Teachable Moments: Smart Ways to Fund and Approach Exterior Repair

Steven Greenbaum
Director of Property Management, Mark Greenberg Real Estate

We manage a 127-unit building in which the windows were literally falling out of their casings. The building did not have sufficient money in its reserves to replace the windows and its residents were facing a large assessment that many could not afford — the median age is about 70 and most are on fixed incomes. This was a two-part problem — replacing the windows and terrace doors and figuring out how to pay for them. We did some research, and found that the Obama Administration had an "energy-saver" loan, which was actually a tax credit. Everybody had assumed that you couldn't take advantage of this in a co-op, but we spoke with a few accountants and found out that if we did install windows that had the Energy Star emblem by a certain deadline, the residents would be eligible. This credit equaled about a third of the cost of the windows and doors. Another third would be drawn from the reserve fund; and the final third would come from an assessment. The lesson: keep plugging away. We thought we were stuck, but through diligent investigations, we figured out a way to get it done.

Peter Lehr
Director of Management, Kaled Management

The board at this building had finally had enough: Its members were tired of paying for the same repairs over and over again, and now they were faced with a $250,000-plus exterior repair and they were unsure how to move forward. The directors discussed going back to the original contractor or contacting vendors from the Yellow Pages to come in and take a look at the problem areas, but we told them that it is better to do the job correctly the first time. We suggested the board meet with our chief financial officer to come up with different financing options [and]figure out a way to do it right and pay for it. I could see that we were getting through to the new board president, and she stood up and said, "We're going to do it — we're going to follow your suggestion, because I don't want to pay anymore for what we should have been doing and done right the first time." The project will begin sometime this summer. I think it will go forward smoothly and won't bother this board anymore.

Mark Hoffman
President, Hoffman Management

We had a situation at a beautiful prewar building on the Upper West Side of Manhattan. The board, independent of our firm, engaged a restoration consultant for an extensive lobby project, which included refinishing the exterior front doors. The contractor wanted about $15,000 for this part of the job, and it was the final improvement. The building ran into financial constraints for this portion, and for several months I listened to them discuss this issue. Finally, when it was clear they couldn't come to a solution, I recommended one of our contractors who could refinish the doors for around $3,000. The board agreed, the doors were refinished, and everyone was happy. Why didn't we get involved sooner? We always try to accommodate the needs of our clients, but the one thing we will never do is make aesthetic decisions for them. The teachable lesson: It always behooves the board to involve the managing agent at the outset because he brings years of experience and contacts to the table.

For more, see our Site Map or join our Archive >>