What you describe is how most co-ops refinance their mortgages every 10 years. Each time, if extra cash is taken out to replenish the reserve fund, the principal amount needing to be refinanced increases.

I recommend that instead of a new 10-year interest-only mortgage, you look into a 10/30 mortgage. The mortgage term is still 10 years, but a little bit of the principal is also paid back as if it was a 30-year self-amortizing mortgage.

Ask your lender to calculate how much you have to repay each month so that the principal remaining at the end of 10 years will be the same as in the beginning. Remember that the more cash you take out, the more you have to repay, and the larger the monthly payments.

I hope this helps.

Thank you Steven, that is insightful. Is it just me or doesn't it seem like a co-op is just a scam/ponzi scheme?

If this is typical for a co-op...what happens in the long term if they just keep borrowing more money? Like what about it in 30-50 years? How is this sustainable?

This is a very good question, and I honestly don't know the answer. I don't think anyone thought that far ahead when the majority of co-ops were formed in the early 1980's.

Another looming issue facing co-op boards is the expiration of the Proprietary Lease. Check the first or second page of your PL. There should be a hard expiration date, which was required when the PLs were first approved.

If the expiration date is less than 30 years from today, new purchasers will find it increasingly more difficult to obtain 30 year mortgages. Why, because when the PL expires, the Co-op corporation will cease to exist and the shares in the corporation (i.e. the mortgage collateral) will have zero value. Banks are reluctant to underwrite mortgages where the collateral can be worthless. ;-)

For boards that haven't done so already, you should have a discussion with your board attorney to find out what they recommend. There are a number of ways to avoid this which is why your attorney needs to be consulted.

I wish Habitat would do an article on this so more co-ops aren't caught unaware.

Thank you for the insight. Another good article would also be about co-ops who have paid off their mortgages - if this exists?

Cellphones have Lithium batteries. I hope you have a durable suit of body armor and a good helmet... :-)

I totally get the dangers large and irresponsibly repaired LiON batteries pose, but there needs to be some leeway. Read up on the regulations being proposed by the Dept of Buildings and the FDNY for guidance. My building is struggling with the same issues. Our managing agent is working on something for all their buildings.

I wish I had more details to share, but this is a relatively sudden development. I hope some of the other posters on here can add to the common wisdon.

I'm sorry I can't add anything to the conversation. I too am looking for an answer. We have just banned e bikes in the garage. Only one person has requested an exception. Now I'm thinking he has put the e bike in his apt. NOW WHAT?

Our building is in the same boat. As Steven424 noted, you can't ban lithium-ion batteries outright, as they are the common rechargeable used in practically everything - including the laptop computer on which I am typing this.

At the same time, we can't count on the City Council to do anything meaningful to protect us. They have just passed some timid and naive bills that are unlikely to have any real effect on the problem. See this article, along with the comments at the bottom that point out the painfully obvious holes: https://gothamist.com/news/council-cracks-down-on-lithium-ion-batteries-amid-spike-in-e-bike-fires

Our board's current thinking is to ban eBikes and eScooters outright, with no exceptions, and regardless of where in the building they are stored. The risk is just too high. We're looking to do this very soon. We're also working with our managing agent to see what plans they develop for their other buildings.

This is a difficult question whose answer depends on the precise circumstances. Different courts have reached different opinions over the years. Google the case law on "holder of unsold shares," which is the advantageous position that sponsors want to preserve. A couple of observations (note that I AM NOT A LAWYER):

1. If the new owner lives in an apartment for even a day, the owner is no longer a holder of unsold shares for that apartment.

2. The Offering Plan is given precedence in most court decisions, even if the coop's governing docs say something else.

Check out Sassi-Lehner v. Charlton Tenants Corp. for some insights. Here's a good summary: https://www.lawpipe.com/New%20York/Sassi-Lehner_v_Charlton_Tenants_Corp.html

Again, you need to consult a lawyer on this. It's a very complex issue without a generic answer.

If I remember correctly the sponsor should make every effort to sell all their shares within five years of when the operating plan is approved.

Suggest you check with your board attorney because my memory is not clear on this

Hi
You have to go to your by-laws for your co-op. In my old co-op the sponsor was the 7th vote/director. Also as per our bylaws anyone could be on the board because it wasn’t written up specifically indicating that you had to be a shareholder or even live in the building but it did state you had to be a shareholder to be the President of the Board. My new co-op states you need to be a shareholder. Also the sponsor would also vote at the annual meeting in my old co-op but not the residents that rented the sponsored units.

I know this is going to sound flippant, but it is really intended to be a serious response.

Join the board. Have like-minded shareholders also run for the board. If you and your slate of candidates are elected, not only will a lot of your rhetorical questions be answered, you will also have the *power* to do something about them.

You motivate members of an organization (in this case, shareholders) to take some action by constantly showing them why it is essential for them to take action. Your Bylaws should give you the right to request a list of names and addresses of all shareholders. Send a form letter to each and every one explaining what you're trying to do and why.

Set up an email distribution list of as many shareholders who will give you their email address you request in the form letter above. Doesn't have to be anything fancy and you can set it up very cheaply. If something comes up you feel is detrimental, send out an email blast. Just be very careful about dealing only with facts. Do not get argumentative or ascorbic. If you're going to offer an opinion, state it calmly, clearly, and factually.

You stated very clearly, "We are left out in the cold because we have nowhere or any one to turn to." Yes you do, turn to yourselves! Sometimes an investment needs to be protected with time and sweat.

I also believe there are sections in the Business Corporation Law (BCL) that deal with boards that for one reason or another have not had an election for a certain number of years. This will probably require an attorney's help.

Best of luck to you.

Thank you ever so kindly for your time and answer.

First, study the past few annual financial reports. Send any questions about finances or building operations in writing to property manager and board and request response within # of days. Invite other shareholders to form a committee and ask board to participate in building decisions as an auxillary committee. If you show good intentions and willlingness to assist the board, they will probably welcome you.

Its customary for the board or managing agent to give notice of the annual meeting and for shareholders to submit questions, comments and concerns.

You can also request to meet with the board about issues.

If your problem is regarding noise, check the rules & regulations if units have to be XX% carpeted.

The neighborhood is a city matter not the board or condo/coops. The annual board meeting should stay within the bounds of the by-laws.

But its worth making suggestions on making improvements like a new intercom system or lobby doors.

We experience the same thing in my building. Each year, when I know the meeting is coming up, I encourage every S/H I run into to attend, etc. I tell them it's important for their investment and that its the place for them to ask questions and express concerns. If you have new people running for the Board (we always do... lots of turnover), I might encourage them to reach out in person—even door-to-door—to introduce themselves and ask them to attend. If they cannot, I make sure they have a proxy. I believe proxies go towards a quorum, but I'm not sure. Anyway, good luck!

There are two sure-fire ways I know to increase attendance at the annual shareholders' meeting:

1) Rent out a function room at a local restaurant or hotel and provide food before or after the meeting. After is better because it guarantees people won't leave after they're fed and the meeting will go very quickly.

2) Make a substantial yet plausible maintenance increase an item on the agenda. Nothing brings shareholders to a meeting better than having a higher maintenance obligation.

The first requirement is that the abatements be distributed according to the list you received from the Dept of Finance. How the DoF calculates how much each *eligible* unit (apartment) will receive is a mystery of the universe.

The second requirement is that all co-op assessments be made equally on a *per-share* basis.

The board is fulfilling its fiduciary responsibility by treating each *share* equally and not each *unit*. This cannot be changed, not even by amending the Proprietary Lease.

Non-qualifying shareholders (usually those whose unit is not their primary residence) are out of luck and there is no recourse. The City has chosen to give primary residents a perk in the form of a tax abatement *per unit* and the board is required to base and collect any assessment on a *per share* basis.

This abatement/assessment wash *never* works out for any unit, and the assessment is equal to the abatement. Some shareholders have a net gain and some have a net loss.

I've been a treasurer for 15 years and I've received this identical question each of those 15 years. I try to preempt it by including a basic description of the different ways the abatement and assessment are determined in the email I send to all shareholders. I still get a couple of calls each year

I hope this helps,
--- Steve

Excellent explanation, Steven. We also get the same questions year after year in our coop.

Just one point to add: the tax abatement is "vapor money." It's not that the coop receives a big pile of cash to hand around to those who were eligible. Instead, the building's property tax bill is reduced by the total amount of the abatement. The coop never actually sees the money, except in the form of lower tax payments.

So there's not any received money to distribute. Instead, most buildings - including ours - follow exactly the process you describe: impose a one-time per-share assessment that (roughly) flattens the abatement for those who receive it, and requires real-money payments from those not eligible for the abatement.

1. New Shareholder purchases from an individual owner prior to February 1:
a) will that Shareholder be eligible for NYC DOF Tax Abatement forwarded via a credit to maintenance charges in June or July of that year?
b) is that Shareholder responsible for any Assessment intended to re-capture the Abatement?

2. New Shareholder purchases prior to February 1 from a Sponsor or Owner ineligible for the Tax Abatement :
a) when does the New Shareholder become eligible for the Tax Abatement?
b) is the New Shareholder responsible for any Assessment until eligible?

Steve and Carl, thanks for the responses. Very helpful and good to know it is not only us receiving this type of question. I am not sure if math has been done to compare the value of the abatement vs the cost to the non-qualifying shareholders but I have to expect they would ultimately be paying more in fees without the reduction in taxes. - Ed

I’m getting to this issue late (proving why it comes up annually. Haha). I’m a retired Lawyer/CPA and a coop shareholder since 2021. I’m struggled to understand the underlying accounting logic (and entries) for why this way and not some other way that perhaps could provide a real cash benefit to qualifying shareholders without an equivalent cash cost to nonresident shareholders, while also leaving the Coop and NY both “whole” (ie, a “wash” in terms of taxes payable to NY after the tax abatement and taxes collected from shareholders in an equal amount).

I sense I may be missing something, but this current treatment seems to leave the Coop in a net cash benefit position (equal to the additional revenue collected from the nonresident shareholders) rather than leaving the Coop in a neutral position that corresponds to what I understood to be a wash from Carl’s comment in that what the Coop pays NY under its quarterly tax bill (annualized) equals the post-abatement receivable due from shareholders (also annualized).

What am I missing in the Coop’s accounting entries that shows that it neither receives a cash benefit from NY’s tax abatement or from nonresident shareholders equal thereto?

Thanks, Todd

Hi Todd - It took me a few years to finally wrap my head around all the different factors in play. I've created an example that may help to explain it.

* 10-unit (apartment) coop. Units are numbered 1 to 10. Each unit owns the number of shares corresponding to its apartment number (i.e. Unit 1 owns 1 share, Unit 5 owns 5 shares, Unit 10 owns 10 shares). The total number of shares in the coop is 55 (1+2+3+4+5+6+7+8+9+10).

* Units 2 and 7 are not primary residences. The rest are.

* Each unit receives an abatement from the Dept of Finance except those not primary residences. The DoF practices the Darks Arts and I think some magic pixie dust factors into their calculations. In other words, there's no logic I can find that mathematically explains the abatement amount assigned to each unit.

* The total amount of the DoF tax abatement for the entire coop is $10,000.

* To calculate the amount of the corresponding assessment the board imposes on the shareholders, it divides the total amount of the abatement by the total number of coop shares. $10,000 / 55 is $181.818182 per share.

* Unit 1 has 1 share so its assessment is $181.82
Unit 2 has 2 shares so its assessment is $363.64 even though it receives no corresponding beneficial abatement
Unit 3 has 3 shares so its assessment is $545.45
Etc.

Coop laws and regulations require all shares in a coop be treated equally. Even though 2 and 7 are assessed because they own shares, they do not receive any abatement benefits because they are not primary residences. It's essentially a zero-sum game because the $10k the coop is required to "distribute" to eligible shareholders is recouped by the income from the shareholder assessment.

I hope this helps. If not let me know and I'll send you my phone number so we can chat.
--- Steve

1) If you're a union building (32BJ) ask your rep if they can create a list for you.

2) If you're not a union building or you'd like to augment a list the union gives you, try online recruiting services like Zip Recruiters or Indeed. You'll have to spend time going through the responding candidates send you.

3) Try doing a Google search. Figure out what keywords to use for your search. It won't take too long to generate a list of your most effective keywords.

Hey! My name is Nick and Im currently a part time super looking for a different building.

I have 5 years expierence as a property manager and a few years in project management. It would be a pleasure to email you my resume.

Nickcataldo@rocketmail.com

When posting on Indeed or LinkedIn, you tend to get those who are not serious and a lot of applicants who do not have what is you are looking for. Many times, the best applicant resume might be burried underneath 100 others.

Word of mouth is best. You try talking to a super in the buildings next to yours to see if they know anyone who might be a good fit.

What is an Annual Renewal and Change Form?

All co-ops are required to file this by February 5th every year to report changes in ownership and even if no new changes.

Steven - Here is the Annual Renewal and Change Form that marym is talking about. Thank you marym for the information!

https://www.nyc.gov/assets/finance/downloads/pdf/coop_condo_abatement/coop-renewal-application.pdf

Thanks, Marym and Marty. Our Property Manager and Managing Agent handle that for us and I think they refer to it with a different name.

In filling out the coop tax abatement renewal form due Feb 15, 2024, on page 2 (schedule B) are we to record *only changes* that have occurred? and not a relisting of the entire roll of owners?

We are a self managed property of a small number of units and for years we have not had to report any changes. One unit turned over last year and so now we are scratching our heads if we only report on the renewal form the one changed item, or if we have to have a line item for each resident even though nothing has changed for everyone else.

We have written into the DOF and have not heard back.

Any thoughts are appreciated, and thank you in advance.

Looking at the form (https://www.nyc.gov/assets/finance/downloads/pdf/coop_condo_abatement/coop-renewal-application.pdf), it appears that you don't need to list any individual apartments. On the first page, right after the INSTRUCTIONS and before SECTION A, it says...

"If you have no changes to report, please check this box. ■
**We will renew the abatement for all of the units that received it last year.** By checking this box, you are confirming that there have been no changes in primary residency, ownership, changes in unit type (for example, residential to commercial), or mergers of units."

Then it looks like you fill out the 4 parts of Section A and the OFFICER/AGENT ADDRESS section below Section A and you're done!

Good luck and keep us posted!

Wow, did I mess that up. I apologize.

Since you do have 1 apartment that turned over, you’d have to list that in Section B.

Do NOT check the box saying you have no changes to report.

You still need to complete Section A and the Officer/Agent Address portion, too.