New Yorkers paid an average of $1.73 per square foot in co-op maintenance in the fourth quarter of 2018, according to real estate appraisal firm Miller Samuel. So for an 800-square-foot apartment, the monthly maintenance bill was $1,384. But that number can fluctuate wildly, even within a co-op. Here, according to Brick Underground, are the 10 Commandments that govern the mysterious art of setting maintenance charges:
I. Underlying mortgage. Co-op shareholders make payments on a building's underlying mortgage. If the building has substantial debt, either because of a high interest rate or a large loan, that could increase the maintenance considerably. In times of low interest rates, refinancing the underlying mortgage can lower interest payments and ease the pressure on maintenance.
II. Taxes and abatements. Co-op maintenance fees also include the owner's share of the building's property taxes. The cooperative pays the real estate taxes for the land and building, and then, thanks to a complicated system of exemptions and abatements, credits the shareholders for any reductions it receives. But a shareholder’s age or disability can affect the size of the tax break.
III. Building size. The number of apartments in a building can have a significant effect on maintenance. In smaller buildings, the maintenance tends to increase by virtue of fewer payers to share in the burden of replacing the boiler or paying staff salaries.
IV. Basic amenities. The lobby, hallways, a simple workout area, the laundry room, and storage facilities all need to be maintained.
V. Next level amenities. Today’s menu of high-end amenities, from pet spas to saltwater swimming pools, will also cause maintenance to rise.
VI. Union versus non-union building. There’s no way around it: buildings staffed by union members are more expensive to run.
VII. Mismanagement. If a co-op doesn’t stay on top of its books, everyone will pay. If shareholders are in arrears, for example, or if the board doesn’t contest unfair real estate taxes, all shareholders will have to pay more.
VIII. Commercial space. Commercial space in a building can be a boon. Or not. In a city riddled with vacant commercial space, shareholders can get hit with higher maintenance to make up for the lost income if a retail tenant leaves or there's a lapse in rental income.
IX. Land lease. If the maintenance seems ridiculously high, a land lease – that is, the co-op does not own the land it sits on, but pays rent to another entity – may be the culprit. If possible, the board should try to buy the land.
X. The particulars of an apartment. The allocation of shares, which directly affects maintenance, is an inexact science that depends on such factors as views, floor height, even proximity to the garbage chute. Is it any wonder that next-door neighbors can pay wildly divergent monthly maintenance?
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