Maintenance Increase Strategies When is the Right Time to Raise Fees?

The dreaded phrase “maintenance increase” is two words that most co-op owners may not want to hear, but sometimes it is necessary for a building’s board to make the unpopular decision of raising fees. With rising operating costs, fuel and insurance rates climbing, and the need for periodic emergency repairs, raising maintenance fees often is not only a necessity but may even be advisable.

“It’s totally dependent on economic consistency,” says Jeff Heidings of Siren Management Corp. in Manhattan. “Sometimes it needs to be done, or else there can be serious problems within the building.”

Having low maintenance fees can be an attractive selling point. Some buildings in Manhattan may pride themselves on not having increased maintenance for decades, but maintenance that’s too low can cause a host of problems on its own—from issues with the 80/20 rule to coming up short in cases of emergency.

As much as owners don’t want to hear that their maintenance will be increased, boards never like to increase their shareholders’ monthly payments but they know that it is a responsibility of their job to be proactive about protecting their building’s well-being and keeping their investment financially and physically sound.

Time Has Come

So how does a board know when that time is? Sometimes it’s obvious, sometimes not so much. If the building is hemorrhaging money in nickel-and-dime repairs of a physical problem that needs a decisive, long-term solution, an increase may be put into effect. Other times, a good board will notice that a potentially bad situation is ahead, and fixes the problem with an increase before the problem mushrooms into a full-blown crisis.

Read More...

Related Articles

NYC's Old Property Tax Exemption Program Gets a Makeover

Gov. Cuomo Pushes 'Affordable New York' to Replace 421-a

A Capital Idea

Is There Ever a Good Time to Raise Fees?

Q&A: It’s in the STAR’s

Q&A:It’s in the STAR’s

 

11 Comments

  • This is a very good article; however, what I am looking for is how maintenance fees were originally designated for the apartments of different size in any given co-op.
  • Markus Vayndorf Treasurer of 64-11 99st Coop Rego on Thursday, January 15, 2009 8:09 AM
    What is the legal time frame to notify the shareholders?
  • I have a question. My maintenance was raised 12 percent but the raise was only for the owners who were subletting their units. IS THIS LEGAL? It was approved by the board.
  • How often maintenance can be raise during 12 month?
  • Where are the answers to the comments? on Thursday, March 04, 2010 6:33 AM
    I see comments written every month. I have never seen any answers to comments with questions. Could it be that everyone can make comments but no one will answer any questions in the comments? Answer: Yes !
  • I also would like to see answers to questions - would be very helpful. I have a similar question to Mike regarding increases only for those subletting, assuming there is nothing in the by-laws to allow for that? Can the Board make arbitrary increases or do they have to be approved by a vote of the members? It sometimes seems to me that the volunteers who occupy the Board have a lot of power. There's only so many times you can blame an increase on oil prices, right?
  • The Comments section of our articles is just that - a place for comments or remarks regarding the articles. Readers may of course respond to comments posted, but The Cooperator itself is not a clearinghouse for legal advice. If you have a legal question, you are welcome to submit it to our Legal Q&A section for submission to an attorney and publication in our print and online editions. Send your questions to davidc@yrinc.com, and thank you for your continued readership.
  • can a shareholder who is technically a proprietary lease holder of rent stabilized apartments charge their tenant (technically a sub-lessee in a rent stabilized apartment) an mci increase
  • my question was not answered. can a co-op board increase maintenance without a 30 day written notice to the owners?
  • i would also like to know how much if any notice is required on increase of the maintenance to the owners. If they are late in notifying us are we still required to pay the difference of the increase, after submitting the payment. thanks dpnuyj
  • as a board member in a coop, I can only speak to my building. We raise 4% every year, and do not assess. We also have a flip tax that is not part of our operating budget but goes to fund our reserves. We have found that 4% tends to be the rate that costs go up over the long term horizon. Much of that is due to coop tax burden (~65% of our annual increase), some due to staff wages (union workers all get raises), and lastly due to capital projects - local law 11, elevator work, etc. Oil and electricity have had some big years recently as well. A good building should have a 5 year capital and budget plan like a business. This allows you to predict and schedule projects and costs and keep a "smooth" maintenance increase. Otherwise you see big swings up and down each year as things come up. I'll also add, it is hard work being on the board. Everyone likes to throw pot shots from the side, but there is a ton of work that you do that isn't paid for the benefit of everyone. We are residents too, and also don't want to pay more. Get involved and help your building! More people means more time to evaluate different vendors, seek alternatives, and find ways to defer or lower costs. If you don't, you can quickly see cost increases of 6-10% per year. A board can do almost anything in terms of raises - everyone is shareholders, so consult your bylaws.