Crisis Management: Turning a Building's Emergency Into a Modernization Opportunity

When Beth Markowitz, President of Merlot Management, received a late-night call about a fire in a nine-unit property she managed, she dashed to the building. The fire was in the basement electric motor room, and she spent the night working with folks from Con Ed, the fire department and the city’s Department of Buildings Emergency Response team.

Cash Call

Residents were temporarily displaced, and the building suffered extensive damage. “Because of the smoke, fire and chemicals used to put out the fire, residents weren’t allowed back in the building for a period of time,” Markowitz says. Smoke and soot permeated several floors, fire stair doors were damaged, the intercom system was compromised, and crucially, “the electrical system that powered our not-so-ancient but not-so-young elevator was fried.”

All of this repair work cost more than the co-op had in hand. While considering a cash call to residents, Markowitz spoke to the building’s insurance broker about getting an advance on the insurance claim to cover some of the upfront costs that were needed immediately. “We got $50,000 up front, which was a substantial amount of money. That meant I could go to all the vendors with some money, and not everybody and to dig in their pockets right then and there,” she said.

Elevator Decision

The elevator damage proved to be a pivotal issue. Markowitz said the board faced the question “Were we going to spend a lot of money to get the existing elevator up and running, or did we want to bite the bullet and do an elevator modernization?” The building’s elevator was code compliant, including the door lock monitors, but new modernization requirements were on the horizon. “So we went to our existing vendor and said, ‘Look, here’s our problem. One, our ancient motherboards are not working and we don't want to spend a small fortune to fix them. And two, we want to bite the bullet and do an elevator modernization."

The board decided that they didn’t want to touch the elevator cab because it would prolong any modernization project. Along with Markowitz, they interviewed several vendors, ultimately settling on one who was able to source old motherboards to keep the elevator partially functional during the transition period. This temporary fix allowed residents to prepare for the inevitable extended shutdown during the modernization.

“We knew at some point the elevator would be completely shut down for four or five months while they did the mod, and so this gave us time to prepare our residents in the building for it,” recalls Markowitz. “This gave us time to put an assessment in place that we tied to the milestones of the elevator project.”

It’s Not Done Till The City Says It’s Done

After the physical work was completed, the elevator needed approval by the Department of Buildings before it could be fully operational. This process can take several weeks, a fact that surprised many residents. "We had to explain that... the DOB is down on manpower because of all the internal issues that the DOB had with inspectors," Markowitz noted, “plus they are sending out inspectors to look at unsafe elevators. Somewhere lower on the list are the inspections to turn equipment back on.”

The Unexpected Offers Opportunities

In times of crisis it pays to explore all opportunities, Markowitz points out. Getting an advance from the insurance company was key, and thinking strategically about an elevator modernization when confronted with a crisis fix was advantageous. Bottom line, says Markowitz, planning and resident communication allowed this building’s emergency to morph into an opportunity for long-term improvement.

— Carol J. Ott