Amalgamated Warbasse Houses Co-op Tackles a “Giant” Project

The Amalgamated Warbasse Houses on Coney Island are a world of their own. This affordable Mitchell-Lama co-op consists of five 24-story towers with 2,585 units that are home to some 8,000 souls. The co-op, which opened in 1964, has its own power plant, two gas-fired boilers that feed heated or chilled water to fan coil units in every apartment. For good measure, the 26-acre property is a Naturally Occurring Retirement Community that sits a few blocks from the Atlantic Ocean, which provides corrosive salt air, punishing winds and occasional floodwaters. When things go wrong at a property this big, they go wrong in a big way.

A dozen or so years ago, the half-century-old  heating and cooling system began to fail. Leaks got so bad that residents began referring to the co-op as “Water-basse Houses.” Wooden floors were damaged. Mold bloomed. Patchwork repair costs mounted.

With an eye toward a massive looming capital project, the 13-member co-op board refinanced the underlying mortgage back in 2014, borrowing $200 million from New York Community Bank, with half set aside for the project. Then in 2017 the board hired Stantec Engineering to perform a thorough survey of every building. It then brought in Allied Partners to serve as owner’s rep.

“Stantec’s report said that the whole system was at the end of its life,” says Michael Silverman, the long-time co-op board president whose family was among the first to arrive when the co-op opened in 1964. “We needed to replace all the risers, all five pumps in each building, and all the fan coil units in every apartment. We were one step short of a complete catastrophe.”

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Preparations came first. “A lot of work went into planning and picking products,” Silverman says. “The most important thing for the board and management is to make sure you have the right people on your team. There are so many things laymen don’t know about. Our owner’s rep, Ed Donnelly, is incredible. He can answer shareholders’ questions because he has done this kind of work before in occupied buildings. Bringing him in was our best move.”

Preparations included extensive communication with shareholders. Thomas Auletti, the long-time property manager, consulted with the property manager at the massive Penn South co-op in Manhattan, which had recently tackled a similar project. Auletti also deployed his eight-member staff and the 65 maintenance workers to visit apartments and canvass residents about their need to move furniture or relocate during work inside their apartments. FAQ sheets were distributed door to door. A psychologist was hired to advise staffers on how to deal with hoarders.

The plan was to tackle one building at a time, with a projected completion date of 2024, Then, after work was completed in all 517 units in the first building, the COVID-19 pandemic hit, shutting the project down. Since workers could no longer enter apartments, the team pivoted. “We were able to adapt and keep workers engaged,” says Donnelly, the owner’s rep. “We amended the plan by installing isolation valves on the risers, which allows us to work year-round in areas outside apartments.” He adds, “This job is a giant.”

Interest payments kick in only when the co-op draws out a chunk of the $100 million that was set aside during the mortgage re-fi. To keep interest payments as low as possible, the board levied two maintenance increases – 7% this year and 7% next year, which will help pay for the capital project and help cover operating expenses. “We rejected an assessment,” says Silverman, the board president. “That would have been a harsh burden for shareholders on a fixed income.”

Despite the inconvenience and the staggering scope and cost of the project, pushback has been minimal. “Overall, people understand that we needed to do this project,” says Auletti, the property manager. “In the beginning, it was overwhelming, and then COVID threw a monkey wrench at us. Now I’m feeling pressure about meeting our 2024 completion goal. But I’m also feeling confident that we’ll find a way.”  

PRINCIPAL PLAYERS – PROJECT MANAGEMENT: Allied Partners. ENGINEER: Stantec. LENDER: New York Community Bank. CONTRACTOR: AC Klem Plumbing.