Paula Chin in Board Operations on March 27, 2018
The Newswalk, a 137-unit luxury condo in a former Daily News printing plant in Prospect Heights, Brooklyn, has had a turbulent history. When the first unit-owners moved in after the 2002 conversion, they were shocked to find construction so shoddy that the “luxury” apartments were barely habitable. The condo board had to make a tough call.
“We made the decision to fix the building right away rather than see it lose its value,” says board president Judy Mann. Although the board had sued the developer, the once-high-flying condo mogul Shaya Boymelgreen, for $10 million in damages, it was forced to raise common charges by 40 percent. Since more hikes were unsustainable, the condo took out a five-year, $5 million loan in 2011 to complete the major structural repairs, which would include mandated facade work.
Once the building was physically fit, the board turned its attention to fixing the forbidding entryway. Board treasurer Eric Reschke came up with an inventive financing scheme – get unit-owners to provide the front money by having them pay one year of common charges in advance, for which they would get one month free. It worked. The board has just completed a $1 million renovation project that transformed the entryway from forbidding to welcoming.
After so much turmoil, the condo was due for a break. And it got one last December, a decade after the board filed its original lawsuit against the developer. Boymelgreen, who is currently banned from selling securities, including condos, agreed to pay an $875,000 settlement – and hand over ownership of the building’s 850-square-foot retail unit and laundry space. It was manna from heaven.
“It wasn’t everything we had hoped for,” says Mann, “but it was a lot more than we ever dreamed.”
To celebrate, the board promptly threw a pop-up party in the retail space, serving pizza and beer and asking residents their thoughts on how the space should be put to use. “We got all sorts of suggestions, like setting up a day-care center or screening room, putting in a lap pool, or building storage lockers so the unit becomes revenue-generating,” says Mann.
In February, Newswalk’s residents got more good news: thanks to the cash infusion, common charges were slashed by 20 percent. “We will credit the people who prepaid, of course,” Reschke says. “They’re going to end up getting an extra two months free.”
Since then, the board has begun moving on to new projects. “We have a bunch of little things on our wish list, like fixing the gym and installing more lights on our roof deck, which is too dark,” Mann says. “We’ve gotten our building in shape, and we want to keep it that way to make sure that it maintains its value. That’s every board’s responsibility, and to do it, you have to deeply understand your cash flow.”
Adds Reschke: “In just 16 years, we’ve been through a tough time financially. But now our loan is almost paid off, we’ve got our settlement money, and we’ve done this beautiful upgrade that puts us in the top tier of Brooklyn buildings. It’s the crowning achievement of our recovery.”
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.
A free digital resource for co-op/condo board directors. Published twice a month. Read now on all digital devices.