Absolutely normal. In fact, below normal and the sign of a fiscally well-managed co-op corporation.

Inflation is currently running between 1.5% and 2%. Simply for that reason alone maintenance needs to increase 1.5% to 2% just to break even with the costs of monthly co-op operations.

One of the biggest drivers of maintenance increases is the annual increase in real estate taxes. In our building these taxes are over 40% of our annual maintenance. We're looking at a 7% tax increase for TY'18, which translates to a 3% maintenance increase.

Sometimes you hear how a board prides itself on "never" increasing maintenance. Show me a board that does that for too long and I'll show you a co-op that is facing a huge assessment, eventual 10% to 20% maintenance increases, or a building about to go bankrupt.

From what you wrote, consider yourself lucky to be living in a building with good governance.

Although this is normal, there's plenty of inefficiencies that can be removed that will provide savings that can be used to prevent maintenance increases. One of our buildings did not need to raise maintenance for 6 years, while at the same time increasing cash balance, all from reducing costs.

Some of the things your maintainance has to cover are Labor contracts which have clauses the escalate annually, real estate taxes which seem to go up yearly, the cost of water has almost tripled in the last 10 years, along with other utilities and service contracts. So is it normal? I would say yes.
That said you should receive an audited financial statement, have a good look at the fixed costs

A Well managed board would look around and find ways to raise money, this is called Amenities. Do you or can your building have cell phone towers? If not find out if it can, this will be rented out for the use of them. It pays big. Does your building have storage? If not this can be a good Amenity just look around or in basement area for bike storage baby carriages anything that can charge a fee. To help your building make money for fixing up your building.
Does your co op have parking/garage this is a big Amenity, Does your co op rent the laundry room to the company are they paying rent for the laundry room rent for the rooms they have to pay the co ops. Look into all of these AMENITIES it's extremely your co op raises extra money to have a lower maintenance. By making your co op with low maintenance you'll get top dollar if you decide to sell. Read the report that you will be receiving very soon.

PC #1, I must respectfully disagree. What you are describing does not help a building make money. It is simply a zero-sum proposition which shifts financial responsibility away from being equitably distributed among all shareholders and onto the backs of those shareholders who either need or desire the "amenities", as you call them.

The model you described is identical to what the airlines have been doing for years; keeping constant or reducing the cost of an actual flight ticket, but making up the lost revenue in all sorts of nuisance fees. This has not proven to be a very popular scheme for the airlines and I feel sorry the board that adopts it.

The other shortcoming of the amenity-fee concept is a co-op or condo must have a guaranteed stream of income to meet its financial obligations. Increasing maintenance by a small amount each year insures a steady flow of money because maintenance is non-discretionary for the shareholders.

Charging fees for amenities is risky because amenities *are* discretionary expenses. If enough shareholders decide the value of an amenity is not worth the cost, they'll simply not pay for it. The co-op loses the income, and generates ill-will in the process.

Most co-op and condo buyers (or their attorneys) today are sophisticated enough to see through the rob-Peter-to-pay-Paul financing model and look at the entire financial environment. Not raising maintenance (unless there are solid extenuating circumstances like the 2008-2009 recession) is a clear warning sign that the building is heading towards financial problems in the future.

I agree with Steven424. Other than possible income from cell towers, the other suggested charges are negligible in a building budget, that may be well in excess of $500k for a 50 unit building. Cell towers may be lucrative, but the owners in our building voted it down years ago due to health concerns, whether founded or not.
Annual or maybe every other year increases are needed to keep up with inflation. An alternative is to have increasing assessments to cover costs. Our owners voted to freeze the maintenance last year and to increase the annual assessment. We offset the assessments with the coop tax credits and STAR so we still need to pull some $ from our pockets each year. We'll see how that goes for a couple years.
Amenities such as bike storage save the hallways and elevators from damage and storage lockers are an obvious convenience, if space is available. Laundry facilities are great and will provide a steady but small revenue stream as well. Usually, the gas, water and electric are provided by the building, which will offset the rent collected.

With increasing maintenance at that rate your value of your co-op/condo apartments will not sell if you charge let's say $700.00 a month with no Amenities and it keeps on going up why should I stay, or buy into your place when others give gyms,storage,off the street parking and monthly maintenance is low with a well maintained clean building and great workers. Real Estate can go down it's hard to sell at a high maintenance and pay a mortgage. So how's it going for you? I guess you can afford to keep carrying this high cost of living. Some share holders can't. Be careful of foreclosure. Then how would your building handle this? It's call maintenance, not rent that applies to Amenities.

I'm curious. What is the monthly maintenance of the building you described which has a gym, storage, off-street parking, and what is its location. I, personally, wouldn't use any of those three amenities, so I guess I'd be a slacker in contributing to the finances.

What would your co-op do if, say, the cost of doing laundry or storing strollers and bikes became so high (because co-op operating expenses have a nasty habit of increasing all the time so the amenity prices would also have to increase), that shareholders decide they'd rather use the corner laundromat or store their bikes in their apartments. You can't hold a gun to their heads to pay for amenities. Where would the money come from to cover required co-op expenses?

PC #1, I have a question I've been meaning to ask. In your April 18th post you mentioned a report we'd be receiving shortly. When do you think it will be published and we'll be receiving it? As an eight year board treasurer I'm always interested in reading about new and creative ways of reducing maintenance.

Thanks!

Steven eight year board treasurer congratulations, but with due respect. It's not about You. It's about the share holders /condo owners that want and need these. Not what you need to over ride them. I can't make you look around your place to make it better or improve it. The place you live at are they happy? What do they want? Or are they angry or upset?
Like I said with due respect, It's Not About You.
I'm speaking from being on the board 18 yrs. The key is Listen. If you need to know all my personal info. your not doing your building a service. Your the eight year board treasurer look at the books, figure out how you can reduce cost. Just saying, I don't want to tell you how to do your job. I know it's hard.

Thanks

It is really about examining every single cost for tightening. Your insurance can be negotiated, your energy consumption can always be reduced - where else is money leaking? Are you wasting money/ increasing the debt on non- discretionary projects?
Don't take 'this is how it is' for an answer from your managing agent - make them show you savings. Be pro-active. Do not drink the cool-aide. Sit down and do the work.
We have NOT had a mntnce increase every single year in our Manhattan cooperative.

DM - All boards, and especially their treasurers, should be doing what you recommend as a matter of course, year after year after year. Any board that cedes all cost reduction responsibilities to their managing agent is not working for the benefit of their co-op.

I have a question for you. How do you cover non-discretionary increases like real estate taxes, staff salary and benefits, water & sewage fees, etc. What do you do to pay for the increases instead of increasing maintenance?

Exactly, and that is the spirit in which I was asking.

As board treasurer I am the most familiar with my Co-op's finances. We are located in an area of Brooklyn that has seen extraordinary real estate tax increases in the past few years, even with aggressive Certiorari challenges. So any suggestions of ways I can advise my board to keep maintenance as steady as possible is something that grabs my attention.

To answer your question, our shareholders are, for the most part, happy and content with the way the building is being managed by the board. Of course they grouse about maintenance increases, but we are completely open and honest about building finances. We make sure shareholders fully understand the reasons for any increases.

They also appreciate our trying to fairly distribute the Co-op's financial burden among all shareholders. For example, we have ample space in our basement for storage cages. A number of years ago we built enough cages so every apartment can have at least one, with some left over. We sold the cages, one to an apartment, at cost, because the board believed additional storage is more a necessity than an amenity. We limited ownership to one cage per apartment so no individual shareholder could buy up all the cages and corner the market.

We rent all unsold cages at $35/month. Rentals come with the understanding that if an apartment that does not already own a cage decides they want to purchase one, the Co-op has the right to terminate a rental (LIFO) with six months notice. We felt this was the most fair and equitable way of eventually making permanent storage space available to *every* shareholders. We did not feel it was fair to charge hundreds of dollars per month for cages, because community goodwill is very important to us. If a shareholder requires a cage, their rental fees should not be used to subsidize other shareholders, and we try to prevent the less affluent in our community from having to do without because they can't afford it.

I'm not interested in any personal info. Since you were suggesting charging for amenities as a way of offsetting maintenance increases, I thought your particular situation might serve as a good example of how this works in practice.

So thanks in advance for any additional info you care to share.

Steven, Steven Have you ever gone to the CNYC in Nov.? DM gave some good advice. Remember the market is hot in Bklyn hardly any inventory to meet the buyers. If your maintenance is too high and your sellers want to sell you've dug your owners a disservice by having a maintenance increase every yr. As DM said "It is really about examining every single cost for tightening. Your insurance can be negotiated, your energy consumption can always be reduced - where else is money leaking? Are you wasting money/ increasing the debt on non- discretionary projects?
Don't take 'this is how it is' for an answer from your managing agent - make them show you savings. Be pro-active. Do not drink the cool-aide. Sit down and do the work.
We have NOT had a mntnce increase every single year in our Manhattan cooperative"

I've been to CNYC many times.

Every apartment sale in my building in the past few years has gone for offering price or higher. We've had a maintenance increase every year and it has not hurt sales nor owner satisfaction.

I'm sorry you seem to be having such a chronic problem with your managing agent that you need to double-check their every utterance. You should consider hiring an MA you can trust to do a good job.

When can we expect the report you promised in your post on April 18th about ways of reducing costs so shareholders can receive top dollar when they sell? I'm looking forward to reading it because I'm sure it will help me do my work.