Bill Morris in Board Operations on September 3, 2013
"They had to operate without full occupancy," says Ann Henderson, associate director of co-op preservation at the Urban Homesteading Assistance Board (UHAB), "and that makes it difficult to meet your obligations. We met with lenders and brokers; we interviewed potential buyers during the recession. It was difficult for buyers to get financing. But in the last year, year and a half, they've had several sales."
In 2009, as the recession bore down, the board secured another $106,000 loan from HPD to tackle Local Law 11 work on the building's exterior. Maintenance, which had remained low at $100 per room under the old regime, has been raised by 50 percent as the board worked to return the building to fiscal and physical health. The building now boasts a $200,000 reserve fund.
"For the past five, six years, it's been an uphill battle, but now we're able to see the top of the hill," says James Maistre, chief operating officer of Veritas Property Management, who was hired by the board in 2007, just before the recession hit. "When I came in, our income never met our expenses. Now apartments are selling at good prices, and the building is mortgage-friendly compared to what it was."
One important change is that the shareholders realize they themselves had been part of the problem. When the building was converted from a rental to an HDFC co-op in 1986, renters were able to purchase their apartments for a price that now seems unimaginable: $250. As a result, they point out, many retained a "renter mentality" and cared little about the condition of the building as long as maintenance remained low. Apathy was a big part of this prescription for disaster.
"If shareholders are not active and don't take a vested interest in their building, they can wind up with serious problems," says Henderson. "You need to deal with each issue and not let it fester. Don't think that if you stick your head in the sand, a problem will go away by itself."
Turnarounds like this one in Washington Heights are the result of teamwork, she notes. "It was everybody," she says, "not just two or three people. The shareholders are now very active in the life of this building. That's always good. These people value what they have."
Maistre agrees. "It's about a team that's working for the benefit of the building, not for their personal issues."
Joy Bailey, the co-op board's secretary, believes impartiality is also important. "You have to treat everyone the same — you can't have favorites," she says. "And you have to have a strong board that's willing to enforce the rules."
Even as the co-op basks in the knowledge of how far it has come from the threat of foreclosure, board president Renee Davenport remains uneasy about how board members have to learn the job on the fly.
"There are no standards for being on a board," she says. "You don't have to know anything about finance or math to be on a board — and yet you're making decisions that affect people's homes. I could get elected to a board because you like my shoes."
Even so, there's no denying that this turnaround has been little short of miraculous. As resident Davenport says, it wasn't about luck; it was about hard work. "In order to make intelligent decisions for your co-op, you have to read and you have to study," she says. "You cannot just be casually interested. We've built an honest team — the board, the manager, the lawyer, the engineer, the super — and that's a big reason why things are going well."
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