Another Civil War Erupts Over a Lack of Transparency

If there’s one word that can spark a fire-fight inside a co-op, surely that word is “transparency.” We told you in our June issue about a highly uncivil war – and legal battle – that has broken out in the Seward Park co-op on the Lower East Side over the board’s decision to switch from park-and-lock to a valet parking service. The 11-member board presented the switch to shareholders as a done deal. Many were incensed that they had not been consulted – that the board had not been transparent.

We take you now to the northwest Bronx, where Andrew Kimerling, board president at the 250-unit Park Reservoir co-op, recently wrote an open letter to shareholders, as reported by the Riverdale Press.

“Our cooperative way of life is under attack,” Kimerling wrote, “and I am turning to you for your assistance in maintaining what we have.”

The “attack” was very similar to the one at Seward Park. Simply put, the co-op board had made a decision – which is its job and its right – to change management companies. Park Reservoir has shared a property manager with the massive Amalgamated Housing co-op for several years – an arrangement that afforded Park Reservoir with around-the-clock security, quick-response maintenance crews, lunches for seniors, children’s games, yoga classes and other amenities.

But the arrangement came with strings attached. At least twice in recent years, according to Park Reservoir board member Steve Zitrin, the Amalgamated had threatened to cut off Park Reservoir’s access to maintenance services after the smaller co-op tried to challenge its big brother’s decisions.

In deciding to end the arrangement and hire Bronx-based Midas Property Management, a majority of the board said it would save Park Reservoir at least $200,000 a year.

Led by Kimerling, disgruntled shareholders convened an emergency meeting, a packed, sweaty, angry affair. Their shared complaint was that the board had acted behind closed doors.

Board member Susan Braunstein spoke in defense of the board’s action, citing a section of the co-op’s bylaws: “The board of directors shall have entire charge of the property, interests, business and transactions for the conduct of its meetings, and management of the corporation as it may deem proper.” She added, “I read what Andy (Kimerling) wrote, and I’m insulted by it. We are being killed financially.”

Which brings us back to that mythical word “transparency.”

“The main issue here,” said shareholder Josif Zhitnitskiy, “is that we do not have enough information to make a decision. We are always in the dark. The first step, since we are having this meeting, is to change the by-laws and make [the board’s work] transparent to the people.”

Well, no and yes. As they’re set up now, co-ops are representative democracies, not participatory democracies. Boards, not shareholders, make the governing decisions. But Zhitnitskiy is right about one thing: there is a clause in the by-laws that says a majority of shareholders can amend or repeal the by-laws – and restrict the board’s power to challenge the changes.

At last we’re getting somewhere: the way to bring peace to these embattled co-ops is not to clamor for "transparency." It's to change the by-laws.