Too Much Detail Is Often Just the Right Amount

The problem. At buildings with commercial spaces, COVID struck hard, which was the case at a 100-unit Upper East Side co-op where the restaurant closed and stopped paying rent. The building needed to do a 3% maintenance increase, which was a hard enough pill to swallow, and then an assessment of 8% on top of that to cover the loss of income from the commercial space, which was brutal for shareholders. We assumed that everybody read in the papers that rents weren’t being collected and that they understood this was happening due to COVID, but we wrote a very detailed letter to tell everybody the increase and assessment were specifically due to COVID and the restaurant not paying.

Putting out fires. Despite that, everybody was very upset. The board members and I got angry calls from people, but when we spoke and explained things to them, they calmed down. So we thought we’d have a Zoom meeting to communicate verbally and face-to-face with everyone in the building. We’d held town hall meetings before whenever there was a big project, like the window installation we did before the pandemic. We brought in the architect, the contractor, the foreman from the job and the actual windows so people could touch and feel them. We’d explain the process, what people should expect, and what we expect from them. So we knew that with any large issue that’s going to affect shareholders, a letter alone isn’t always the best way. 

Show and tell. For the Zoom meeting, we sent out letters and an email blast with the invite and the link. We thought we’d get a 50% participation, but we got about 80%. And we were very prepared. In addition to the board and myself, we had the building’s accountant and attorney, and Greenthal’s VP of finance, who had helped with the budget. We were able to share our screen and put up pie charts, bar graphs and diagrams explaining line by line where every penny of income comes in and where all the expenses are. Then we answered questions that people had emailed in advance and took live questions as well. By the end of the meeting, everybody clearly understood things and thanked us for taking the time to present it in a way that was easy for them to understand.

Happy ending. The postscript is that about 30 days after the meeting, we were granted our Paycheck Protection Program loan. We had told people at the meeting that we’d applied, but didn’t know if it was coming through and exactly how much it would be. Thanks to the loan, the assessment only lasted three months, and it helped us get over the hump on our financial problems, which was great. Now the restaurant is open again, and they’ve made some payments. We’ll be happy when they can pay in full and hopefully give us some of the back money they owe us, but overall things have worked out pretty well. 

Takeaway. Being transparent and meeting with people face-to-face is really important and not just with financial issues, but with any building project or upgrade. There can be a fear of the unknown, and when you take that away people are much happier. And where there is the sting of a maintenance increase or assessment, it makes it a lot more palatable to people.