Board, Begin Again
The new board learned that their predecessors had not always solicited bids on contracting and boiler repair jobs, and in fact had locked themselves into several costly contracts.
The board's attorney was charging $300 an hour, including $22 per e-mail. The accountant didn't complete the 2013 annual financial report until August of 2014, and 2013 taxes weren't prepared until September 2014.
The co-op's long-term property manager had left abruptly on the eve of the 2013 annual meeting. The co-op's management company, Douglas Elliman, sent veteran property manager Cary Smith III to that meeting in her place.
Smith spent three months reading 10 years' worth of minutes from board meetings, learning that the board was spending enormous amounts of money on unnecessary expenses, thus requiring repeated assessments and maintenance increases.
"To make it worse," Smith says, "there was little transparency or communication with shareholders. What made it difficult was that shareholders did not have a clear understanding of why they were getting these increases, so they did not sit well with people. I also learned that there were a lot of Band-Aid repairs, especially to the windows. Over time it deteriorated. It cost a good amount of money to get the work properly completed."
Mark Hankin, a veteran real estate lawyer with the firm Hankin & Mazel, whom Profita had contacted in late 2012, made another discovery: "The former managing agent [had been] going around collecting proxies so she could keep the board in power. When you're employed by the co-op, you shouldn't be doing that. It was ridiculous."
With the old managing agent out of the way, the new board got down to some serious housecleaning. They replaced the existing attorney with Hankin. They hired a new accountant and a new assistant for Smith. They got rid of the old boiler and the landscaping and cement contractors.
Perhaps most important of all, the board has lived up to its campaign promise to bring transparency to its dealings. Regular newsletters and flyers keep shareholders abreast of the its activities. And with an eye to the future, the board is working with the property manager to develop a 15-year capital-improvement plan.
"Our financials are straight now," says Profita. "Banks wouldn't even talk to people who live here. Now they're getting loans and mortgages all over the place." And the board is now working to make sure the 2015 budget doesn't require a maintenance increase.
"Marilyn [Profita] is a tiger," adds Hankin. "She wouldn't let it go till she got justice. I believe that once she and this board are done, you're going to see a big turnaround with this co-op. They're a very well-oiled, thinking board. They really could turn this place around."
Adapted from "We Took Back Our Building" by Bill Morris (Habitat, December 2014)
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