Well if I can read behind the lines, it sounds like your co-op has insufficient funds. Take for example the STAR credit. The 2013/2014 one is not ready yet so you must be talking about the 2012/2013 one. That credit was for the previous year (2012/2013). It is usually credited to the shareholders January through June or January 2013 through June 2013 in this case.

Sometimes there are processing delays outside of the control of management necessitating a Feb-June or March – June payout, for example.

While not getting the STAR credit by this time is a concern, not having funds to pay Real Estate Taxes should be even more alarming. Many properties (mine, for example), save up ahead of time and pay off the Real Estate Taxes in June for the entire year (not just the payment due at that time). This gives the property interest while saving up each month, a discount when paying and a working capital buffer in case of true emergencies.

By the way, be careful if you assess the STAR or Co-op credits back to the corporation. If you only assess those who receive the credits, you may be inadvertently treating the shareholders unequally and opening up yourselves to legal action.

I would suggest finding out how much cash is coming in, where the funds are going, and making the hard choices necessary to put the financial footing of property on back on track.

Steve

Thanks Steve..

I am not sure if the co-op is using the credits to pay the property taxes.

I'll check The BBL on DOF sight.

a co-op can opt to assess the STAR credit. however, they must also assess those who don't receive STAR for the same amount.

You could explore bank financing to fund the repairs. There are banks who will lend the condo corp money, and that might be one way to get your repairs done. Most likely common charges will rise to pay financing expense, but probably not as much as doing assessments. Good luck! Sounds like you're in a tough spot.

Thanks for the advise. I looked into this and it seems like a good idea. The problem is these loans are not short term. The shortest term is 10 years. When I project 10 yrs to problems not included in the engineer's evaluation (roofs are now 14 yrs old and were not included, driveway/parking has sinkholes, exterior will need painting...all not included in engineers report) taking out a 10 year loan for less than $750k-1Million doesnt make sense. Even if I take out a 500K loan, paying it off over 10 years (with interest) still means we need assessment to cover the costs. A 10% raise in maintenance only amounts to an extra $23,000/year for us. That will not cover the loans. We already are running the place dirt cheap so cutting costs wont be the answer either. Thanks though.

It's easier said than done, but I would say just bite the bullet and assess again. People won't like it but you can't let the building fall apart. Sounds like you're doing this all yourself, though. At the least, you need to delegate some of the work - can't the treasurer share the burden of communicating tough facts to owners? Sometimes we as board members are so caught up in the immediacy of owner/shareholder reactions that we don't let ourselves plan ahead. If you can get through the misery of another year of dissatisfied owners, you will have saved your building. Best of luck!!

Does someone know what should be the suggested OR minimum reserve fund in the 100+ coop building? Can you refer me to the official source of information?
I heard that it should be a certain percentage of the annual building maintenance.
Please advice.

This is a tough situation. Your unit owners need some no-nonsense talk: "Our building is in bad shape, and it's just going to get worse if we keep pretending we can fix it with Band-Aids and a skeletal reserve fund. We've GOT to raise a lot of money and this is going to add to your monthly payments, whether in common charges or as an assessment. If we don't do this now, it's going to cost even more money down the road. We've already delayed this for too long, and we can't put it off any longer. We're all *owners* here, not renters; there's no landlord who can be pressured into solving our problems for us."

I agree with those who suggest that a bank loan is in order. Furthermore, you should borrow *more* than you think you need, not less. I'm a co-op guy and am not sure of the intricacies of a condo loan, other than that the security is the revenue stream of common charges. With one of your unit owners in foreclosure and two others in default, this may pose problems in getting a loan - especially since the condo association's interest is subordinate to the bank's. You may end up with nothing after the foreclosure goes through. (This is quite different from co-ops.)

It sounds from your description like your common charges haven't been increased in ages. This is a terrible idea for a building in your situation, especially when your by-laws cap the annual increase at 10%. I would push hard for a 10% increase immediately, plus whatever additional assessment you need to impose.

You also need to build up your reserve fund. Most sources advise that the reserves should be equal to at least 25% of your annual budget. If you don't have that much - or at least a plan to replenish the reserve fund over the next few years - then a purchaser's attorney will be rightly nervous and units will become difficult to sell. Once the reserves start growing, resist any urge to plunder the fund as an alternative to raising common charges.

Stress to the unit owners that you're not spending money needlessly and that your budget is already tight. Unless they want their apartments to become virtually unsellable, higher charges are essential and must be implemented immediately. Be straightforward and matter-of-fact, but firm. You're not frittering away money on amenities; you're making critical repairs to the building itself.

Thanks. This is very helpful and is along the lines of how i am thinking. The problem i face with my own board members is that they are concerned if I increase the maintenance and assess further it will drive more owners into not paying. I do not know if this is true or not but it makes for a lively debate. The problem is (an I feel bad saying it) there are a number of owners who should not own in our complex because they can not afford to live here. They were able to get by when there were no assessments and the complex was left to fall apart by failing to maintain the place. But now that repairs need to be done, they can not (or at least claim they can not) afford to pay the extra costs

I was surprised to see this. There are many of us that have issues with this developer. He seems to be untouchable. Please send me your information so that we may get together and publish something concerning developments that he builds and then walks away. I know someone who is willing to help with this issue.

He seems to be untouchable since he has donated so much money to our Governor. Sadly our elected officials are aware of this and yet fail to address this since there is big $ with real estate packs and this developer is a big donor. This should be brought to the attention of the Attorney Generals Office.

Agree with all comments, but realistic about the chances. This is a long haul to get politicians to stop backing certain developers. some in my building want to wait for the politician to put 'pressure on DC to fix mistakes. If we do that we will wait forever.

BD--That may be true (waiting forever), but giving up and giving in and taking care of the problems that the developer created, is why those of us willing to fight the fight and demand help from the politicians and the media, is the reason we wait forever. The developers know that if they stall long enough, we will go away.

Unless your building is magic and lasts forever, waiting forever means the building will fall apart before you get political help. Dont you have blueprints or some proof of the problem? the evidence of his screw up wont go away if you fix it. That is as long as you have some proof.

BD:
I am sure we all have blueprints, and engineering reports to prove the defects and you are correct, if we fix, we will never get help, but it doesn't seem like we will get help since so many hands in so many pockets. Exposure is something that has to be done. This blog is great, but the one problem is, how do we all get together and finally do something?? It seems no one wants to give out their information on a blog and that's understandable. Is there a way that someone can set up an email, not with their name so as not to give away who they are and then some of us can reach each other and start a dialogue with the media and others.

You misinterpreted. I did not say if you fix your building you will never get help. My advice is fix the building, hang on to proof of mistake, eventually you may get something back based on proof. If you sit on your hands and wait for pols to take action before you fix, your in trouble. building will crumble. Best of luck.

BD:

You misinterpreted. I did not say if you fix your building you will never get help. My advice is fix the building, hang on to proof of mistake, eventually you may get something back based on proof. If you sit on your hands and wait for pols to take action before you fix, your in trouble. building will crumble. Best of luck.

BD:

I am answering your above blog. I didn't misunderstand, but fixing the errors before we hold developer accountable costs LOTS of money. How can we obtain that kind of money without hurting shareholders by making their homes unaffordable to live in? Any borrowed money has to be paid back, thereby the developer can turn around and say, it's fixed, we're not responsible. How does one deal with that?

How do I reach you? I need to be anon on this blog for now and can't be the Norma Rae that I want to be, yet?

There is someone at the DNA that will do a story on this Developer, but we need to get all of us together and have a meeting. I know no one wants to give personal information out, but how do we all get together to accomplish this? The AG knows all about this Developer, complaints have been filed years ago.

Can you give me your email address? i can not emphasis how corrupt this all is. Public Advocate Deblasio has been useless, elected officials in my neighborhood are all out to lunch.

Just setting up this new email. Try within a day: decarey101@hotmail.com

Great, will try tomorrow.

It bounced. Will try again tomorrow.

I am very interested in discussing this matter further. I am currently involved in his application to receive public subsidies for another private development. It blows my mind that a developer like this is not only allowed to operate, but also receive taxpayer dollars to do so. Anyone wishing to contact me may do so at this address naou191@aol.com and I will give you my personal one after.

Have been trying but keeps bouncing back.

Can you give me your email address? i can not emphasis how corrupt this all is. Public Advocate Deblasio has been useless, elected officials in my neighborhood are all out to lunch.

Because this is a blog it is difficult, I would love all of us to get together and expose this issue. That is the issue, how do we do that? If I can, I will try to figure out how we can all get in touch with each other, please, if you can think of a way advise. It is an important issue and if we can get an article in the Media that would be a step in the right direction. With the election around the corner, we need to try to get people in office that will help. Of course, that's wishful thinking, everyone that's running is not worth much.

We had one sponsor tenant and one owner who had 'issues'. In a way, we were lucky, no one was injured because of the occupants. The owner was dropping bricks down the stairway, the other would just bang the steam risers whenever she heard dogs barking, loud tv's, etc.
We called the NYPD on the brick dropper, they took him away via ambulance and after psych evaluation, he moved out, I think due to his family being contacted.
The woman hadn't been seen for a period of time, we were concerned that she was dead, and called NYPD. After trying to view the apt via the fire escapes, knocking on the door, calling her name to no avail, we drilled the lock and entered the apt. We found her sitting on her sofa, fully alert. She just 'didn't feel like responding' to the police, or anyone else. They made a report to social services, and after their follow-up, they located a son who took her out of the building and placed her in a nursing home.
I would suggest calling 911 for NYPD, if there is something visibly wrong. Thyey will call for an ambulance if they feel it's needed. The person may be off their medications, or having other health issues which can be evaluated best in a medical facility. They can also contact family members, if they can be identifed and located. In my building, we request emergency contact info from everyone that moves in, and try to update it annually.

Call your Board Attorney. You are extremely limited as to what you can do. Only the Police can enter their premises unless there is an emergency as defined by your Bylaws. Being concerned and helpful is fraught with real liability. You need an objective assessment of the issues, a situation entry plan, goals, and an exit plan all with alot of very cogent contingency and 'plan B's'. The court is very protective of seniors and the possibly ill. If they don't have 'willing' family to intervene, you could wind up on the wrong end of being right. Just because you think think their behavior is a problem doesn't mean they don't think its you. They are very possibly in a good position to hire a lawyer. Which can easily wind up at your expense! Don't email each other, meet and talk. Meet with your property manager and lawyer, in person.

Actually, there's a lot you can do. This article is about aging residents primarily, but also talks about hoarders and other mentally disabled residents

http://www.habitatmag.com/Publication-Content/2008/2008-May/Featured-Articles-from-Our-Print-Magazine/Adjusting-as-Residents-Grow-Old-and-Infirm

Hi Craig,

An audit will only tell you if the financial statements are reported in accordance with generally accepted accounting principles (GAAP). (They may also catch gross mismanagement, unreported assets and potentially theft). In my opinion, you need an independent voice confirming the finances. If an audit has not already been performed (my complex performs one every year), then I would absolutely have a CPA firm perform an audit. If you need a suggestion on which firm, please respond back. This is not an activity that a typical Board is able to perform.

However, an audit will not give an opinion on business decisions within the law. For example, the question “was it really wise to do “x” with shareholder funds?” would not be answered. However, this is something that a Board along with a financial advisor can perform (either a finance person on the Board or a hired consultant).

I would also be really careful in alleging “theft” or “mismanagement” without due proof as it may open you and the Board to lawsuits.

Additionally, sometimes a change in management companies is in order.

Finally, think about unintended consequences. If theft or fraud has actually happened, be sure to contact the authorities or place lawsuits. However, if the issue turns out to be differences of opinions on permissible matters, remember to respect each other as you all have to live together in the same community. Certainly discuss what is needed but remember to come together in the end.

Steve

Steve-Inwood is correct. There is a lot of gray area between what is poor or bad judgement and what is illegal. The kind of audit you are asking about is called a "forensic audit", intended to uncover illegal activity. These are very expensive and most likely will not add any value to the issues you are facing.

Following what Steve suggests is a very good place to start.

Unfortunately my coop was plagued by this situation for over 20 years- also include the accountant in this group because they produce the financial statements which cover the fraud - we had massive overstatements of expenses etc - However we did have a forensic audit but beware who you hire - Our former management company had not paid total withholding taxes for almost a year, we paid over $50,000 to IRS, they did not pay the union which cost us $200,000, etc etc - during this time we had increases and assessments of 25%, 15%+ every year - yet the accountant couldn't find anything, absolutely amazing - so where did all this money go because the corporation did not have the money

Do not let the board's typical meeting time dissuade you or other shareholders from running for the board. There is no reason for the current meeting time to be set in stone; if current members are available at 10 am, they are also available at other times.

After a new member is elected, that member can provide his or her available times to the board. It is the board's responsibility to agree on a time when all can meet.

If after getting on the board the rest of the board for some reason will not accommodate a new member's schedule, the new board member should speak with the co-op's legal counsel, who should be able to persuade the board to be accommodating. I am not a lawyer, but I believe that by excluding a board member from meetings, the board would be violating its commitment to fiduciary responsibility, and to business corporate law.

Thanks very much for the feedback here. We hope to be able to vote at least one new member to the Board this year.

Sorry, but scheduling meetings at an inconvenient time is NOT "excluding" a new board member. Majority rules here, & if 6 members like Thursday mornings & 1 doesn't, many would think it unfair to force the 6 to change.

The idea that the board has a "responsibility to agree on a time when all can meet" is unsupported wishful thinking. The idea that counsel would be able to make the board "accommodating," or would be interested in doing so, isn't much better.

In the climate you describe, the notion of passing a by-laws amendment is simply unrealistic.

After getting elected, I'd instead spend my energy getting the board majority to allow participation by teleconference [phone or Skype] at their regular time. There's no good excuse not to, there's ample precedent, counsel would have trouble objecting, & if the board refuses THAT becomes your justification & rallying cry for a recall election.

Scheduling a single board meeting at a time that's convenient for the most members is reasonable, and no one would argue with that - so long as the same people aren't being excluded time after time. And that's the issue here: it's a *systematic* problem. The board *always* meets at a time at which people with full-time jobs could not reasonably be expected to participate. This is unfair on its face.

Allowing participation by teleconference is certainly a good idea, and we've had it in our own by-laws for years. Unfortunately, it doesn't address the central problem in this case. Someone with a conventional job can't be expected to drop everything at work and hang out on a phone call during the business day for an hour or two.

This would be clear-cut if the excluded board member had a disability that prevented attendance: "We always meet on top of the hill." "But it's not wheelchair-accessible." "TOO BAD! Majority rules!" Obviously the board would need to make a reasonable accommodation in that case. The present situation feels very similar: the board is being inflexible on an element of the meeting that precludes attendance by most people with jobs. Furthermore, it's hard to see how the board could argue that it would be an undue hardship to change the meeting time.

"No one would argue with that" is another unsupported assertion which simply ignores the facts of this case. Every sitting member of this board would argue with that.

Further, what you [or I] may think "reasonable" or "fair" has no relevance or meaning here.

The wheelchair comparison fails, as you're now talking about a protected class which the law says must be accommodated. [Though this board could say: "OK--we'll meet at the BOTTOM of the hill instead...but it's STILL Thursday morning."]

Having a job is not a disability, & no consideration is due board members who don't find the meeting time convenient.

That's why I suggested teleconferencing...as a stop-gap until more considerate & flexible board members constitute the majority.

Wishing & hoping for some magical by-laws provision or external rule to force the board to be nice will waste time & produce no results. Pleading with board members to change their ways is also likely to be unproductive.

Bite the bullet, get elected, attend by phone, & you'll have immediate access to all corporate records. Then begin work on securing additional seats.

Teleconferencing solves nothing, as I mentioned earlier. A personal call during business hours that lasts from one to two hours is simply not possible for most full-time employees.

It's true that a disabled person would have a stronger legal argument with an inflexible board, but I don't know whether any case similar to the one at hand has actually been argued. I'd point out, however, that the underlying ethical argument is not "It's the Law (TM)" but "It's unfair to have board meetings that one or more members can never attend."

It's the ethical issue that's likely to appeal to shareholders more than the legal one. And it's not a matter of "wishing and hoping"; it's a matter of getting enough people motivated and involved that they will do some or all of the following:

* Run for the board themselves
* Vote in new board members who are more flexible about meeting times
* Vote for a by-law amendment to require evening meetings, except by unanimous consent

And yes, they also can (and should) vote for a by-law amendment to allow participation by teleconference. It's a perfectly good idea to adopt, but it doesn't solve the problem at hand.

Making an appeal to shareholders is an approach I'd support. However, the question posed was: What can a single new board member do if all meetings are currently held Thursday mornings?

If the new board member compromises & finds a way to participate, a year hence he or she can make the ethics/fairness argument to shareholders & organize a slate to take control of the board.

The trick is managing the 1st year, & I'm still hearing no other pragmatic suggestions. Talking fairness & ethics with current board members is likely to lead nowhere.

It's time to vote in a new President! Our building had board members in place for over 25 yrs. they were the original "sponsors" and controlled the commercial space (profit going to sponsors). The Board basically had a major conflict of interest and worked very hard to stay in power (holding annual meetings that were diversions from the truth). It wasnt until the old board was completely overthrown that the "truth" came out. The board had been dysfunctional, priorities were based on their profits (controlling commercial space -they had long term lease ), neglecting upkeep of the building, artificially keeping maintenance down (as their commercial rent was based on a % of the maintenance - lower maintenance ment lower their rent, but their subtenant paid going rates). In short, the building was a mess inside and out.
Stand your ground, let the shareholders know. Vote this person out!

Wow, that's pretty unpleasant. Co-ops can change eligibility requirements for serving on the board by amending the by-laws, but this is a different matter. Consistently holding meetings at a time that's not feasible for certain members (or potential members) to attend seems quite unethical. You should consult an attorney.

One possible solution is amend your by-laws to require that meetings be held (for example) no earlier than 6 PM, except by unanimous vote of the board. You'd need to get the shareholders to formally vote on the amendment: most by-laws provide that an amendment adopted by the shareholders may not be repealed by the board alone. Note that this revision does not prohibit meeting at an earlier hour, so long as all the board members agree.

It has been going on for some time. I think some very quick excuses were made and the board more or less turned their eye. Perhaps because it is not clear to them it is happening.

Tammy this is very easily resolved, have your property manager (or whomever is managing your property) contact the dry cleaning company and explain to them that if personal items are put in with work items they will not be paid for those items. Also send a memo to your staff explaining that it has come to your attention that personal items are being put in with building items and it will not be tolerated. Everyone has now been put on notice so you can take corrective action from here on it if it is repeated (staff suspension etc) Hope I was of some help as that is how I would handle the situation.

I guess the first question is do you have proof? copies, photos of ticket etc. As a PM/RM, I do not think it is acceptable as their is a distinct difference between a work uniform and personal clothing (personal clothing is not part of your work uniform). Larger buildings that have a Resident Manager may opt to put his/her clothing on an account as shirt/tie etc, it the building specifies the dress code. Hope this helped.

MRM

The manager at the dry cleaner remembers the personal items being put into doorman account by someone claiming to be a staff member. The person evidently came in person to the cleaners to drop them off instead of leaving them for pick-up at the bldg as is the norm.

Frank - Who were the papers served on? Contact your Co-op's attorney and insurance carrier immediately, and do not say anything to anyone before you do. DO NOT try to deal with this or negotiate on your own. You will dig a hole deeper than you realize. Personal Injury lawyers love to deal with non-attorneys who think they are saving money.

Your insurance carrier is probably the best place to start. They will assign an attorney to you to handle the case. Your board attorney should be involved because that is why you have board attorney.

Do not try to cut corners to save money. It will wind up costing you more in the end.

Don't remove the tree, don't change the tree, don't change anything. Doing could be made to seem that what you originally had was hazardous. Wait until you get competent advice from either your insurance company's attorney or your board attorney.

Good luck with this,
--- Steve

Steve,

All that's been done. Insurance co will probably try to settle. What I find an outrage is that there was no contact immediately after the fall other tha receiving legal papers a year later. Seems suspect. Btw, our streets is inundated with bars and rehab centers.

I am so glad you said not to remove the tree!! That would be heartbreaking. But maybe a new fence? Or pave the enclosure instead of stones?

We had 2 of these, 1 inside the building and 1 outside. No witnesses to either one, legal notice can be served via the Dept of Corporations in Albany. Defective stairs inside, what defect? Nothing broken, nothing to repair. Insurance company inspects the sidewalk every year or two, came up ok. We contacted our insurance carrier, they handled both, settling both. Even with recorded video, you're not likely to have 2 years of history available to play it back to see what happened. This is life in NYC, loaded with lawyers, and also elected to serve us in Albany.

I've been on the board in my builiding for over 15 years. We're on our 4th mgmt co, not counting a merger. After about 20 agents, 3 or 4 were worth the money. The rest had trouble writing a decent letter, doing a weekly walk through of the building, staying on top of the required inspections, filings, etc. We're going through a second bout of late elevator inspections with hefty fines. Typical follow up of issues presented during a board meeting occurs 2 or 3 days before the next meeting, resulting in a continued list of unresolved items. I spend several hours a week myself talking to contractors, reviewing tasks with building staff, checking for new finance dept charges, violations, water meter charges, etc. to try to avoid late fees, etc. when the bills get lost.
Insurance proposals came in 4 days before current policy expired. All you can do is keep a checklist of things that they need to do and follow up to make sure that they are done timely. Know who the back office staff is that handles your building, deal with them directly if you can, copy in your manager on emails, scan/copy/date everything you send to them.

there are a bunch of recent posts on this subject here.
the managing agent agent industry is rife with corruption and incompetence. most boards do not have members who know enough to stand up to the managing agents. sen. kreuger is trying to get a bill through the congress in albany that would establish an ombudsman for shareholders. letting your reps in albany know how important that bill is to correct pervasive management abuse is a way to take action.
btw, christine quinn is in the pocket of the real estate industry and a few years ago would not let a bill get to the floor because it required boards to give a reason for rejecting co-op applicants. the real estate industry flooded her office with letters against the bill.

You are totally incorrect regarding the real estate industry and intro 188 the City Council bill requiring the reason for rejection in purchasing co ops. The NY State Association of Realtors has been working long and hard to get a version of this bill passed. There may be some, mainly co op board presidents who do not want this bill, but I can assure you that NYSAR has representatives working with council members trying to get the necessary support for the bill. I am one of them. Don't blame an entire industry when there might be some factions that are for or against a particular policy or bill.

it’s good to know the new york state assoc of realtors is working to get support for the bill requiring co-op’s to give the reason for rejecting a buyer. is the nysar also working to get sen. kreuger’s ombudsman bill passed?

The above posted message looks like it came from me, which it didn't. However, I will respond by saying that NYSAR is a strong supporter of Liz Kreugers ombudsman bill.

i'm a more recent board member (going on 5 years) and from the moment i joined my board i've been pointing out issues with our management company. unprofessional, at times borderline incompetent, never in the least sorry for the errors they've made. i've even pointed out errors to senior management at the company and there's no sense of concern. it's a tough thing because we'd like to change but don't know that we'd get anything better.

Unfortunately we live in a world where we can go get ourselves a real estate license and then call ourselves a managing agent. There should be a list of worst managing agents and I'm pretty sure our elected officials don't want one due to the fact that's where all their $ comes from. There is a bill where managing agents would have to be licensed and it still baffles me that my hair dresser goes thru more state requirements to cut my hair then my managing agent who oversees numerous residents housing.

The building I live in we have allarea managment and I wouldn't recommend them at all. Why do I need to explain to the managing agent various building codes issues? Why do I need to remind him the elevators need to be inspected? I could go on and on...and this company should be closed down but they have given $$ to our elected officials.