Marianne Schaefer in Bricks & Bucks on May 22, 2019
The bylaws of the 237-unit Gotham condominium at 170 East 87th Street establish strict spending caps for capital improvements. Unlike co-ops, many condominiums have such caps – and the consent of a majority of the unit-owners is required if the board wishes to exceed the cap in a given year. Usually these caps do not apply to routine repair and maintenance; they do, however, apply to discretionary upgrades to amenities.
“The Gotham condo has especially intense restrictions in its bylaws,” says property manager Robert Grant of Midboro Management. “Their bylaws state that the cost of alterations to the common elements or even repairs that exceed $100,000 in any calendar year shall not be made unless first approved by the majority of the unit-owners.”
Rather than going directly to unit-owners for spending approval, the board and management tried a different approach. First, they looked at every system in the building, from roof to basement. “We determined what we had to do for each of these systems, if anything, over the next five years,” says Grant. Next, the board looked at the amenity spaces – a children’s playroom, a lounge, a patio with a kitchen for parties, a terrace, and a meeting room, plus a swimming pool in the basement.
“These amenity spaces are great, but they were very dated,” says Grant, “and they could not compare with all the new condos that are going up around us.” Board and management came up with a $4.1 million, five-year spending plan. “It would’ve been crazy and an administrative nightmare to take every single project to the 234 residential and three commercial unit-owners to get their consent,” says Grant.
Instead, the board created a spreadsheet, and unit-owners were asked to vote on the entire plan. “This was so much easier,” says Grant. “Who is not going to consent to replace elevators when they need to get replaced? Or an HVAC system that heats and cools the hallways? Of course you have to vote ‘yes’ on those things.”
As expected, there was some criticism to this approach. “There were people who might not have cared about the lounge or the kids’ room or the pool,” says Grant. “All I know is that they had an opportunity to say ‘yes’ or ‘no’ to the whole plan, and they said ‘yes.’”
The condo is now in the second year of the project. The common area on the third floor is finished even though there were some serious complications. “One problem was that they have a movie theater as a commercial tenant,” says architect Diane Naiztat of Naiztat & Ham. “That meant we couldn’t make any noise during movie screenings or the sleeping hours of the residents. The work took a very long time because we could work only between 9 A.M. and noon – three hours a day instead of 12. Also, prices are volatile. A budget from today will not be the same a year later.”
These challenges were met, and the amenities were revealed to unit-owners at the annual meeting. “And then, hahaha!” says Grant. “The unit-owners’ jaws were dropping. It was the best annual meeting we ever had. Anybody who had any doubts now understood that this is not only great for their use, but also great for their property value.”
Heidi Halpern, president of the condo board, says some unit-owners pushed for even more upgrades than the board included in the five-year plan. “As a result,” she says, “we will start [renovating] the lobby as soon we’re done with the current plan.”
The five-year plan is being financed with a $1.8 million assessment billed over 36 months, and the remainder will come from existing reserves. “The average assessment for the entire five-year plan is about $8,000 per unit,” says Grant. “At the same time, the value of the unit goes up several tens of thousands of dollars. We tried to make that clear before they voted, but seeing is believing.”
PRINCIPAL PLAYERS – GENERAL CONTRACTOR: Zoom Contracting. ARCHITECT: Naiztat & Ham. PROPERTY MANAGER: Midboro Management.
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