Hot Topics at This Year's Annual Meetings: A Survey Report

Then there's the 108-unit Belvedere Gardens in Jackson Heights, where veep James McLoughlin reports his board is bumping up contributions to the co-op's reserve fund in light of the slowing economy. Aggressively looking for savings, his board has found particular success in challenging erroneous water bills from the city. "We don't accept any bill as a fait accompli from any governmental authority," he says.

Flip taxes, greening and, primarily, financing capital improvements are all on the minds of board members as they prepare for the annual-meeting season. And with an uncertain financial picture, boards foresee maintenance increases to cope with sharp rises in water, fuel, insurance and tax bills.

Among the big issues residents and professionals report:

Capital improvements. The 350 Bleecker board needs major window repairs and replacements over the next five years, and will be budgeting for the expense. McLoughlin's Queens co-op is looking at capital improvements as well, including pointing and an elevator upgrade. Assessments were recently imposed to remove asbestos tiling from hallways and install new lighting. Additionally, the co-op profited on the resale of a unit that was purchased by the building at below-market rates.

The economy. Jeff Friedman, president of Vintage Real Estate, says co-op and condo foreclosures have been rare, and in many cases happen for reasons not directly tied to overall economics. While units "which may have sold in four weeks a year ago now take three months to sell," he says, "they do sell, and at good prices." Don Levy, a vice president at Brown Harris Stevens, says the buildings he manages see "only faint flutterings" of concern about the regional economy.

Avi Horwitz, president of a 244-unit co-op near Lincoln Center, remembers the downturn of 1991-92 when some apartments did enter foreclosure. He believes that with new requirements for loan-to-value financing of 75 percent, his co-op is better positioned against that possibility.

Flip taxes. Horwitz is looking to pass a flip tax by saying it's a fair way of ensuring every shareholder contributes to ongoing capital work, since shareholders moving in after a major upgrade receive a benefit without having paid any assessments.

Jay Rodriguez, treasurer of Manhattan's 127 West 96th Street, a 145-unit pre-war co-op, says the building's recent switch from non-union to union staffing had increased payroll expenditures more than anticipated. This added to the building's upward pressure on maintenance. Rodriguez believes a flip tax will help, and has seen lively feedback on the building's Web site and blog.

Energy prices. Manager Levy notes that oil prices are volatile, and believes the subsequent economic slowdown may bring a considerable real-estate tax increase to make up for city revenue lost in the downturn.

Going green. "I've had a couple of green walkthroughs this year," says manager Levy. He says boards are changing common-area lightbulbs to compact fluorescent lights (CFLs) and grappling with the finances of greening.

The board at 350 Bleecker has received a proposal from a solar-energy contractor that includes photovoltaic roof panels and passive water-heating collectors, with a prediction of cutting energy costs 30 percent. Geils says such a plan, if proven workable, would not affect net cash flo, but would help protect the building against increases in energy costs. The board also plans to build a rooftop hydroponic greenhouse, which would be part of the solar project and allow shareholders to maintain a vegetable garden. The board's also interested in storm-water management, which involves capturing rainwater falling onto the building for later use in watering the grounds and in laundry systems.

Rodriguez says his West 96th Street co-op undertook a NYSERDA audit. Although it cost $15,000, he believes it can result in significant savings. The board recently renovated the penthouse roof with 3.5 inches of insulation and gravel, an upgrade over the previous less-than-an-inch. His capital-project list includes extensive plumbing repairs; each shareholder already is required to use water-saving devices when doing renovations.

How will residents respond to all these plans? Manager Friedman says that "when annual meeting time comes, I can tell you that people are very understanding, because they either drive a car and buy gas, or pay an electric bill or have insurance. They understand that there are increased costs, and in most of the buildings we manage people respect the machinations the board goes through in trying to cut every possible corner to preserve the services that the shareholders have come to expect."

Adapted from Habitat April 2008. For the complete article and more, join our Archive >>