.

To think in the here and now is just a condition called Myopia.

AdC

Sad but true. From my very own personal experience haveing managed many properties the board member(s)appear to be the first one to break their own rules more often than not.

Example: "All dog walkers/owners must take their pets on the service car and out the service entrance except for board members who can use the front elevators and go out through the lobby." Could you also ask the staff to enforce the rules.

FN

Oh FN dont get me started on Board members braking rules.
I can go on for ever listing what goes on. Not all board members though. Just a few that feel privileged.
Its a shame that we just cant tell them the truth and what really is on our minds without knowing that to do so would mean looking for a new job.
Pg

First there must be a tone of fiduciary responsibility and ethical values which must be inculcated in the board’s activities day after day, decision after decision, meeting after meeting, etc.

Basically personal gain or good are checked at the door and the it is the good of corporation and the shareholders which is paramount.

In our case, when we found a board member had broken a rule and wanted to be grandfathered, we then found a replacement board member and asked that offending board member not stand for reelection. This was kept quiet, other board members were aware, but not made public. This action was taken even after the offending board member took corrective action.

In my view the board needs to behave in a proper manner at all times.

This is one reason in our coop the board of directors does not have access to any waiting lists for any cages, parking, etc. This simple expedient eliminates any chance of personal persuasion and also allows the board to face the shareholders and honestly respond: ”I don’t know who is on the list or in what position, nor can I influence the list, nor would I want to influence the list.”

Why don't your board contact the sponsor through your management to request that the seat on the board be given up for the explanation provided below: deadlock during decision-making. Alternatively, invite the sponsor to participate for the same reason.

Unfortunately, if the sponsor's number of shares if voted all for one member is able to retain the seat, then there is not much to be done except keep asking the sponsor to give up the seat.

In most cases, the sponsor may retain the seat to have access to financials. In many proprietary leases, boards cannot make an independent decision to assess or increase the maintenance if the sponsor still holds a certain percent of shares in the corporation. This is to protect the sponsor's own operating budgets from unforseen major incrases, specially when the sponsor may have a large number of apartments occupied with rent controlled, non-eviction tenants.

AdC

Why don't your board contact the sponsor through your management to request that the seat on the board be given up for the explanation provided below: deadlock during decision-making. Alternatively, invite the sponsor to participate for the same reason.

Unfortunately, if the sponsor's number of shares, if voted in one block for one individual, is able to retain the seat, then there is not much to be done except keep asking the sponsor to give up the seat.

In most cases, the sponsor may retain the seat to have access to financials. In many proprietary leases, boards cannot make an independent decision to assess or increase the maintenance if the sponsor still holds a certain percent of shares in the corporation. This is to protect the sponsor's own operating budgets from unforseen major incrases, specially when the sponsor may have a large number of apartments occupied with rent controlled, non-eviction tenants.

AdC

Why don't your board contact the sponsor through your management to request that the seat on the board be given up for the explanation provided below: deadlock during decision-making. Alternatively, invite the sponsor to participate for the same reason.

Unfortunately, if the sponsor's number of shares, if voted in one block for one individual, is able to retain the seat, then there is not much to be done except keep asking the sponsor to give up the seat.

In most cases, the sponsor may retain the seat to have access to financials. In many proprietary leases, boards cannot make an independent decision to assess or increase the maintenance if the sponsor still holds a certain percent of shares in the corporation. This is to protect the sponsor's own operating budgets from unforseen major incrases, especially when the sponsor may have a large number of apartments occupied with rent controlled, non-eviction tenants.

AdC

Thank you, AdC.

"if the sponsor's number of shares, if voted in one block for one individual, is able to retain the seat, then there is not much to be done except keep asking the sponsor to give up the seat"

So you're saying that apparently the sponsor is voting for himself at each election.

Hm. At each election the sponsor's name always appears on the ballot, and we (the shareholders) are told to vote for four additional officers. So the way it is always presented to us is that the sponsor's presence on the board is inevitable. We aren't given the option either to vote for him or not. He is just always there, an inevitability.

If there are five directors and the sponsor retains at least 20.01% of the shares, the sponsor's rep is automatically elected. And that's if all shares are voted, which (of course) they aren't.

Even if every single shareholder votes, there is a sixth person running against the sponsor's rep, and the sponsor's shares dip below that 20.01, you cannot hope to see the sponsor's rep defeated until the sponsor's shares dip to around 16.5%:

shareholders split 83.5% among 5 directors (16.7% each director)
sponsor's rep has 16.5%

Hope that sales are brisk.

Thanks for the info, Batch; very helpful.

Well, I guess the solution is to bring one more officer on board. So technically there will be six board members; but, since the sponsor never comes to board meetings, it will be as if there are five members and deadlocks can thus be avoided.

GK - Unless your sponsor controls enough shares of his own and/or by proxy to keep voting himself onto the board, or your by-laws give him the right to be on the Board, I see no reason why he has to be on the board.

You said his name is always on the ballot and you're told to vote for 4 BMs. Who creates the ballot? Who's "telling" you to vote for only 4 others? The sponsor, board, mgmt, coop attorney? Who chairs your annual meeting and oversees the election proceedings?

If your sponsor doesn't control enough shares or have the right to be a BM per your by-laws, get more Shs to run for the board and vote him out. If board votes on coop business keep ending in a tie, the sponsor doesn't vote and nothing gets done, that's unproductive. Talk to your mgmt company or attorney and get some straight answers as to why the sponsor is a permanent fixture on the ballot and why you don't have the option to vote him in or out. And get other Shs involved. If you want to get some action on this, you have to take some action.

BP, thank you, as usual, for your input.

The sponsor owns just under 20% of the shares at this point.

...or your by-laws give him the right to be on the Board...
I've looked again and I see nothing in the bylaws that explicitly gives the sponsor this right. There is one passage that confuses me, though:The president shall be a member of the board, but none of the other officers need be a member of the Board. . . . An officer who is employed by or affiliated with a holder of unsold shares need not be a shareholder.
BP said:You said his name is always on the ballot and you're told to vote for 4 BMs. Who creates the ballot? Who's 'telling' you to vote for only 4 others? The sponsor, board, mgmt, coop attorney? Who chairs your annual meeting and oversees the election proceedings?
It's amazing, isn't it, what people will accept when something is unfamiliar and they are told that that's simply the way things are done. In most aspects of my life, I question just about everything—but it has taken me five years to start peeling away the opaque layers of this co-op. At every annual shareholders' meeting I have attended, ballots are passed out by the managing agent. (In a thread from last spring I talked about how the managing agent "lost" my proxy at the most recent election.) Those who are running for the board are listed with a checkbox next to their names. The sponsor is also listed, but his name is in bold and there is no checkbox. At the first meeting the person next to me said: "Oh, yeah, there are five board members, but you can only vote for four; the sponsor is always assured a seat." And, you know, I thought that was weird and I didn't really get it but I got busy with the rest of my life and didn't think too much about it.

I would like to get some independent advice on this. The board VP and I were just talking today about how we should seek independent legal advice re: a fuel spill that occurred in the building in October. Residents called the managment company to complain of overwhelming fumes; the super perceived that a spill had occurred and notified the management company. But the management company waited a full week to report the spill to the DEC, lied about when the spill occurred (stating that it had occurred just minutes before they called the spill hotline) and cleanup was needlessly delayed. As you can imagine, we're not happy about this, and we feel that we need legal advice. But co-op counsel is employed by the management company. So the board VP and I are concerned that we won't be dealt with honestly. (By the way, I've always been bothered by the fact that the co-op accountant and co-op counsel are both employed by the management company and wonder if that's the norm. Is it the norm? Not to mention that the only board member counsel/accountant/managing agent have any contact with is our problematic BP. I think I'm finally making some inroads into persuading others that this situation needs to change and that there needs to be more transparency.)

Thanks again for your feedback. I am going to push hard for removing the sponsor from the ballot or at the very least making him run for the seat like everyone else.

Good luck with your aspirations.

In my experience, the sponsor will be with you on the board until the last rental unit sells.

First, about the sponsor. It doesn't matter how many apartments the sponsor owns. What matters is how many shares the sponsor holds. Your building has 5 seats on the board, so the sponsor needs only 20% of shares to elect him-/herself to the board. When the sponsor holds less, you may be able to run five residents and the sponsor; if the 5 residents get the votes, they win. (Ask your attorney for details -- prop leases vary on how votes are counted in contested elections.)

As for the number on the board, it sounds to me as though you have a perfect reason for adjusting the number. As long as you explain to shareholders why you're making the change -- and do it politely (no reason to annoy the sponsor) -- they shouldn't have a problem. After all, it will increase THEIR voice on the board.

in our coop, the sponsor has a right to elect on person every year (unsually himself) and last year - the board president used all the sponsor proxies to vote himself and his own slate in to prevent a new comer from being elected. (the newcomer was actually a very decent person) - so what can we do about that?

In other words, is the term of office 2 years in which the sponsor is elected for two years, then the votes are used to elect another member? or

Is this a matter of double counting?

Who acts as the supervisor of the elections? The independent accountant and counsel or someone else...?

AdC

Every year without doubt this subject comes up. To be or not to be, that is the question, the bottom line is that any cap or pre buying scenario involves speculation. As in any speculative market there is risk. You are either the hero or the donkey when you sign for this agreement. I have been both donkey and hero, let me tell you first hand last years hero says nothing to this years donkey, so much for short memories.

Here is a new slant on this dilema, contact you local oil suppliers and ask for a rate keyed to the barge reseller index, your supplier will offer a percentage above this FIXED and POSTED rate (on the Journal of Commerce)number, you can use this as an effective tool to obtain price quotes on your fuel oil

It's all a ball game. The good thing about locking prices is that you will know what your budget will be during the heating months or during the time your contract lasts. However, it's hard to lock the prices much in advance because of the market volatility.

Just read and follow the forcast provided by EIA to have a better idea of what is an uncertain world, then roll the dice and make a decision. You may be lucky or you may not be as lucky, but at least you made a decision on best available knowledge for your shareholders if it goes the wrong way:

http://tonto.eia.doe.gov/oog/info/twip/twip.asp

Also, the new york mercantile exchange is a good page to check for current and past prices. I believe the webside is

http://www.nymex.com

Good luck with your decision!

AdC

Info taken from the site...

Barcoding, Inc.'s Package Track Solution combines everything you need to start automating your company's package delivery system.
The off-the-shelf software package joins a Microsoft Access database on the PC, and a Pocket PC-based handheld terminal with an integrated barcode scanner using imager technology. The software will allow you to scan in packages as they are received using the existing barcodes, assign packages to the recipient, collect a signature upon delivery, and generate daily reports.

Features:
Generate reports for internal package tracking
Record time and date stamp for receipt and delivery
Capture electronic signatures
Automatically email final receipts upon delivery

Benefits:
Reduce time from mailroom to recipient
Reduce time spent looking for lost packages
Increase efficiency in the mailroom.

http://www.barcoding.com/tracking-software/barcode_package_tracking.shtml

~AR

here is a link to a scanner that we use. We found it great and works with all us mail, fed ex, ups etc.
Pgrech

http://www.product-catalog.com/preview_item.cfm?BAToken=printheads&item=658893

The answer depends on whose roommates they are.

If they're the roommates of shareholders, it's fairly easy because the shareholder is generally responsible for the conduct of his/her guests while on co-op property. So no matter who in Apt. 7-B is playing loud music/leaving trash out/loitering, the shareholder takes the blame. You can admonish or fine the shareholder for his/her guests' misbehavior.

If they're the roommates of the sponsor, it's much more difficult. Even assuming you have a cooperative sponsor, people in rent-regulated apartments are in a protected class. Talk to your sponsor's contact person and explain the situation. Suggest a letter from the sponsor (i.e. from the renter's landlord) that explains that there have been complaints about such & such behavior by a guest of the renter. The letter would explain that the renter is responsible for guests' behavior. Conclude by pointing out that the next time there's a verified complaint, the renter will be fined $XX. Then follow through.

You can draft this letter for the sponsor.

If the sponsor isn't cooperative, ask your lawyer. Also, talk to the lieutenant in charge of your precinct's community policing program. The police can work as a non-threatening deterrent. Ask them to send an officer over one day to explain security to all residents. That way you'll meet the the local police, and you'll be able to get them on your side. They can't solve everything, but their presence alone may cut back on some bad behavior.

Good luck.

I guess I wasn't clear enough- we are a co-op with NO sponsors, all owners. The reaseon I mentioned rent control at all was to just example the dishonesty that one "roommate" of a shareholder engages in - holding onto a rent controlled apartment elsewhere while living with a shareholder here.What right does our co-op have to know who is living with our shareholders in this building in terms of security/identification. SOme of these live-ins seem less than desirable types who would not pass co-op Board review but are in nevertheless.

Although there is such a thing as a Roommate law, the NYS Rent Laws as well as the PL states that after 30 days lessees or shareholders must inform the landlord or the co-oop about residents overstaying the 30 day period.

Your apartment may enact a "meet-and-greet" meeting with two board members or admissions committee members to go over the rules and meet the individual.

If the lessee or shareholder moves out the builidng, then the occupant may need to move out; otherwise, you may have a sublet that may be in violation or not with the co-op's policy.

AdC

doors slamming? smoke? you have got to be kidding. if you dont like people and their everyday noises and smells - the move to a remote place. thses seem like very small problems. do you have anuy idea what a problem tenants is relaly like? and, yes, the roommate law fortunately superseeds any coop laws or rules (thank you god)...

You never want to state how you voted on anything to anyone, it will usually come back and bite you later on somehow.

Perhaps there is a lack of proper communication between management/the Board and the shareholders.

When a resolution is made (lets say... raising maitenance 12%) and you must tell this to the shareholders, it is not your job. let management send a memo to all SH stating that

[actual letter i sent]

After careful consideration and review of the many rising operating expenses; such as Fuel (35%), insurance (9%), electric 15%), real estate taxes (11+%), supplies, labor, etc… it has been determined to raise maintenance in the amount of 12½%, beginning January 1, 2008.
Kindly understand that this increase is purely to permit us to operate at par with the rising operating expenses of the building.
Please do not hesitate to contact me should you have any questions concerning the aforesaid matter.

this type of memorandum takes the blame and eyes off the BP. all other communication should be the same.

hope that helps some..
~AR

Not sure if you are Alex P Keaton from Family Ties? Quies simply, you each have a vote when it comes to decision making but the result is a board decision,(3,5,7,9) not Bob, Mary, and Jane were in favor and Pat and Sam opposed. If you are going to inform shareholders how you voted you might as well post it on a bulletin board and a target on your back.

FN.

I agree with the others -- the decisions the board makes are the board's. As we say in our board meetings, it's fine to disagree among ourselves, but once a decision is made, everyone on board defends and upholds it.

Let me add that although the managing agent can help answer questions about unpopular moves (such as raising the maintenance fee), any board member must be prepared to answer those questions as well. If he or she can't, you, as board president, should ask them to refer the questioner to you.

Making unpopular decisions is never easy. When I'm asked, I explain why we need to raise money (so we don't have to borrow money to pay operating bills), and that we, the board, pay the maintenance fee just like everyone else. You can also ask the complainer for suggestions on how to save money so the next increase will be less -- that is, make the complainer responsible for finding a solution.

We send a letter to the shareholders about three weeks before the fall “open board of directors meeting” describing the “planned” increases and the rationale. All board members sign the letter. This “budget approval” open board of directors meeting is typically conducted in November.

By this, I mean that twice a year, we take a room in a nearby public building and invite all shareholders to view (not participate) in the open board of directors meeting. This part of the evening takes about ten minutes. Note shareholder opinions are not solicited during the open board of directors meeting. Shareholders not permitted to ask questions or make statements during the open board of directors meeting. Then, we conduct a Q&A session for all shareholders. This Q&A session usually lasts about sixty to ninety minutes.

Because we have previously reviewed the amounts and all the details at a board of directors workshop; hence all details are finalized (no votes are taken for the record at the workshop, though all board members can voice opinions, and we come to any compromises, as necessary), at the open board of directors meeting, shareholders see all the board members vote affirmative.

= = = = = = = =

In May we have our annual open board of directors meeting wherein new board members are elected (following publication of candidates and solicitation of proxies). Any items to be voted during the open board of directors meeting are previously discussed in a workshop, without votes, and thus any motions are always unanimously voted.

Note as with the fall meeting, shareholder opinions are not solicited during the open board of directors meeting. Again shareholders not permitted to ask questions or make statements during the open board of directors meeting. Following the close of the May open board of directors meeting, which usually requires fifteen minutes, we then have a Q&A session that usually lasts about ninety to minutes.

We recruit like minded board members. But do note, we have a history of longevity among board members. Further, we have a common purpose (kindly see my other postings herein these forums) and all board members check their personal demands at the door.

Yes, there was a discussion thread about two weeks ago regarding soliciting votes. We usually recruit friends of the board of directors and they in turn go door to door to solicit proxies for the preferred slate.

But do also take note that we are without any debt, having retired the original mortgage without refinancing. We raise maintenance EVERY year by 2.5% to 4%. We slowly year by year raised our capital assessment which initially garnered $20,000 so that now we are bringing $900,000 to our yearly capital reserve fund. Yes, there was a jump from $450,000 to $900,000 when we retired the debt and its payments, and moved the debt retirement amount of maintenance from the maintenance income stream to the capital improvement stream.

And we have a mega-million line of credit which as I noted elsewhere is used for intra year payments in anticipation of capital reserve income.

= = = = = = =

How did we do it?

Single minded focus of a board of directors recruited by the board of directors with total dedication to fiduciary responsibility.

= = = = = = =

Oh, we are self managed, and our staff is all long term thus avoiding the churn of management companies and managing agents even if the same firm is retained.

= = = = = = =

"...Any items to be voted during the open board of directors meeting are previously discussed in a workshop, without votes, and thus any motions are always unanimously voted...."

Can you explain to everyone what a "workshop" is, as to clarify your process?

This is a great process / protocol and I think we all cab benifit by understanding it more, thanks.

~AR

As a way of introduction, we are self managed. In our decision process, we have periodic workshops. Attendance at the workshop is composed of the board of directors, the building manager (employee, almost always attends), the superintendent (employee, usually attends), our in-house attorney (most often), our outside attorney (occasionally), guest invitees, e.g.: a resident with a particular skill, a tax specialist, a banker, etc.

The frequency of workshops is about one a month or one every six weeks. The duration is typicallyractor 60 to 90 minutes.

At recent workshop meetings, we discussed such items as:
• The underlying rationale for the 2008 maintenance increase and the 2008 assessment; and how we would explain it to the residents.
• The final agenda and format for the annual “open” board of directors meeting.
• The status of arrears in general (we hardly have any), and the status of one shareholders.
• The purchase of a billy-goat to clean our sidewalks.
• The need for some additional furniture in our lobby.
• The status of our outside security firm’s performance.
• The final steps in our acquisition of a larger credit line.
• The Christmas holiday luncheon for our staff of employees and contractors and vendors.
• Shareholders (a married couple) who purchased, who did not move into the apartment but in turn allowed their daughter to occupy the apartment, e.g.: illegal sublet.
• Discussion of capital improvements completed this year and those planned for next year.
• A suggested elevator cab improvement.
• Any pending legislation that might affect The Twin Rivers (Hightstown, NJ) case.
• The status of our pool services company and its contract.
• Letters to the board and the proper response.
• Planned meetings (one-on-one, really two on one) with shareholders.
• Results of requests for proposals and thence selection of a vendor.
• Results of engineering studies.
• Superintendents report on the status of the mechanical plant.
• Discussion of other property conditions.

Quite frankly, our property is in an excellent financial and management position, e.g.: no mortgage, a large capital reserve fund, extremely minimal arrears, board longevity, formal reporting of our financials monthly, weekly management reports from the building manager (including all letters from shareholders), mechanical plant in excellent condition, building in excellent condition, etc.

Thus, we do not have a need for very frequent multi hour board meetings with much anguish and weeping to discuss what will be paid, what will held, where we have issues, etc. As we have a building manager as an employee, most issues are resolved before they come to any board member. In some cases, the building manager will consult with a board member when making a decision, e.g.: switching vendors, responding to a shareholder who is a pest, etc. Kindly note, not all board members need to be consulted. The board member responsible for the landscape committee is somewhat autonomous. Likewise, the board member responsible for the security committee operates somewhat autonomously. The board member responsible for capital improvements operates somewhat autonomously. In point of fact once the outside engineer approves an invoice submitted by the vendor, the responsible board member approves the invoice and allows the building manager to issue a check in the next cycle. Kindly do not opine that we do not seek competitive bids, we do.

Note that we have two payment cycles each month for invoices. All that arrive by the 25th of the prior month are paid by the fifth of the current month. Special payments are issued during the last week of the month. All our vendors are aware of the policy and conform to our requirements for invoice submission.

Thus the fall (year end) open board of directors meeting to which all shareholders are invited by letter covers a narrow range of voting topics, e.g.: approval of the budget for the next year, approval of the maintenance changes (it increases every year in the range of 2.5a% to 4.5%) and assessment (we have an assessment every year), authorization for the board to enter into contracts that might be required per the budget and the capital improvement plan, and approval of the plan to accumulate capital reserves.

As a consequence entering into contacts during the next year becomes a procedural formality that does not require full board of director’s ratification as we have preapproved the authority of the board to enter into contracts. But do note, the bid, the proposals from the vendors and the selection of the vendor is discussed in the workshop.

500 units @ $1000 avg/mo = $500,000/mo, $6 million/year.
45 units @1000 avg/mo = $45,000/mo, $540,000/year.

Which one of these co-ops can afford huge capital projects and to pay off their mortgage early?

Tired of hearing about it.

Geez

Let me clarify when I assert that our shareholders pay about $1,000~ a month for maintenance (average); studio through three bedroom. (In reality we are closer to $1,100, and this cost includes the parking fee of $60 a month for one car.) This cost also includes all taxes, all heating and all air conditioning. We have a central heating and cooling plants. Thus, residents do not have PTAC units within their apartments that in turn are operated by the residents and funded by the residents directly.

In our building, there is a continuous loop of chilled or heated water that is routed through the under window units in the residents apartments. The residents operate the "fans only" in these units to their desired heating or cooling level.

Thus, the costs above are inclusive of heating and cooling but exclusive of the residents monthly electrical bill for lighting, appliances, PC's TV's and heating/cooling fan operation. For example, a typical three bedroom unit will see a monthly electrical bill of $55 to $80, depending upon season.

I believe that shareholders should know how board members vote, in prior years our board unfortunately has had almost all members voting the same - this does not imply individual thinking - especially in matters of assessments and raises - which we have had since 2001 and over 50% in 3 years - the cause of this which your coop might not have is ignorance, non caring and corruption. Our supply and repair costs are massive and then we do not have the supplies and the repairs have to be done again because they were not done correctly, we have in our coop massive waste, misuse and disappearance of funds and when certain board members vote against the increases and assessments because they are aware of these problems I believe these votes should be made public so that at election time the shareholders can make an educated vote

J,I disagree with you. If the individuals on the board cannot make a deision (vote) on their own and everyone has to agree maybe it is time for others to step forward.So what if six agree and one person disagrees when a vote is taken.

Fat Nickie

Sorry to bear unhappy news, but...

Unfortunately, the Board was probably advised correctly.
We would all like to see the funds advance to the Coop, but no judge would award it. After spending good money, the SH will be ordered to remedy the illegal sublet within a specified amount of time. You lost more money chasing justice. It is truly unfortunate, but this is the way it works.

Let it be a lesson the board and management to keep a closer and clearer eye on every apartment. The super plays an important role in notifying management of anyone who moves furniture, or changes in mail or faces. Management should look at things such as the postmarks on the payments when they arrive (a check postmarked from Florida for 2 consecutive months is your flag), there are many more red flags to look for, but that is the managers’ job.

~AR

pls to check your facts..

This is the way it is (unfortunately based on several 1st hand experiemnces); however, if I am proven to be in err anywhere, please tell me how and where.
I am open, and quick to accept correction (we'd like to hear your experiences too - that's why we're here!)

~AR

stop hideing, no anons please anon.

Bob

the shareholder is caught after 2 years. does she have to pay backfees? (she already had 2 yrs of subletting prior - and should the board grant yet a third year after catching her? (house rules only 1 with exception for 2 and 3 - but she already technically has done 4).

AS I said before... I just lost a similar court case. the SH did not have to pay back fees.

It is up to the Board to approve or not.. but have a good reason to disaprove. (watch dor discrinminatory decisions that might come back at you later)
if they were paying and did not bother anyone, you probably are obligated to approve again if it is within your HR guidelines.

AR

the HRs say that one year must be allowed with second at approval and third at special approval/ discretion. so it seems they did not have to allow this third year esp after having caught the sharholder abusing the situation and lying to them.

how come we cant get fees? what did court day? thanks again.

In some instances Goidel says that the board may give the tenant the opportunity to "legalize" the sublet. They may elect to have the shareholder pay the back fees and let the tenant remain. However, Goidel believes this is a bad policy. It provides shareholders with no incentive to comply with the boards rules. "If you get caught (illegally subletting)," he says, "this person has to go."

from 'the cooperator.."