A Brooklyn Tale

It was a house divided against itself, but now, through planning, perseverance, and pluck, the shadow over
Nostrand Gardens has finally lifted.

Nostrand Gardens was no good. Back in 1995, the board of that six-building, 348-unit co-op on Haring Street between the chromosome avenues, X and Y, in Sheepshead Bay, Brooklyn, was a house divided against itself, with different factions suing each other in court.

Its buildings were fading fast, with necessary maintenance delayed because of money woes. It had narrowly avoided default. There were charges and countercharges of fraud, improprieties, and physical intimidation. As they still say in that part of Brooklyn, “Oy, vey…”

But a dozen years can make a difference. Today, Nostrand Gardens is a handsome and spruced-up enclave filled with families and first-time buyers, a multi-cultural enclave where Asian, Jewish, Russian, Spanish, and various combinations thereof all live as though they were in some Sesame Street by the bay. There’s a reserve fund of $1,650,000, says board president Flora Berkowitz, and that’s after all the refurbishing of late. Sure, there are problems – a September 2002 murder at the nearby New Active Car and Limo on Avenue Y was an anomaly in the generally quiet neighborhood. But, on the positive side, how many co-ops can claim to be within walking distance of Randazzo’s Clam Bar and the Sheepshead Bay Pier?

In the 1990s, however, “it’s really true, we were going down,” says Berkowitz, a feisty warrior and nonpracticing real estate agent universally known as Flo. “Looking around, our place was really deteriorating. It was really very bad. And we had to do something about it.”

And they did. What was it like before? As they also say in Brooklyn, “Don’t ask! Okay, alright already, let me tell you….”

The Early Years

The Nostrand Gardens Cooperative rose in 1951 with the help of the National Housing Act. It was one of the first co-ops built under the Depression-era act’s Section 213, a mostly postwar urban-development effort that insures private-lender mortgages, including those for new construction. Nostrand Gardens, self-managed by its shareholders for its first four decades, ironically weathered New York City’s 1960s and ’70s downturn only to find trouble in the 1990s boom years.

The trouble had started a little earlier, coinciding with the 1987-91 co-op board presidency of a former Rikers Island corrections officer, Captain Mike Toffel – who, as later board president David Gorenstein told Habitat in 1995, “ruled with an iron fist, and would shut people up by telling them, ‘You’re done now.’” The 13-member board was frequently riven with factions and secrecy, especially regarding finances. It all came to a head when the co-op’s original 40-year loan from the federal Department of Housing and Urban Development (HUD) was about to come due, in July 1991. Although only $270,000 of principal was owed, well, Nostrand Gardens didn’t have it.

A splinter group of board members and other shareholders got together in a garage to form the Committee to Save Nostrand Gardens. (Why a garage? Because Toffel wouldn’t let them to use the common area meeting room.) The committee filed a lawsuit in November 1991 to oust the board. Accusations began circulating that the board had exhibited suspicious patterns of undocumented expenses. HUD took everything seriously enough to tell the board to resign – which it did on December 31, 1990 – and that the next board must hire another managing agent. The new board retained Elm Management, which found Nostrand Gardens in such financial disarray that the co-op couldn’t even buy heating oil without putting up security deposits and relying on Elm’s leverage with suppliers.

The new board discovered what appeared to be fraud and embezzlement on the part of its predecessor. Financial records were in disarray – many canceled checks, bank statements, financial reports, and board minutes were simply missing. In October 1991, the board hired a forensic accounting firm, Kessler & Associates, which spent two years investigating. By 1994, the firm had uncovered enough evidence for the board to file a civil complaint against Toffel, five other board members, and several vendors who, the complaint alleged, slipped Toffel kickbacks in exchange for excessive payments. Toffel allegedly kept the co-op checkbook locked away and wouldn’t let anyone else look at it.

Like GoodFellas without the guns, the 30-page complaint is a sad, shocking litany of skimming, forged checks, and a bookkeeper who told Habitat in 1995 that he was forced to give kickbacks and to let himself be misrepresented as a CPA out of fear “for my and my family’s life.” The New York State Attorney General’s office even got involved, charging three vendors with criminal felony complaints.

That same year, however, the cash-strapped board “just decided to drop the case,” says Nostrand Gardens manager Jennifer Christman of Wentworth Property Management, the co-op’s current agent. “They didn’t have enough proof. There was no outcome. It was just dropped, plain and simple.” To this day, Berkowitz believes Toffel “got away with it.” (As to where he is today, he had residences both at Nostrand Gardens and in Boca Raton, Florida, and moved to his Florida home sometime afterward. The only two “M. Toffel” listings in Florida are an unrelated man in Delray Beach, and a disconnected number in Pompano Beach.)

The Co-op Today

Nostrand paid off the HUD loan in 1993 and hired a new management company, Britvan Realty Associates. (Elm Management was put out of business six years later, after its principal pled guilty to taking kickbacks. Christman says Elm had been dismissed because “there were rumors of impropriety – no solid facts – that got back to the board. There were questions about higher-ups in the company, and the board said, ‘Let’s move on.’”)

In 1994, the nonprofit Community Preservation Corporation granted the co-op a $2,840,000 mortgage. That money allowed Nostrand to install new boilers and undertake many other long-deferred repairs and refurbishments. At that point, what the co-op didn’t want was to become a landmark legal precedent, but that’s just what happened because of board and management inattention and inaction. The 1995 decision in Nostrand Gardens Co-op vs. Howard found the cooperative at fault for not having done anything, after repeated notice, about “excessive noise emanating from an apartment … throughout the late night and early morning hours,” and held that the co-op had failed to take any “effective steps” to abate the nuisance. The shareholder who began this lawsuit, said the court, was entitled to a 50 percent abatement of maintenance. One critic of the decision wrote the case “demonstrates the judicial tendency towards misplaced liability; i.e., a victim of wrongdoing, and not the actual wrongdoer, is made to pay.” It’s a criticism that oddly suggests it’s okay for a co-op to ignore repeated, valid habitability complaints. Nostrand Gardens learned the hard way that you can’t.

This happened the year after Flo Berkowitz moved in. She went on to join the board in 2000, and, two years later, helped shepherd the co-op through an equity loan from HSBC that paid off the principal of the roughly 8.35 percent Community Preservation Corporation refinancing. The new equity loan, with a fixed rate of 5.35 percent, “enabled us to have the money to go forward to do the construction work.”

You’d think they’d be out of the woods then. But no. “We made a lot of mistakes,” Berkowitz admits, “because we didn’t have the right crew taking care of things.” Between the time it hired Elm and the time it hired Wentworth, she says, the co-op’s quest for a managing agent yielded “a few people in between with no merit. We had to get hurt before we finally got the right people.” In addition to Wentworth’s Christman, Berkowitz praises the “help and perseverance” of current superintendent, Jim Porter.

Porter, who’s been there two years and oversees a staff of four porters and one handyman, ticks off the list of recent improvements: “We got all the hallways painted, new lighting fixtures put in, new fronts to the buildings – meaning we put in canopies, removed the old fronts, and put in new doors and new entrances – and we tiled the hallways. We have new laundry rooms. We have a new company.” Christman adds that security cameras were installed two years ago, augmenting the long-standing security guards, and that new lobby mailboxes were installed. Berkowitz notes that the on-site playground has been renovated, and that the landscaping has been contracted out.

“The work that’s still coming up,” says Porter, “is [refurbishing] the outside curbing on the street, trimming the trees, and waterproofing the foundation.” A vintage recreation room is also on the schedule for spiffing up. “It’s the original 1950s rec room – even the chairs are the original,” says Porter. “They’re not big fans of that,” he says, chuckling. “When they rent it, they want people to be in the year 2007, not 1951.” The improvements, observes Berkowitz, haven’t made the maintenance skyrocket. “A two-bedroom is about $600 a month, and a one-bedroom is five-and-change.” Remarkably, “that includes gas and electric. All utilities.”

Still, what exactly accounts for the turnaround? Aside from ousting a board that had questionable practices, the thing Berkowitz keeps coming back to is a single word: perseverance. There’s still some shareholder apathy to overcome. The board currently sits 11 members; the number varies between 9 and 13. “Some people have resigned and we haven’t replaced them,” Berkowitz says. “We’re going to have elections at the end of the year. A lot of people don’t want to give up their time and energy to devote the time to being on the board. It’s very rewarding,” she says, “but it’s frustrating, too.”

The board and Christman are “trying very hard,” she says, to reach out to shareholders to get them to serve. “We’ve got a slight problem because the people moving in here are not all English-speaking. The majority of them moving in now are Russian; we have four members of the Russian community on our board. They’re all from different backgrounds, [including] an engineer.”

The financial scandals of the past are also history, she says. “We’re very honest, to the penny, to the dollar,” Berkowitz says. “Nothing is kept secret here, everything is written in the books. There was nothing like that before. He was running the entire thing himself,” she says of Toffel, the former board president.

The co-op’s accountant, Frederico G. “Fred” Cipriani, of Cavalcante & Company in Brooklyn, credits the turnaround on “an extremely proactive board of directors, who implemented a flip tax on all unit sales and [bring] constant dedication to the budget and actual spending of the cooperative, and [on] a management company and an attorney who are very knowledgeable of the industry.”

Described by one shareholder in 1995, not unkindly, as “like a retirement home,” Nostrand Gardens now attracts “parents, young people, and first-time homeowners,” says Christman. “A lot of families. We have grandparents in one apartment and their children in another.”

Or, to put it another way: that was then, this is Nostrand.