Creative Financing Buys Newswalk a New Entryway

Three years ago, the entryway to the Newswalk condominium was nobody’s idea of a welcome mat. “The concrete pavers on the walkways were disintegrating because, astonishingly, the developer had used indoor tiles instead of outdoor ones,” says Eric Reschke, the building’s treasurer. “Every winter they would freeze and thaw and break into pieces, creating quite a risky obstacle course.” 

A 60-foot circular concrete turnaround was “a white elephant,” Reschke adds, since cars don’t use the entryway. “And because of poor drainage, it was cracking and crumbling as well.” 

Before that project could be tackled, however, the board had to dig Newswalk out of a hole. When unit-owners moved into the 173-unit development – a former Daily News printing plant in Prospect Heights, Brooklyn, that was reincarnated as condos in 2002 – they were horrified to discover the workmanship was so stunningly sloppy that their apartments were practically uninhabitable. A lawsuit was filed against the developer, the once-high-flying condo mogul Shaya Boymelgreen, and residents were forced to spend millions of dollars for massive repairs to make their apartments fit for occupancy. 

“We made the decision to fix the building right away rather than see it lose its value,” says board president Judy Mann. Although the board had sued Boymelgreen for $10 million in damages, it was forced to raise common charges by 40 percent. Since more hikes were unsustainable, the condo took out a five-year, $5 million loan in 2011 to complete the major structural repairs. 

With those repairs behind it, the board turned its attention to transforming the forbidding entryway into a welcoming garden. Brook Anderson, a board member and architectural designer, solicited ideas and input from unit-owners, then selected a landscape firm, Terrain, which began designing models. 

But the plan ran into another unpleasant surprise when a Local Law 11 inspection in 2016 indicated that the 10-story prewar structure needed extensive facade repairs. “That left us about $300,000 short,” Reschke says. “But we’d already put so much time and money into redoing the garden, and there was a lot of momentum there. I didn’t want things to just come to a halt.” 

An independent tech consultant who likes working with numbers, Reschke began poring over cash-flow spreadsheets and doing the math. His innovative solution: get unit-owners to provide the front money by having them pay one year of common charges in advance, for which they would get one month free – in other words, guaranteeing them a short-term, market-rate return on their investment. 

“In addition to paying their current charges, they would give us the money for the 12-month period starting in June 2018,” he explains. “By that time, our loan would be paid off, which would free up enough cash to offset the common charge money that went into the garden project.” 

“We were thrilled with Eric’s plan,” says Mann. “But he explained that we needed at least a third of unit-owners to participate, and we weren’t sure we could get that many.” 

The board spread the word by email and held a meeting to answer residents’ questions. “We pitched it as a really attractive amenity that would enhance our curb appeal,” Reschke says. “We presented the drawings and models because it’s important for people to have a vision of what they’re buying into. I think residents always want to contribute to their community, and this was a way for them to do it.” 

Indeed, the sales pitch worked. The required quorum quickly stepped up and fronted the cash last June, and work on the project began. The results have been gratifying. “Everything is a lot cleaner-looking and much more visually pleasing,” says Anderson, the board member. “We’ll see more people out there, especially now that we have more young families at Newswalk. This is exactly what our community needs.”