David Hales Finds Sanctuary in Yorkville Co-Op Amidst Challenges

DAVID HALES
President,
340 E. 83rd St.

David Hales has found the perfect place to call home at his Yorkville co-op. After earning a bachelor’s in classics and philosophy from the University of Southern California, the Los Angeles native moved to New York for his career as a consultant in international public health. Focusing on nutrition and the global HIV epidemic, he has worked for UNICEF and various government organizations, which has often taken him abroad. But he still finds time for his duties as board president. Hales spoke with Habitat about the challenges of running a small co-op — and the joys of nesting there.

Stepping up. After I moved to New York about 30 years ago, I rented an apartment in the West Village but moved uptown because I used to run marathons and being close to Central Park was a big deal for me. I’ve traveled a huge amount for work, so I was just looking for a small, manageable place to park myself. This building has just 22 apartments, all of them studios, and I liked the easygoing, informal vibe. About two years after I joined the co-op in 2016, one of the board members who lived on the same floor as me asked if I would be interested in joining the board. We have very, very low board turnover — not because we wouldn’t welcome other people but because shareholders who are capable and willing are limited. I became the board president because I was already handling the majority of the work — which I’m happy to do — and it was just easier that way.

Scaffolding headache. As a five-story building, we’re not affected by the Facade Inspection & Safety Program, but four years ago we did an assessment of the building envelope and learned that in addition to brickwork, we were going to have to do everything from installing a new roof to installing new windowsills and lintels. Partly because of delays caused by the pandemic, it was a slow, protracted process that took 2 1/2 years. It was a real challenge to both manage the work and keep people happy because there was scaffolding on the front of the building practically the whole time. It was a big bill, about $400,000 to $500,000, but what was really upsetting was the cost of the scaffolding bill, which was about $90,000. It’s no wonder boards want to get scaffolding down as soon as possible, because after the first big upcharge, you have to pay a monthly fee.

Delicate balance. To cover the cost of the exterior repairs, we had to refinance our existing mortgage from $850,000 to $1.2 million. Without that, there would have been a significant assessment, but we were able to impose a very modest one, which has carried us through. Boards are always trying to thread the needle to keep their buildings solvent while also having a decent reserve fund. Our reserves are too small, so we compensate by having a line of credit, which we haven’t had to tap into so far. We’ve tried really hard to keep maintenance increases manageable. We’ve had property management companies that said we have to raise maintenance 5% a year regardless of the building’s economic situation, but we were never comfortable with that. Our increases have been below inflation overall, and we’ve had years where there were none at all. 

Luck of the draw. To raise revenue, we instituted a sublet fee. A few years ago, about 60% of our apartments were rented, which was a problem because banks won’t lend money to prospective buyers if they see a co-op as a quasi-rental building, which they consider a nonfunctioning one. We also developed an annual sublet lottery, which I think is pretty innovative. There are only a certain number of slots, so it’s kept the rental numbers low. We currently have just seven apartments that are sublets.

Performance problem. A couple of years ago, the board decided it was time to find a new management company, mainly because we didn’t feel there was good value for money with the one we had. After a pretty extensive review of the options, we decided to go with one of those newfangled, tech-focused management companies. Its use of technology and their lower fee structure were very appealing. Unfortunately, what we got wasn’t what we were promised. The technology didn’t work well at all. Communication was a nightmare. People didn’t follow up. And their general lack of knowledge about the realities facing small coops created endless headaches for the board and shareholders. So earlier this year, we switched again, to Sandberg Management. We pay more now, but we trust the team there and they actually answer their phones.

Realistic expectations. Being the board president at a small co-op presents special challenges. Shareholders think we’re supposed to provide a lot of services and don’t always understand how that would impact maintenance. They’ll say they want a laundry room, but we don’t have the space. And because we have a small population to draw from, board members serve long terms. It’s a lot of work, but somebody’s got to do it.