BOARD OUTSIDE THE BOX: UNORTHODOX THINKING SAVES A CO-OP

Things began to change, when a representative from an energy audit firm spoke at an open shareholder meeting. A core group at that meeting realized they shared a passion for making the building, built in 1964 and converted to co-op in 1982, more environmentally friendly. In 2005, three members of the group got elected to the board, joining two incumbents. And the two factions blended together like oil and water.

"We had questions and we wanted answers," says Robert Gloddy (below), a leader of the newcomers who has since become board president. "The new guard had a ton of ideas. After one meeting, the two holdovers resigned because they saw that we were educated, enthusiastic and we wanted to bring about change."

They designated seats for a fourth shareholder and also for the sponsor's daughter, a real estate attorney with board experience. Then the five neophyte board members "had to rebuild," says Carol Anthony (below), the vice president, a former actress who now works as a software tester at a law firm. But because the departing members had left few paper records behind, "It took us a year to realize money was leaking out of the co-op due to poor management."

They dismissed the property manager and hired White Management, a small firm in nearby Scarsdale. They fired their attorney an engaged a new one. To counter rumors of kickbacks, new vendors, such as electricians and plumbers, were brought in. To cut down on the squabbling, the super and his assistant were assigned to different wings of the H-shaped building. Exit doors were brought up to code, roof leaks patched, bricks re-pointed and exterior locks changed as a security enhancement.

To bolster the co-op's stagnant reserve fund of about $350,000, the board made revenue-generating changes: installing installed storage cages, wiring the building with Verizon fiber optics, imposing an assessment for heating oil and levying fines for quality-of-life infractions, from excessive noise to unauthorized renovations.

Despite their zeal, the board members found themselves operating in a vacuum. No volunteers came forward to serve on the admissions, finance and quality of life committees. "People pay maintenance and think the board should take care of everything," says Gloddy. "That's been the history of this building. Ultimately, I blame our problems on lazy shareholders, apathy and ignorance."

There was one more place to spread blame. "The board was doing a ton of work the property manager should have been doing," Gloddy says. "We got tired of that."

Why not hire our own contractor

to oversee the physical plant,

then hire an accountant to do

the back office work?

With pressing repairs needed for crumbling concrete slabs on the parking deck and to an improperly installed and potentially dangerous boiler-room door, and with the board's desire for a new roof, an elevator upgrade, a gym and a renovated laundry room, the directors came up with an innovative, creative solution.

"I had spoken with people in the trades and they had mentioned general contractors," says Anthony. "I did some research into who might be able to manage all aspects of our building's operation and came up with a dozen companies."

Here's where it gets interesting: Rather than expecting the property manager to run all aspects of the building, the board split the job in two. One company would take care of the physical plant; another would run the back office.

Gloddy asked himself: "Why not hire our own contractor to oversee the physical plant, then hire an accountant to do the back office work? After a time, our thinking was that a general contractor has to have a license and insurance — unlike a property manager — and he would realize what has to be done to repair and maintain the building. Instead of paying outside vendors for every little job, we've got one person who can do it in-house — plumbing, electrical repairs, everything. If it's a huge job he can subcontract, then oversee the work."

The majority of the board was skeptical, says Anthony. But after discussing the pros and cons, the other board members began to see that this unorthodox idea was consistent with the board's new vision.

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