New York's Cooperative and Condominium Community

HABITAT

NEW YORK CITY

 

July 20, 2009 — Somewhere in Queens where Elmhurst and Middle Village meet, just south of the Long Island Expressway, one average, everyday co-op has made itself appreciate in value in a way that any other co-op or condo can, well, appreciate — and emulate. The Bradford House co-op made a creative capital improvement of the kind that, it turns out, banks encourage and residents love. Not just appreciate or accept logically, like a roof renovation. Love. See the pictures at the end of this article if you don't believe us.

Years of mistrust between the holder of unsold shares and the resident shareholders of a cooperative came to a boil at their recent annual meeting. The holder, who owned a large percentage of the corporation's shares, previously voted for the same resident board members for the past five years. A group of resident shareholders, angered over a series of maintenance increases and assessments, wanted a change but, because of historically low resident turnout, could accomplish that only if they were able to collect a large number of proxies beforehand.

When it comes to selling your co-op or condo apartment, "A low appraisal can blow up a deal," says real estate attorney Jeffrey Reich. If a buyer needs 80 percent financing and the appraisal is $50,000 less than the selling price, the buyer will need to come up with extra cash or walk away. But if the seller lowers the price to save the deal, a board concerned with property values in other units could reject it.

In 2005, I became treasurer of my co-op. I had been a lawyer in the field since 1968, president of the board in 1985, and served for two terms at other times. One would think I was prepared for the job. How wrong you would be....

Co-op and condo boards have many "non-professional" professionals — lawyers, engineers, insurance agents, architects, teachers, designers, accountants and others who can tap into their work résumé to help expedite matters at your buildings. Savvy boards have learned to complement their paid professionals by utilizing the talents of a variety of professionals living in your buildings.

An exclusive Habitat co-op/condo board survey shows that co-op and condo boards seem to stick with their property-management firms. Slightly over 60 percent have been with their current firm six years or more; some 16.5 percent have been with the same firm for 11 to 15 years; and some 12.6 percent have had a more-than-21-year relationship.

But despite this longevity, 40.6 percent say the performance of their current managing agent is "subpar" or "needs improving." It's easy to see there's a difference between what boards accept and what boards expect.

Co-op and condo boards "have a couple of options" when it comes to lead-paint testing, says John Marino, owner of the contractor JMPB Enterprises. "Either use an EPA-certified contractor to test for lead or hire an outside firm." An outside firm  "provides more sophisticated testing methods, typically with the same results but for more money."

Designer Joel Ergas, of Forbes-Ergas Design Associates, begs to differ. "I don't think a test by an outside consultant is egregiously expensive," he says. "Our experience is that it's in the $600 to $800 range. Is that a lot of money? If you're a tiny little building, it can be." But it can save money, too. "If you test prior to a general contractor becoming involved, you know exactly what the scope of the job is and [so] the job can be bid accordingly. If the general contractor does it, he's already onsite and he's open to charge whatever he wants to do lead-safe practices. We like to know upfront [if there's lead] so that the job can be bid out accordingly."

Eric Ackerman, board president of a 192-unit co-op in Mamaroneck in Westchester County, recalls the incident clearly. A tenant-shareholder approached him in the elevator and asked: "Where was all that smoke coming from the day before yesterday?"

"Smoke?" Ackerman replied. It was the first he had heard about it. 

Puzzled, he called the property manager.

I talk to reporters almost every day, and one thing is clear: Many of the most negative stories we see are generated by homeowners who have turned to the media for public redress of their personal grievances — valid or not. Reporters love David-and-Goliath stories that pit underdogs against an "all-powerful" HOAs, co-op boards or condominium associations. Like it or not, that's our reality.

More often than not, the reporter is given what seems to be a distorted, one-sided perspective.  That's bad enough, but here's the disheartening part: All too often I'm told that the board won't talk to the reporter — hiding behind the incriminating lament "No comment" or simply not returning calls. Hiding is exactly how reporters see it, and that's usually viewed as an admission of guilt, incompetence or worse.

The savings can be significant. Last fall, Cooper Square Realty, which manages 600 properties, pooled 250 of them to buy electricity from an electricity service company. So, instead of buying 500 kwh of electricity for a single building, the company shopped for 130 million kwh. Individual properties saved between 9 and 20 percent on electricity costs.

"You get a better pricing structure because of the volume," says Cooper Square president Dan Wurtzel. His firm hopes to eventually bring all its managed properties into the new plan.

Buying in bulk also works for capital improvements. Five years ago, Fairfield Properties offered six of its properties the opportunity to convert to natural gas. By bundling the projects together, the company reduced the upgrade costs. The five properties that agreed to the offer are each saving about $100,000 a year on heating costs, says Alvin Wasserman, director of Fairfield.

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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

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