Our new board raised maintenance 6% a few months ago with no explanation other than the new Management said we were not keeping up with other coops. To say the shareholders are a little upset is an understatement. I believe in a 2% COL raise unless something in the budget went out of whack, then you have to balance the budget with a larger increase. Good luck.

We have seen an increase in arrearage. I was thinking about proposing to the Board that we borrow from our reserve fund on a temporary basis (until the specific arrearage issues are resolved through the courts) to be paid back later. We have approximately $5k per unit in reserves. I am not seeing much pressure on other expenses with the exception that it might be a colder winter. We also have the union staff raises.

I believe that arrearages are going to continue to be a problem with the general poor economic conditions and people losing jobs every day. While borrowing from reserves is a temptation, I'd be very cautious about that because how are you ever going to put it back? It's a bad precedent to set. I've brought up at our Board meetings that we need to be alert to people losing their jobs and having arrearages but no one seems to care. To me, that's a problem too, and I really don't know the answers. Please keep us posted on how things go, and good luck.

Riverdale has it right. Borrowing from reserves to pay for operations is VERY dangerous - you could easily find yourself being unable to pay it back without an even larger increase in your operating budget.

Also see my other post about real estate taxes - they are much bigger than your water or heating bill and you can be assured that they only have one way to go...UP.

OK - maybe I am missing something but I don't see a danger in borrowing from reserves for a temporary arrearage issue that I expect will go away when court proceedings are complete. Raising maintenance for true expense increases in one thing (and we may have a small one for that reason anyway). Trying to raise it for shareholder cash flow problems is another and harder to support. The only danger I see is once the funds are received, not having the fiscal discipline to depositing the funds back in the Capital Account. If I am missing something, please let me know before I present this to the Board on 12/5 for a vote.

Thanks!

In our budgetary preparations for next year, our water bill is anticipated to rise 10% again – which for a small building adds 3-4K in expenses, there are union pay requirements, plus the pension surcharge, MTA surcharge which is on gross income, utility increases, which add up as well. From our operating standpoint this will be offset with our new sublet fee and storage room implementation, so we may be lucky to keep maintenance flat. As a driver of financial prudence, we are upgrading our parking amenity, and increasing the fee to a discounted amount compared to Riverdale indoor parking surrounding us, increasing our revenue side.
The arrear issue is one we are monitoring closely, it has increased across the spectrum, and we are looking to work with each shareholder to confirm circumstances and to work with the shareholder to get back on track. For the 2010 budget we are going to go the conservative route and assume a 1% reduction in maintenance revenue due to arrears etc to be safe. If it does not materialize we can adjust at year end or bank the money.
Additional budgetary note – a provision has been made each month to continue funding our reserve fund, to keep focus on the long term needs of the building as part of the budgetary planning process. We maintain a separate project list with funding requirements and time frame and as funding is completed the project commences.
I hope this helps.

I see it raising 5% - last year an increase was not passed. This increase is due to catching up with costs. Although the economy has not been great, prices have not come down by way of services. It is also foolish to cut your scheduled maintenance in bad and good times to satisfy your shareholders. Expensive equipment suffers as a result of poor maintenance!

AdC

Each of my buildings have a different expectation for the maitenance.
We are raising maintenance in most by 2% to cover regular inflationary costs.

Some buildings we agreed to keep it the same and announced to the shareholders that the board would review the budget again in May/June to reassess the need for an increase. That is the minimum that should be done at this point, you should never reduce maintenance. If your in that great of shape where the excess is too much and you feel the need to give back, return it in the way of an increased service.

~AR

What surprises me in this chain is that no one has mentioned real estate taxes which likely represent the largest single line item in your budget.

Real estate taxes represent more than 50% of our budget. Our auditors are advising us to expect both a increase in the tax rate AND the assessed valuation on July 1 which could add 3% to 7% to your tax bill. Add to that the likelihood of a NYC mid-year increase (January 1) and you get a significant number without even considering the other line items of your budget.

Those of you budgeting for a negligible increase or no increase at all should discuss it with your accountants and sharpen your pencils!

I was advised this week by our managing agent that the city has increased tax rates retroactively 1.44% starting in January 2010 (for July -December) which means a 2.88% increase for the Jan - June 2010 period (1.44% for the past period and 1.44% for the current period).

Has anyone heard about water/sewer rates yet? I was planning on a general 8.5% increase starting in July 2010 unless someone has heard anything more specific.

Water bill is proposed to increase by 10% in July; I doubt this will be pared down given the budget shortfalls of NY City and NY State.
We are budgeting an increase of 7% for real-estate taxes, based on increased value estimates.
Also look out for increased electric costs and for those with large staff requirements, MTA salary surcharge, along with union requirements and pension surcharge.
Hope this helps.