New York's Cooperative and Condominium Community

Habitat Magazine Insider Guide



Smart Spending with Refi Money

Mitchell Unger, Controller, John B. Lovett & Associates


It’s no secret that money’s cheap, and a lot of co-op and condo boards are taking advantage of that by refinancing their underlying mortgages. Are your co-op clients rushing in?

As a matter of fact, yes. Over the past six to eight months, with interest rates dropping, many of our cooperatives have had the opportunity to refinance their underlying mortgages. Many of our co-ops were able to refinance at 2.75%. The timing was great. The prepayment penalties were affordable. They were able to review their financial needs, and the loans have brought in a swell of funds for capital improvements that need to be done.


How challenging is it to figure out how to spend the money brought in from these refinances? 

It really has created the perfect storm. You have a board of directors, you have management, and you have a tremendous amount of residents who have many interests — sometimes competing ones — in improving the property. New York City has mandated many capital improvements with local laws, energy, carbon footprints, so forth and so on. It is management’s job to propose and help the boards prioritize these projects.


Who’s involved in the conversations on how to spend this money?

It really depends on the building. But board directors are also residents and shareholders or unit-owners in their communities, and they have friendships and relationships with many of the people in the building. So while you are dealing directly with the boards, you’re really working to communicate with residents and help them prioritize.


When you’re trying to create a list of priorities about what you need to attack first, how involved are engineers and architects? Do you bring professionals in on the conversation at this point?

A lot of these consultants, engineers and other professionals were involved before we even refinanced. Many of the funds that we’ve borrowed are based on inspections that these professionals have already done. So we’ve gotten them involved well before the refinance.


Let’s move on to a related issue — the Climate Mobilization Act. Are boards scared of the looming requirements, and is that becoming a big part of the conversation when you start talking about capital projects?

It is part of the conversation. We are looking at bringing in professionals to look at our energy needs. It’s not that boards are scared per se. It’s just going into the unknown and having these discussions to potentially set aside funds. Many of the projects that need to be done are further out in the future, but we are communicating as much as we can.


To wrap up, what’s your advice for boards who have just hit the jackpot with a nice refinancing of their mortgage and have a bunch of money in their pocket?

The advice is relatively simple. You need to prioritize and set up cash flows for these various projects. You have to set aside, of course, for a rainy-day fund for those unexpected projects that come up. So we propose, we plan, we allow the board to prioritize, and then we really try to execute that plan as best we can, taking into account any and all contingencies that can happen here.

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Learn all the basics of NYC co-op and condo management, with straight talk from heavy hitters in the field of co-op or condo apartments

Professionals in some of the key fields of co-op and condo board governance and building management answer common questions in their areas of expertise

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