Paula Chin in Board Operations on October 18, 2016
When Carrie Feng moved into the Newport cooperative in Flushing, Queens, in 2004, she thought she had found the perfect home. For Feng, who had been renting in the area for several years after immigrating from China, the location was ideal. The six-story, 211-unit building is close to a subway station. That made for an easy commute when Feng, who worked for an import-export firm, had to meet clients in Manhattan. The Newport, with a sizeable Chinese population, felt like home.
But Feng’s first annual shareholders’ meeting was a contentious affair, with angry residents complaining that they were not being treated fairly and that costs were too high. Even more disturbing, they accused the board president of self-dealing by hiring family members.
“Basically, they thought the building was being run in the best interests of the board and not the shareholders,” says Abbey Goldstein, a partner at Goldstein & Greenlaw and the co-op’s current attorney.
According to Feng, the problems stemmed from brazen nepotism by the board president, who had held the job since the building went co-op in 1984. She hired her husband as a doorman. She hired a relative who was not with the management company to be the building manager. She hired her son, who was 18, to maintain the pool.
Costs were out of control. Between 2004 and 2010, maintenance increases totaled 45 percent. The final straw came in 2011, when the board announced a $250,000 project to repair what it claimed was a damaged stone wall around the building’s entrance. But a shareholder discovered the actual estimate submitted by the board was for $68,000.
After Feng had an architect inspect the wall – he deemed it structurally sound – she got half of the shareholders to sign a petition to stop the project. The board ignored them and hired contractors to begin the job.
“After that,” Feng says, “we realized we had to change things ourselves.” So she and five other volunteers tried to enlist enough residents to vote out the board at the next annual shareholders’ meeting. Remarkably, after six months of pushing, the dissidents did not get much support.
But Feng persevered and, by 2012, she had collected $5,000 from a number of shareholders to hire Goldstein. It took months for the board to consent to an election. When the ballots were counted, the old, seven-member board was voted out by an overwhelming margin.
The new board found that despite the hefty hikes in maintenance, the co-op was barely covering operating costs, and there no reserve fund to cover an outstanding credit balance of $585,000.
Feng became board president in 2014. Under her leadership, the co-op hired a new management company, John B. Lovett & Associates, and fired the super for unethical behavior. The Newport also brought in a new accountant, James Pai, who specializes in co-ops and condos and speaks both Mandarin and Cantonese.
The co-op had soon put its house in order. The board refinanced the mortgage, from $4 million at 5.9 percent interest to $5 million at 3.8 percent, using the additional money to pay off the debt and fund capital improvements, including an oil-to-gas conversion that saved the Newport more than $250,000 in fuel bills last winter.
The co-op has amassed a $700,000 reserve fund without raising maintenance, as well as a $300,000 cash flow for smaller projects. As a result, market values have almost doubled, with a 1,000-square-foot apartment now selling for $340,000 compared to $180,000 four years ago.
“[The co-op] has emerged from chaos and political warfare and become a well-run building,” Goldstein says. “Shareholder meetings are actually informational, there are always interpreters, and the board listens to recommendations and different opinions.”
“That’s the way it’s supposed to be,” says Feng. “Before, we felt like we were living in jail. People are much happier because the building belongs to them.”
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