Paula Chin in Building Operations on February 12, 2019
Co-op and condo boards could do worse than to borrow a page from the playbook of successful business managers – the seven steps to problem solving. The steps start with identifying the problem, and they end with agreeing on how to monitor and evaluate the solution.
At Cameo House, a luxury nine-story co-op in White Plains, Step 1 – identifying the problem – was not a challenge. It was in plain sight. The original rail-and-glass balconies at the 50-year-old building – a prized amenity in each of the 99 apartments – were deteriorating. For years, the solution had been to replace the glass and shore up the concrete balconies. But Cameo House was losing the war. “We were running out of glass, which came from Austria and wasn’t being made anymore,” says board president Stuart Levinson. “The integrity of the balconies was failing. We had spent $70,000 over two winters. It was time for a major project.”
Then came Steps 2 through 4. The other board members listened to Levinson’s argument, and they agreed with his thinking. Then they listed and evaluated their options. Residents were given several options for new balcony materials, including slats, new glass, and aluminum panels. “The slats were not private enough, and the glass was out of our budget,” says Levinson. Eventually, sleek aluminum panels were chosen. “Although there was some consternation as to how our panels would look throughout the building, the overwhelming response has been very good.”
To cover the estimated $2.2 million in repairs, they decided to take advantage of low interest rates by taking out a $2 million line of credit and also imposing a four-year assessment that averaged about $100 a month for each unit. “It had to be palatable for people, since our maintenance is relatively high,” explains Levinson, adding that the board put the plan in writing and informed shareholders four months in advance to lessen the sticker shock.
As for paying back the loan, the board earmarked $10,000 from the assessment every month. “We also timed the assessment to end several months before our mortgage refinance was coming up,” Levinson says. “Instead of having to pay back the balance of the line of credit, we would incorporate that into our new mortgage, since the assessed value of the building would increase.” With reserves in excess of $1 million, there would also be ample funds in case other capital projects were needed.
The balcony repairs began in 2016, one floor at a time. New concrete was poured, balcony floors were stripped down and recoated, sturdy aluminum railings were installed along with the aluminum panels. “With a 10-year warranty on the coating and a forever guarantee on the railings, we’re set for the foreseeable future,” Levinson says. “I would say 90 percent of the residents are extraordinarily happy, and the other 10 percent are the people whose balconies haven’t been done yet. We’re not on time, but we are on budget.”
As Levinson sees it, it is a board’s responsibility to try to make as many people as happy as possible. “To do that, you’ve got to know your audience and what you can and can’t do,” he says. “We primed shareholders for the inevitable, gave them visuals of the new balconies, and explained that the project was in their interest because their apartments would be worth more.”
Levinson, an executive at a printing business, admits he stumbled a bit when it came to Step 7. “I should have put penalties in the contract in case of delays,” he says, “especially with a project of this size. [At my printing business] we try avoid problems by having procedures in place. It’s a little different from being board president, but having a system certainly helped.”
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