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A 15% increase is certainly substantial, but the co-op's circumstances may dictate that it's needed. Did your co-op issue a statement explaining why they felt a 15% increase was necessary? They should have.
I will also bet that your co-op's property taxes and water bills had tremendous increases this year - like all co-ops in NY - since everyone is home and using water like crazy. Property taxes have skyrocketed in the past 10 years. DeBlasio hates co-ops and look at us as cash cows to fund his pet programs.
Did your co-op face any unusually large expenses this year - like repairs to the boiler and the roof? That may be a factor. Is the co-op facing legal problems that cost $$? Maybe some apartments didn't pay their maintenance due to shareholders losing their jobs in the pandemic.
Did your co-op recently replace the elevator to comply with the new guidelines? If so, that's several hundred thousand dollars.
Maintenance increases should not be evaluated for just one year. That's just giving you a snapshot right now. I feel that you must look at your maintenance over a 10-12 year period in order to properly determine if increases were warranted and if they were excessive. The longer the period that you evaluate, the more accurate the evaluation will be.
What's the co-op's mortgage situation? That could also be a factor.
I recommend that you talk to a Board member and ask for a complete explanation. That will be the only way to find out the real reason.
Good luck.
15% maintenance increase is a little harsh being we are experiencing a high rate of unemployment and pay cuts. My question is why didn't your board have an assessment instead of a monthly increase. This would be a one time deal.
Look at it this way, your board has to also pay the 15% maintenance hike. Thinking your board is doing things that is causing financial hardship you can do 2 things (1) Run for the board (2) Put your apt. up for sale and run if you can. Good Luck
PC #1 brings up the very important issue of a maintenance increase versus an assessment, especially during the pandemic. There are no easy answers. As a point of reference, we asked our accountant this same question a few months ago and this is what he said...
"Generally an assessment is used to solve a one time (or temporary) issue...because it is a temporary solution. For example, back in the days when oil prices surged due to the Middle East war shortly after 9-11, many coops passed a Fuel Assessment to remain in place for as long as the oil prices were elevated. The more common situation for an assessment is to fund a Capital project. The capital project is generally a once-in-a-very-long-time event....so an assessment is ideal to fund such a project.
When it comes to implementing an assessment for an on-going issue (like a budget deficit caused simply by rising prices (in RE Taxes, wages, etc...), the "temporary" assessment concept simply won't work because the assessment will have to be implemented every year....and will likely have to be increased as the deficit grows.
I've seen some co-ops try to solve a "budget" deficit with an assessment equal to one month's maintenance charges...then the next year it becomes a two month assessment...and so on until they do away with the assessments and replace them with a maintenance increase."
I agree with PC that your 2 option are run for the Board or run away and sell your apartment.
Good luck.
My co-op just increased our maintenance 41% and added on a 30 month capital assessment payments of 52.56 per owner shares included with the new monthly maintenance increase.
Suzie,
Did the Board fully explain to the s/h why there was a need for both a maintenance increase and an assessment? They should have.
We were told that the building was 200,000.00 in debt.
You should ask the Board for a complete breakdown of the $200K debt. It's your right as a shareholder.
In addition, you should have received a copy of the annual financial report. Ask the Board to show you specifically what areas were most responsible for the debt. Then ask the Board what steps are being taken to prevent this type of debt from happening again in the future
It's possible that the co-op has had several large expenses in the past year or so. Like having to upgrade the co-op's heating equipment in order to comply with Local Law 97 (Climate Change Bill). Maybe the elevator and/or the roof has needed expensive repairs?
When's the last time you had a maintenance increase? Some co-ops put off making any repairs to avoid expenses. But, then all of a sudden, many repairs at once are needed.
There are many possibilities in play. Ask the Board for all of this information and you should get a clearer picture of what's happening.
How many units are in your co-op? If there are relatively few units, then all s/h must foot a greater portion of the debt repayment than if there are several hundred units in the co-op.
Has the Board held Annual Meetings and given out yearly financial statements? Your questions are valid ones to ask at the Annual Meeting and, as I said earlier, to the Board right now.
You have a right, as a shareholder in a corporation, to know how every dollar is being spent.
Good luck.
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Thank you, Marty, for the very complete answer. I know everything that you've suggested. And yes, the building itself has had issues, and we're operating with a somewhat illegitimate board. Answers are not to be found there, and I won't go into here.
I just wanted an idea who else's coop is being so over-the-top in the midst of dire financial circumstances.
Thanks again and safe new year.
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