Carol J. Ott in Board Operations on June 15, 2018
James Fowler’s family moved into the 432-unit River Terrace co-op in Washington Heights when he was 9 years old. Fowler went on the serve as board president twice, during the 1980s and from 2011 to 2017. “I got on the board in the first place,” Fowler says, “because our neighbors, as well as my family, made it very clear that part of the freight you must carry [in a co-op] is to be a board member and be actively involved.”
He saw the symptoms of deterioration at River Terrace but couldn’t quite get to the cure. “There was a clash of philosophies,” Fowler says. Costs were increasing, but so was finger-pointing. “As a self-managed building, it all comes down to money,” he says.
Discontent grew as cash dwindled. Shareholders had experienced maintenance increases from 2009 through 2011, and assessments from 2005 through 2008. When the board announced another increase of 22 percent to begin in 2015, spread out over three years, the community grew angry, suspicious, and vocal. “People thought they were not being heard, so what do they do?” says Fowler. “They don’t speak more eloquently, they just speak louder.”
Today, with a major assist from the current board president, Mark Hines, those days are ancient history. There were five keys to the co-op’s turnaround:
Management Change. After a lifetime of being self-managed, River Terrace changed course and hired a management company, Metro Management. That step was huge. “We were one of the last self-managed properties in the Mitchell-Lama system,” says Fowler. Despite the ego investment in this, he adds, “I think we had plateaued in terms of what we could do on an island.” Notes Hines: “Now we had a team.” River Terrace began to get timely financial reports.
Collecting Arrears. Back-office support provided by the new management team became crucial in collecting arrears. “Before,” Fowler says, “our manager was chief cook and bottle-washer. That is a lot heaped on that plate.” The back office freed the onsite manager to respond to resident and building concerns.
Housing Development Corporation (HDC) Loan Revisited. River Terrace received an $8 million loan from the HDC in 2008 to undertake a long list of capital projects and to pay off its existing mortgage of $2.2 million. “The reality was that there were a lot of stalled projects in the co-op,” says Hines. “HDC was entirely frustrated with us, and I understood this.” So he and Fowler rekindled the board’s relationship with the agency and had weekly conference calls. “These energy things have got to be at the top of the list,” Hines told the HDC. Rising energy costs and a reliance on oil were two of River Terrace’s biggest problems, and Hines wanted to tackle that. In a remarkable display of lender flexibility, the HDC agreed.
Fuel Switch. There had been a suggestion to switch from oil to natural gas before the start of River Terrace’s deficit years, but the push had died due to the cost. Cogeneration and solar power had also been proposed. While there was no blueprint on how to do it, natural gas seemed the most doable to Hines. The co-op had learned that there would be a $2 million price tag to bring gas to the building. They didn’t have the money, so they combined political pressure with community activism and also reached out to neighboring buildings. They created a community coalition that convinced Con Edison to bring gas to their area. By joining forces, the buildings avoided individual hook-up charges.
Energy Upgraded. Now, with change in the air, alternative energy solutions were put on the table again. The board hired an energy consulting firm that led it through the maze of incentives and credits. The result is a combined solar and cogeneration system.
River Terrace’s “fixed” energy costs are a distant memory. So are the anger and suspicion – all because some long-time shareholders decided to get actively involved.
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