Is My Co-op Collecting Too Much Money?

July 27, 2015 — The financials show a pretty large reserve fund. Is the co-op collecting too much money?

A perfect example of how an adequate reserve account can benefit the building is what occurred after Superstorm Sandy in October 2012. All of the storm-damaged properties we manage in these areas had adequate or more than adequate reserve funds. We recommend that each property have between four to six months' worth of the monthly income in reserves. Because they had this, the board and management did not have to wait for insurance money to be received before restoration could begin.

For example, most boiler rooms were flooded, but we had the funds to rent large generators, which allowed us to start replacement of pumps and various electrical parts of the heating systems. Many contractors asked if they had to wait for insurance money to arrive before they were paid and we were happy to tell them that we had the funds and they did not have to wait. This made it much easier to get companies to restore services.

While insurance may cover damages when emergency situations occur, it is very important to have funds available. We review a property's financials every month and will make recommendations to help guide the board in its decision-making.

John D. Wolf is president of Alexander Wolf & Company.