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Refinancing Your Cooperative
In today's low interest rate environment, refinancing is the top agenda item for many cooperatives. However, while the current interest rates would seem to guarantee a "win-win"¯ situation, a savvy board must take into account more than just low rates when making the decision to refinance. As board members, you need to consider the existing terms of the property's underlying mortgage and closely analyze your co-op's financial security, current monthly costs, and projected capital improvements as you seek the optimal refinancing option. Read More
When Apples Equal Oranges
A taxpayer normally recognizes gain or loss realized on the sale or exchange of property. However, pursuant to Section 1031 of the tax code, there is no recognition of gain or loss on the exchange of property for like-kind property. Read More
Timing It Right
Sometimes a board has no choice about when to repair or replace some building feature or piece of equipment. If the boiler goes on the fritz in January, for example, it has to be fixed - period. Other projects, like interior design and renovations, can be scheduled more deliberately. In addition, the timing of certain exterior maintenance and repair projects can have an impact on how quickly they get done and how much they end up costing the building. By bidding and scheduling strategically, boards can save time and money on a renovation project. Read More
Thank Your Lucky STARs
In 1998, after receiving a "bill"¯ for zero dollars and zero cents for the prior year's school taxes, some New York State property owners wrote checks to the government in that amount. They were convinced that a clerical error had been made, and felt compelled to raise attention to the matter. In fact, there was no error. Read More
Avoiding Pitfalls
While many New Yorkers have navigated the process of applying and interviewing for - and eventually buying - a co-op or condo, securing a mortgage can be a complex, sometimes, lengthy process in which professional advice is recommended and most likely required. Read More
Renovations: A Work In Progress
Whether it's a house, co-op or condo, renovations are fraught with potential problems. Such quagmires as multiple change orders, delayed supplies or contractor errors can add substantial costs to a budget. One way to bypass problems and work within a strict design and construction budget is to plan precisely what needs to be done long before the project begins. Read More
Dollars & Sense
When most people think of fat, they think of unsightly rolls on out-of-shape bodies, but the truth is, buildings can be over-padded, too. Given the stagnant economy, boards can't afford to let their buildings just wallow in fiscal waste. It's time to seriously trim the pork from your building budget. I'm not talking about mortgages and finance; that's not my department. Increased property taxes, insurance premiums, and utilities are facts of life in New York City, and while complaining may feel better in the short term, there are decisive steps you can take to lower the day-to-day expenses in your building - and avoid paying the price for waste. Read More
No Easy Task in Today's Market
Back in the days of irrational exuberance, co-op board directors would occasionally contact me to inquire about investing in stocks to achieve higher rates of return on reserve funds. I believed it was an unwise move then and my advice would be the same today. Read More
A Taxing Situation
The city has been buzzing in recent months over Mayor Bloomberg's historic 18.5 percent property tax hike and what it will mean for property owners throughout the five boroughs. The tax hike comes hard on the heels of serious increases in insurance premiums, rising fuel prices, and a lingering economic slump. Read More
Going Private
In increasing numbers, residential developments constructed under New York's Mitchell-Lama housing program are considering the option to privatize - or "buy out"¯ of the program - when they become eligible to do so. Understanding this trend and the ramifications of taking such an action are critical for any Mitchell-Lama property. Read More
Feeling the Burn
On the morning of December 2, Mayor Michael R. Bloomberg signed an 18.49 percent property tax increase into law, the largest such increase in city history, but much lower than the 25 percent he originally proposed. Read More
Estate Planning
The death of a loved one not only brings grief and sorrow, but an agonizing pile of paperwork to tend to and affairs to get in order. For residents of New York City, it also means figuring out the fate of the deceased's co-op or condo apartment, if it hadn't been figured out beforehand. Read More
The 80/20 Dilemma
Picture this: the mom-and-pop dry cleaner that has inhabited your building's ground floor retail space for years is moving out and a broker tells you that an upscale clothier wants the space for triple the rent. Or perhaps one of the many cellular companies in town wants to rent your roof for antennae placement. Maybe your adjacent parking garage is changing hands and the new contract will yield twice the income of the old one. Read More
Flippin' Out
As buildings age, they inevitably need repairs and capital improvements - a boiler needs replacing, the faƧade needs repair, or the outdated lobby can use a facelift - to name a few. For cooperative buildings with healthy reserve funds, the cost of these expenses may be covered without additional contributions from shareholders. But, when there isn't enough money in the reserve fund, shareholders may be hit with a hefty assessment to cover the cost. Read More
Make-A-Wish
The turning of a new year is always a time to reflect on the old one, make personal resolutions for the next 365 days, and maybe make some wishes. 2002 was a roller coaster year for New York real estate, charting spikes and lulls in activity that reflected a more widespread uncertainty about the economy, the prospect of war in the Middle East, rising taxes, and plans for rebuilding Lower Manhattan. Members of New York's real estate community are still digesting the hubbub of the past year as they look ahead to 2003, and despite the uncertainty about what the coming year will bring to our troubled, though resilient city, most are looking ahead with optimism - and with some ideas about what they'd like to see happen in and around the city, in their buildings, and throughout the industry at large. The Cooperator asked some prominent players in the co-op and condo scene to tell us what their wishes are for 2003; some of what they had to say was what you might expect - a stronger market, continued stability of property values in the co-op/condo community, and more shareholder/owner involvement in building affairs - but some of their replies may surprise you. Read More
It's Your Dime
As surely as kids dread the back-to-school season every fall, so too must co-op boards face the budget season. A building really has only one shot at establishing income for the whole next year, and while many of you may be far from novices when it comes to preparing a budget, this year has some unique surprises in store for all of us. Determining the optimal level of maintenance income is really a balancing act between various - and sometimes conflicting - goals. To further complicate matters, the effects of a volatile stock market and the widespread evaporation of huge amounts of financial wealth has some shareholders and unit owners acutely concerned about preserving and enhancing the perceived value of their units - and thus more sensitive to any changes in maintenance charges or assessments. They are seeking stability and consistency at a time when real estate taxes and insurance costs and other building expenses loom on the sidelines ready to stir up our game. Read More
Gimmie a 'J'... and a '421a'
Four years ago, the co-op at 430 West 34th Street in Manhattan was in trouble. The 17-story, 168-unit vanilla brick building needed money - and needed it quickly. A couple of major capital projects, including new window installation, grouting and a boiler replacement, were looming, and the board didn't have the money to complete them. Read More
Saving Electricity for You and Your Neighbors
New Yorkers certainly wouldn't want to spend their summer being stuck in a crowded elevator or a hot, steamy subway car with no lights or air conditioning, especially when the temperature climbs to around 100 degrees. That is not a pleasant situation to say the least. However, some experts are predicting that New York City may face those dire consequences this summer as California did in 2000 when power supply problems forced the implementation of rolling blackouts disrupting workplace productivity and daily lives. Read More
Retracing The Six Steps
When "A Six Step Program for Boards - Plan Ahead for a Healthy Financial Future"¯ was published in The Cooperator back in 1996, very few boards were running their buildings like businesses, and even fewer had a long-range plan. While some buildings still bounce from month to month and crisis to crisis, an increasing number of boards are operating their co-ops in a more business-like fashion. Whether this is thanks to more experienced board members, more pro-active managing agents, more diligent accountants (or articles like this), really doesn't matter. The result is a brighter outlook for those boards that have made a habit of the "Six Steps."¯ Read More
Minding Your Money
Board members have a number of responsibilities and face many different challenges - and managing the building's finances is chief among them. But since most board members aren't trained financial professionals, what is the best way to make sure you're doing a proficient, effective, and thorough job? Having a good relationship with your accountant and financial advisor - as well as clearly defining and understanding their role - is essential, but board members must also be willing to learn about the basics of their co-op or condo's financial documents to ensure that their building is financially sound. Read More
Borrowing Smart
Most borrowers opt for fixed rate loans in today's low-interest market, but for those willing to embrace change and play the field a bit, still-cheaper rates are available. There are state-sponsored loans for making your building more energy-efficient, for example. To shave percentage points off a loan for other purposes, there's the so-called London Inter-Bank Offered Rate (LIBOR)-based rate. Or you might consider looking into the new adjustable-then-fixed rates from Fannie Mae. Read More
That Ugly "F" Word
"Foreclosure"¯ is a word no co-op or condo owner wants to hear, but when residents fall behind on maintenance fees or common charges - when their financial burden becomes too large to shoulder - sometimes foreclosure can be the only answer. Read More
Cardio, Cappuccinos, and Convenience
Imagine this: It's a rainy gray Monday morning. You're snug in bed, dreaming away, when the alarm rings. Six thirty. You have just enough time to hit the gym before work, but the very idea of suiting up and traipsing out into the cold world to go work out makes you want to pull the covers over your head, hit the snooze bar five or six times, and just grab a big, buttery croissant on your way to the office. Read More
Where the Money Comes From
As residential properties in the metropolitan area begin to show the wear and tear that comes with age, properties in need of façade repairs and other exterior renovations to comply with Local Law 11 are scrambling to find financing for these projects. Whether exterior or interior, planned or not, the question remains: How will your building afford a project that could cost hundreds of thousands of dollars? Read More
Getting What You Deserve
In recognition of their service to their country, veterans of the United States Armed Forces are entitled to an extensive system of benefits. Unfortunately, many veterans are not aware of the full extent of these benefits and don’t take full advantage of them. While the legal jargon used by the government to describe these benefits can sometimes be confusing, it pays to stay informed of veterans rights and entitlements. Government benefits offer significant financial aid to veterans, ranging from tax breaks to government-guaranteed home loans (not to mention the plethora of non-real-estate benefits). So it is important that veterans–and co-op buildings that have veteran shareholders–make themselves aware of the benefits that they are entitled to. Read More
Planning for Posterity
Every year, co-ops and condos spend serious time and energy compiling their operating budgets. The process can start as early as September, with an evaluation of the first eight months of expenses for the past year–the primary purpose of which is to investigate unexpected variances from the prior budget and to determine if they will re-occur. In the end, it’s still more than likely that the new budget will mirror the old, albeit with some small adjustments or across the board percentage increase. After that, maintenance charges will be set, the philosophy typically being that maintenance charges should equal expenses. This is where most buildings stop. Read More
Preparing for the Unthiinkable
Since 9/11, terrorism has become a palpable new threat against the lives and property of American citizens. Not only has our peace of mind been compromised, but the attack on the WTC has affected lives in other, less obvious ways. Read More
Plan A or Plan B?
By their nature, co-ops and condos are about ownership, common interests and camaraderie. They are also predicated upon the sharing of costs–both of the day-to-day maintenance of the property, as well as periodic capital expenditures. As with any other home, at some point in time there will be a need for major repairs and replacements. Read More
Show Me the Money
The prevailing economic climate has given rise to concerns for us all, especially co-op and condo boards currently in the process of budget preparation. The natural course of action would seem to be to review past budget-related decisions and apply them to present-time decision-making. But what happens when the premises of previous decisions are no longer valid? In light of recent events, what budget-related issues must boards grapple with that they may never have had to consider before? Read More
Your Building's Reserve Fund
As the future of the economy remains questionable, the matter of your building’s finances begs the question: Should your co-op or condo board reexamine how you invest your reserve fund? No doubt, this has already crossed your mind, but even if it hasn’t, perhaps now is a good time to reassess your reserve fund investment strategies. Read More
Back from the Brink
When Irwin Cohen, president of Manhattan’s A. Michael Tyler Realty came on board in 1997 to manage a ten-unit co-op on the Upper East Side, the building was on the verge of bankruptcy. In addition to depleting their reserve fund to pay for sorely needed repairs, the co-op owed over $100,000 to various vendors and service providers–$100,000 it couldn’t afford to pay. The co-op had obtained a $100,000 line of credit to do the necessary repairs, but well over half of the sum was long since spent by the time Cohen came on the scene. Read More
The Mitchell-Lama Debate
Here in New York, where real estate values have risen to unprecedented levels, limited equity co-ops created under the Mitchell-Lama program are presented with the choice of either embracing their own dizzying market value by removing the restrictions imposed by the program and converting to free-market housing or remaining limited equity where both purchase and sale prices are limited to several thousand dollars a room. So how is the buy-out issue affecting cooperatives? Are they rushing to claim their share of the windfall? What are the economics of their situation? Is it even ethical to be reducing the stock of affordable housing at a time when no new affordable housing is being created? Read More
The Future is Now
The well-known business guru Peter Drucker once said, "Long-range planning does not deal with future decisions, but with the future of present decisions." This is the basic philosophy professional financial planners use in guiding their corporation shareholder clients. Board members who are responsible for guiding their buildings’ financial futures must always consider both long-range and short-range needs and contingencies. Read More
Garage Benefits
If someone were to tell you that as a New York co-op or condominium owner you may be throwing away up to $1,000 a year on unnecessary taxes, you’d probably be pretty indignant, right? No matter who you are or what you do, a thousand bucks is nothing to sneeze at–and you could certainly think of better things to spend it on than taxes. Read More
Are We There Yet?
Alan Greenspan and the Open Market Committee of the Federal Reserve have received a lot of press coverage recently for their aggressive attempts to revive the economy and ward off a recession. Their unprecedented program of mostly half-point cuts has reduced the discount rate (the rate certain banks pay to borrow funds from the Federal Reserve to meet their daily capital requirements) from six to 3.25 percent since the beginning of this year. Most banks have followed suit by lowering their prime lending rate (the rate these banks supposedly charge their very best customers) from 9.5 to 6.75 percent over the same period. Read More
