Marianne Schaefer in Bricks & Bucks
Evelyn Gaviria had known for years that her 34-unit HDFC co-op in the Bronx was in financial trouble. But when she learned that the co-op was facing foreclosure, she decided to become a board member and fight to save her home.
The challenge was staggering. The co-op owed $900,000 in back taxes, many residents were in arrears on maintenance or rent, the commercial space was vacant, water bills were unpaid, maintenance had been deferred, and lenders were making unpleasant noises.
Gaviria, 44, a mother of three who was unemployed at the time from her job as an armed security guard, settled into a small office in the building and rolled up her sleeves. “It was the most stressful situation,” she recalls. “I was crying at night, thinking, ‘What are we going to do?’ I imagined finding my home padlocked.”
The board, Gaviria soon discovered, was not functional. “Nobody wanted to be on the board,” she says, with the notable exception of Joffrey Jaramillo, the treasurer. “People wouldn’t even come to a shareholder meeting. They did not understand – or refused to understand – the seriousness of the situation. I had to go from door to door pleading. I left flyers. I tried everything.”
Gaviria also discovered that the co-op had been working with the Urban Homesteading Assistance Board (UHAB) for several years trying to find low-interest loans for the building. Gaviria and Samantha Kattan, assistant director of organization and policy at UHAB, decided to try a new approach. UHAB approached Housing Preservation & Development (HPD), which oversees HDFC co-ops, about a program that offers buildings tax forgiveness under certain stringent conditions.
“This is not a formalized process with a form you can download from the internet,” says Kattan. “This is something we had to work out with HPD. To achieve tax forgiveness involves so many hurdles that nobody had even tried it since 2001.”
HPD’s demands included: a two-year financial audit by an independent CPA; budget projections for the next five years, including a strategy to address outstanding water charges; minutes of two recent board meetings and the most recent board election monitored by UHAB; and all pending litigation against shareholders and tenants for unpaid maintenance or rent.
One of the biggest hurdles, according to Kattan, was income verification. “This means that shareholders had to consent that their tax returns were made available by the IRS,” she says. “Residents had to prove that they were low- or middle-income – but had enough money to guarantee future financial stability.”
It wasn’t easy. “It took a year and a half to get all the information,” Gaviria says. “We called for a shareholder meeting, but only 11 people showed up. We had to go to extreme measures. We begged, we knocked on doors, we were waiting for residents in front of the building so we could talk to them when they came home from work. I worked hard every day, sometimes until 11 o’clock at night.”
Meanwhile, the board hired Trion Real Estate Management, which assigned John Coleman to the property. “We got them a new accountant, a new lawyer, and house rules are now enforced,” says Carmelo Milio, president of Trion. “We helped negotiate with lenders, and the commercial space is now leased. We achieved all this without raising the maintenance.”
It all paid off when, against steep odds, the back taxes were forgiven. With foreclosure averted, the co-op was able to begin addressing its other problems.
“The board did a truly amazing and heroic job talking and convincing the shareholders,” says UHAB’s Kattan. “In order to save the building, residents had to give up rights of privacy and were extremely reluctant to do so.”
“The board,” in this case, was a dedicated shareholder named Evelyn Gaviria, living proof that one person can make a world of difference in a financially distressed co-op.
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