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On the Money: A Brooklyn Co-op Saves Money Through Quick Action

Written by Jonathan Leaf. The first of a new biweekly column on board finances. on October 21, 2014

University Towers, 191 Willoughby Street, Fort Greene

"It's the lowest interest rate I've ever seen for 10-year money to a co-op." That was the reaction of Jordan Muchnick to the mortgage refinancing arranged last year with Morgan Stanley for University Towers at 191 Willoughby Street, in or on the edge of Brooklyn's Fort Greene neighborhood.

One might not think Muchnick, being a vice president for lending at the property-management giant FirstService Residential, is totally objective — at least not until one hears the rate: 3.21%. That figure was made even more attractive as the loan amortizes not on a 30-year schedule but 23. Consequently, the co-op saw the benefits in refinancing with more than three years left on its old 10-year mortgage.

Dean Starkman, a board member of a 12-unit Brooklyn Heights co-op. negotiated with a lender to refinance the mortgage on his apartment, a fairly routine affair. He had assembled all the required paperwork and, he recalls, "the last piece of the puzzle was our certificate of good standing as a corporation." At that point, the lender informed Starkman it was putting a hold on the deal because the co-op's corporate status had been revoked. How could that be?

The Newswalk condominium has had its own private slice of hell for a decade now. Involved in a protracted lawsuit for several years, the 153 unit-owners could be pardoned if they all decided to stay home and hide from the world. The legal battle concerns shoddy construction work by the property’s developer, Shaya Boymelgreen, who began selling apartments there in 2002. Because of excessive leaks, some units became practically unlivable. As Habitat reported in June 2010, the renovation of this aging, former Daily News printing plant in Prospect Heights, Brooklyn, was so stunningly sloppy that the unit-owners filed a lawsuit seeking at least $10 million in damages. (A decision in the case is pending.)

The average price of an apartment in certain Brooklyn neighborhoods is now higher than that of Manhattan co-ops and condos, according to a StreetEasy study cited by Crain's New York Business. While the magazine notes the "obvious caveat" of comparing neighborhoods with an entire borough — where apartments in Inwood and other upper-Manhattan locales sell for far less than in such luxury area as Central Park South or Tribeca — at least two Brooklyn spots blow Manhattan's $890,000 median out of the water: DUMBO (Down Under the Manhattan Bridge Underpass), at $1.5 million, and the Columbia Street waterfront, running through Cobble Hill and Carroll Gardens, at $1.147 million. DUMBO, in fact, averaged less than just a half-dozen Manhattan nabes. On the bright side, Kensington is still very affordable.

Illegal hoteling is any building's bête noire. But, reports Ronda Kaysen in her her New York Times "Ask Real Estate" column, one Williamsburg, Brooklyn, condo board is doing what other beleaguered boards should and just slapping a fine on miscreant — who, if they want to play the "it's not an illegal rental, it's my friend / cousin" game can then damn well try to pull that crap with a judge in court. Perjury, anyone? Just make sure your bylaws allow you to levy that fine. And besides, when an apartment-owner rents to a short-term tenant in violation of New York State laws and most co-op / condo bylaws, that tenant can be hard for the owner to evict. The same column answers a Carroll Gardens condo-board question about short-term rentals. Who knew Brooklyn was such an epicenter of this?

It happens more often than you might think, and it's a cautionary tale to all boards: Did we actually file the lawsuit we intended to? We think we did.

The two-building, 73-unit Clermont Greene condominium in Fort Greene, Brooklyn, has a seven-member board, with three of those members affiliated with the sponsor, Vanderbilt Mansions. The board, claiming construction defects, building code violations and hazardous conditions, hired Howard L. Zimmerman Architects to investigate. HLZA reported several defects related to inadequate or poor workmanship or designs that failed to meet industry standards.

The board began an action, asserting claims for breach of contract, warranty, and fiduciary duty. There was also a demand for an accounting. The sponsor's claim in response? That the board never authorized the start of the lawsuit at a properly noticed meeting of the board.

Following corruption charges last week by nearly 900 residents of the Brooklyn Mitchell-Lama co-op Lindsay Park Housing, the local Community Board chair and two New York City Council members, the co-op board issued a statement denying those claims. Critics allege the board exploits "general proxies," which don't name a candidate, rather directed proxies, which name a specific candidate, in order to keep board members in power.

According to DNAInfo.com, the board says its election practices are fair and monitored by an independent third party approved by the Department of Housing Preservation and Development, and that the dissident Shareholders for the Betterment of Lindsay Park is "a group of relatively uninformed and disappointed tenant-shareholders, who have not been able to have members of their group elected to the Lindsay Park Board and who oppose needed maintenance increases at Lindsay Park." The board said directed proxies are "restrictive" to the democratic process and that there was "no basis" to "unsubstantiated charges of 'corruption.'"

DNAInfo said the board is is verifying signatures on the group's petition to change the method of proxy voting, and will hire an election company to monitor the special meeting that per the co-op's bylaws must be held within 10 to 40 days of the petition's submission.

With their local Community Board chairperson in agreement and on their side, nearly 900 residents of Brooklyn's Mitchell-Lama Lindsay Park Housing Cooperative (click image to enlarge) are petitioning to change a board election process they say leads to an entrenched board that is secretive, non-responsive and, as 64-year-old Elizabeth Blizinska told DNAInfo.com, "a dictatorship."

The co-op board of the seven-building Williamsburg complex gathers "general proxies" that don't name a candidate, rather than "directed proxies" that do — which the bylaws allow. The corruption comes in, petitioners say, when the longtime board president uses the proxies to re-elect herself and her allies, sometimes after having misled or intimidated immigrant and elderly residents into signing away a vote. CB1 chair Dealice Fuller agrees with the dissidents. Board president Cora Austin has denied knowledge of any petition, said DNAInfo, but the website cited memos Austin sent to residents earlier this month warning them not to sign it.

“It was a big deal, a big undertaking,” says Jay Silverberg, principal in Zenith Properties. He’s not kidding, either: take a 21-member board in a seven-building co-op complex, add a $4 million project to convert 10 boilers in three boiler rooms from No. 6 heating oil to natural gas, factor in Housing Preservation and Development (HPD) involvement because it’s a Mitchell-Lama (subsidized) property, and consider that HPD restrictions prohibit loans – and the undertaking doesn’t just seem big. It seems impossible.

Recent news affecting co-op / condo buyers, sellers, boards and residents. This week, a co-op board takes away a parking space from a little old lady with Parkinson's, saying her car's insurance and registration had lapsed — they hadn't — and that the car didn't run ... so they took away the spot while the car was in the garage to, y'know, run. Doesn't sound like the board's running on all cylinders, either. Same might be said on Fifth Avenue, where a co-op board president who lost a bid for an apartment in her building allegedly decided no one else could buy it, either. Plus, Patrick Stewart makes it so with a condo buy in Brooklyn.

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