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HOW TO RUN YOUR BUILDING!


CONVERSATIONS WITH CO-OP & CONDO MANAGEMENT EXECUTIVES

August 13, 2024
Season 2
Episode 3
All Episodes

How One Board Turned A Setback Into A Success

A bundle of projects at a downtown condominium was humming along smoothly - until they weren’t. A problem was discovered with the building’s vault which drove up expenses and suddenly costs exceeded what the board had raised for all the projects. Add in a hallway and lobby re-do, and suddenly trouble was brewing. Ira Meister, President of Matthew Adam Properties, shares the story of how the board overcame a shortage of funds and an obstructionist subletter. Meister is interviewed by Habitat’s Carol Ott.

Carol Ott: Welcome to How to Run Your Building, a conversation with New York's leading property management executives. I'm Carol Ott with Habitat Magazine, and my guest today is Ira Meister, president of Matthew Adam Properties. Raising money for building projects is always a complicated process. It's not uncommon for several types of projects to be lumped together.

That's what happened at a condominium on the Lower East Side of Manhattan. Ira, you have managed this loft conversion since the day that the developer put the units on the market. The board has five members and includes people from finance, business ,architecture, design — basically professionals who have no trouble making decisions and executing them.

That is until recently. Can you tell us what happened there? 

Ira Meister: Sure,. Carol. This happens to be one of the best boards I've ever dealt with. I've been managing the building since 1984. The day the developer put the key in the door probably longer than most management companies have been in business.

So we started a bunch of projects at the building. The board followed the book. We had a meeting of all the unit owners. They approved the expenses-- approximately $2 million worth of expenses. This is for me, the third turn of renovation for the building being there. They raised capital off of those who didn't have the money to put up front.

They arranged a line of credit with a bank. And I'd say probably a third of the building participated in the line of credit. So they really did everything set up to make it perfect. They had a display in the lobby: what's going to happen. Projects included a sidewalk vault, elevators, lobby and a rear courtyard.

There was a lot of things going on at the same time. So they did the elevators first and they came out perfect-- on target. Then they decided to do the vault on the sidewalk. Everything started to move along nicely until we opened up the sidewalk and realized that the facade of the building, which is historic, not a landmark, actually part of it rested on the sidewalk.

So it became a massive project where the building, the head of steels would support the facade while the sidewalk and vault were being replaced and then to top things off, to make a little bit worse: years ago, I guess the city, when they opened the firehouse down the block, they made the street wider.

So nobody had realized that about three feet of our wall actually extended under the New York City street. Which was pretty interesting. So in order to finish that part, we had to get Department of Transportation involved. And then they came about and said, well, you've got a a lamp streetlight on your property.

You're gonna have to move that. 

Carol Ott: And let me just interrupt here. This all sounds like it's costing more than they had raised. When did they realize this and what did the board do? 

Ira Meister: They built in a 20% buffer into the loan, into the assessment and line of credit.

But this was going to exceed it. They put their little thinking caps on and they were gonna cut back in the hallways, a little bit around the building. And we had a meeting with the board, and one of the board members is a noted designer. Primarily does a lot of home construction renovations.

Kind of things on television. He came through and said you know what? We gotta get the hallways done. I'm going to donate the carpeting for the hallway to you. So there are 12 floors of carpeting. The hallway's not that large, so 12 floors of carpeting he donated.

So that took a nice chunk off the budget. Was very unbelievable thing to do. 

As they realized that we'd have also cut back on the lobby portion of the budget, just do some minor painting and things like that. So again, same gentleman said, we can't, it's a half-baked project.

We have to do the right thing. So he ended up donating a lobby. A magnificent lobby. So it, it's like the thing where no good deed goes unpunished. 

A resident in the building, wasn't even a unit owner, decided to make her own little uprising 'cause she did not like the way the lobby came out.

The lobby's stunning, absolutely stunning. Did not cost them a penny. So the board rightly says, okay, let's diffuse this situation and have a zoom meeting . 

Carol Ott: The tenant who was a renter didn't like it. And so how did she let anybody know, or how did she stop anything?

Ira Meister: She lives in the building, decided to go under everybody's door, ring doorbells, and make trouble. 

Carol Ott: I see. 

Ira Meister: So it, a couple people signed on with her. Not a lot. The board decided, okay, let's have a zoom meeting, get everybody on. Let's vent let's stop it right now. It's ridiculous.

And it was interesting because I was expecting, , fireworks, whatever and it was the part is the owner of the unit did not permit her to come on the meeting. And she has no, his quote, "she has no skin in this game." what's going on here? And so people came onto the call and the board made a presentation, was fantastic.

The designer was great. One shareholder a unit, owner, a noted attorney said, okay, so , who wants to come up with $200,000 now to redo the lobby? Or, what is it gonna cost us to undo the lobby? Another hundred thousand dollars? This is ridiculous. Lobby itself was pretty interesting. It was industrial looking.

It was nothing in there, but a little bench, maybe. This is the way we like it. This is the way it was designed. And I was there at the beginning. And I explained this is not the way it was designed. It was designed to be a furnished lobby. What had happened the developer did not anticipate that two weeks after starting sales, it'll be sold out.

Pretty amazing. This was the first commercial loft and factory to a luxury apartment conversion. 

And he said, heck with, I'm not gonna put the furniture in there. Some of it went in his office and I guess the rest, I don't know what he did with, but he left it with one bench in the lobby.

Everybody thought that was supposed to be, but I was, I guess I'm the only one that knew the history of it. And I explained to them this is not what was supposed to be. Maybe you've gotten used to it over the years, but it was supposed to be a magnificently furnished lobby with white furniture and everything.

So they pretty much backed down from the historic, lobby took the wind out of that sail. And now I guess everybody's gotten used to it, their beautiful new lobby and it's nice and quiet. And the board did the right thing. They just finished up their rear courtyard and this is truly a magnificent building.

Carol Ott: So let me ask you, because the board clearly had been very decisive in organizing all these projects, which included the lobby and the hallways, and then when they got complaints that was instigated by the renter, the board was stopped in their tracks. I'm curious what happened. Why? 

Ira Meister: The board was stopped in their tracks because this is a very unique building and a very cohesive building, and they wanted everybody to be happy, so they figured, let's do this meeting, let's explain everything.

And go forward from there. It is unusual. I've done so many hallway projects over the years. That's probably one of the toughest things to do, and half the time you end up with beige, because nobody can make a decision and beige is the way to go. But they were fantastic the way they deal.

They just didn't want any, anybody to be unhappy. They wanted everybody to know where this came from, what the stories were . Even though there were things posted in the lobby, some illustrations posted, they wanted things to do. And I guess when this was finished, the designer gentleman decided, oh, we need something on the wall that represents the area. He found the historic print of Union Square. It is magnificent. And bought the rights to it online. And had it blown up. I think it's five foot by five foot and it's now a black and white, beautifully framed poster behind the couch and lobby. So it's really interesting. Here's someone who really cared about the building and the board supported it.

Carol Ott: I wanna ask you, for other board directors. I know there are a couple of types of board directors. There's the firm decision maker. And then there's the conciliator and the conciliator who I have served with on the board before, is a wonderful person because they keep everybody in the building happy, but sometimes decisions don't get made.

And I'm curious from the property management side. What you think about the two types of board directors? And maybe there are other types? And should one have a decision maker and a conciliator and maybe some others on the board. Is that useful? 

Ira Meister: It's a useful, it's a very useful thing to have. But the board has to make good decisions .

That's what they're elected for. They're not going to please all the people all the time. And the old adage is that a camel was a horse designed by a co-op board. So yeah, that's the old thing. And you really have to be on board.

You can't have your own agenda. That's what one worst thing that I found out. You have a board member come on with his own agenda. You really have to act as a real group. Think about the constituents in the building and do the right thing. 

Carol Ott: And the right thing is the the thing that hopefully 

lots of your professionals are gonna help you see. 'Cause one person's right thing is clearly not another's. So as a takeaway for other boards and thinking about this situation what would yours be? 

Ira Meister: My takeaway would be follow what they did. They had the meetings, they posted the illustrations, they listened to the comments positive and negative, and they made the decision in the best interest of all the unit owners.

And that's the right way to do it. 

Carol Ott: All right. Thank you very much for sharing your insights. 

Ira Meister: You're very welcome. 

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