New York's Cooperative and Condominium Community
Bendix Anderson in Bricks & Bucks on September 4, 2019
Over the last six years, the co-op board at the Commons at North Babylon has spent more than $1 million replacing roofs, windows and several boilers at its 216-unit complex, spread over a dozen buildings on the south shore of Long Island. So far, they’ve paid for these capital projects without assessing shareholders or increasing monthly maintenance – and they have $1.2 million in the reserve fund. How do they do it?
Through careful long-range planning, according to Alvin Wasserman, director of asset management at Fairfield Properties, which converted the Commons to a cooperative in 1988. “They were very well-prepared to pay for all of these capital expenditures,” Wasserman says. “They have always transferred money into their reserve account every year.”
The first step was refinancing the underlying mortgage back in 2003, when interest rates were the lowest they had been in decades. At the time, the co-op had just $54,000 in the bank, including both its operating and reserve accounts. But the low interest rates allowed the board to take out a larger loan without increasing the amount of its monthly loan payment – while raising millions to pay for renovations. “Interest rates have really been the biggest factor that made this work possible,” says Linda Bacchi, president of the co-op board. Good timing certainly didn’t hurt.
With money in hand, the board began tackling a long laundry list of capital projects. In addition to the roofs, windows, and several boilers, the board replaced lighting fixtures, both outdoors and in common areas of the co-op’s 12 two-story brick buildings arranged around three landscaped courtyards.
The boilers are a work in progress. The board has been replacing these 50-year-old behemoths as they fail – three in the last few years, at a cost of more than $100,000 apiece. “When they spring leaks, we patch them,” says Bacchi, “but with these three units the workers couldn’t weld them anymore. The walls of the boilers were paper thin.” Once again, by carefully planning and budgeting, the co-op board was able to pay to replace these boilers and continue to build up its reserve fund.
The board plans to continue replacing the boilers as they wear out. But thanks to its large reserves, even if all nine of the remaining older boilers failed at once, the board would still have enough cash on reserve to pay to replace them without a special assessment. Meanwhile, workers are repairing brick walkways that had begun to crumble.
“The banks are very happy with us,” says Bacchi. So are the shareholders.
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