Cars and Cash

This began as the story of a co-op board that had found a new kind of revenue-raising amenity for its residents. Along the way, it became the larger story of how co-ops and condos can brand and market themselves with corporate sponsorship, raising their profiles and also the value of their apartments.

In January 2010, the Seward Park cooperative on Manhattan’s Lower East Side became New York City’s first to provide on-site “car sharing” – hourly car rentals – in a deal with the Hertz car rental agency that gives residents discounted rates and provides financial sponsorship for the co-op’s upcoming 50th anniversary. It’s also part of Seward Park’s green initiative, an attempt to reduce the need for private car ownership. Above all, though, it’s a blueprint for how other co-op and condo boards can, for better or worse, pursue corporate partnerships.

“I got elected last June to the board,” says co-op president Michael Tumminia, 40, a former Price Waterhouse Coopers senior manager and now owner of the small-business management and financial-consulting firm 212 Partners. One of his main initiatives, he says, “was to raise the profile of the Seward Park co-op,” a complex of four balconied towers that houses over 4,000 residents in 1,728 apartments. “It’s my business-development background,” he explains. “I’m actively trying to create business opportunities that benefit the co-op,” where he and his wife, corporate recruiter Jennifer Salzman, bought an apartment in 2004, and which he considers “one of the best places to live in the city, given our cost and value.”

To that end, the board is doing a $2.5 million Local Law 11/98 fix-up, planting new trees, investigating its air rights with an eye toward some additional construction, and considering installing electric-car charging stations. On the less physically visible side, it’s adding amenities and technology that include a relaunched website and, on a trial basis, the internal web-network application MyBuilding.org

It was the MyBuilding connection, in fact, that led to the car sharing innovation, Tumminia says. “The CEO of MyBuilding.org introduced me to Laura Poznanski, a market-development specialist at Connect by Hertz” – the car-sharing arm of the venerable Hertz rent-a-car corporation – who “called me back immediately.” The CEO also provided the name and contact information of the local marketing manager for the rival company Zipcar, but, Tumminia says, after he left several messages and one e-mail, “I never heard back from him.” That made an impact. “I believe if you want business you respond to somebody’s interest in a timely manner.”

A Zipcar spokesperson said, “That was an oversight and is not representative of how we do business. My understanding is that the call came during a time of transition between two business development managers. It should have been handled, but it wasn’t.” He points out that, “Zipcar has relationships with more than 20 different properties in New York City [that are] all either co-ops or condos. In several of Zipcar’s partnerships we receive discounted parking rates and pass on the savings to residents in the form of reduced application or membership fees.”

In any event, Tumminia says, “Connect by Hertz has been a great corporate partner.” And that’s the crux: Seward Park views Hertz not simply as a vendor, but as a partner working toward mutually beneficial ends – ones that all begin with a grey Toyota Prius hybrid and a red Daimler Smart mini-car.

How It Works. The pair of hourly rental cars occupy two spaces at one of Seward Park’s outdoor parking lots. (The complex has about 400 indoor and outdoor spaces, and a waiting list of about 500 names, Tumminia says.) Residents and others sign up online to become a Connect by Hertz member. This gives them a key card allowing them to use any Connect by Hertz vehicle. “You take your card, and technology in the car opens the door with it if you have a reservation,” Tumminia describes. Keys are inside, as are a global positioning system, or GPS, device and a gasoline card. “Gas is included in the cost of the rental, depending on the miles you drive,” he says. “So, effectively, any gas you need to put into the car is on the company.”

Because of its size, Seward Park was able to negotiate with Hertz. “They created a special promotional code so that when Seward Park residents sign up, they get certain discounts that non-Seward Park residents wouldn’t get. It allows a person to rent a car for under $15 for a couple of hours, gas and insurance included. We also got an extra driving credit,” he says, referring to the company’s customer-incentive program. He adds: “We wanted to make sure we had environmentally friendly cars on our property, so we dictated to a degree that we wanted a Prius and a Smart car.”

The board also deserves credit for recognizing an inexpensive and easy-to-implement but potentially far-reaching opportunity. “We wanted a press release from Hertz,” says Tumminia. “A major corporation is more likely to get press coverage than a co-op in Manhattan would. They wrote it, we had the opportunity to review it and put in our two cents, and they put it on the wire.” It got picked up by, among other places, CNNMoney.com. It’s genuine news: as Hertz spokesperson Paula Rivera notes: “This is the first co-op/condo/townhouse situation in the country where our cars are staged.”

Then there’s the sponsorship deal. “Seward Park turns 50 years old this year,” dating from when the first residents moved in, 1960. (Construction was completed in 1959.) “We’re going to have a series of events to commemorate. And part of our deal with Connect by Hertz is they would be a sponsor. The amount of the contribution depends on utilization of the vehicles.” Related to this, the company “has done promotional events in every one of our lobbies, and sponsored a ‘green day,’ which was a shareholder meeting to talk about all the green initiatives we’ve undertaken. They provided things like refreshments.”

So far, he says, the car sharing program has been successful. The co-op hasn’t made “a windfall,” Tumminia reports, “but it’s been in the thousands of dollars” which goes into the operating fund and “allows us to defray some of the costs of the anniversary celebration.”

Getting the plan through the board initially had proven straightforward. After Tumminia broached it with the idea, the board passed a resolution empowering him to negotiate. “We have a very progressive board,” he says.

Negotiations took about two months. “Try to come up with ways that a deal is not just about financial terms,” he advises, “but also about how to get the co-op’s name into the press in a positive light, and how to integrate your corporate partner into your community.” The latter is a point about which Tumminia – who’d spent $50,000 renovating his and his wife’s apartment a few years ago, using only neighborhood vendors – is bullish. The deal included an obligation by Hertz “to do some local advertising in an effort to create awareness for carsharing,” he says. “They ran an ad in a local publication, Grand Street News, where we also got a story out of it.”

After negotiations concluded, Hertz presented a contract to Seward Park. The board’s newly hired legal counsel, veteran real-estate attorney Arthur Weinstein, reviewed it and identified issues that needed to be clarified, including indemnification. Now, after some fine-tuning, says Tumminia, “If something happened to the vehicle we wouldn’t be responsible – if, God forbid, the Toyota Prius had problems with the accelerator or if a car on Seward Park property got a dent, that’s the responsibility of the [Hertz] corporation.”

Then came the practical decision of where to physically park the cars. For that, the board turned to its property manager, Charles H. Greenthal Management. Explains Tumminia: “Our general manager is Frank Durant. We also deal directly with Jonathan West, the president of Greenthal. They were not involved so much in the review process, but in the operational side of the decision. Frank is the one who said, ‘This is where cars can go, this is how management staff will support the effort.’ For instance, we keep a spare set of car keys in the management office, under lock and key, so if there’s any emergency need to get into the car, our management team has access to keys. If there’s an issue with the vehicle, our management has direct access to Connect by Hertz. If the cars get dirty, we can ask them to call Hertz and let them know.”

Outdoor spaces were chosen for security reasons, since any Connect by Hertz member, resident or not, can use the cars. “We didn’t want people who were not residents to be able to enter our garage. The cars are outside our management office, where we put up a Connect by Hertz sign and on the ground painted in yellow ‘RESERVED.’”

In this case, the story involves a corporation and rental cars. But it could involve beverage companies, communication companies, playground -equipment companies – what have you. “Just find a way to reach a deal that benefits the shareholders both financially and from a quality-of-life perspective,” Tumminia says. And quality-of-life, in this day and age, includes your co-op or condo’s brand. “I love the idea of putting our logo, our brand, next to an established piece of American corporate life. I think that has a value to the corporation and a value to the co-op.”