can you require owners to insure?

Transcription

CAN YOU REQUIRE OWNERS TO INSURE?
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MARCH 2013 HABITAT 1
PODCAST
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LEGAL TALK
Co-op and condo board members
make the crucial decisions that keep
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turn to for advice? A lawyer.
2013 brings a whole set of new
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Habitat’s Legal Talk podcast has
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Every episode, we present a real-life
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2 HABITAT MARCH 2013
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Contents
March 2013
Writers & Artists
DAVE BAMUNDO is an artist whose work
has appeared in Newsweek.
6
DALE J. DEGENSHEIN is a special counsel
at the law firm of Stroock & Stroock &
Lavan.
LIZA DONNELLY, a contributor to Habitat
since 1982, is a cartoonist at The New
Yorker. She is the co-author, with her
husband, cartoonist Michael Maslin, of
A Cartoon Marriage.
MARCELLUS HALL, an artist whose
work has appeared in The New Yorker,
illustrated the book City I Love.
JENNIFER V. HUGHES has written for The
New York Times.
by Jennifer V. Hughes
10
ABIGAIL NEHRING has reported for and
published essays in Brooklyn Magazine,
Guernica, Idiom, and Think Africa Press.
Can you require residents to get
homeowners insurance?
26 The Face of
Destruction
Two condos spent $20 million
to restore their façades.
Then Sandy struck.
by Ronda Kaysen
Our Coverage
Doesn’t Cover You
RONDA KAYSEN writes about commercial
real estate for The New York Times.
BILL MORRIS, a reporter for 34 years,
formerly worked for the Daily News, and
currently writes for The New York Times.
A year in the life of
a board.
by Mary Fran
Seizing
the Energy
Moment
MARY FRAN is president of the board at
her Inwood co-op.
STEVEN HOCHBERG, an attorney, is the
former president of his Riverdale co-op.
20 Dear Diary
Sometimes a
building needs
a catalyst.
For one
Manhattan
co-op, Local
Law 87 was it.
by Frank Lovece
16
PATRICK B. NILAND is president of First
Funding, a mortgage brokerage.
RICHARD SIEGLER is a partner at Stroock
& Stroock & Lavan. He currently teaches a
course in real estate law.
How Windsor Oaks developed
a renovation credit to keep
apartment values from spiraling
downward.
38 Fob Appeal
Pricing Tactics
by Bill Morris
Cars have them –
now buildings can,
too. Say hello to
the new key.
by Abigail
Nehring
Columns
4 PUBLISHER’S NOTE
by Carol J. Ott
Property Reports
42 ASK THE MORTGAGE BROKER
The positive role of debt. Yes, debt.
by Patrick B. Niland
Projects Around Town
54 SPOTLIGHT ON
55 White Street
44 CASE NOTES
Sponsor and architect liability.
by Richard Siegler
and Dale J. Degenshein
Neglected and mishandled,
the once-grand 55 White
Street was deteriorating.
“There was a piece of castiron literally hanging by a
thread on the front of the
building,” recalls the board
president. A remarkable
comeback story.
47 BOARD TALK
A conversation about the ADA.
52
FROM THE EDITOR
Can you be too cost-conscious?
by Tom Soter
56 ENDPAPER
When “no” means “maybe.”
by Steven Hochberg
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51
PLANNER
50
BUILDING LOANS
51
ADVERTISER INDEX
50
MANAGEMENT TRANSITIONS
55
RECENT SALES
Publisher’s Note
I
t doesn’t take much to start saving energy dollars – sometimes
only a few tweaks. Why, then, do so many co-ops and condos
find it so difficult to start?
I’m not sure, but it probably has something
covered in
to do with their mindset. The board at 110
“The Face of
Riverside Drive has embraced new thinking,
Destruction,”
though, and as part of their work under Local
p. 26): care of
Law 87 – the new retro-commissioning law
your building’s
– they are adjusting many dials to lower their
façade pays off,
usage (“Seizing the Energy Moment,” p. 6).
and this season’s
Case in point: the building invested $1,000
wild climate ride
to program a heating control change that will
proves it.
save them $2,500 a year. Small dollars, but add
If you haven’t yet read Habitat on your iPad,
them up and they’ll achieve significant savings.
you owe it to yourself to give it a swipe. It’s not
Two condominiums are profiled in this
a replica of this print edition, there’s additional
issue, both suffering extreme damage from
content, and it’s a really fun experience. Plus
Hurricane Sandy. What makes these two
you can easily archive the issues on your iPad
unique, though, is that in the recent past both
for future reference.
buildings invested a combined $20 million
Enjoy the issue - in print and on the iPad.
for capital work to shore up their façades and
roofs, work that helped protect them from the
ravages of Sandy. The lesson learned (and
PUBLISHER AND EDITOR - IN - CHIEF
SERVING NEW YORK BOARD MEMBERS & PROPERTY MANAGERS OF CO-OPS & CONDOS
MARCH 2013 VOLUME 32 NUMBER 296
FOUNDED 1982
PUBLISHER AND EDITOR-IN-CHIEF
ADVERTISING DIRECTOR
WEB CONTENT EDITOR
Carol J. Ott
[email protected]
Stephen Hanks
[email protected]
Frank Lovece
[email protected]
EDITORIAL DIRECTOR
ART DIRECTOR
EDITORIAL ASSISTANT
Tom Soter
[email protected]
Michael Gentile
[email protected]
Kathryn Farrell
[email protected]
DIGITAL AND MANAGING EDITOR
Ian MacFarland
[email protected]
CONTRIBUTING ARTISTS
Dave Bamundo
Liza Donnelly
Marcellus Hall
CONTRIBUTING WRITERS
Dale J. Degenshein
Mary Fran
Steven Hochberg
Ronda Kaysen
Bill Morris
Abigail Nehring
Patrick B. Niland
Richard Siegler
OPERATIONS MANAGER
Jennifer Wu
[email protected]
COLLECTIONS SUPERVISOR
CONTRIBUTING PHOTOGRAPHERS
Carol Ott
Tom Soter
PROOFREADER
Dave Baker
Bill Hoover
HABITAT® (ISSN-0745-0893; USPS 681510) The Magazine serving New York Co-op/
Condo Board Directors & Building Managers, is
published monthly except for a combined issue
in July/August by The Carol Group Ltd., 150
W. 30th St., Suite 902, New York, NY 10001.
Periodical postage paid at New York, NY and at
additional mailing offices. POSTMASTER: Send
address changes to: Habitat, 150 W. 30th St.,
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© 2013 by The Carol Group Ltd. All rights
reserved. Reproduction in whole or in part
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assume no responsibility for unsolicited
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accompany all materials if return is requested.
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Sometimes a building needs a
catalyst. For one Manhattan co-op,
Local Law 87 was it.
Seizing the Energy Moment
By Jennifer V. Hughes
Some people see a problem. Others see an opportunity. The board
at 110 Riverside Drive, a block-long, two-building co-op on West
83rd Street in
Manhattan, falls into
the second category.
The directors saw
an opportunity
in Local Law 87,
the new rule that
requires buildings to
perform an energy
audit and then take
steps toward “retrocommissioning”
– which is a
basic overhaul to
ensure heating, air
conditioning, and
water systems are
operating efficiently.
TOM SOTER
110 Riverside Drive
“They used Local Law 87 as a
catalyst to really move forward,” says
Michael Scorrano, managing director
at the energy services company EnPower Group, which performed work
at 110 Riverside Drive.
The co-op completed its
energy audit in the fall of 2012,
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while simultaneously deciding
to participate in the Multifamily
Performance Program (MPP).
Offered by the New York State
Energy Research and Development
Authority (NYSERDA), it covers
condos and co-ops and also starts
with an energy audit. If 110 Riverside
successfully completes the MPP and
reduces energy usage by 15 percent,
the co-op will receive a rebate of
$107,000. Under the MPP version
for which 110 Riverside qualified,
the building will get back part of
the money spent on the audit, or
about half of the $12,000 cost.
(Scoranno notes that the current
MPP does not cover energy audits.)
The audit showed that the co-op was
doing extremely well. According
to NYSERDA, it rated 67 percent,
meaning that it was better, energyefficiency-wise, than 67 percent of
similarly sized and situated buildings.
Room for Improvement
But there is still room for
improvement. The retrocommissioning work required at
the co-op by Local Law 87 will
include basic maintenance and repair
work to the current boiler system.
“We will put in new burners, a new
burner management system; we will
overhaul the boiler, tune the gaskets,
that sort of thing,” Scorrano says.
Also as part of the retrocommissioning angle, En-Power will
perform a programming change on
the boiler to reduce the overnight
temperature by one degree. That
work will cost only about $1,000,
but just that one degree will save the
building $2,500 annually.
“Retro-commissioning is not
supposed to be a major item,” he
says. “It’s about tweaking things
and making sure that they work
the way they should.” All told,
Scorrano estimates the co-op’s retrocommissioning cost at about $25,000.
The audit suggested other measures
that would not be required under
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Energy audit infrared image.
Compliance by the Numbers
When do you have to comply with Local Law 87? It all
depends on your building’s block number. If it ends in 3, you’re
due in 2013; if it ends in 4, your deadline is 2014; and so on.
It’s a two-stage process: first get an energy audit. Second,
comply with retro-commissioning. Both have to be done by your
deadline. The whole procedure has to be repeated every 10
years.
You are not required to tackle every project suggested in the
energy audit. But you do have to make sure that your heating,
air conditioning, and water systems are up to the standards set
under Local Law 87.
For example, hot water heater temperatures should be set
no higher than 130 degrees. Energy consultants will check
to ensure your motion sensors in common hallways are
placed properly to work efficiently. If your heating system is
programmed to set back at night, retro-commissioning will
ensure that it is actually setting back.
No matter what, those in the know are suggesting that you
tackle your Local Law 87 project as early as possible. Michael
Scorrano, managing director at the energy services company
En-Power Group, says early adopters can take advantage of
energy savings sooner rather than later. Scorrano also says
there are currently financial incentives to be gained from Con
Ed and agencies like NYSERDA, but they may not last; the law
could change at any time. So, if you can, act soon. —JVH
FOR MORE INFORMATION
MPP
http://bit.ly/MultifamilyPerformanceProgram
Oil to gas
http://bit.ly/OilToGas
Regen elevator drives
http://bit.ly/RegenElevator
Local Law 87 but would help the
building meet its MPP goals. The
biggest, as in almost all buildings,
would be to convert from burning
fuel oil to natural gas. The problem
is that the building is in an area that
is not currently piped to handle a
boiler system load. Scorrano says the
co-op could pay an extra $100,000
for Con Ed to link the building to its
system, or it could wait to see if the
company decides to expand into the
neighborhood on its own. If Con Ed
starts to service the neighborhood
fully, the cost to convert from oil to
gas would be about $250,000 and the
return on investment (ROI) would be
about four years.
Another biggie on the MPP
list, and one the co-op is still
considering, would be to install
a separate domestic gas-fired hot
water heater. Currently, the building
provides residents with hot water for
things like showers and dishwashing
by utilizing steam-coilers in the
boiler.
“That requires the boiler to be
operating year round, even in the
summer,” he says.
There is a small existing Con Ed
line that provides natural gas for inunit stoves and the building’s dryers.
Scoranno says it is possible that the
line could accommodate a hot water
heater, but they are still checking
with Con Ed. The savings would be
dramatic.
“It would cost about $100,000
and it has a 3.6-year ROI,” Scoranno
says. An upgraded system would
mean the building would use 17
percent less energy annually, easily
allowing the co-op to meet its MPP
goal.
Other Projects
One project the co-op did tackle
was to modernize its elevator system
– a project that had begun before
the Local Law 87 energy audit and
the MPP process. The new elevator
system has so-called “regen drives”
that use the energy created by the
elevators’ motion to feed power back
into the system. The elevator project,
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which cost about $1 million, will
be paid over a four-year period and
comes with a $21,000 annual energy
savings.
Co-op board member Carl
Valentine says the initial year’s
cost was paid by a shareholder
assessment. Subsequent payments
will be made from the board’s
operating resources.
Another project that helped the
co-op meet its NYSERDA goal was a
lighting upgrade. Motion sensor bilevel lighting was installed in service
stairwells and older fluorescent bulbs
were swapped out for better ones.
The total project cost was $7,500 and
carries a $1,600 savings.
Valentine says the board is also
considering options that did not
even arise in the initial energy audit.
The part of the co-op that faces
Riverside Drive is generally much
colder than the interior areas, and
because of the way the heating zones
are configured, when thermostats
are triggered in colder areas, they
also pour more heat into apartments
that are already warm. “It’s very
inefficient,” he says.
The co-op is looking to a
neighboring building that is trying
out a multi-zoned system that would
eliminate that inefficiency. The
board can’t even ballpark the costs
yet, preferring to see how it works
nearby, but it is an option on the
table.
Opportunity, Not Burden
Valentine repeats that Local Law 87
is not seen as another burden imposed
on them by the city, but rather as an
impetus to do the types of things that
will save money in the long run. He
points out how one resident switched his
apartment light bulbs to energy-saving
models and posted building-wide how
much he personally saved on his electric
bill.
“It’s really about changing how you
think about using energy, just as much
as changing the way our boiler works,”
Valentine says. “Changing people’s
thought process is a big deal. It’s hard to
do. It can take a while.”
■
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When the going gets rough, insurance can save the day.
Can you require residents to get it?
Our Coverage Doesn’t Cover You
By Frank Lovece
TRUE STORY Shareholders at one Manhattan co-op
voted down a referendum that would have required them
to buy homeowners insurance. Then one day some water
pipes burst, the building’s insurance didn’t cover all the
damage, and the board had to issue an assessment to make
up the difference. Shareholders who had homeowners
insurance got reimbursed by their insurance companies
for the assessment amount. Those without had to pay out
of pocket. And the next time the board tried to require
homeowners insurance – the shareholders voted it down
again!
The one thing you can’t insure against, it seems, is
shortsightedness. That notwithstanding, boards still may
want to push to mandate that co-op shareholders and condo
unit-owners carry insurance, as many buildings already
require.
Why? What difference does it make to the co-op or
condo as a whole if shareholders carry homeowners
insurance on their individual apartments? “It fills in a
gap for everybody and the building itself,” says attorney
Matthew J. Leeds, a partner at Ganfer & Shore and an
adjunct professor at Fordham Law School. If an uninsured
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09/2011
owner’s bathtub overflows, ruining
the bathroom of an uninsured owner
a floor below, then you have neighbor
suing neighbor for damages. And
if the overflow creates a moldy
mess inside the common walls, the
building would either have to fix that
at its own expense – possibly suing
the first owner to recoup – or else fix
it and file an insurance claim, which
could raise the building’s premiums.
“It goes for a much smootherrunning building when everybody has
coverage,” says Steve Greenbaum,
director of management at Mark
Greenberg Real Estate. “God forbid
there’s a claim between neighbor and
neighbor, the co-op doesn’t have to
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"$! % "(
#$! $"$)#&
)'''" $!
get involved. Instead, they call their
own insurance companies.”
“Our concern as a co-op entity
is that [shareholders] at least have
liability insurance, because a worker
in someone’s home could trip and
fall and then they’re going to go after
the contractor, go after the owner,
and go after the co-op,” says Michael
Herzog, a retired accountant and
finance manager who’s been board
president of the 68-unit Cedarhurst
Park Corp. in Cedarhurst, Long
Island, since it converted in 1988. “So
any insurance [shareholders] have
will protect the co-op.”
Can You Require It?
But while recognizing that
there might be good reasons for
homeowners to carry insurance –
aside from the intrinsic fact that it
protects the individual homeowners
themselves – boards are often
reluctant to require it. “Some people
either don’t focus on what would
be good for them or they find it
paternalistic,” says Leeds, “and some
people think it’s an added expense”
they can’t or don’t want to pay. A
basic homeowner policy for a middleclass apartment in the New York area
costs about $350 to $600 a year, or
roughly $29 to $50 a month.
Yet both co-op and condo boards
can indeed mandate it. While it’s
possible to do so with a board vote
that adds it to the house rules and
regulations, it stands up better when
challenged by contentious individuals
if you amend the building’s operating
documents – the co-op’s proprietary
lease, the condominium’s bylaws
– which generally requires a supermajority of homeowner votes.
Before you go to the trouble of
arranging that, be sure to check
those selfsame documents first.
The requirement might already
exist, unbeknownst to boards and
homeowners. And if it doesn’t, get
outside professionals to help convince
homeowners to amend the rules.
“People don’t realize their
exposures, and that’s the key
point,” says Patricia Batih, vice
president of sales and marketing
at the insurance agency Mackoul
& Associates. “Maybe have an
insurance broker come out and
speak to the homeowners, like fire
marshals or police [liaisons] or other
professionals do.”
Should you bother, given that banks
and other lenders already require
homeowners insurance in most cases?
Yes, because otherwise, you just don’t
know if it’s true in all cases. “I can’t
imagine a bank lending money to
someone without making sure they
have insurance,” says Greenbaum.
“But I’ve seen it. I’ve seen it a lot.”
Insurance 101
What exactly should you require?
A board could, one supposes, simply
require homeowners insurance and
leave it at that. But specifics are
important, since “many shareholders
have inadequate insurance,” says
James Samson, a partner in the law
firm of Samson Fink & Dubow. Adds
Leeds: “If the deductible is too high
it’s almost like not having insurance,
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because the threshold is so hard to
reach before the insurance company
gets involved.”
The standard nomenclature for
homeowners insurance is:
sCoverage A: Dwelling (the
declared value and covers direct
physical damage, including to
carpeting, floors, and even some
elements of decor)
s Coverage B: Other Structures
(such as tool sheds or detached
garages, which can be pertinent
to townhouse condominiums and
the like)
s Coverage C: Personal
Property (loss of things that aren’t
a permanent part of your home,
such as furniture and clothing,
and is generally limited to 50
to 70 percent of the “Dwelling”
coverage amount; it excludes such
items as fine art, jewelry, and coin
collections, which can be insured
by a separate “endorsement,” also
called a “rider” or a “floater”)
s Coverage D: Loss of Use
(offers reimbursement for the
amount of additional living
expenses incurred when one’s
home is uninhabitable)
sCoverage E: Personal
Liability (pays for claims and
legal defense arising from injury
or property damage to oneself
or others, whether by accident or
negligence; “Medical Payments”
can be a subsection of that or its
own separate section)
“We had required $300,000
liability insurance,” says board
president Herzog, but in January, “we
passed at our board meeting a rise to
$500,000.” He continues: “We also
indicated that if you have an umbrella
policy for a million, you can have
that instead of the $500,000 liability
insurance.”
A personal umbrella policy (PUP)
is a type that provides liability
coverage beyond that of your
automobile or homeowners policy –
somewhat like the overdraft function
of a checking account. “We also
take the position that what you do
with the rest of the insurance is your
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business,” he adds, referring to the
specific amounts for coverage other
than liability.
“We recommend half-a-million
[minimum liability coverage], since
we are in a very litigious society,”
Batih says.
“That would be the very bare
minimum,” says Don Mayer, an
account executive for the insurance
brokerage the NIFC Agency (known
as Northeast Insurance & Financial
Consultants outside New York State).
“I would write a policy with at least
a million per accident, two million
aggregate per year. The difference in
price is minimal.”
Make sure that your owners get
the right type of insurance. There
are several categories of “HO” (for
homeowner) policies, but only two
are applicable here: HO-4, which is
standard rental insurance, and HO-6,
which is specific to condominium and
cooperative apartments.
“If it’s an owner-occupied co-op or
condo [unit], the policy is an HO-6,”
says Batih. “If it’s being rented out,
the person renting it should have their
own HO-4, and the owner’s HO-6
doesn’t apply more. They should
cancel the HO-6 and write a special
policy – some companies call it a
‘landlord package policy’ – and that’ll
protect the owner’s interest in the
[apartment] and his liability exposure.
If you’re subletting for a couple of
months, that’s different. But if you’re
renting it out for a year or something,
you should have a landlord package
policy and your renter should have an
HO-4.”
Enforcing Safety
Passing a policy is all well and
good, of course, but how are you
going to enforce it? In a 100-unit
building, say, with a hundred different
policies and possibly as many different
insurance dates, who’s going to keep
track of that? It’s simple enough to
enter owners’ start and end dates into
a database that alerts a manager when
a policy is about to lapse, but then
follow-up manpower is needed for
recalcitrant owners who didn’t renew
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or for those who procrastinate on
sending proof of coverage.
“We don’t have a mechanism for
enforcing it,” Herzog concedes,
echoing a lament of many boards that
have required homeowners insurance.
“It’s complicated, and management
companies are not going to ask
[owners] to submit their certificates
every year. So at this point we have
to leave it up to [our shareholders]
to comply. Where we do have a little
latitude is on sublets,” he says. “We
will not allow a sublet unless the
shareholder and the subtenant each
have liability insurance, and since
sublets are only one-year leases, after
a year we can enforce it again.”
The specific mechanism, at
least, for enforcing the requirement
is for a managing agent and/or a
co-op/condo association to be a
“certificate-holder,” which is done
through something called a “binder
of insurance” – a document that says
coverage is on force on this day and at
these amounts.
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“ACORD 25 Certificate of Liability
Insurance,” which provides the same
information. That’s a standard form
published by the Association for
Cooperative Operations Research
and Development (ACORD), an
insurance-industry organization.
“But that’s normally for commercial
lines [of insurance],” says Batih. “In
personal lines, a broker will give
a binder of insurance, which says
basically the same thing.”
Another method is to have the
managing agent and/or co-op/condo
association listed as an “additional
insured,” also known as an “additional
interest” or an “alternate payer.”
“There’s a big distinction between
an additional insured and a certificate
holder,” says Mayer. “A certificateholder is simply the person who
requested the certificate. An additional
insured is an entity actually named
in the policy: they’re covered by Mr.
Smith’s insurance policy just as Mr.
Smith’s covered.” Does it cost extra? “In
many cases there is a charge, generally
nominal,” he says.
However, points out Batih, “Fewer
and fewer insurance companies are
willing to list the building as an
additional insured, because it’s a
conflict of interest. If there’s a debate
over whose responsibility the damage
was, the homeowners’ insurance
company is repping both the building
and the owner.”
There’s a trump card to all this, in
the case of particularly recalcitrant
homeowners. “If a building has an
effective insurance program and a
thorough provision in the operating
documents,” says Leeds, “a board
could say that if a shareholder or a
unit-owner does not have insurance or
the insurance lapses the building can
obtain insurance on their behalf and
charge them for it.”
And all the normal penalties
apply as well. For co-ops, ultimately,
eviction under the proprietary lease;
and for condos, fines, and liens.
Now, if only boards could buy
homeowners insurance to protect
against aggravation, apathy,
and constant complaints from
homeowners, coverage would be
complete.
■
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How Windsor Oaks developed
a renovation credit to keep
apartment values from
spiraling
downward.
Pricing
Tactics
By Bill Morris
RONALD KAYE moved into the sprawling, campus-like
Windsor Oaks apartment complex in Bayside, Queens,
in the 1960s. Back then, the garden apartments – in 53
two-story brick buildings sprinkled across 40 acres – were
rentals. Windsor Oaks went co-op in the 1980s, and Kaye,
an accountant, eventually became a shareholder, then a
board member. Today, he’s board president.
When he joined the board in the 1990s, it had already
established minimum sale prices as a way of protecting the
value of all shares, a practice known as “floor pricing.”
But as the property aged, disparities arose. Some
apartments up for sale had been renovated several times,
while others had been left virtually untouched since the
complex opened in the 1950s. It was a middle-income
property with an aging populace, so many sales came in
the wake of shareholder deaths. In such cases, survivors
were frequently eager to unload the apartments and were
willing to accept “fire sale” prices, according to attorney
Eric Goidel, a partner at Borah, Goldstein, Altschuler,
Nahins & Goidel, who has represented the board for the
past 27 years. Floor pricing was a way of preventing such
lowball sales.
“In the case of estate sales,” says Goidel, “they often
tried to sell without great regard to price. The board
wanted to avoid a death spiral – down, down, down – in
prices.”
But it wasn’t the only challenge facing the co-op.
“The board had to wrestle with several issues,” Goidel
continues. “What do you do for someone who put money
into their apartment? What do you do for a person who
bought in 2007 at the peak of the market, while an original
shareholder bought in for $20,000? Even in a downturn,
the market wasn’t the sole factor driving prices; so was the
condition of the apartments.”
Says Kaye: “We’re always looking at our sales, to see
if they’re keeping up with prior years. When the market
turned [in 2007], some of the fixed-up apartments
were selling, but people who hadn’t done work on their
apartments were having trouble selling.”
Floor Show
Even before the market soured, Kaye and his eight fellow
board members had started talking about a way to retain
the floor prices while taking into account the disparity in
the condition of apartments – and therefore the prices they
were likely to fetch on the open market.
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“We did not want to lower the
minimum prices,” Kaye says, noting
that the apartments come in two
sizes, with minimum prices currently
set at $209,183 for the smaller floor
plan and $232,126 for the larger. “If
you peg the minimum too low, the
banks make that the market price and
that lowers the value of the whole
property.”
The board’s discussions led to a
novel solution – something board
members call a “renovation credit.”
Here’s how it works: if an apartment
is in need of work and is unlikely to
fetch the board’s floor price on the
open market, the seller can reduce
the asking price by as much as 10
percent – provided the buyer agrees
to pay the full floor price and invest
the difference in renovations to the
apartment. That “renovation credit”
is then put in escrow and up to 90
percent of it can be released to pay
the contractor for the cost of the
work. The remaining ten percent
is paid after the managing agent
inspects the apartment and confirms
completion of the work.
“We’re rewriting the rule now,”
Kaye says. “The new maximum
renovation credit will probably be
higher, about $30,000, which will
cover a kitchen and a bathroom, or
whatever’s needed.”
He estimates that about one-fifth
of sales now involve a renovation
credit. As the city’s real estate market
has picked itself off the floor, sales
volume at Windsor Oaks has picked
up, Goidel says, while prices have
stabilized.
“Over time,” he adds, “the
renovation credit has increased
the co-op’s value because the sale
process forces people to bring their
apartments up to the 21st century.”
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But floor pricing is not universally
loved at Windsor Oaks – or at
many other co-ops across the city.
According to a report in The Daily
News, Tom McCluskey’s sister was
living at Windsor Oaks when she died
of pancreatic cancer, and soon after
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that McCluskey’s father was admitted
to a Manhattan nursing home.
McCluskey, a Queens native who
now lives in Los Angeles with his
wife and young daughter, put his late
sister’s apartment on the market for
$223,000, a price that met the co-op’s
minimum. The apartment languished
on the market for more than a year,
causing emotional strain.
Mary Ann Rothman, executive
director of the Council of New York
Cooperatives & Condominiums, is
not a fan of floor pricing, but she
believes the Windsor Oaks board’s
renovation credit may help people
who are having trouble selling their
apartments. “I think [floor pricing]
imposes restrictions on people
who need or want to sell that are
unrealistic and unfair,” Rothman
says. “In normal situations, there’s no
need for a floor price. That’s what the
market is. But this renovation credit
is a compromise that allows people to
move on.”
The Windsor Oaks board was
not deaf to detractors of floor
pricing. To determine if a distaste
for the policy was shared by most
shareholders or was the feeling of a
minority, the board decided to put
its floor pricing policy to a vote of
all 898 shareholders last spring. The
renovation credit almost certainly
played a role in the final tally, which
came back with an overwhelming
majority of shareholders voting in
favor of the floor pricing policy.
“People who criticize this policy
ignore the fact that boards have the
power to reject prices they deem too
low,” Goidel says. “The board felt
they had to do this because they have
to balance the sellers’ needs with the
shareholders’ need for value. At any
given time, roughly three percent of
the apartments are on the market.
The board has a greater obligation to
the shareholders who are not trying
to sell.”
Several lawyers stressed that the
renovation credit must be handled
carefully, so that the discrepancy
between the appraisal price and the
sale price does not become confusing,
misleading, or even illegal.
“Boards and managers should
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make sure the brokerage community
notes the reasons for a below-market
sale,” Richard Siegler and Eva Talel,
partners at Stroock & Stroock &
Lavan, wrote in the New York Law
Journal in 2009. “Thus, if shares
are sold at a discount because the
apartment needs significant repairs,
subsequent purchasers would
know the reason. Presumably, if a
subsequent purchaser knows the
circumstances surrounding a belowmarket sale, that sale would not
affect the price of a later sale so
long as the physical conditions of
the units are different.”
Renovation credits will work
under one condition, observes
Ronald A. Sher, a partner in the
law firm of Himmelfarb & Sher:
“You can do it if you show on
the transaction documents that
the price has been agreed to by a
concession, and that concession has
to be specifically described in the
transfer documents.”
Lending institutions and their
appraisers must also be considered,
along with the unique position of
potential buyers. If buyers get a
loan based on the appraised price
of an unimproved apartment, but
then have to come up with the
money to cover the difference
between the appraisal and the floor
price, they might get squeezed.
“I think the renovation credit is
a unique and intriguing approach,”
says Tom Smith, a partner in
the law firm of Smith, Buss &
Jacobs. “But I think a potential
problem is the excess cash the
purchaser would have to have
since the bank’s appraisal is based
on the apartment’s unrenovated
condition.”
The answer, he believes, is to
convince lenders to look not at the
past, but at the future.
“It’s called a forward appraisal,”
Smith says. “It’s an appraisal based
on the apartment’s value after the
work is completed.”
That shouldn’t be too hard to get,
since the board at Windsor Oaks
will put that money in escrow –
and hold onto it until the apartment
is brought into the 21st century.
■
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Dear Diary
A year in the life of my board.
By Mary Fran
TOM SOTER
Park
Terrace
Gardens
W
HAT MAKES A TYPICAL YEAR FOR
a busy board? There’s the routine and the
not-so-routine, from discussing bills to plugging
leaks. Mary Fran is a fairly typical board member,
dedicated and determined, serving for three years
as a member-at-large, one year as vice president,
and then a year (so far) as president. And her home,
Park Terrace Gardens in the Inwood section of
Manhattan, is a fairly typical property of its type: a
five-building, 387-unit cooperative built in 1939-40
and incorporated as a cooperative in the mid-1980s.
It has a nine-member board, four supers, five porters,
and a resident manager and her assistant in an on-site
office. Most of the apartments are owned, although
there are a few rental units left over from before the
building was incorporated. We asked Fran if she’d
recall for us, month by month, the ups and downs
of her first year as president, so other boards can
compare and contrast how their board shapes up
against hers. Indeed: as you read, ask yourself, “Does
your board juggle as many problems? Is there as
much harmony?” One can learn a great deal from
studying the slow-and-steady-wins-the-race efficiency
of this pragmatic board.
WWW.HABITATMAG.COM
JANUARY
Infrastructure Issues
Board service is exhausting, annoying, funny, frustrating,
gratifying, and unpredictable, except in its continuing
variety. An agenda of 17 items begins our year. We divide
our meetings into open and closed sessions so that
residents can attend part of the meeting if they wish to
do so. Among the
“smaller” items to
be discussed are
an update on our
recently installed bike
room, updates from
committee, a proposal
for basement cameras,
and the management
report on operations
and maintenance
items. The really big
stuff, in the form of
major repairs to leaking façades, involves reviewing a
proposal from two engineering companies on what this work
will entail and cost.
Like many older buildings in New York, ours has had to
address aging infrastructure and in our case, serious leaks
experienced by some of our residents. Decisions have to
be made as to which approach to take, who should be our
engineer, and how we will proceed with the project when the
problem varies in seriousness throughout the complex.
From our first meetings involving this issue we have
been confronted with a tradeoff in the cost/benefit: where
was the need the greatest and how much cost could we
ask our shareholders to take on? At this first meeting, we
approve an engineer and a not-to-exceed amount pending
confirmation of a timeline.
We also set up a second January closed board meeting
with our attorney and accountants to discuss our finances,
maintenance increases, capital improvements, and financial
planning in general. Both attorney and accountants consider
us in good financial shape but they say it is important to
understand our choices, future issues, and how we might
prepare for major projects and general cost increases.
FEBRUARY
Renovations, 1 of 24
A huge agenda of 24 items greets us at this meeting.
A proposal to move and replace the deteriorating garbage
stockades is presented as well as a proposal for the energy
audit required of all buildings by New York City. These larger
issues often take less time and discussion than many
“minor” ones. A new requirement from the city regarding
emergency phones in elevators, one with which we have to
comply, engenders a lot of back and forth about what kind,
what design, which company to do it, where the phones
are to be placed (not much choice here). During our closed
session there are legal cases to discuss, questions about
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fees, apartment renovations,
lease renewals, and problems
connected to water intrusion,
among other items.
The personal dynamics of
working with a board contribute to
the efficiency and efficacy of how
problems are solved. Everyone
brings her/his own interests
and experience to board work.
Our 2012 board had two architects with considerable
expertise but who often disagree on how to proceed.
We have members for whom our garden is supremely
important and energy conservation paramount. As board
president I find it difficult to moderate these conflicts and
to encourage broader thinking about the overall good of
the co-op.
MARCH
Energy Audit Coming
The big decision of this meeting is to move ahead with
façade repairs for two of our buildings, those with the
worst leaks. We had tried patching these areas during
previous Local Law 11 work, but this met with minimal
success. It is decided that two façades must be taken
down to the underlying cement, patched, a waterproof
barrier applied and the
walls rebricked. Two
façades were all we
could reasonably ask
shareholders to pay for
with assessments.
There are many items
in our management firm’s
report as well, including
updates on legal cases, apartment repairs, apartment
sales, facility repairs, and a particularly nasty conflict
between residents. A separate meeting is scheduled to
review proposals for performing the energy audit (Local
Law 87). This meeting takes place five days later and a
company is chosen to do the audit.
APRIL
Money Matters
Again, the exterior work is the most important issue
at this meeting, and the board approves a contractor
to perform this work. There are,
however, 16 other items on the
agenda, including insurance
increases, the first draft of
the 2011 financial statement,
the management report, J-51
application status, bike room
proposals, fees, condition of
the roof furniture, apartment
transfers, continuing difficulties
between neighbors, and other routine items. I am always
amazed at how long some of these things take to resolve.
JULY
MAY
This is a really tough meeting. We do not usually meet in
August, so a lot has to be decided before we break. As it
turns out, we cannot cover everything in this meeting and
extra meetings are called. No one likes this, but we have
no choice as there are
serious time constraints.
We set up a meeting on
the energy audit for the
end of July.
Demolition on one
building is ongoing and
we have permits for the
second to commence
within the week. We are slightly ahead of schedule but we
are all keeping our fingers crossed that things will move
ahead without horrible surprises. The board approves an
assessment to help fund the exterior work with additional
funds to be withdrawn from our reserves and the sale of
corporation-owned apartments. This will be a burden for
some, but we have tried to make it as manageable as
possible, given the necessity to do this work.
Permits in Order?
Ongoing, as usual, is the exterior work. Our manager and
I had met with our engineer and contractor on the status of
Department of Buildings permits and where we stand with
starting dates, scaffolding,
and garden protection
during construction. We
bring the board up to
date. This board meeting
seems, on paper, to be
rather straightforward,
but in closed session
we have legal cases to
review, energy audit questions, shareholder complaints and
conflicts, and other nuts-and-bolts recurring issues.
JUNE
New Use for Garden
Things move forward on the exterior repairs, although
there is non-compliance by the contractor to some items
in the contract causing considerable agitation, back and
forth, and further meetings with our engineer, contractor,
and manager. The work is proceeding although it is noisy,
dirty, and disruptive.
Generally residents
are taking it in stride,
although some have
found it more difficult
than others.
Our treasurer
presents a
spreadsheet on
funding options to the
exterior work, which
will be discussed in
July.
One source of
conflict in our co-op
is the use, or nonuse, of our gardens.
Currently, and for
some years, the
gardens have been off-limits to any activity beyond walking
through it, and the two co-op sponsored parties held around
Memorial Day and Labor Day. One of our members proposes
a one-night “camp out” in the garden for parents and young
children. This proposal is approved but will certainly cause
some strong response from those opposed to any change in
garden activity.
By now, the board begins to look really tired.
Summer Meeting
SEPTEMBER
Doing Laundry
Because it is so expensive, so intrusive and important,
the exterior work has dominated the board’s interest and
work throughout the year. The kind of waterproofing to be
applied before the rebricking of the façade has required
much research, discussion, and consideration. One of the
unpleasant, but not wholly surprising, discoveries of the
exterior work was that the parapets above these façades
need to be replaced. This will involve additional time and
cost, but we hope that it will minimize future water intrusion
as well as keep the building façade safe. In addition, we
have the mandatory
fuel conversion
proceeding with
filing for permits, the
beginning of budget
planning for further
exterior work that we
will have to do over
the next few years.
Concerns by
shareholders over
the assessments
and increases are expressed and the board waives late
fees for those who cannot comply in time. The board plans
to make these financial changes with more lead time in the
coming year. The laundry contract was approved after much
back and forth with the vendors bidding on it. With five
laundry rooms, we are a valuable client.
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OCTOBER
Goodbye, Board
Exterior work proceeds. We have
been lucky with the weather; and
even with some delays because of
unexpected parapet work, we appear
able to finish before it becomes
too cold. The board approves an
extension of the engineer’s weekly
construction inspections.
Planning for the 2013 budget
begins and will have to consider
routine cost increases, further façade
and parapet work, energy upgrades,
and other major costs.
This is the last meeting of this
board. Our annual meeting takes
place in November and the new board
will meet the following week. Three
current members are taking a break
or retiring.
Between the October and November
meetings I take a seminar designed
for board presidents only. It clarifies
my thinking on board management
and I hope will help me to do better
with the new board. My first priority
will be to work toward shorter, more
efficient meetings. I have the support
of the board for this, but it’s not so
easy to implement. I also have plans
to bring any new members up to date
by meeting with them separately
to answer questions and thereby
minimize that awful period when you
have no idea what anyone is talking
about. I have also prepared a onepage statement of function for new
and returning board members for their
information and reference.
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Watching over you
for 35 years!
NOVEMBER
The New Board
The amount of maintenance
increases and assessments is still
undecided, but the board will spread
these out over the year hoping to
So clean, you can
drink it right
from the tank
Installing, cleaning and
maintaining New York City’s water
tanks for three generations.
11-42 46 th Road, Long Island City, NY 11101 T: 212.736.6618 · F: 212.465.1734
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Like many
older buildings
in New York,
ours has had to
address aging
infrastructure
and in our case,
serious leaks
experienced
by some of
our residents.
Decisions have
to be made as to
which approach
to take.
minimize the impact on the cash
flow of shareholders. The exterior
work is complete, and the scaffolds
and sidewalk bridging are being
dismantled.
Planning for energy upgrades
begins, with more questions about
percentage savings, NYSERDA
incentives, timing, project
management, and legal review of
contracts being major decision
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points. Other items are committees,
tree removal (post-Sandy), plans
for forum software, and updates on
legal cases, sublets and renewals,
apartment sales, noise complaints,
staff bonuses, proposed house rule
changes, and specific work going on
in the complex.
DECEMBER
Turning a Page
Our last meeting of the year is
rewarded by the consensus that our
exterior work, long and difficult and
expensive as it was, has produced a
very good outcome. The board, and
residents, have seen the finished
walls and are really pleased. We
think that we have gone a long way
toward solving water intrusion in
these two areas. A request for a
proposal for 2013 work is approved
It’s time for
CROSSOVER®
In a class by itself
Crossover by Wascomat is built to last 15,000+ cycles
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and will be sent to our engineer. The
board approves the removal of five
trees that have been damaged, have
diseases, or have grown in a way to
compromise safety and infrastructure.
It has been a long year of very long
board meetings, lots of disagreement,
discussions, and challenging projects,
as well as the daily grind of what’s
involved in overseeing and managing
a co-op in New York City. Another
year faces us with many of the
same challenges, with a dedicated,
intelligent board, some good luck,
and hard work. I hope for another
productive year as we try to make life
better for our shareholders.
■
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When laundry means business.
The Face of
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LIDO BEACH TOWERS IN LONG ISLAND
and Greenwich Club Residences in Manhattan
would not normally have much in common. One
is a beachfront condo with a colorful, decadeslong past; the other is a luxury condo in the
Financial District. Now they share a common
experience: they both did façade work that
partially protected them from Hurricane Sandy.
Two condos spent $20 million to
restore their façades.
Then Sandy struck.
Destruction
By Ronda Kaysen
CAROL J. OTT
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CAROL J. OTT
At Lido Beach Towers, all the mechanical
equipment housed in the basement was
destroyed, including the management
office (right). Shari Morse, Lido’s general
manager, surveys the destruction.
Lido Beach Towers
Lido Beach Towers has had many
chapters in its storied history, but
none as devastating as the one
written by Sandy, which rendered
the Long Island property indefinitely
uninhabitable. This latest episode
didn’t start when the storm made
landfall; it started a decade earlier
when the condo board made a
controversial decision that ultimately
spared this historic property from
even more harm.
On October 29, Sandy bore down
on the Lido, unleashing its wrath
on this 184-unit complex. The first
floor was overwhelmed by a 15-foot
storm surge and five feet of sand. The
water reached the ceiling tiles. All
the mechanical equipment housed
on the ground floor was destroyed,
along with numerous ground-floor
apartments.
But the upper levels, including
windows, balconies, and the façade,
were largely spared despite the
building’s beachfront location.
Although no one can live in the sixstory condo because it lacks heat and
running water, all of the apartments
above the ground floor are sound.
The condo board points to a decision
it made in 2002 to overhaul its
façade as the reason that the vast
majority of residences did not suffer
damage. The $18 million project
had the unintended consequence of
making the exterior sturdy enough to
withstand the might of a hurricane.
“Lido Beach turned out to be very
lucky,” says board president Gary
Weiss, who was president during the
five-year-long restoration project.
“We never realized that we had built
a hurricane-proof building.”
Beginnings
The property opened just before
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the stock market crash of 1929 as
a beachfront resort called the Lido
Beach Hotel. In its heyday, the
Moorish-style property, with its
iconic bubblegum pink façade, was a
vacation spot for the rich and famous.
It boasted swimming pools, tennis
courts, a restaurant with a retracting
roof, and lush gardens. Entertainers
like Milton Berle and Robert Goulet
played in the ballroom. By the 1980s,
it had converted to a condominium
and was renamed Lido Beach Towers.
But years of neglect wreaked
havoc on the building’s façade.
Consequently, a decade ago, the
board began a five-year, $18 million
project to restore the building’s
roof, windows, balconies, doors, air
conditioning sleeves, and famous
pink hue. At the time, residents
were horrified by the ballooning
price tag and stunned by how much
the building had deteriorated over
the years. Residents paid for the
work through individual apartment
assessments spread out over five
years. Virtually nothing happened
without a fight – even selecting a new
shade of pink was controversial.
Once the work was done, however,
residents were happy with their
restored gem. Set on 13.5 acres, the
Lido had its own private beach, a
barbecue pit, five tennis courts, and
glorious landscaping.
War Zone
No one anticipated that all the work
would also provide the building with
a vital shield against the wind and
water when a hurricane hit. Although
the façade is still undergoing
laboratory testing, it appears that
the only damage incurred was from
flying objects that hurtled into
the building during the storm. As
part of the restoration, the original
stucco façade was covered with a
synthetic replacement called Exterior
Insulation and Finish System, or
EIFS, which proved to be wind- and
water-resistant.
“The façade performed remarkably
well,” says Jordan Ruzz, a consulting
engineer who worked on the original
restoration and is now helping with
the recovery process.
The road to recovery for the Lido
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Storm Learning
No building can ever be fully
prepared for a colossal storm of the
magnitude of Hurricane Sandy. But
there are steps condo and co-op
boards can take before a storm hits
to lessen the damage done to the
building and the residents.
Preventive Maintenance Is
Good Medicine. During a major
storm, wind, rain, floodwaters, and
debris will find the weak spots in a
building and expose them. A wellmaintained building, however, will
have better luck fighting off the
forces of nature than one in poor
repair.
Maintenance isn’t cheap, particularly for repairs to façades, ductwork,
plumbing, drainage, and rooftops, but straining the reserve fund before
the storm to pay for preventive work can save a building in the long run.
The $18 million that Lido Beach Towers spent on a new façade turned
it into a windproof and waterproof shield against Sandy. It provided the
upper floors with vital protection. Board president Gary Weiss feels
certain that if it hadn’t been for all the preventive maintenance performed
on the façade, individual units on upper floors would have sustained
substantial damage. “The building was restored so well that it literally
became hurricane-proof from the second floor up,” Weiss says.
Read the Fine Print. Long before a disaster strikes, board members
should read through their insurance policies carefully so they understand
the fine print and know exactly what is and is not covered. Insurance
policies are often confusing and the coverage terms can be vague. For
the buildings damaged in the storm, figuring out what was covered by
which policy often took weeks, if not months. The more a board knows
beforehand, the better prepared it can be, and it can take steps ahead of
time to expand coverage. When disaster strikes, quickly enlist the help
of a public adjuster, who can help navigate the treacherous waters of
multiple insurance policies.
Managing the Maintenance Fee. The maintenance fee is a
controversial issue. While some say that maintenance must be paid even
if the building is uninhabitable, some courts have allowed a maintenance
rebate when an apartment is uninhabitable. But if a building is going
to have a fighting chance of coming back, it must try to maintain
that revenue stream to pay such expenses as the mortgage, insurance
premiums, and taxes. Therefore, make sure residents understand that
maintenance fees are vital to the building’s ability to operate – even if it
isn’t habitable.
Consider an insurance policy that covers maintenance costs for
displaced residents. But make sure board members fully understand when
it can be tapped.
At Greenwich Club Residences, residents were given a reprieve when
the condo board realized that its insurance policy would reimburse the
building for maintenance fees while residents were evacuated. With the
help of a public adjuster, the board was able to get the insurance company
to agree to cover the cost. “That was a huge win,” recalls board president
Patrick Redmond. –RK
CAROL J. OTT
will be a long one. The losses include
a number of hot-water heaters,
water tanks, and pumping systems;
four elevators, their banks, and all
their controls; all of the electrical
switching gear and metering centers;
air-conditioning equipment for the
common areas; communication
equipment and telephone wiring; and
all cosmetic finishes. When the storm
surge retreated, it left behind sand up
to the building’s doorstep, covering
the 13.5-acre grounds.
“I’m usually good with words, but
this is something indescribable. This
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West Village Houses
At a recent meeting at his office,
Anton Cirulli (right), managing
director of Lawrence Properties,
turned to Jim Bozart and quipped:
“Of course, we couldn’t have started
handling your property in the new
year; no, we had to start early.”
It’s lucky for the West Village
Houses (below) that they did; Bozart, the board
president, says that the co-op got its money’s worth from
the newly hired firm. Soon after taking over as managing
agent on the 42-building 420-apartment complex in
lower Manhattan, the management company had to
cope with the devastating effects of Hurricane Sandy,
which knocked out power and flooded the basement and
ground-floor apartments, leaving 33 families homeless.
“Almost 10 percent of our apartments have been
destroyed by the storm,” says Bozart.
“There’s been extreme dislocation,
lots of suffering, most of the people
are not back in those units. They’ve
been gutted.” In the following
excerpts, Cirulli and Bozart talk with
Habitat editorial director Tom Soter
about their experiences.
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Did your experience as a colonel in the military
help?
CIRULLI Absolutely, absolutely because no one was
prepared for this. This was like a bomb hitting the
property. There is no preparation for a bomb. I
have been in real estate management for 35 years,
and when I first saw this, I said, “My God, this is
overpowering – how do we get these people home?
How do we get insurance adjustors? How do we get
this kick-started? Where do we go? Where do you
go?” This wasn’t a Joe Schmo construction thing to
get the remedial work, this was, you know, so –
BOZART And this was occurring at a time when
the system was overwhelmed. You know, insurance
companies that have a hundred
claims a day suddenly had 20,000
claims and that just was impossible
to handle. So, it required great
expertise, patience, and good
relations to get these people to
come and pay attention to you,
because they were so overwhelmed.
This is so overwhelming today, it
hasn’t cleared yet. And it’s true of
all of the agencies and insurance
companies and other parties that
are involved in this: contractors are
overwhelmed, trying to get bids
from people, trying to get insurance
adjustors get things settled.
Everything is backlogged because
the entire system is overwhelmed
by this very, very incredible
disaster.
TOM SOTER
This was a major catastrophe.
What was the impact on your
company?
CIRULLI We brought down our
director of operations, and we brought
down a construction manager. We
had three more people on top of the
two that are normally stationed down
there. So we increased our presence
by at least 125 to 130 percent. Most of our people were
working, for at least the first six to seven weeks [after
the storm], 12-hour days, 13- to 14-hour days, seven days
a week, until I got the remedial company to get in there
and rip out the sheetrock.
Time was of the essence – the possibility of mold was
a substantial concern, and we were afraid if we didn’t
address it, the mold would grow and expand to the upper
floors. After you have a flood of this nature, if it isn’t
under control right away you are going to have a ton
of odors, sickening odors. The super was excellent in
putting heaters and air purifiers into the apartments so
we minimized the dust, we minimized the air pollution,
we minimized the mold smell.
We also had hired a public [insurance] adjuster to
come in to start that process.
We also brought in extra security because all of a
sudden we found [some] very energetic people [were
taking] stuff that people left outside the apartments that
they might otherwise have kept, like metal furniture.
They were these metal scavengers trying to pick up stuff.
It was a war zone, it was like some of the stuff I saw
many years ago in my service in the army. It was a
disaster, a monumental disaster.
Simultaneously, Lawrence Properties was
dealing with storm problems at other buildings?
CIRULLI It wasn’t isolated. This was the biggest
place, because this was 33 [damaged] units and
required more attention than the other buildings.
You are spending an extra amount of time at
the West Village Houses?
CIRULLI Yes.
So how does that affect your buildings that
were not seriously damaged?
CIRULLI It means that I put in 10-hour days, and
we’re putting in substantially more on Saturdays than
we normally do. The people with me – the director
of operations, the construction manager, the property
manager – are putting in a substantial number of
hours now, although that will slow down shortly.
But we like what we are doing because it’s personal.
This is rewarding because it’s about helping people in
distress.
■
retro
to the
Future!
Retro-commissioning, that is.
New York City Local Law 87/09 takes
effect this year, requiring properties
50,000 square feet or larger to have
an energy audit conducted followed by
retro-commissioning—adjusting and
maintaining building systems for better
operating efficiency. That adds up to
greater energy savings, now and
for years to come.
Buildings with block numbers ending in 3 have
to file an Energy Efficiency Report with the city
by December 31, 2013; those ending in 4 must
file by the end of 2014, and so on. The audit,
retro-commissioning, and filing process can take
a year or more, so now is the time to start.
To get on track for Local Law 87/09 compliance, contact
RAND at 212-675-8844; [email protected]. Because when
it comes to going retro, the future is now.
At the Greenwich Club
Residences, the laundry room,
building’s gym, electrical
equipment, fire pump and
controls, domestic water pump,
compactors, and elevator pits
were damaged or destroyed.
is uncharted territory,” says Weiss. “It
looked like a bombed-out war zone.”
It took nearly three weeks to pump
out the water and sand. Then the
building had to be sanitized. The
entire 40,000-square-foot first floor
was stripped down to the studs. The
board is still tallying up the losses
and hashing out what damages will
be covered by which of the three
insurance policies – flood, wind,
and excess. Ultimately, some of the
costs will be borne by residents,
as some repairs, such as sand
removal, landscaping, and building
a new fence, may not be covered by
insurance.
Guarding Against the
Future
The board is considering ways to
rebuild that will protect the property
against damage from future storms.
But that is no easy feat for a seaside
property, which needs protection
from both seawater and groundwater.
Moving critical equipment up from
the ground floor means finding
space to house it elsewhere, and that
is not always possible. The elevator
equipment, for example, is too heavy
to be housed on the roof. Taking a
larger step like building a sea wall
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PHOTOGRAPHS COURTESY COOPER SQUARE REALTY
would be enormously expensive and
still not protect the property from
rising groundwater.
“Unfortunately, retrofitting
a building built in the 1920s to
withstand flooding is not an easy
thing to do,” says Ruzz. “It’s possible
to protect the building; I just don’t
know if it’s economically feasible.”
In the meantime, residents are still
waiting to come home. Weiss hopes
that they will be able to move back
by June. For now, they are dispersed,
staying with friends, in hotels, in
rentals, or in housing provided by
the Federal Emergency Management
Agency (FEMA). Weiss rented an
apartment nearby. Despite not being
able to live in their homes, residents
are still required to pay maintenance
fees, a fact that has caused tension.
“That is one of the difficult
emotional areas – when people are
asked to pay maintenance and they’re
not living there,” says Weiss. “It’s
unfortunate for all of us, but the
reality is the building still has its
expenses.”
Greenwich Club
Residences
The Lido isn’t the only property
that was protected by its façade
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when Sandy struck. In Manhattan,
Greenwich Club Residences, a luxury
condo in the financial district, was
nearly finished with an over $1
million façade restoration project
when Sandy made landfall. That
project, a Local Law 11 improvement,
ultimately proved to be a shield
against the storm.
“There is no doubt that we would
have had water infiltration had we
not fixed our façade,” says Robin
Klasewitz, the property’s general
manager.
Nevertheless, the 452-unit building,
at 88 Greenwich Street, sustained
several million dollars in damage
when its basement flooded with
three million gallons of water, the
equivalent of five or six Olympicsized pools. It was rendered
uninhabitable for four weeks, and
would have been uninhabitable for
far longer if the fire department
hadn’t allowed the condo to place a
fire warden in the building while it
replaced a three-ton fire pump that
was destroyed.
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212.545.4678
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Despite the enormous losses,
no individual units were damaged
because no water seeped into the
façade and the windows did not
break. When residents finally
returned home, their apartments and
most of the common areas were in
flawless condition.
“The building is magnificent.
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Damages
In 2006, Buttonwood Real
Estate (a company headed by
Andrew Heiberger, the founder of
Citi Habitats) and Thor Equities
converted the 37-story building into
a luxury condo, installing a gym in
the basement, a lavish billiard room,
top-shelf finishes, and a stunning
lobby.
When the Hudson River surged
into the basement, it destroyed
the building’s gym, electrical
equipment, fire pump and controls,
domestic water pump, compactors,
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and pits for all nine elevators.
The tenant storage lockers were
destroyed, as were the staff locker
rooms. A 10,000-gallon oil tank
was ripped from its footings,
floating up and careening into the
ceiling. The billiard room sustained
minor damage but has since been
reopened.
The building’s management
company, Cooper Square Realty,
expects that the myriad insurance
policies, including flood and wind
insurance, will cover the damages.
In the face of climate change,
the condo board is considering
relocating some of its critical
equipment, like its electrical
panels, to the 13th floor, where
the boilers are already housed.
Although insurance covers the
replacement of any lost equipment,
it does not cover relocating it; if
the board chooses to do that, the
cost would come out of reserves.
The board is also considering
installing a cogeneration system or
a generator, projects with potential
$1 million price tags. At this point,
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To avoid future flood damage like
this, the Greenwich Club board is
considering relocating some of its
critical equipment to the 13th floor.
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the board has not raised maintenance
fees and has hefty funds in its
reserves. But the gym will be rebuilt
in the same location, as there is no
other place to put it.
Unlike the residents at the Lido,
Greenwich Club unit-owners received
a reprieve on their maintenance fees
while they were displaced because
of a provision written into the
building’s bylaws; these fees were
then reimbursed by the building’s
insurance. One resident, however,
lodged a $35 million lawsuit against
the condo board, management
company, and two staff members
for damages. Neither the board nor
management would comment on the
ongoing litigation, but Cooper Square
shared letters of gratitude written by
other residents.
“People understand that this was
an act of God,” says Greenwich board
president Patrick Redmond. “People
are generally happy to be home and
are anxious to get back to normal as
much as possible.”
■
Fob Appeal
Cars have them – now buildings
can too. Say hello to the new key.
By Abigail Nehring
A
n alleged breakin that happened
three years ago
still lingers in the
memories of the
board members
of the Coliseum Park
Apartments cooperative on New York’s
Upper West Side. Why only alleged? The
shareholder had no evidence that anyone
had illegally entered. No security camera
footage. No damaged furniture. Just a
valuable stamp collection gone missing.
That’s one reason the board ultimately
decided to pursue a rigorous new key fob
access system that would not only make
the building more secure but also give
doormen far-reaching oversight of who
entered and exited.
Another reason is curb appeal. The
co-op redid its lobbies and, on top of
that, the board felt a more modern
access system would make the co-op
more attractive to would-be buyers.
The Coliseum Park Apartments
consists of two 14-story buildings
adjacent to each other and a block
away from what used to be the New
York Coliseum (that was replaced by
the Time Warner Center in 2000).
A garage serves as an underground
conduit between the two buildings.
There are 32 doors tied into
the new access control system,
installed by Academy Mailbox, a
security company.
That firm has worked with
Coliseum Park in the past to
improve its intercom system and
upgrade the security of the office
spaces on the first floor of the north
building. When the new system is
fully off the ground, every resident
will be provided with a fob, either
in the form of a token that can be
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attached to a keyring or a card much
like those used by hotel patrons.
This means that, ultimately, the
fob technology allows building
management to target and control
access. For example, only those who
use bikes will be allowed access into
the bike room in the basement. Hired
dog walkers and weekly cleaning
services will be given limited access
to only the doors necessary for them
to perform their jobs.
And if anyone loses a fob, building
superintendent Jason Panarella,
who has been very involved in the
installation process, will merely
deactivate it and issue a new one.
A host of logistical problems will
evaporate, making the key fobs an
attractive option from a managerial
perspective.
“As soon as I’ve used a key fob,
[the usage is] going to come up
on this computer,” says Panarella,
pointing to a computer console in
the front lobby. “My name is already
programmed to the key fob, so it will
say I came through this door at this
time.”
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Putting a Plan into Action
The board of Coliseum Park
Apartments approved Academy’s
proposal for installation on May 5,
2012. The idea was conceived before
Panarella was hired – they had been
toying with various security system
upgrades. Geoffrey Kovall, who was
on the board until this year, recalls
discussing the possibility of installing
number pads that would require
residents to punch in a passcode
to open a door. Installing security
cameras was always an option on the
table. The final decision to go with
the key fob technology was carefully
discussed, and, “for a job this size,
that’s typical,” says Steve Arnold,
vice president of Academy.
Arnold has been part of the familyrun security service for more than
a decade. Whether or not the board
members or Panarella were aware of
it, they were taking on an advanced
access system of larger proportions
than he had seen before. This made
the project an important one for
Academy, which sees key fobs as
the “way of the future.” Arnold, who
heads all of Academy’s access
control projects, came on board with
Coliseum Park early last summer
and brought with him experience
installing similar technology in other
New York residential buildings.
“It wasn’t a rushed job,” Arnold
notes. “If it [had been,] we could
have gotten it done in a third of the
time.” The installation happened in
two phases. As Arnold explains, there
were the “dirty work guys” and the
“electronic guys.” And finally, there
was the installation of the magnetic
strips, which was done by yet another
contractor, Abbey Locksmith.
The first two months of labor
were devoted to doing the wire
runs. This was a bit like spinning
an enormous wire web throughout
the two apartment buildings in order
to connect each door in the system
to a central computer. Because the
property’s subterranean garage
space is so large, the connection
between the two buildings presented
a challenge for the wire runners.
In the end they solved the problem
by tapping into the building’s
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phone wires that had already been
laid down. Although this hurdle
was overcome eventually, it was
last minute changes like this that
ultimately made the wiring take
up more time and labor than Arnold
had initially anticipated.
“[We] underestimated the amount
of time needed for the wire,” he
concedes. “You try to calculate it in
your head, but you can’t stay on top
of it.”
There would be other unwelcome
surprises. When it came time to
install the magnetic strips on some
of the older doors in the basement,
for instance, they soon found that
the doors would need to be replaced
in order to fit the new equipment.
Having to order new ones would
put construction back yet again and
meant that Abbey Locksmith had
to return to the site a few additional
times.
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wire to now was two months of
labor,” Arnold recalls. Setbacks
notwithstanding, the installations
were completed by January, including
32 doors tied into a centralized
system and a huge stash of new key
fobs ready to be assigned to their
owners.
No Two Buildings Are Alike
Part of what makes projects like
this one challenging is that they
are inherently resistant to being
fully streamlined. There is a unique
installation process for every building
in New York and every level of
security needed.
One of Academy’s advertising
taglines is “A standard access
control system does not exist,”
and the Coliseum project certainly
provides a fine example. Given
that installation will inevitably
involve constantly coming up
with novel solutions to unforeseen
challenges, what may be the most
important factor is the tenacity of
the people involved, and Coliseum
Park has had a winning team,
with Arnold acting as a liaison
between the construction crew and
the building staff, and Panarella
working diligently to make sure the
doormen are well trained in the new
software. Despite the roadblocks
they faced, Arnold is convinced that
the return on the investment is well
worth the effort.
“The key ring Jason has [had]
to carry around [in the past]
looks crazy,” he says. If the
superintendent loses it or quits his
job, the board has to go through
the process of installing a new lock
and distributing new keys to the
residents.
No more. Soon, the building
management company, Akam
Associates, will help organize and
distribute the new fobs to all the
residents, and floor by floor, one by
one, they will finally be able to give
up their old metal keys and join the
21st century era of electronic access
control.
■
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DESTINATION:
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Ask the Mortgage Broker
By Patrick B. Niland
The Positive Debt
Our condominium is
Q
confronting several large repair
projects. Everyone on the board is
committed to doing the work, but
we are evenly divided between those
who favor a series of assessments to
fund the individual projects as we do
them and those who want to borrow
enough money up front to pay for
them all. Who’s right?
Our underlying mortgage is
Q
coming due this summer. Our
treasurer says that we should pay it
off instead of refinancing because
“every apartment in the building
will jump in value once we get rid of
our mortgage.” According to him,
our reserve fund plus a “small”
assessment would be enough to pay
it off. Should we do it?
A
Both of these questions concern
the role of debt. That role
can be discussed in philosophical,
financial, or physical terms. For
example, to some people, debt is
something to be avoided at all costs
and, if incurred, paid off as quickly
as possible.
For others, it is a way to buy
things with other people’s money...
so, the more, the merrier. This is
the philosophical view on debt. It
is rooted in a person’s upbringing,
cultural background, religious
affiliation, and/or life experience.
It tends to be more emotional than
factual.
The financial approach compares
the cost of the money being
borrowed to the value or benefit
derived from the loan. The concept
of leverage employs this comparison
of interest to return. So, a building
might borrow money to replace
decrepit wood-framed, single-paned
windows with new aluminumframed, double-glazed windows
because the operating savings are
expected to exceed the interest on
the loan. While there may be an
emotional component to this decision
in terms of shareholder comfort, the
final decision will be justified by
numbers.
Money (That’s What I Need)
Sometimes, the need for money is
unexpected (e.g., the boiler dies in
the middle of February), urgent (e.g.,
brickwork falls from a façade or a
plumbing riser bursts), or subject to
significant escalation if the problem
condition is not addressed in its
entirety (e.g., serious roof leaks). In
these instances, the physical realities
of the situation drive the decision.
For me, debt is just a tool. It is
neither good nor bad – though its
use may be one or the other. And,
like any tool, it should be matched
to the job at hand. A financial
rule of thumb dictates that assets
with relatively long lives should
be financed with long-term debt.
Therefore, a boiler or roof that might
be expected to last 10 or 20 years
theoretically should be purchased
with 10- or 20-year debt. However,
the circumstances of the individual
borrower, as well as the current
market conditions, might call for a
modified solution.
Unlike a cooperative, the legal and
capital structure of a condominium
does not include underlying mortgage
debt. So, the issue of financing
usually comes up in relation to
capital improvements. For many
years, condominiums funded
virtually all repairs and capital
improvements through unit-owner
assessments because existing law
did not allow them to borrow for that
purpose. Even after the law changed
in 1997, many condominiums shied
away from loans and continued to
levy assessments. Over time, though,
more condo boards are deciding to
borrow, especially for very large
projects that would require onerous
assessments.
Since condo loans tend to be
motivated by specific projects, it
is easier to match loan maturity to
estimated asset life. The market does
restrict this a bit since the longest
loan maturity currently available is
15 years, with many lenders offering
only 5- and 10-year loans. A further
complication is that virtually all
condo loans are self-liquidating,
i.e., they must be paid off over the
respective loan term (either 5, 10, or
15 years). Nonetheless, paying for
capital improvements through loans
instead of assessments simplifies
the funding process, spreads the
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financial burden of the capital
improvement over a longer period
of time, and has significant tax
advantages for many unit-owners.
Cooperatives, on the other hand,
almost always have some amount
of underlying debt. Further, that
underlying debt rarely gets paid
off, instead being refinanced
again and again as a permanent
part of the cooperative’s capital
structure. The need for repairs or
improvements sometimes precipitates
the refinancing of a cooperative’s
underlying mortgage, but other
factors usually influence the final
loan structure.
Fuggedaboutit
Cooperative apartment buildings
tend to be older than their
condominium counterparts and
usually need major repairs every 7
to 12 years. So, while a new roof
might have an expected lifespan of
20 to 25 years, some other building
component(s) may need repair or
replacement before that time has
elapsed. Also, because underlying
mortgages are relatively large,
overall budget issues and shareholder
maintenance levels frequently
dominate the discussion. Then, the
current financial market may limit
what is feasible. For example, present
interest rates for 10-year mortgages are
very favorable while those on 15- to
30-year loans are disproportionately
high, making them unaffordable for
many buildings.
So, getting back to the
condominium trying to decide
between assessment and loan, I will
say that neither choice is right or
wrong. However, I could make a
fairly strong argument that a loan is
the better solution for all involved.
Assessments are unpopular and, if
repeated, can have a negative effect
on unit values. They also can be
troublesome to collect in a timely
manner, which can delay the start or
progress of needed work. Loans can
be closed relatively quickly, have more
useful tax advantages, and provide
a more equitable distribution of the
financial burden than an assessment.
That’s because current unit-owners
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pay the entire assessment for an
improvement that will last for 5, 10,
20, or more years. In contrast, a loan
spreads the payment of interest and
principal over that longer period and
the changing unit-owner population.
For the cooperative thinking
about paying off its underlying
mortgage with its reserve fund plus an
assessment, I say, “Fuggedaboutit!”
Draining a reserve fund is never
a good idea, but this purpose is
especially imprudent. You might ask
your treasurer to explain his plan for
funding the next building system that
needs repair or replacement. If you
exhaust your reserve fund and pay
off your existing loan, you just might
find yourself struggling to collect
an assessment in a hurry or secure
a new loan from a lender who has
little incentive to help you. Keeping
your underlying mortgage at a
reasonable level is a wise objective and
maintaining an adequate reserve fund
at all times is the safe thing to do. ■
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Case Notes
By Richard Siegler and Dale J. Degenshein
Sponsor and Architect Liability
M
ay the individual principal
of a sponsor that converted
a building to condominium
ownership (who was also the
architect) be held personally liable for
construction defects? That was one of
the issues addressed in The Board of
Managers of the Lore Condominium
v. Steven Gaetano and Lore Gaetano.
The plaintiff is the condominium,
located at 261 West 112th Street in
New York City. Steven Gaetano was a
principal of Gateway IV, the sponsor
of the condominium conversion. His
wife, Lore, was the president and sole
shareholder of Manhattan Property
Managers Realty, the managing agent
for the condominium. Mr. Gaetano
was also the architect.
In the offering plan, Mr. Gaetano
made affirmative representations
concerning the construction quality
of the building. Specifically, he
represented that the construction
quality would be comparable
to prevailing local standards,
in accordance with law and in
accordance with the plans that
had been filed concerning the
condominium.
In the architect certification,
Mr. Gaetano represented that the
architect’s report, which he had
prepared, adequately described the
construction, would be relied on,
did not omit material facts, did not
contain any untrue statement of
fact, did not contain statements that
were fraudulent or deceptive, did not
contain promises beyond reasonable
expectations, and did not contain any
false statement where he knew, or
reasonably should have known, the
truth.
In addition, Mr. Gaetano executed
a certification in his capacity as the
sponsor’s principal. That stated that
the terms of the transaction were
complete and accurate, gave potential
purchasers an adequate basis to
form their judgment, did not omit
any material facts, did not contain
untrue statements of material fact, did
not contain fraudulent or deceptive
purchases or sales, did not contain any
promises or representations beyond
reasonable expectations, and did not
contain any representation that was
false when he knew, or should have
reasonably known, the truth.
Condo Complaint: Illegal Construction
The condominium asserted that the
building was not built in accordance
with law and that there were defects,
including water leaks from the roof.
The board asked Mr. Gaetano to
cure the defects, but he did not do
so. In addition to construction defect
matters, the board sought to recover
common charges owed by Gateway,
as owner of the unsold units.
The board brought claims for
negligence, fraud, breach of contract,
and unjust enrichment against
Mr. Gaetano in his capacity as an
architect, and for breach of contract,
fraud, and unjust enrichment in his
capacity as a principal and alter ego
of Gateway. As to Ms. Gaetano,
the board sought claims against
her for breach of contract, breach
of fiduciary duty, and unjust
enrichment as the alter ego of the
management company.
In June 2010, Ms. Gaetano, on
behalf of the management company,
entered into a management
agreement with Mr. Gaetano, who
controlled the condominium’s
board. As part of its duties, the
management company was to collect
common charges. After control of
the board was turned over to the
residents of the building in April
2011, the resident board members
notified Ms. Gaetano that she
could not issue letters that common
charges to be paid by Gateway
had been paid because, in fact, the
money was not there. The board
directed Ms. Gaetano to collect the
common charges from Gateway, but
she refused and resigned. In doing so,
she refused to turn over receipts for
financial transactions entered into by
the management company on behalf
of the condominium.
The board alleged that Mr.
Gaetano, in his capacity as an
architect, owed a duty to the
condominium to perform design and
construction work in a good, suitable
manner free of defects, in accordance
with industry standards and practices
and in compliance with the law. The
board asserted that he breached this
duty in a negligent fashion, resulting
in unsafe construction, defects, and
noncompliance with the law.
Breach of Contract?
The court discussed long-standing
principles that a breach of contract
would not be considered a tort
(such as negligence) unless there
was a legal duty independent from
contractual obligations. The court
believed that the claims of negligence
were merely a restatement of the
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claims for breach of contract. The
court stated that the negligence
claims arose from statements made
in the offering plan and thus were
duplicative of the claim against Mr.
Gaetano, as architect, for breach of
the plan.
As to the architect certification,
it stated that the description of the
building would be what existed upon
completion of the building “provided
that construction [was] in accordance
with the plans and specifications” Mr.
Gaetano examined. The court found
that Mr. Gaetano could not be liable
for negligent construction where
he certified merely the plans and
specifications relied on in his report.
The board also alleged that Mr.
Gaetano, as architect, made express
representations that the condominium
would be of a quality construction
in accordance with prevailing local
standards and applicable law. The
complaint asserted that the board
knew or should have known that the
representations were false, as the
condominium building was not in
compliance with the law and there
were defects. The court dismissed
this claim, as it was pre-empted by
the Martin Act, General Business
Law Article 23-A, under which only
the attorney general has the right to
sue for such claims.
Using knowledge and expertise
to provide
condominiums, cooperatives,
developers and managers
with answers for over 25 years!
Right to Sue Sponsor Debated
The court reviewed the law
concerning the right to sue a sponsor.
In another case, New York’s highest
court had held that purchasers could
not bring claims for fraud when
the fraud was predicated solely on
alleged material omissions from
the offering plan (i.e., Martin Act
requirements). Two years later, the
same court clarified its position,
stating that a purchaser may bring
an action for fraud if it is not entirely
dependent on the Martin Act. It
stated, “Mere overlap between the
common law and the Martin Act is
not enough to extinguish commonlaw remedies.” However, the Lore
court noted, a fraud claim could be
precluded by the Martin Act if it is
primarily based upon the certification
that the attorney general requires be
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included in the offering plan. Here,
the board’s fraud claim was based on
Mr. Gaetano’s certification, and the
claim was dismissed.
The board also sued Mr. Gaetano,
as architect, for breach of the offering
plan because he failed to obtain a
permanent certificate of occupancy,
and because he failed to construct
the building in accordance with the
offering plan and all laws. The court
dismissed the claim, as there was no
contractual relationship between Mr.
Gaetano, as architect retained by the
sponsor, Gateway, and the board of
managers. The court asserted that the
board’s support for this claim was
really based on Mr. Gaetano’s liability
as a principal of Gateway, and not in
his role as architect.
The court then turned to the board’s
claim against Mr. Gaetano in his
capacity as a principal of Gateway,
the sponsor. The court found that the
claim was duplicative of the contract
claim and, therefore, was dismissed.
Failure to File and Pay
The board also brought two claims
against Mr. Gaetano for breach
of contract, alleging that he was a
principal and alter ego of Gateway.
One claim was that he failed to
obtain a permanent certificate of
occupancy and failed to construct
the condominium in accordance with
the plan and law. The board also
alleged that Mr. Gaetano failed to pay
common charges and other money
due by Gateway.
Mr. Gaetano asserted that the board
failed to show facts sufficient to allow
the court to “pierce the corporate
veil” and hold him personally
responsible for the actions of
Gateway. The court stated that it did
not need to address whether the board
had pleaded sufficient facts to allow
the court to pierce the corporate
veil, because a plaintiff could seek
damages against individual principals
of a sponsor for breach of contract
based upon the certification made by
the individual in the offering plan.
Although Mr. Gaetano did
not dispute that the certification
created personal liability for alleged
misrepresentations, he asserted
that the claims had to be dismissed
because there were “as is” disclaimers
in the plan and because the board
failed to give him notice of defects
under the plan. The court found that
the board stated a claim for breach
of contract against Mr. Gaetano as
a result of his failure to obtain a
permanent certificate of occupancy
and his failure to pay common
charges and other money due on the
unsold units owned by Gateway.
As to the claim of notice, the court
observed that there were issues of
fact that precluded dismissal of the
claim. As to Mr. Gaetano’s claim
that he is protected from liability
because the offering plan stated that
purchasers accepted their unit in “as
is” condition, the court determined
that whether the units were delivered
as described in the offering plan was
a factual issue that could only be
decided in court.
Unjust Enrichment Claims
The board also set forth causes
of action for unjust enrichment
against Mr. Gaetano in his capacity
as an architect. The court found
that Mr. Gaetano, in his role as
architect, was not responsible for
overseeing construction and therefore
could not be liable for a claim that
he deprived the board and unitowners of the benefit of a properly
constructed condominium. As to an
unjust enrichment claim against Mr.
Gaetano in his capacity as a principal
of sponsor, the court found that such
a claim was not viable because there
was a valid contract claim.
Concerning the claims against
Ms. Gaetano: in order to hold her
personally responsible for the acts
of the management company, the
board had to show that she exercised
complete dominion and control
over the company and abused the
privilege of doing business in the
corporation form. In this instance,
the board had not sufficiently alleged
claims that Ms. Gaetano had such
control over the company and used
it to perpetuate a wrong. Although
the board asserted that Ms. Gaetano
employed the management company
to commit breach of contract, fraud,
and other dishonest acts – including
failing to collect common charges
owed by Mr. Gaetano – there were no
allegations that she used the company
for her personal use, that funds were
being commingled, or that corporate
formalities were dispensed with.
The most the board alleged was
that Ms. Gaetano acted in bad faith
while representing the management
company, and that was not enough to
pierce the corporate veil.
The Takeaway
This case is significant because
it addresses many of the issues
typically raised in a case where a
plaintiff claims construction defects,
and does so in a circumstance where
the Gaetano family played many roles
in the conversion, something that is,
in our experience, not the norm. The
court discussed the impact and import
of Mr. Gaetano signing certifications
that are required by the Office of the
Attorney General – both in his capacity
as sponsor and in his capacity as
architect. Consistent with other cases
we have seen, the court found that the
architect’s certification did not expose
Mr. Gaetano to liability for fraud in his
capacity as an architect and determined
that only the attorney general had
the right to sue him for fraud, in
accordance with the Martin Act.
However, when Mr. Gaetano signed
a certification in his capacity as a
principal of sponsor, it did expose
him to potential liability for breach
of contract, consistent with other case
law. Here, the court not only held that
there was potential personal liability
relating to alleged construction defects,
but also to the sponsor’s failure to pay
common charges. These claims were
not precluded by the Martin Act. As to
the fraud claims, they were duplicative
of the breach of contract claims and
were dismissed for that reason.
■
ATTORNEYS
For Plaintiffs
Law Offices of Ilene H. Guralnick
For Defendants
Bartels & Feureisen
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Board Talk: Online
A Conversation about the ADA
www.habitatmag.com/board-talk
board member
Does anyone have any experience with what the
Americans with Disabilities Act (ADA) requires of a coop in terms of the following? The co-op has a rule against
bicycles being brought into the lobby. Instead, bicycles are
to be taken into the garage and chained to a metal bicycle
rack. Bicycle owners must
then walk roughly 125 feet
to the elevator to reach the
lobby.
An individual with a
severe physical disability
has rented a unit on
the lobby level from
a shareholder. This
individual uses a bicycle
for her transportation.
Walking is visibly difficult
for this individual. The
individual with the
disability has visible
difficulty making the walk
through the basement and
has been bringing her
bicycle into the lobby (the same level as her apartment).
Recently, while bringing her bicycle into the lobby,
the individual was observed by the managing agent who
informed her that it was not permitted. The individual
asked to be considered an exception to the rule due to her
disability. The managing agent ordered the bicycle taken
out of the lobby. We do not want to run afoul of the ADA.
Any thoughts on what should be done?
Bob
Common sense should prevail at all times. It is not
always a black and white case. (If I were the renter, I
would send a letter to the board/agent explaining my
circumstances.)
Peg Meerkatz, Disability Advocate
The law requires that condos, co-ops, apartments, etc.
make “reasonable accommodations” for the disabled. If
someone with a disability, say, requests a closer parking
space, this would be a reasonable accommodation. I
believe that this individual’s request is reasonable given the
nature of her disability and the law and therefore should be
granted.
JB
The Americans with Disabilities Act does not apply
to private residences, including co-ops and condos. The
applicable law is the Fair Housing Act. The disabled
individual needs to write a letter to the board requesting a
specific reasonable accommodation – being able to bring
his/her bike through
the lobby directly to
his/her apartment –
and the reason for the
accommodation – that
the long walk from the
basement can only be
done with extraordinary
difficulty because of
a physical disability.
The New York City
Commission on Human
Rights can advise.
dianne stromfeld
Contrary to your post,
ADA does cover coops because they are
not considered private residences. This is the reason the
tax situation is so unfair. Co-ops are taxed as commercial
property. Many of us have been trying to get a new zoning
category, but nothing has happened yet. You state that
it is actually in the Fair Housing Act. I would greatly
appreciate you noting which part of the act covers this to
the exclusion of ADA. Thanks.
Attorney Geoffrey Mazel, a partner at Hankin
& Mazel, offers these comments regarding the
disagreement over whether the ADA covers co-ops:
Based on the information provided, it appears that
both the Fair Housing Act and the Americans with
Disabilities Act would apply, as well as New York
City and New York State Human Rights Laws. In
this example, the disabled resident is asking for an
accommodation because of her disability. The coop is required by all applicable laws to provide a
“reasonable accommodation” when a resident shows
a medical necessity for it. It is my opinion that the
request in this situation is reasonable and the co-op is
obligated to accommodate the disabled resident.
■
“Board Talk” is an online discussion forum where board members can post questions to which other board members
can respond. Topics range from mouse-proofing to legal retainers – really, anything, and all things, that boards
encounter on a daily basis. Some of the responses have been edited for clarity. Opinions expressed in Board Talk do
not reflect the opinions of Habitat. Want to participate? Go to: www.habitatmag.com/board-talk
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to New York’s co-op/condo board directors and building managers.
Marketplace
RATE INFORMATION
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One rate for one full year 11 issues of Habitat:
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Get happily involved.
Contact: J. Wu, Advertising Coordinator
212-505-2030 x3006
F: 212-254-6795 E: [email protected]
AIR DUCT & CHUTE CLEANING
1-800-CHUTE-ME.............................800-248-8363
Get your chute together.
Chutemaster Indoor Environmental
800-234-4656
ARCHITECTS/LOBBY DESIGN
Baron Design Inc, NYS Licensed…... 212-242-6567
Lobby and Hallway Specialists for 20 Years
barondesigninc@gmail www.jonathanbaron.com
Ivan Brice Architecture/Engineering
LL 11-98 & Landmarks Filings, Condition Reports,
Budgeting, Plans, Specs, Construction Administration, Interior Renovation, Exterior Restoration
212-274-0056
Robert Cane Architect, PLLC….......212-769-9605
Designers of Distinctive New York Lobbies.
Visit our website at: www.cane-architects.com
ACCOUNTANTS & AUDITORS
Bollam, Sheedy, Torani, & Co. LLP..212-661-8640
Offices in NYC, Long Island, and Albany
[email protected]
Douglas Condon, C.P.A, LLC..........718-788-3913
Co-management & other services available.
Jay M. Menachem, C.P.A...............516-877-9277
Marin & Montanye LLP………………..516-625-3700
ATTORNEYS
Abrams Garfinkel Margolis Bergson, LLP
Contact: Neil B. Garfinkel or Barry G. Margolis
212-201-1170
Borah Goldstein Altschuler
Nahins & Goidel, P.C. .....................212-431-1300
Braverman Greenspun................212-682-2900
Gallet Dreyer & Berkey, LLP..............212-935-3131
MayerMeinberg LLP..........Syosset: 516-921-8900
NYC: 212-631-9500
Ganfer & Shore......................212-922-9250 x277
Contact Matthew Leeds: [email protected]
Newman, Newman & Kaufman, LLP
.......................................................... 516-364-0700
Visit us on the web: www.nnkllp.com
Hankin & Mazel, PLLC......................212-349-1668
Contact Geoffrey Mazel, Esq.
ACOUSTICS/NOISE/VIBRATION
AKRF Inc....................................... 646-388-9829
Contact Benjamin Sachwald or visit www.akrf.com
Himmelfarb & Sher, LLP.....................914-682-0040
Hoffman Wachtell Koster Maier Rao
& Goldenberg, LLP
Contact Ira S. Goldenberg, Esq........914-997-0999
Marcus Rosenberg & Diamond, LLP
FINANCE
212-755-7500
Schneider Mitola LLP......................516-393-5555
also 212-485-9400
Stark & Stark……………609-896-9060
Email: [email protected]
Visit us at: www.Stark-Stark.com
Tane Waterman & Wurtzel, P.C.......212-766-4000
Wagner Davis P.C...........................212-481-9600
Wolf Haldenstein Adler
Freeman & Herz, LLP......................212-545-4600
Contact: Jeffrey Schwartz, Jeffrey Reich or
Steven Sladkus
CK Engineer, P.C.
Christopher Kelly, P.E. Principal.....212-986-3619
Building Condition Surveys and Reports. All
Disciplines, Cost Estimating, Design-Specifications &
Plans. Construction Administration. LL 10-80/LL 11/98.
Falcon Engineering,
Architecture & Energy Consultants
Building Envelope Consulting/Inspections/Specs,
Parking Garage Investigation/Design, Capital Reserve Analysis, LL 11/98 Inspections/Reports, LL 84 &
87 Benchmarking and MEP Design/Evaluation
646-292-3515 [email protected]
Ivan Brice Architecture/Engineering
LL 11-98 & Landmarks Filings, Condition Reports,
Budgeting, Plans, Specs, Construction Administration, Interior Renovation, Exterior Restoration 212274-0056
RAND Engineering & Architecture...212-675-8844
EXT. RESTORATION * LL 11/98 INSPECTIONS/REPAIRS
Bldg. Surveys, Design & Specs, Construct. Admin.,
Structural, Roof Replacement, Windows & Doors,
HVAC/Elec/Plumbing, Architectural Design,
Green Roofs, Energy Audits, Expediting...randpc.com
ENERGY/FUEL
Castle Oil
Corporation..................................914-381-6600
High-quality fuel oil and burner service, chemical
water treatment, boiler cleaning, heating equipment installation, and computerized heating
control and monitoring systems. Serving New York’s
most successful property owners and managers
for over 75 years.
Dual Fuel Corporation.....................347-6NYCGAS
Tired of high oil prices? Considering a switch to
clean, economical natural gas? Call DFC today to
see how our NO-cost conversion can provide you
with substantial savings.
METRO ENERGY...............................718-383-1400
We’re leading the way in clean energy. Besides
quality heating oil and natural gas, we’re proud
to offer competitively-priced biofuel alternatives. We service many NYC Cooperatives and
Condominiums of all sizes with our dedicated fuel
supply. Talk to us about your options.
ENVIRONMENTAL REMEDIATION
SERVICES
1-800-CHUTE-ME.............................800-248-8363
Get your chute together.
FINANCE
Meridian Capital Group, LLC
Underlying Cooperative Financing
Robert P. Corso, Jr.
212-612-0117 or [email protected]
www.meridiancapital.com
BICYCLE PARKING & STORAGE
INSURANCE
CLOTHES DRYER/VENT CLEANING
INTERCOMS & MAILBOXES
WireCrafters....................................718-359-1619
1-800-CHUTE-ME............................800-248-8363
Get your dryer drying.
800-234-4656
COMPACTOR SALES & REPAIRS
800-234-4656
CONSULTING ENGINEERS
York International Agency LLC......914-457-1285
Contact Barbara [email protected]
Academy Mailbox Company Inc
%ST)NTERCOMSs-AILBOXESs##46s
!CCESS#ONTROLSs%NGRAVINGS
www.academymailbox.com
718 or 212-539-1000
INTERIOR DESIGN
Art & Interiors.................................516-626-6555
Specializing in Full Scope Lobby and Hallway Design. Versatile Style that can meet any request.
WWW.HABITATMAG.COM
Lobby & Hallway Design Associates
212-989-9966
A boutique Interior Design firm, focusing on complete Hallway and Lobby service from design to
construction management. Our associates have a
combined 20 years of experience servicing NYC’s
leading Co-ops and Condos and we specialize in
creating maximum value for shareholders. Call us
today for your budget or tailored proposal, including
a digital mock-up.
www.LandHdesign.com
LAUNDRY SERVICES
Automatic Industries.....Toll Free.1800-THEWASH
Too often we hear “I hate my laundry company.”
You can learn to “love” your laundry company.
Providing coin & debit card operated laundry rooms
to the Co-op & Condominium community.
Family owned & operated.
www.automaticindustries.com
PROPERTY MANAGEMENT
Alexander Wolf & Company
NYC Toll Free ................................866-316-6672
or LI (516) 349-0540. Specialists in Co-op/Condo/
HOA & Senior Housing Management. 24 hour
emergency availability.
Contact: John D. Wolf, President
ALL AREA REALTY SERVICES INC.
SERVING COOPS & CONDOS IN
NEW YORK AND LONG ISLAND
www.aarsny.com..........................1-866-333-6182
Barton Management..........................212-682-9693
Specialists in Co-op/Condo/Residential
Management. Contact Georgia Barton:
[email protected]
www.bartonmanagement.com
Cooper Square Realty…………..…..212-634-8904
Premier NYC residential property management
company. Portfolio includes 60,000 residences in
400+ condos, co-ops and rental properties. Learn
how our professional approach will maximize your
investment and provide an exceptional quality of
life for residents................www.coopersquare.com
H.S.C. Management Corp......(main) 914-2371600 35 Years Professionally managing Co-ops,
Condos, and investment properties with Honesty
and Integrity. Contact Josh Koppel, CPM, direct
718-414-2073
www.hscmanagement.com
Kaled Management Corp. ............516-876-4800
Co-op/Condo/Rental/HOA Property Management
Contact: Peter Lehr
Newgent Management, LLC ........... 347-707-1010
Expert handling of your real estate headaches!
Attention to all co-op/condo issues maintenance of detailed financial records,
owners’ charges and payments (including online),
suggesting “to-do” ideas, tracking and reporting
maintenance and repairs, etc.
Quantum Management Inc............914-592-1100
Specializing in all areas of real estate property
management. Call Tom Bundarin
RLH Management.......................... 516-944-3595
35 years experience in Nassau County
Managing Co-ops/Condos/Rentals/HOA
Siren Management Corp................212-483-0700
“Managing to be the future of your real estate”
Specializing in co-op, condo & rental management
Contact: Jeff [email protected]
www.sirenmgt.com
Vintage Real Estate Services Ltd....212-736-3680
Co-ops/Condos/Mitchell-Lamas
Contact: [email protected]
Veritas Property Management........212-799-2365
Co-op & Condo Excellence – Call Carl Borenstein
or James Maistre – www.veritasmanagement.com
REPLACEMENT WINDOWS
Ross Window Corporation...............212-221-1800
also 914-668-2050.
STORAGE SYSTEMS
Bargold Storage Systems................718-247-7000
Fully Enclosed Steel Storage Units. Custom Built
and Installed. Excellent income producer.
FREE INSTALLATION.
WireCrafters...................................800-626-1816
Woven Wire and Solid Enclosed Storage Lockers
delivered and installed.
Ask about our FREE TRIAL OFFER.
WATER COST MANAGEMENT
New York Water Management.......718-686-0400
Real Estate Management Consultants
Water & Real Estate tax reductions
Sub-Meter Installations and meter reading
Vantage Group Inc.......................888-860-2990
Complete Cost Reduction Programs,
NYC Bill Correction,
TURN WATER METERING TO YOUR ADVANTAGE!
AUTOMATIC METER READING SPECIALIST!
WINDOW FILM
Chutemaster Indoor Environmental.
800-234-4656
WINDOW PARTS AND SERVICE
Ross Window Corporation..............212-221-1800
also 914-668-2050
LOG ON
tinyurl.com/habitatexperts
Ask the Experts
Ask the Experts
Boards meet. They research. They get bids.
They make decisions.
Sometimes, though, it would be nice to have an
expert on hand. To answer your questions, to bring
out the important points, and to just make things a
bit more clear.
That’s what “Ask the Experts” does.
Key players from leading companies provide
succinct video answers to important questions
facing your co-op/condo board.
EXPERT ROSTER
Bargold Storage Systems, LLC
Joshua Goldman, CHIEF OPERATING OFFICER
Brian Fink, VP SALES & MARKETING
Legal
Finance
LAUNDRY SYSTEMS
Automatic Industries
STORAGE
Bargold Storage Systems
FINANCE
First Funding of New York
LEGAL
Braverman Greenspun
HIGH PERFORMANCE
BOILER SYSTEMS
Unilux
HALLWAY & LOBBY DESIGN
Lauren & Chase Design Group
High Performance
Boiler Systems
LOG ON TODAY.
You’ll be glad you did.
Laundry Systems
Storage
WWW.HABITATMAG.COM
Hallway &
Lobby Design
Stats
“Stats” is a listing of important facts,
figures, and statistics of concern to
the co-op/condo world. It is subdivided
into “Building Loans,” which represents
a sampling of cooperative underlying
mortgage refinancing deals; and
“Management Transitions,” which
includes a sampling of buildings that
hired new management firms (takeover
dates appear in parentheses). All data,
covering the past three months, has
been voluntarily submitted, and the
omission of any professional from this
section is no reflection on his or her
business. To have your item published
in an upcoming issue, call (212) 5052030 ext.3006, fax (212) 254-6795,
or e-mail: [email protected].
KEY:
BR bedroom
B bathroom
DR dining room
EIK eat-in
kitchen
LR living room
SF square feet
OTM on the
market
NA not available
at press time
MTNC monthly
maintenance
CC common
charge
RE TAXES real
estate taxes
Management
Transitions
Manhattan
Chelsea
85 Eighth Avenue
125-unit co-op. Transition to: Pride
Property Management (1/1/13)
Upper East Side
The Gotham Condominium
170 East 87th Street
241-unit condo. Transition to: Midboro
Management (8/1/12)
Upper West Side
West Park Housing Corp.
170 West 76th Street
20-unit co-op. Transition to: Veritas
Property Management (1/1/13)
Financial District
William Beaver House
15 William Street
322-unit condo. Transition to: Cooper
Square Realty (1/1/13)
Lenox Hill
St. Tropez Condominium
340 East 64th Street
301-unit condo. Transition to: Cooper
Square Realty (10/1/12)
Long Island
Hempstead
Carriage Townhouse HOA
57-unit HOA. Transition to: All Area
Realty Services (12/1/12)
Long Beach
Winward Condominium
251 West Broadway
29-unit condo. Transition to: Alexander
Wolf & Company (1/1/13)
Melville
Stratford Park by Timber Ridge
Homeowners Association
100 Victoria Lane
36-unit HOA. Transition to: Alexander
Wolf & Company (11/1/12)
Building Loans
47 East 67th Realty Corp.
Lenox Hill, Manhattan
6-unit co-op, 0% unsold shares
LOAN: $425K
TERM: 15 years
RATE: 5.55%
CLOSING: 12/4/12
BANK: NCB
LOAN OFFICER: Sheldon Gartenstein
BUILDING REP: Irvine Realty Group
LOAN: $1 mil
TERM: 26 months
RATE: 4.25%
CLOSING: 12/6/12
BANK: NCB
LOAN OFFICER: Edward Howe
BUILDING REP: Cooper Square Realty
Claremont LaSalle, Inc.
Morningside Heights, Manhattan
LOAN: $1 mil
TERM: 10 years
RATE: 3.6%
CLOSING: 12/1/12
LINE OF CREDIT: $100K, 10 years
BANK: New York Community Bank
LOAN OFFICERS: Avi Geller and Nicoletta
Pagnotta, Meridian Capital
BUILDING REP: Manhattan Modern
Management
1095 Park Avenue Corp.
Carnegie Hill, Manhattan
LOAN: $1.5 mil
TERM: 76 months
RATE: 4.75%
CLOSING: 12/5/12
BANK: NCB
BUILDING REP: Gumley-Haft
Utopia Tenants Corp.
37-15 Utopia Parkway
Auburndale, Queens
LOAN: $1.8 mil
TERM: 10 years
RATE: 3.56%
CLOSING: 12/4/12
LINE OF CREDIT: $300K
BANK: NCB
BUILDING REP: Rachlin Management
Company
131 Perry Street Apartment
Corporation
West Village, Manhattan
LOAN: $800K
TERM: 10 years
RATE: 4.1%
CLOSING: 12/3/12
BANK: NCB
BUILDING REP: Self-Managed
Saunders Owners Corp.
Forest Hills, Queens
LOAN: $2.3 mil
TERM: 10 years
RATE: 3.33%
CLOSING: 12/1/12
BANK: Sovereign Bank
LOAN OFFICER: Avi Geller and Steve
Geller, Meridian Capital
BUILDING REP: Metro Management &
Development
Lexington Avenue Co-op
Manhattan
LOAN: $890K
TERM: 10 years
RATE: 3.41%
CLOSING: 12/1/12
LINE OF CREDIT: $500K, 10 years
BANK: People’s United Bank
LOAN OFFICERS: Robert Corso and
Nicoletta Pagnotta, Meridian Capital
BUILDING REP: Halstead/Brown Harris
Stevens
755 West End Housing Corp.
Upper West Side, Manhattan
LOAN: $4.5 mil
TERM: 10 years
RATE: 3.21%
CLOSING: 12/3/12
LINE OF CREDIT: $500K
BANK: NCB
BUILDING REP: Maxwell-Kates
2 Horatio Owners Corp.
West Village, Manhattan
The Terrace View Owners
79-10 34th Avenue
Jackson Heights, Queens
WWW.HABITATMAG.COM
ADVERTISER INDEX
LOAN:
$5.5 mil
TERM: 10 years
3.28%
CLOSING: 12/6/12
LINE OF CREDIT: $1 mil
BANK: NCB
BUILDING REP: Metro Management &
Development
RATE:
75 West 238th Street Owners Corp.
Riverdale, The Bronx
LOAN: $700K
TERM: 21 months
RATE: 4.5%
CLOSING: 12/5/12
BANK: NCB
BUILDING REP: Robert E. Hill
Mark Terrace Owner Corp.
3410 De Reimer Avenue
Eastchester, The Bronx
LOAN: $8 mil
TERM: 10 years
RATE: 3.5%
CLOSING: 12/1/12
LINE OF CREDIT: $2 mil, 10 years
BANK: New York Community Bank
LOAN OFFICERS: Nicoletta Pagnotta and
Avi Geller, Meridical Capital
BUILDING REP: Westchester Property
Management
PLANNER
MARCH 1
Taxes. Last day to apply for
reduction of 2013-14 assessment
for New York City real property
assessment for Class 2 and Class
4 properties.
MARCH 15
J-51. J-51 tax exemption and
abatement program. Last day to
file applications with Department
of Housing Preservation and
Development’s J-51 office for the
first filing period in 2013.
Taxes. Last day to apply for
reduction of 2013-14 assessment
on New York City real property
assessment for Class 1 property.
WWW.HABITATMAG.COM
ADVERTISER
PAGE
Academy Mail Box ........................................................19
Access Northern Security ...............................................35
American Pipe & Tank ...................................................24
Argo Real Estate .............................................................36
Bargold Storage Systems ...............................................17
Big Apple Fire Sprinkler ................................................33
Blue Woods Management ..............................................35
Buchbinder & Warren ....................................................15
BuildingsNY ..........................................................Cover 3
Calray Gas Heat Corp. .....................................................9
Cesarano & Khan, CPAs ................................................25
Chutemaster ....................................................................45
Cooper Square Realty .....................................................17
Douglas Elliman Property Management.........................15
Fairfield Property Services .............................................18
Gerard J. Picaso Inc. ......................................................23
Habitat Ask the Experts ................................................49
Habitat Board Subscription Update ...............................53
Habitat Podcasts ...............................................................2
Hankin & Mazel .............................................................36
Hercules Corporation .....................................................11
Impact Real Estate Management ....................................32
JMPB Enterprises: Lobby & Hallway Renovation ........14
Kaled Management ........................................................43
Lauren & Chase Design Group ......................................19
Lawrence Properties .........................................................7
Lovett Group...................................................................24
Mark Greenberg Real Estate...........................................41
Matthew Adam Properties ...............................................1
Metro Management Development .................................13
Midboro Management ....................................................37
NCB .......................................................................Cover 2
New York Water Management .......................................13
Norris McLaughlin & Marcus ........................................18
Pride Property Management ...........................................40
Rand Engineering & Architecture ..................................32
Robert Cane Architect ....................................................23
Rudd Realty ..............................................................12, 30
Schroder & Strom ............................................................7
Time Warner Cable ............................................5, Cover 4
Tudor Realty Services.....................................................33
Vantage Group ................................................................34
Veritas Property Management ........................................41
Wascomat Laundrylux ....................................................25
Wilkin & Guttenplan ......................................................45
Wirecrafters ....................................................................40
Wolf Haldenstein Adler Freeman & Herz ......................34
From the Editor
By Tom Soter
Cost-Conscious
C
an boards and managers be too costconscious? This inquiry came to mind
when Habitat received an e-mail from
board member Regina Warren, who was
questioning a financial arrangement her building
had with an attorney. Was it an expense the board
needed to incur? Specifically, were the fees paid
to tax certiorari lawyers who annually challenge
a building’s tax assessment a necessary expense?
And were they fair?
“Our [tax cert] lawyer charges 15 percent of
the tax savings the reduced assessment provided,”
she explained. “The only problem is that when
the city increases a building’s assessment by a
huge amount, it is limited by how much it can
increase it per year – so the city phases in the increase over
the years. However, when the lawyer gets the assessment
increase reduced, the lawyers seem to charge the client for
the five-year reduction at once. Then, the next year the city
starts over and raises the assessment again. It seems this is
a crazy process that enables the lawyers to reap the most
benefit.
“For example, if a building’s assessment was raised
$500,000, that’s about an extra $65,500 in taxes. However,
the city only phases that $65,500 extra in over five years;
that is about $13,000 per year. Now, if the lawyer gets the
$500,000 taken away, the lawyer charges the total savings,
which comes close to $10,000 (15 percent of the $65,500).
The net benefit to the building is small. Then the next
year the city raises it $500,000 again, and it all starts over.
That’s what happens to us.”
Cert attorney Eric Weiss, a partner at Tuchman,
Korngold, Weiss, Lippman & Gelles, has heard all that
before. “New York City operates under a transitional
tax system,” he noted. “All real property is reassessed
annually. There are two assessed valuations. The actual
assessed valuation made public on January 15 of each year
is the assessor’s determination of the proper value. The
transitional (taxable) assessed valuation is derived from the
actual assessed valuation. Under this system, any increase
in the actual assessment is phased in over a five-year
period in equal annual installments. The phase-in each
year is called the transitional or taxable assessed valuation.
“The benefit from a settlement usually consists of a
cash refund as well as a future savings in taxes,” he added.
“The refund portion may be much smaller than the future
savings. The size of the refund depends upon the history of
the assessments on the particular parcel. The refund arises
from overpayment of the taxes for the first year of the
track where the taxes were paid on the original transitional
assessment. After the settlement, the remaining payments
in the track are made on the reduced transitionals, giving
rise to the savings.”
Weiss argued that the fee is fair in that the tax challenge
saves money in the long run, and that the board members
who complain tend to forget about how high their taxes
would be without the successful challenge. It’s costly, he
concluded, but boards should look at it in perspective and
try not to pinch pennies unreasonably.
Still, Warren is correct to raise questions about costs,
because board members who do not question the bills are
doing their property a disservice. This is a point that came
up when I talked to longtime management executive Ellen
Kornfeld, vice president at The Lovett Group.
“You have to question every bill you receive,” she said.
“Some managers and board members are lazy; they get the
invoices from contractors and just sign off on them without
checking. You have to make them fill out P.O.s [purchase
orders], so it is clear what the service is, when it was done,
and who okayed it. Small vendors may do it cheaply and
do great repairs, but they don’t do great bookkeeping. You
should check everything.”
She recalled one building where a representative of a
fire-extinguisher company showed up, telling the board
that the law required them to get new fire extinguishers
at $32 each. The going price, however, was researched by
Kornfeld. “It was $10 for each extinguisher,” she noted
wryly. “I told the board, ‘If you don’t know the price of
things, don’t sign off on bills.’ You have to be careful.” ■
WWW.HABITATMAG.COM
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Fax Update to: 212-254-6795
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Projects Around Town
Spotlight on
55 White Street
Ed Fields, who has lived in
Tribeca since Halloween 1982,
has seen his neighborhood
change – but still regards it as a
“a small town” located within the
vast city. He notes that change
can be good, and points to the
condominium he has lived in for
the past 20 years as an example.
The building, at 55 White
Street, was constructed in 1861,
and features a striking cast-iron
facade, with large picture windows, Corinthian columns, and
intricate designs in the brickwork.
It was one of many beautiful
buildings that resulted in the
neighborhood being designated
the Tribeca East Landmark District in 1988.
But the current five-person
board – of which Fields was
president for years until he
stepped down last October – also
knew that the 17-unit 55 White
Street had fallen into disrepair.
The sponsor who converted the
property to condominium loft
units in the mid-1990s had done
“a lot of really crappy work in the
original renovation,” Fields notes,
paying little attention to the
historical exterior of the building,
and discarding some of the original cast-iron elements in favor of
riveted aluminum and substandard fiberglass. About 10 years
ago, Fields says that a repair job
“went very badly as well.”
Neglected and mishandled,
the property was deteriorating.
“There was a piece of cast-iron
literally hanging by a thread
on the front of the building,”
says Fields. Howard L. Zimmerman Architects, which had
been introduced to the property
to investigate leaks by 55 White
Street manager Andrews Building
Corp. in 2007, returned in 2009.
Explains Fields: “As we thought
about addressing the big safety
issue, we said, ‘Once we’re up
there, we might as well do’” everything that needed to be done.
In 2009, Fields says they began
taking bids on the project, with
Zimmerman acting as a façade
and exterior restoration consultant to review and prepare bid
and construction documents for
the restoration.
The work began in 2010. The
majority of the cast-iron elements
were removed and restored in
shop and reinstalled upon completion. Missing elements were
replaced with fiberglass matching
the exact detail of the original.
Through a computer-matching
process, the entire façade was
then coated to duplicate the original color of the building.
The façade windows were
stripped to bare wood, and then
repaired and painted to match
the original condition. Rotten
wood, rusted fasteners, and
metal flashings were removed
and replaced with stainless
steel versions. Cracks, holes,
and voids in the wood were
filled with wood, while rotting
wood was cut out of the heavily
damaged sections and new wood
spliced into the existing frames.
New sill moldings were replaced
as well.
Zimmerman notes that extreme
care was taken with everything,
from marble window headers and
sills and iron shutters on some of
the windows to a replacement of
the roof (damaged by penthouse
apartments installed there during
the 1990s conversion).
The board had regular weekly
meetings with architect Brett
Rieger, from Zimmerman, who
had been at every board meeting
leading up to construction and
who now supervised the job. It
was budgeted at $1 million, but
because of defects and deterioration discovered as the work progressed, it is now $200,000 over
budget. That money has come
from a special assessment spread
over three years, paid for by the
young professionals, some with
children, who are increasingly
populating the building.
When will it all end? Fields,
who writes for television (his
latest are “Mankind” and “The
Men Who Built America,” on the
History Channel this fall), reports
that the scaffolding has just started coming down, so that means,
“we’re almost done.” And 55
White Street will have its groove
back. At last. – Tom Soter
NEIGHBORHOOD
s Tribeca
VALUE
RECENT SALES
10/19/10: $615,000
7/27/10: $1,925,000
7/21/10: $2,400,000
BUILDING INVESTMENT
PROJECT: $1.2 million
s Cast iron façade restoration
s Window restoration
s Roof replacement
s Masonry and stone restoration
CONTRIBUTORS
s Howard L. Zimmerman
Architects
s Brend Renovation Corp.
s Andrews Building Corp.
s Board president: Ed Fields
Began in summer 2010 and
scheduled for completion in
spring 2013.
WWW.HABITATMAG.COM
Recent Sales
Spotlight on
304 West 75th St., #16H
Upper West Side, Manhattan
1BR/1B co-op. Features a renovated kitchen with stainless steel
appliances, hickory cabinets, granite countertops and a breakfast
bar. Corner residence has windows with direct river and city views
from every room, high ceilings, hardwood floors. Building amenities
include 24-hour doorman, elevator, gym, laundry facilities, bike
storage, and a private, landscaped garden. 600 SF. Mtnc.: $1,444.50.
Tax deductible: 43%.
DEAL MAKERS
Seller’s agent: Sheryl Berger, Argo
Residential; buyer’s agent: Doug
Bellitto, Brown Harris Stevens
THE SALES SKINNY
THE ASK: $625,000
THE GET: $645,000
THE PRICE PER SQ FT: $1,075
THE WAIT: 2 weeks
(Closed 11/29/12)
THE FINANCING: 80%
THE BUILDING
2012/13 taxable value:
$5,111,219
Market value: $12,391,000
Annual property taxes:
$709,764
MOST RECENT SALES
s $1.575M for a 2BR/2B
(closed 12/28/12)
s $350,000 for a studio
(closed 11/15/12)
s $601,000 for a 1BR/1B
(closed 7/11/12)
Spotlight on
97-40 62nd Drive, #9D
Rego Park, Queens
2BR/1B co-op. Features a terrace,
open views of the city, windowed
kitchen. Property includes on-site
laundry and storage facilities, livein super, summer pool with a 50
percent resident discount. 875 SF.
Mtnc.: $737.
DEAL MAKERS
Seller’s agent: Gail Coverdale,
Argo Residential; buyer’s agent:
Charles Kriegel, Argo Residential
THE SALES SKINNY
THE ASK: $269,000
THE GET: $252,000
THE PRICE PER SQ FT: $288
THE WAIT: 5 weeks
(Closed 8/10/12)
THE FINANCING: 80%
THE BUILDING
2012/13 taxable value:
$16,615,421
Market value: $50,008,000
Annual property taxes: $2,283,445
MOST RECENT SALES
s $117,000 (closed 1/2/13)
s $350,000 (closed 12/21/12)
s $158,000 (closed 11/20/12)
WWW.HABITATMAG.COM
Endpaper
When “No” Means “Maybe”
Steven Hochberg
I
SERVED FOR 25 YEARS as the president of my co-op
board (and hope to serve on the board again, perhaps).
We are a 20-story, 339-unit cooperative building located
in the Riverdale section of the Bronx, with a diverse
cross-section of people. In my quarter-decade of service I
learned many things, but one of the most important was to
be flexible.
What do I mean by that? Rules are important. Generally
speaking, they must be enforced. But a wise board can and
should know when to make exceptions. Over the years as
president, I learned when to do that.
I’ll give you an example. We have a wonderful health
club in our cooperative. We let the shareholders use it for
free. But for renters (we have quite a few, which is not
atypical for Riverdale) and any outsiders who use the
club, we charge an annual fee. This is a fixed fee; it is not
prorated, and the renters and outsiders must pay the fee,
period.
But I don’t believe a period should be used there. You
should make exceptions, based on need. In setting most
board policies, you of course have to treat all shareholders
equally (that’s the law), but in the case of the health club,
we were dealing with renters. I had a longtime renter –
whom I had known for years – come to me and say, “I’d
like to be in the club, but money is tight. Can we pay in
two installments?” I said, “OK.” Another renter came to
me and said that he was moving out in four months. Could
he join the club for only four months? I agreed.
Some people say, “A rule is a rule.” End of story. I
say, “You have to look at the situation, at the people, and
make exceptions to improve the quality of life of your
residents, as long as the choice does not adversely affect
the interests of the co-op.” The rule is only the beginning
of the story.
I’ll give you another example. We have a room that
we use for board and shareholder meetings and social
gatherings. A woman in our building who had a child
with special needs was having trouble helping him with
his homework in their apartment because he was easily
distracted by toys and other things in his immediate
environment. She asked me if she could use the meeting
room occasionally to tutor him. There was no specific
rule governing this; still, some might have said, “No,
that’s not what the room was intended for.” But I thought,
“These are good people. Whom does it hurt letting
them use it? There is no cost to the co-op, and it creates
goodwill among the residents.” So I agreed.
For all that, boards must be aware that there is a certain
danger in such flexibility: the danger of abuse. You have
to be sure that you aren’t playing favorites, and you must
always be scrupulously even-handed when dealing with
shareholders’ rights (consult your lawyer if you have a
question). But in many instances, being flexible can help
enhance your building. I know it did at ours.
■
WWW.HABITATMAG.COM
TOM SOTER
Former president
2500 Johnson Ave.
Riverdale, the Bronx
Easy money is within reach.
Add a new revenue stream to your business when you become a
Time Warner Cable Marketing Agent.
Earn money when you sign residents up for TV, Internet and Home
Phone serivce. You’ll earn money for new residents and for the existing
Time Warner Cable customers in your building. You can even double
your earnings when you sign up more residents.
There’s nothing to lose – just a whole lot of money to be made.
To find out more about earning easy money with Time Warner Cable,
call 212.598.1761.
Compensation paid quarterly. Marketing Agent Program is available in limited Time Warner Cable service areas. Owners of buildings with 50 or more
units may contact Time Warner Cable’s New Market Development/MDU Department to discuss eligibility and program requirements. All rights
reserved. Time Warner Cable and Time Warner Cable logo are trademarks of Time Warner, Inc. © 2012 All rights reserved.
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