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Yonkers Co-Op Rebuilding After Fire with $19 Million Insurance Settlement

Emily Myers in Bricks & Bucks on April 17, 2024


Fire Damage

A marijuana heat lamp was the source of the fire, which destroyed 15 apartments and a portion of the roof. (Photo courtesy Keona Serrano)

April 17, 2024

A year after a fire tore through 671 Bronx River Road Inc., a six-story, 95-unit co-op in Yonkers, the board is slowly rebuilding with a $19 million insurance settlement. Shareholders, who have been forced to move out because of the extensive damage, are eagerly awaiting for the repairs to be completed — and for their long nightmare to finally end. In the meantime, the board is brainstorming ways to use the setback to its advantage. 

Access denied.  The source of the blaze was a marijuana heat lamp in an apartment rented out by the co-op sponsor. The fire destroyed 15 apartments and a portion of the roof. When crews came to assess the building, they found asbestos present, which further complicated the rebuilding. Residents were denied access for safety reasons, but the co-op then became a target for thieves. Slowing the rebuild further, a group of shareholders won a temporary restraining order, stopping work in the building until they could retrieve their personal items. 

To break the stalemate, the board worked with its contractor, Franchise Contractor Group, to devise a creative solution. “We had a set-up in a parking lot trailer where residents were connected to a worker wearing a live webcam so they could direct him to the belongings in their units,” says co-op board president Keona Serrano. The items were retrieved, decontaminated and returned to residents, allowing the asbestos abatement to take place. 

Abatement has also been completed in the common areas, as well as the fire-damaged section of the co-op, which is framed for reconstruction. The roof has been reconstructed, and the brick facade, compromised by heat damage during the fire, has been reinforced. The  work is expected to be finished early next spring, thanks in part to approval from the Department of Buildings for construction to take place during extended hours from 8 am to 11pm. “That will help to expedite the timeline,” Serrano says.  

Negotiating a deal. The cost of rebuilding has been estimated at $23 million and the co-op’s insurance payout was upwards of $19 million. The board was able to get what’s called a proceeds agreement with the contractor. “The terms will determine what work the contractor is agreeing to perform in return for receiving the insurance proceeds,” says David L. Berkey, a partner at Gallet Dreyer & Berkey. He does not represent the co-op, but says in these situations an engineer will advise the board if the proposed work is sufficient to properly restore the building or if additional work is required. Franchise Contractor Group has agreed to deliver the building to shareholders ready for occupancy.

Spying an opportunity.  The building’s mechanical systems were not destroyed, but with the help of their management, the board is evaluating what energy efficiency improvements might be possible while the co-op is under construction. Josh Koppel, president of H.S.C. Management, who took over the management of the co-op a few months after the fire, is hoping to tap into NYSERDA’s Low Carbon Pathways program to fund the upgrades. “Maybe we can get upgraded windows, take out the boiler, or even go geothermal while the building is vacant,” he says.

Money crunch. The prolonged vacancy, however, is affecting the co-op’s bottom line. Having put the $19 million settlement into an interest-bearing account, the building is getting $30,000 a month, which is going toward operating costs. However, with shareholders living elsewhere, maintenance cannot be collected to help cover the co-op's $70,000 monthly expenses. “We are facing a huge deficit,” says Serrano. The co-op’s mortgage is in forbearance until April 2025, but the interest on the loan still needs to be paid each month — not to mention liability insurance for the construction. Until recently, these costs were paid with insurance funds, but Serrano says the building has now “exhausted the loss of income insurance monies.” 

To raise funds, the board has imposed a new assessment on shareholders. It is also looking into securing a $6 million bank loan and has managed to get a 46% reduction in property taxes from July. 

New precautions.  Looking ahead, the board plans to ensure adequate insurance coverage is in place for the building in the future and urge shareholders to have individual apartment insurance. “It’s nothing we can enforce, but we can strongly encourage it,” Serrano says, whose personal insurance payout for additional living expenses was just $5,000. The board also plans to review the co-op’s governing documents to see what more can be done to vet all rental tenants to ensure they have a positive impact on the community. “We want to look into that before the building reopens,” Serrano says.

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