Matthew Hall in Board Operations on September 9, 2016
Board president Bruce Horowytz thinks of his co-op building as “iconic.” “I like to call it the Dakota building of Hell’s Kitchen,” he says. He’s only half-joking. While it may not be able to claim the Dakota’s past and present residents – including John Lennon, Yoko Ono, and Lauren Bacall – the Piano Factory has played an instrumental role in a New York City neighborhood that has undergone dramatic change.
The building dates back to 1874 when it was, indeed, a piano (parts) factory – and when a piano in the parlor was a common sight in many New York homes. But by 1981, the brick building with its elaborate arched entryway and wrought-iron flourishes had been converted into a luxury co-op. It may now be iconic in another way: as an exemplar of how buildings can succeed by going it alone.
The 49-unit building is self-managed – an approach that comes with perils and paybacks. Shareholders control their own fate, and their monthly maintenance is generally lower than in co-ops that pay fees to a management company. On the downside, you don’t have an experienced real estate professional to advise you, so shareholders have to carry the load.
“When you’re self-managed, participation by shareholders is important,” says Bonnie Reid Berkow, a Piano Factory resident for more than 30 years, a current board member, and a partner at the law firm Wagner Berkow.
About 10 years ago, the board found its self-management skills pushed to the limit when it faced a financial dilemma: an extensive repointing project (plus other expenses) had wiped out the co-op’s reserve fund. The board set up a finance committee that performed an evaluation of the building’s potential upcoming repair and maintenance needs and mapped out a financial path to pay for it. “We put together the operating expenses, we went through the accounts, and we looked at what was happening,” explains Christine Shostack, the building treasurer. The committee created a list of potential problem areas: roofs, roof fans, the boiler, and other infrastructure. “We estimated the useful life and we guesstimated the cost,” says Shostack, who has worked as a program and project manager for banks and brokerage firms.
The plan allowed Shostack to earmark $80,000 each year toward capital repairs and a reserve fund. Most of the budget was raised through monthly maintenance payments, although a $100 assessment was introduced for several months. The board was counting on a second mortgage to fulfill their capital needs and carry out their plan. The first mortgage was for $1.75 million; the second for $350,000.
Horowytz, the president, has lived in the building for 21 years, and his long-term knowledge helps keep a lid on repair and maintenance budgets. “We step up,” he says. “I like the board president job, and I am very hands-on. I go onto the roof and inspect it with the super and pull walls apart and see that we don’t need the whole roof replaced. That’s a different approach from having a management company, and it saves us a lot of money.”
Engage, enrage, ask questions and give answers with your community of board members. Submit your questions and comments here!
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.