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A Fairy Tale About a Co-op Full of Happy People

Marianne Schaefer in Bricks & Bucks on July 25, 2018

Lenox Hill, Manhattan

Fairy Tale

The roof deck at 401 E. 65th Street, one many capital improvements that shareholders happily financed.

July 25, 2018

It sounds like a fairy tale, except it didn’t happen once upon a time; it’s happening right now. And it’s not happening in a galaxy far, far away, but right here in New York City, in a Lenox Hill co-op at 401 East 65th Street

In this 137-unit, 16-story building, the shareholders routinely applaud the work of the five-member board of directors. “There is a lot of trust,” says board president Gerry Maughan, 65, a retired financial consultant. “They know what we’re telling them is not only straightforward but also always in their best interest. I know it’s rare and we have a very unique situation, but we have gone out of our way to build this kind of relationship.” 

Shareholders have access to all co-op documents with a password and a click of a mouse. “There are absolutely no secrets here,” says Maughan. “The shareholders own the building, and we treat them accordingly. Our residents are our partners.” 

The fairy tale continues. When the board presented shareholders with a smorgasbord of capital improvements that would require an assessment equal to 5 percent of monthly maintenance for five years, the shareholders not only voted in favor of the plan but praised the board for its farsighted approach. “We laid it all out for them,” says Maughan. “Exactly what it was for, making sure they understood what every project would cost. And they wanted it. And because they wanted it, they were willing to pay for it. So we did it all.” 

In 2012, the boiler was converted from oil to natural gas. At the same time the board refinanced the underlying mortgage with Employers Reassurance. The earlier assessment helped pay for a gym, a bike storage room, and a roof deck. The board also installed a Building Link system to improve communications with shareholders. To accommodate residents who are not computer-savvy, all notices are also posted in the two elevators. “We now have electronic monitoring of washers and dryers,” says Maughan. “When you are in your apartment, you can go on your phone or computer and check to see if machines are available. You also get an alert telling you that you that you have two minutes left on your cycle. Those seem like simple things, but they really are tremendous.” 

The co-op has a $1 million reserve fund, which is never used for operations. The board has replaced both elevators, and next comes renovation of the lobby and hallways – usually one of the most contentious undertakings in co-ops. Even that went without a glitch. The board presented the shareholders with several options for the hallways, and 80 percent agreed on one design. The lobby design is still in the works. “Of course you have to give shareholders a choice,” says Maughan. “They have to live with it, and they’re paying for it. Just generally, we as a board never impose our will on the residents.” 

Property manager Rebecca Farley of Akam Associates also helps to keep residents up to date. “I send out emails to residents on a weekly basis,” she says. “Just to give them updates what’s going on with the board and the building. You don’t get that everywhere.” 

Many lawyers and property managers advise co-op boards that openness is an invitation to litigation and other problem, but this board has chosen to ignore such advice. “People are briefed in great detail about all the financial underpinnings of the building,” Maughan says. “We give presentations to people, and they walk away from these meetings telling us that we did a wonderful job and they now understand exactly what’s going on and why we, as a board, asked for or proposed something.” 

One result is that few shareholders move out. “And why would they?” asks Maughan. “The building is well run, and there is a good and neighborly feel. People love it here.” 

In this city, that qualifies as a fairy-tale ending. 

PRINCIPAL PLAYERS – MANAGEMENT: Akam Associates. FINANCING: Employers Reassurance. DESIGNER: Lauren Interior Design.

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