When Boards Need to Act Like a Chameleon

Sometimes, co-op boards and their property managers need to be as adaptable as a chameleon. This came home during a recent oil-to-gas boiler conversion project, when the city changed the rules in the middle of the game – and the co-op board was forced, against its will, to adapt.

The story began to unfold about two years ago, when the board decided to kick the oil habit and convert to natural gas heat. Plans were drawn up, bids were sent out, and a contractor was hired.

“As we were doing the work, the Department of Buildings (DOB) changed some of the directives,” says Timothy Grogan, president of the management firm Grogan & Associates. “We had a gas meter room inside the boiler room. (DOB) was concerned that if there was a gas leak that the gas would go back into the boiler room and explode. The city came out with a mandate in the middle of the project, saying that if you have a meter room inside the boiler room, you need to put a gas detector in there with a device that would automatically shut down the boiler. There were other directives from the DOB as well.”

What’s a property manager to do? Adapt. Grogan had to estimate the cost of the fix demanded by the new DOB rules, then tell the board the bad news: the cost of the job jumped by $40,000.

“The board was very upset,” Grogan recalls. “I had to tell them that the city’s rules are constantly evolving. It’s a very widespread problem right now, where buildings will have to comply with different regulations that change the cost of the job even as it’s being done.”

Grogan, the engineer and the contractor went to the DOB to negotiate, and they wound up saving the co-op thousands of dollars. But the cost was still above what the board had originally anticipated and budgeted for. Timing is everything, and this co-op’s timing was all bad.

But the board learned a valuable lesson. By trusting its manager, this board made the best of an unpleasant situation. That trust, in Grogan’s eyes, is a prerequisite for a smooth relationship between boards and their property managers.

“What boards have to learn is to trust the manager and his business acumen when he’s choosing vendors,” Grogan says. “And you have to stand behind him. Sometimes in this business, we managers almost feel like when we walk into board meetings, we’re adversaries. We’re your allies. Boards have to have more confidence in the firms they hire.”