New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

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TSUNAMI OF LEGISLATION: THE GOOD & THE BAD

Tsunami of Legislation: The Good & The Bad

Alvin Wasserman, Director of Asset Management, Fairfield Properties

 

Since January, more than 50 pieces of legislation have been introduced in Albany that could have a profound effect on how co-op and condo boards conduct their business. Some are good ideas, some not so much. Is there one you think is a good idea? 

One of the bills that I think is a great idea, and which I’ve been advocating for years, is that property managers should be certified or licensed and on file with the State of New York. The problem is that just about anybody could say, “I’m a property manager” and offer their services, and they could do so at discounted fees. They may not have any experience, may not have any organization behind them, and they could just open a management business. And I think that this has held the industry back. I think we need a good set of professional standards that the state will acknowledge and recognize for licensing. 

 

When you say it’s holding the profession back, do you think it’s causing people to see the profession as not really professional? 

Those who are going into the business without the proper qualifications and the education experience are learning by the seat of their pants, and they make mistakes. Then the community gets the impression that this is indicative of the entire management profession, and it’s not. There are a large number of reputable companies, but these new folks offer lower management fees, and some boards put that as a primary incentive, ahead of value and quality service. So it does create a mixed image of the industry that is not helpful to those professionals who have put in the work.

 

Are there any bills in Albany you think are a bad idea? 

Yes, and this has also been a pet peeve of mine for quite some time. It has to do with the budget process. Some boards are very responsible about budgeting, and they work with their management company and with their independent accountants and come up with a budget that will meet their operating expenses. They set up reserves for capital improvements in the future and have enough money in the bank so that the community is secure in case of an emergency. But there are other boards who have been irresponsible about budgeting. In some instances they were not increasing fees for years and spending their savings down to nothing, and then some of the board members who have decision-making authority sell their units and leave. And what they do is they leave a mess behind for those that remain. Shareholders and owners thought they were heroes, until they had to pay the bill and until there was a very large maintenance increase to balance the budget and restore the reserves.

 

So what the state is proposing is that all owners or all shareholders have to vote on and approve the budget. Now, I don’t know that that’s going to make matters better. In fact, it may make matters worse because there are shareholders who may be on a tight budget, and irrespective of what the property needs in terms of maintenance and capital improvements, they may turn down the budget if there are any increases in it. So this is going to make it very difficult for boards.

 

If Albany’s fix to this problem isn’t a good idea, what do you think might be? 

The state has good intentions, but what I would suggest is for them to require that a licensed, independent accountant — generally one that the board needs for their annual financial statement — has to sign off on the budget. The accountant works as a team with the board and with management to come up with a responsible budget, but that accountant’s license is on the line if he doesn’t advise them correctly. I think that would be a good solution to help the budgeting process for management professionals and board members, who are living and breathing what goes on in a property every day.

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