Searching for a New Approach

The definitive textbook on how to run a housing cooperative has not been written. When it is, it should include a chapter entitled “Creative Solutions to Knotty Problems.” And an excellent case study for such a chapter would be the Gentry, a 182-unit co-op in the southern Westchester County village of Tuckahoe, where an aggressive board of directors recently developed an unorthodox management set-up to address seemingly intractable problems. Those problems included an unresponsive property manager, a tyrannical board president, two squabbling supers, shareholder apathy, and rumors of kickbacks to vendors. The seven-story, H-shaped building, erected in 1964 and converted to a co-op in 1982, was sliding into disrepair, and there was no long-range plan for capital improvements. The co-op was, in the words of one shareholder, “surviving but not thriving.”

That all began to change about three years ago when a representative from an energy audit firm spoke at an open shareholder meeting. A core group at that meeting realized they shared a passion for making the co-op more environmentally friendly.

In 2005, three members of the group got elected to the board, joining two incumbents. The two factions blended together like oil and water. “We had questions and we wanted answers,” says Robert Gloddy, a forceful leader of the newcomers who has since become board president. “The new guard had a ton of ideas. After one meeting, the two holdovers resigned because they saw that we were educated, enthusiastic, and we wanted to bring about change.”

The new guard suddenly had control of the board. As they say, be careful what you wish for. The departing board members had left few paper records behind, so the newcomers had to feel their way. They designated seats on the board for a fourth shareholder and also for the sponsor’s daughter, a real estate attorney with board experience. Then the five neophyte board members got busy learning the ropes.

“By and large, we had to rebuild,” says Carol Anthony, the vice president, a former actress who now works as a software tester at a law firm. “It took us a year to realize money was leaking out of the co-op due to poor management.”

The property manager was subsequently dismissed and replaced by White Management, a small firm in nearby Scarsdale. The attorney was fired and a new one hired. To counter rumors of kickbacks, new vendors, such as electricians and plumbers, were brought in. To cut down on the squabbling, the super and his assistant were assigned to different wings of the H-shaped building.

It was a good start, but much work remained. “I think of the building as a giant ship,” says Gloddy, a physically imposing man with a passion for running in marathons. “We had to steer the ship in a new direction. Before we could do that we had to knock the rust off.”

To knock that rust off – and bolster the co-op’s stagnant reserve fund of about $350,000 – the board members made a number of revenue-generating changes. They installed storage cages, wired the building with Verizon fiber optics, imposed an assessment for heating oil, and levied fines for quality-of-life infractions, from excessive noise to unauthorized renovations.

Exit doors were also brought up to code, roof leaks were patched, bricks were re-pointed and exterior locks were changed as a security enhancement. The rust was coming off, bit by bit, but the ship had barely begun to turn.

Despite their zeal, the board members found themselves operating in a vacuum. No volunteers came forward to serve on the admissions, finance, and quality of life committees. “People pay maintenance and think the board should take care of everything,” says Gloddy. “That’s been the history of this building. Ultimately, I blame our problems on lazy shareholders, apathy and ignorance.”

There was one more place to spread blame. “The board was doing a ton of work the property manager should have been doing,” Gloddy says. “We got tired of that.”

And that’s when the directors came up with a creative solution to their knottiest problem – how to tackle the major repairs that would determine if the ship continued to float or would sink like a stone.

The most pressing repairs were needed for crumbling concrete slabs on the parking deck and to an improperly installed, and potentially dangerous, boiler room door. Future projects include a new roof, an elevator upgrade, installing a gym and redoing the laundry room.

“I had spoken with people in the trades and they had mentioned general contractors,” says Anthony. “I did some research into who might be able to manage all aspects of our building’s operation and came up with a dozen companies.”

Like many brilliant ideas, this one was simplicity itself. Rather than expecting the property manager to run all aspects of the building, the board considered splitting the job in two: one company to take care of the physical plant; another to run the back office. “I was the person who pushed for this initially,” says Anthony with an obvious glint of pride. “The majority of the board was skeptical.” But after talking over the pros and cons, the other board members began to see that this unorthodox idea was consistent with the board’s new vision.

Gloddy asked himself: “Why not hire our own contractor to oversee the physical plant, then hire an accountant to do the back office work? After a time, our thinking was that a general contractor has to have a license and insurance – unlike a property manager – and he would realize what has to be done to repair and maintain the building. Instead of paying outside vendors for every little job, we’ve got one person who can do it in-house – plumbing, electrical repairs, everything. If it’s a huge job he can subcontract, then oversee the work.”

The board whittled Anthony’s list of a dozen candidates down to three, then conducted interviews. In January, it signed a two-year contract with the general contractor Roy Howard, who has been in the construction business for 20 years. It also decided to keep White Management to perform such back-office tasks as collecting maintenance and arrears, paying bills, and handling correspondence. “Some wanted to cut the ties [to White Management],” says Gloddy, “but others were reluctant because [White] knew the building.”

For his part, Howard quickly learned a great deal. “They have an old building, it was deteriorating, and they were doing things at the recommendation of vendors,” says Howard, 40, a Westchester County native. “For instance, past boards spent thousands and thousands of dollars on brick pointing, but nobody asked why they had to keep doing that work. I could see that air-conditioning units were causing leaks behind the façade. Then they spent $600,000 doing that [boiler room] door, and it was done wrong. The engineer didn’t design it properly. With us that never would have happened. I’ve already brought in an engineer I know is reputable. I critiqued his proposal, negotiated a contract, and presented it to the board.”

After taking three bids on the boiler-room door job, Howard will make a recommendation to the board, which often meets with Howard’s director of operations, Anthony Troiano, with notes of the meetings taken by Barbara Maxey, the board secretary. “This is the first time I’ve seen anything like this,” says Jessica Rocchio, who has been handling the Gentry account for White since the fall of 2007.

She says the new arrangement has cut the time she spends working for the co-op from five to about two hours a day. “No one likes being taken away from what they’re doing,” Rocchio says, “but they needed someone to handle the large projects they’ve got coming up. If this is what’s best for the building, it’s best for the building.”

The early reviews have been positive. “It’s working because Roy Howard’s a straight talker,” observes Gloddy. “When we have questions, he gets right back to us.”

“I think it’s amazing,” says Howard. “There’s no more cost to the board, and they gain two professionals who specialize in the two aspects of property management. It’s a win-win.” Anthony, who got the ball rolling, adds: “This management team has already made progress in identifying major issues and the order in which they should be addressed.”

Of course, it’s still too early to tell if this unusual arrangement will succeed in the long run. But that doesn’t faze Anthony.

“If something’s not working, you need to try something else,” she says. “We’re trying this, and if it doesn’t work, we’ll try something else. That’s the essence of running a business, and this is a business.”