Matthew Hall in Building Operations on September 23, 2016
Is your co-op or condo board thinking about going it alone and becoming self-managed? If so, you might want to take a lesson from The Piano Factory, a 19th-century industrial building in Hell’s Kitchen that was converted into a 49-unit luxury co-op in 1981 and is now self-managed.
As the seven members of the Piano Factory’s board will tell you, self-management saves the co-op money, but it’s not always a walk in the park. For one thing, there is no buffer zone between the board and the residents. “There are some neighbors who don’t like me and don’t talk to me because of things I have had to do as board president,” explains the hands-on board president, Bruce Horowytz. “If we had a management company, then it would be easy to say, ‘Oh, the management company wanted to do that.’”
On a more practical note, being self-managed also means never getting to say you’re too busy. You have to make time, which can be onerous when you’re taking on a big project.
“Finding an engineering or architectural firm, interviewing people, having them report to you, and dealing with contractors is a lot of work and very time-consuming,” says board member Bonnie Reid Berkow, who reports that the board flirted with the idea of hiring an outside management firm recently when it faced a large capital project. “Then we think about it and decide we can do it,” she adds. “This is working and we keep on going as we are.”
A self-managed board tends to rely heavily on its superintendent. “An effective super is a key component to making self-management work,” observes board treasurer Christine Shostack. “Day-to-day interaction with contractors, inspectors, and potential vendors is key to making the building run. Board members have full-time day jobs, so we count on the super to handle the transactions and escalate as needed. When we had [an inefficient] super, this all fell on board members.”
Shostack, as treasurer, files any required documents with the city each year. Bookkeeping is outsourced. “Early on, we had a shareholder doing the bookkeeping,” she says. “Outsourcing ensures privacy and takes care of large clerical tasks like cutting checks, getting maintenance tasks out, banking – all the stuff that is very hard to do when you have a full-time job and you’re trying to juggle that with the co-op.”
Some board members worry that being self-managed could hurt the co-op’s ability to keep up with neighboring buildings in the curb-appeal sweepstakes in gentrifying Hell’s Kitchen. “Apartments are selling for $1.5 million and people want $1.5 million services,” says Shostack. “We never had a doorman. There is some concern that we’re competing against buildings with these services and the prices will reflect that.”
There’s another concern. In the future, self-managed buildings such as this one may face an insurmountable hurdle: The necessary commitment from all shareholders may not be possible.
“The people who are buying the apartments are more often professionals who have less time than those that moved in originally,” Shostack says.
Can self-management at the iconic Piano Factory survive? Stay tuned.
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