Annual Meetings

If it’s spring, it must be annual meeting time. Around the five boroughs, boards, managing agents, and attorneys are scrambling to put together the agenda for the meeting, with new issues coming up – such as security – and old chestnuts – Local Law 11/98 work – going on the front burner once again.

Boards are talking about three things: safety, security, and rising costs, says Mary Hack, a managing agent with Blue Woods Management.

While most of the co-ops in her portfolio – middle-class to upper-middle-class co-ops, with units ranging from 60 to 150 – are worried about the prospect of increased maintenance to cover rising fuel prices, insurance costs, and property taxes.

The biggest topic, though? Security and what the co-op board can do to keep its building safe. Initially, says Hack, several of her boards had invited the community affairs officer from the local precinct only when there had been a mugging in the neighborhood or a break-in at the building, “and those discussions evolved into a discussion about general security, about being aware of what’s going on in the neighborhood.”

The police officers were not alarmist, adds Hack, they merely emphasized that in buildings where there is a high percentage of rentals or sublets, the residents need to be aware of the comings and goings of their neighbors.

That means:
(1) insisting that all outside contractors who work in the building, either in the main areas or in private apartments, wear uniforms that identify them with their company;
(2) ensuring that there is a system for handling all packages that are brought to the building, and that no packages are left unattended in the buildings, and
(3) making certain that the building’s board is aware of the security of the neighborhood in general: either by going to the community meetings once a month at the local precinct and reporting back to the building, or inviting the community affairs officer from the local precinct to discuss criminal activity in the neighborhood and the best steps that shareholders can take to protect themselves and their building.

David Berkey, a partner in the law firm of Gallet Dreyer & Berkey. also hears worries about security. “While different buildings have different concerns, all individuals “want to make sure their buildings are safe,” the attorney notes. “I think September 11 raised the consciousness [of boards]. Most of the occupants of buildings in New York City have to at least focus on the question: ‘How can we make sure we are safe?’”

Along with the issue of safety and security, shareholders are keenly interested in increased operating costs, and savvy boards will come to their meetings prepared to talk about two big ticket items this year, points out Adam Zerka, account manager with Century Management: mandatory Local Law 11/98 work – façade repairs on all buildings over six stories – and the expiration of the current labor contract with SEIU 1199 workers.

This past February marked a new, two-year cycle in which the owners of all buildings over six stories high must have their properties inspected by an architect or engineer, and have the inspection report and repair schedule filed with the city’s Department of Buildings by February 2007. Under the city’s building code, the front and back façades must be inspected every five years, and the building owners have a two-year period to inspect, complete the repairs, and file the completed report with the city’s Department of Buildings. The latest cycle of inspections began in February 2005 and runs until February 2007. “Everybody is getting questions about repairs, and how much it will cost,” observes Zerka.

At the same time, as the current contract with the union expires, “the savvy boards will talk about the upcoming labor contract expiration and about increased health care costs for the staff members,” says Zerka.

At the annual meetings, boards should also be prepared to give a general breakdown of sale prices over the past year, and describe the current market value of the co-op units. “In the past couple of years, people have been anxious to hear what their apartments are worth,” observes Steve Greenbaum, director of property management at Mark Greenberg Real Estate.

Shareholders are going to be looking for an overview of what’s going on in their building and the smarter boards are putting together committees – such as a capital improvement committee and a finance committee – to report on what they have done in the past year.

And finally, the perennial topic will certainly come up: whether the board has been communicating properly with the shareholders during the year. “I have never been to an annual meeting where someone did not complain about lack of communication,” says David Goodman, director of business development for Tudor Realty. While the complaints vary with the type of building and how well the board has been communicating, “for some people, it doesn’t matter how much communication there is.” They will always complain.

Goodman’s advice? Be prepared. If the board knows that there is an assessment that has to be passed, or a maintenance increase that has to be implemented, if “they give the shareholder the information and time to adjust to what’s coming, usually by the time of the annual meeting, it’s not an issue.”