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2 HABITAT february 2014 www.habitatmag.com Contents February 2014 Writers & Artists

jacques Beauchamp is a Paris- based photographer.

Jason Carpenter is a freelance writer for The New York Post, Men’s Health, and This Old House.

dale J. Degenshein is a special counsel at the law firm of Stroock & Stroock & Lavan. 6 Project Co-op LIZA DONNELLY, a contributor A can-do board, a crack management to Habitat since 1982, is a team, and the secret of success. The gathering for cartoonist at The New Yorker. by Aparna Narayanan 30 The Mother of All marcellus Hall is an artist whose work has appeared in The 14 The Carbon Challenge Repair Jobs New Yorker. Mission: Possible. Cutting greenhouse An ordinary sidewalk hides an Maitland McDonagh has written gas emissions by 30 percent. underground vault – as well as BUILDING OWNERS AND MANAGERS for The New York Times and by Bill Morris an extraordinary undertaking. Entertainment Weekly. by Bill Morris Bill Morris, a reporter for 34 Troublesome Tenants years, formerly worked for the Daily News and currently writes for The New York Times. 18 Nuclear Option When should a co-op kick out a RAY OCHS is a board member at his Forest Hills co-op. troublemaker? by Frank Lovece Discover the newest products & services to save money on your building from over 300 LISA PRevost is the Mortgages vendors all in one place columnist for The New York Times 36 If You Can’t Beat It, and the author of Snob Zones: 19 Strange Bedfellows Fear, Prejudice and Real Estate. Sometimes you have to sleep with the Exempt It Learn about the latest emerging codes, laws and trends in NYC through our richard Siegler is of counsel at enemy to get things done. Don’t flip over a new tax rule. comprehensive education program and networking events Stroock & Stroock & Lavan. by Jason Carpenter Here’s what you can do.

stephen troup is a partner in the by Lisa Prevost Solve problems and find solutions for all your building’s needs and more in just 2 days firm of Tarter Krinsky & Drogin.

Columns New York’s Complete Buildings Event Projects Around Town 4 Publisher’s Note by Carol J. Ott

40 Ask the Attorney The stuff of nightmares. marketing/ security/ back office/ design & disaster energy/ maintenance restoration environmental leasing Life safety building construction relief energy & operations & renovation by Stephen Troup automation management 43 Case Notes with the most new products Bamboo invasion. 54 Spotlight on by Richard Siegler and Dale J. Degenshein 68-12 to 68-44 Burns Street

46 My Turn 52 From the editor 50 Management Transitions THE BIGGEST BUILDINGS SHOW register now for free Looking up. Absurd is the word. 50 Building Loans by Ray Ochs by Tom Soter IN NEW YORK at www.buildingsny.com Like Us follow Us 51 Advertiser index 47 board talk Crossword puzzle 56 51 Planner Supported by: A conversation about meeting times. One tough clue. 55 RECENT SALES

www.habitatmag.com FEBruary 2014 HABITAT 3 Publisher’s Note

Lots of activity around co-op/condo town this month: cogen being installed at the Brevoort East in Greenwich Village; a smart workaround with banks and a flip tax that will kick-start sales again at Brigham Park in Brooklyn; and a sidewalk vault rebuild that was anything but easy. Stuff doesn’t just happen without fingerpointing, and leadership – and, of course, a ton of work then – boom! – a and effort. That’s what makes these stories headache. You’ve so remarkable. Someone, or a group of got options, and we’ll help you sort through someones, steps up to the plate and pushes. them. The tools they use are unique to their tales, And, hey, are you up for the city’s but they can be copied. “Carbon Challenge”? It’s one of the final But on a dime, things can turn dark. When hurrahs of the Bloomberg era, and aims to a great board experience becomes bad, cut greenhouse gas emissions by up to 30 look for a troublesome tenant. Whining, percent over the next ten years. At press

publisher and editor-in-chief

Serving New York Board Members & Property Managers of Co-ops & Condos HABITAT® (ISSN-0745-0893; USPS 681- FEBRUAry 2014 VOLUME 33 NUMBER 306 510) The Magazine serving New York Co-op/ Condo Board Directors & Building Managers, is published monthly except for a combined issue FOUNDED 1982 in July/August by The Carol Group Ltd., 150 W. 30th St., Suite 902, New York, NY 10001. publisher and editor-in-chief contributing photographers Periodical postage paid at New York, NY and at Carol J. Ott Jacques Beauchamp additional mailing offices. POST­MASTER: Send [email protected] Michael DiFonzo address changes to: Habitat, 150 W. 30th St., contributing writers editorial director Tom Soter Suite 902, New York, NY 10001. Copyright Jason Carpenter Tom Soter Jennifer Wu © 2014 by The Carol Group Ltd. All rights Dale J. Degenshein [email protected] reserved. Reproduction in whole or in part web content editor Jennifer V. Hughes without permission is prohibited. The editors associate editor Frank Lovece Maitland McDonagh [email protected] assume no responsibility for unsolicited Aparna Narayanan Bill Morris manuscripts or photographs. Postage must [email protected] Ray Ochs advertising director accompany­ all materials if return is requested. Stephen Hanks Lisa Prevost Editorial and Advertising Sales Offices: 150 editorial assistant [email protected] Kathryn Farrell Richard Siegler W. 30th St., Suite 902, New York, NY 10001; [email protected] Stephen Troup operations manager (212) 505-2030 fax: (212) 254-6795. Co- Jennifer Wu op/condo board corporate subscriptions are proofreader art director [email protected] $70.00 per association, entitling up to 4 board Dave Baker Michael Gentile directors to receive their own copies of each [email protected] collections supervisor issue. Additional board members’ subscription Bill Hoover rates can be found at www.habitatmag.com/ contributing artists subscribe. Individual subscriptions are $49.95 cover photographs Liza Donnelly for one year. Canadian and foreign subscribers­ Jennifer Wu Marcellus Hall must contact Habitat for rates. Single copies of most issues are available prepaid at $5.

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Habitat-FP-1113.indd 1 11/14/13 2:09 PM Project Co-op

firing on all cylinders (clockwise from top left): Board member Silverzweig (hand in pocket) and his team inspect the basement; detail of cogen unit; building lobby; worker assembling equipment.

By Aparna Narayanan/Photographs by Jennifer Wu

n the cavernous sub-basement of the Brevoort East, a 26-story, 325-unit cooperative at 20 East 9th Street in Greenwich Village, workmen spent the past summer piecing together a giant metal jigsaw composed of the boilers, engines, generator shafts, catalytic converters,I and assorted pipes of a cogeneration system. The seed of the idea for this beast of neighborhood of Brooklyn. In 1950, a young Jay a machine lies in a formerly industrial Silverzweig, the owner of a plastics business,

6 HABITAT february 2014 www.habitatmag.com

watched electricity costs take a toll on his neighbors in Greenpoint. Two fellow entrepreneurs, who used steam to clean rags, finally decided to get off the electric grid. So, they fooled around with cogeneration (or CHP, i.e., “combined heat and power”), a system that uses natural gas to produce electrical and thermal power. More than 60 years later, those POOF early experiments in alternative energy were lurking somewhere in Silverzweig’s mind as he spearheaded Skyrocketing expenses. Escalating maintenance. the $1.5 million Brevoort East cogen project. Dying boilers, elevators, roofs. Difficult shareholders. “It’s a birth process,” says the 31- Lazy staff. Challenges we face every day. year board veteran, describing how We know how to make them vanish. ideas come to fruition. “It just takes years to push it back and forth, and LAWRENCE PROPERTIES then comes an opportunity.” After it becomes operational in Residential managers the spring, the cogen facility will since 1925 help the building save more than $100,000 annually in energy costs. Call Anton C. Cirulli, Managing Director (646) 454-2932 But the achievement is not unusual 150 West 30th Street, New York, NY 10001 for the board; it is merely the latest www.lawrenceproperties.com in a series that includes an oil-to-gas conversion; a lobby renovation; and an LED lighting upgrade. Not many buildings could pull off simultaneous cogen and Local Law Kipcon… 11 (LL11) projects as the Brevoort Decades of Experience East did, in 2012 and 2013. And the board didn’t stop there. When For generations, clients have put their trust the LL11 inspection of the building in the industry-leading experts at Kipcon, façade revealed incidental problems where we proudly provide a complete range – terraces in disrepair that posed no of engineering services including: immediate danger to public safety, for • Structural/Mechanical Design example – it fixed those as well. At a time when many co-op and • Building Exteriors/Roofing condo boards are working hard just to • Capital Needs Assessments keep on top of problems, this board • Energy Supply Opportunities and its management team are looking • Local Law 11 Inspections ahead, discussing their next project • Life Cycle Costing while tending to the current ones. • Reserve Studies So, what’s the secret? The co-op, it must be admitted, is blessed with a fairly unusual pair of circumstances that helps it succeed: healthy capital reserves and a prime downtown location attractive to commercial tenants. Yet it would be all too simple to explain away the property’s accomplishments as mere luck. Many boards, similarly placed, flounder at 5 Penn Plaza | 23rd Floor | New York | NY 10001 the helm of their co-op or condo. The Call 800.828.4118 to learn more or visit www.kipcon.com

NY Cooperator 1/4 page.indd 1 6/20/13 7:21 PM www.habitatmag.com FEBruary 2014 HABITAT 7 Brevoort East has something more – something elusive but essential – that accounts for its success. It all starts, perhaps, with those who guide the building through the choppy waters of building operations.

A Man to Be Trusted On a recent brisk November day, Silverzweig, now well into his 80s, walks slowly out of his co- op’s elevator to noodle around the hulking cogeneration equipment. Despite the schlep to the basement and sub-basement, he is a frequent visitor to the staff offices and machine rooms located there. In fact, to hear building employees tell it, the chair of the infrastructure committee can be a bit of a taskmaster, the type who lets nothing slip by. “[At his age,] he shouldn’t be down there, but he’s down there making sure that everybody is doing what they need to do,” says Robert Mellman, a management executive with Orsid Realty who supervises A UNITED TEAM (from left): Board member Silverzweig, the firm’s Brevoort East account. “He’s a doer, and he management executive Mellman, resident manager Miller, forces us to be doers.” on-site property manager Baum.

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Such praise clearly makes Silverzweig uncomfortable, and he is quick to lob it back: the building is “blessed,” he says, to have a cohesive core team including Mellman, superintendent Robert Miller, and on-site property manager Elizabeth Baum. As for himself, he insists, “I am just a cooperator.” But every successful building needs an Ideas Guy, the one who says: “We need this, we want this, and let me tell you why.” At this co- op, Silverzweig is it. His own mantra for what makes a project succeed consists of three words: “conception and execution.” He fits a tad more into the conceptual end of things. The cogen and LL11 initiatives are among the many works he has overseen since moving into the co-op in 1982. In fact, he describes infrastructure projects and financial affairs as “my little niche in the building.” This enterprising streak can perhaps be traced to the plastics business he ran for 28 years. “I’m just a compulsive individual,” he says. “I enjoy detail. I’ve put together several plastics factories, and I know [a project] requires a great deal of dedication.” As a certified public www.habitatmag.com FEBruary 2014 HABITAT 9 accountant, he is also naturally Cogeneration Annual Project Savings attuned to budgetary matters – the $1,500,000 $100,000+ how, in his words, of picking out “those things that can be changed and Lighting Annual Project Savings $84,000 modified” and the why of identifying $255,000 those costs that need to be controlled or examined. Local Law 11 Project $3,500,000 “Nothing Dramatic” – BREVOORT EAST but a Lot to Do Lobby Silverzweig downplays his own role Renovation $1,750,000 The Building That in putting the Brevoort East on sound Gets Things Done financial footing. “Nothing dramatic, Sidewalk just prudent management,” he says, Upgrade describing the process. But there is a $175,000 reason why the co-op has managed to Gym Gas Annual accomplish a clutch of big projects – Renovation Conversion Savings 11 in the last seven years alone (see $70,000 $275,000 $150,000 chart, at right) – without assessing its Storefronts Boiler Roof Deck 900 residents. Upgrade Replacement Addition What he dismisses as “nothing $300,000 $300,000 $260,000 dramatic” entails hours of research Children’s so that building funds are wisely Playroom Upgrade invested, and carefully selecting those $50,000

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Co-op Managers - Shareholders projects that result in annuities and build capital reserves. The co-op Residential Owners - Managers does not relent in its focus on, and Turn water metering to your advantage! finessing of, the bottom line: in Silverzweig’s words, the “what do we have here, how can we do better, which costs can be controlled, you Automatic Meter Reading Reduce water bills as much know?” Save money – Save time as 30% to 40% easily! This forward-thinking attitude Put your meter on line! Fix DEP bill errors forever! is typical for board members. During an oil-to-gas conversion in 2010, they installed a 12-inch line although the job called for merely an 8-inch one. It was no mistake: they were planning for the future. Vantage Group Cogeneration was at the back of their minds, and they had found Helps Buildings “GO GREEN” – and Save Money – that such a system would require with Strategic Water Cost Management. larger piping. Because of this foresightedness, when the cogen www. vantageh2o.com plant was installed in 2013, “we were not ripping out all the piping,” says Mellman. “Saving billions of gallons & millions of dollars!” Strategic Water Cost Management Call Us: (888) 860-2990 The board’s cohesiveness Automatic Meter Reading Specialists Email Us: [email protected]

www.habitatmag.com FEBruary 2014 HABITAT 11 enhances teamwork all around, to superintendent Miller. “They presentation, during which material testifies Baum, Orsid’s on-site know that the board does their due samples were made available for property manager for the co-op for diligence” researching projects and residents to see and touch. seven years. “I am working in a group getting the best prices for them, he “It was not to give them an with good back-up,” she says. “I don’t says. “Questions are answered, not opportunity to vote on [the lobby worry about what’s happening, as put off.” project]; this was a decision that long as there is no fire, flood, or gas That causes a ripple effect. the board took very seriously and leak.” Satisfied with how the building made after due diligence,” says is being run, residents tend to be Orsid’s Mellman, “but we kept the Respect Is the Word happier with employees. They inquire shareholders in the loop.” As the board goes about getting after one staff member who has had a Not everyone was happy that they things done, it treats with respect the mini-stroke and congratulate another could witness the process but not professional expertise of both its own on his child’s accomplishment. “It’s actively participate in it, he admits. employees and outside contractors. more of a family atmosphere here,” Two factors smoothed things over: This manifests in ways big and small. says the super. Miller arrived at the first, the “calming approach” of the Staff members have, on average, 25 co-op in 1981, intending to stay for a co-op leaders, who understood the years of service with the building. year and then move into the property importance of allowing dissenting When the men’s locker rooms were management field. But within that views to be heard. “Whether the redone a few years ago, they got more first year, he had decided to stay on. board agrees with the comments than the expected new lockers. Air- What clinched that decision, he says, or not is almost irrelevant as long conditioning and microwave ovens was how warmly he and his wife as [shareholders] have had the were installed as well. And while it were welcomed into the building. opportunity to voice their opinion,” is hardly unusual for buildings to buy Besides treating staff like one he says. “This board listens.” uniforms for their staff, the Brevoort of their own, the board members Secondly, the directors and East also bought them brand-new understand that communication is management kept the focus on the shoes so they all look alike. key. Some years ago, a lobby redesign efficiencies that the lobby project This inspires confidence in the generated heated tempers, as projects would bring about – a package cooperative leaders – a sentiment involving personal taste often do. So room for better mail sorting and a shared by residents, according they invited the designer to give a refrigerator to store food deliveries,

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12 HABITAT february 2014 www.habitatmag.com for example – rather than its aesthetics. “That’s all functionality, Has your laundry company “sold out?” and nobody can argue with Why stick with a “Big Box” provider when mid-sized, functionality,” explains Mellman. family-owned and operated companies still exist? “So, at that point, that becomes the focus of the conversation as opposed to the color of the window Co-op and Condo treatments.” Boards should have the option to pick Constantly Evolving the laundry-machine In his own role, supervising 16 supplier that best suits properties for Orsid, Mellman its needs. offers best practices learned on With more than 40 the job to all buildings within years experience, his portfolio. Not all boards, AUTOMATIC INDUSTRIES he finds, are equally open to offers the kind of expert suggestion. “What the board at personal attention and the Brevoort East has done better service you won’t get than most is that they take those from the Big Box boys. recommendations [and adapt them Contact us today! to their own situation],” he says. “There is a lot of tweaking that goes into everything.” www.automaticindustries.com In an environment where [email protected] “tweaking” – the process of streamlining building operations – Toll Free: 1-800-THE-WASH is constant, employees are expected 1-800-843-9274 to adapt to change. But the learning curve is taken into account. Miller, the superintendent, cites an example: some years ago, the co-op switched to the computerized, web-based BuildingLink platform to Making a Difference. communicate with residents. Every Day. It aroused some apprehension among staff, “who were used to writing things by hand,” but their fears were allayed by the board. “Nobody expected anybody to learn in one week, or one year, even,” he says, adding that employees “don’t feel that if you make an error, you are going to get written up.” As New York’s residential property management leader, This instills a sense of security. we know what it takes to create great communities that residents are proud to call home. “They enjoy learning because they may not want to be a porter or a Our full-service solutions and exceptional customer service add value and enhance the quality of life for the properties handyman forever; they may want and residents we serve. Exclusive services, like our FS to have their own building [to run Energy Aggregation Purchasing program, saved our clients over $6.3 million in energy costs in just two years. as superintendent],” Miller explains. Some staff members have gone on to How may we serve you? Contact us today. do just that, he adds, “and we were Dan Wurtzel, President, Property Management glad to see that happen.” Tel 212.634.8904 Email [email protected] Miller himself is staying put. Web www.fsresidential.com The reason is simple: “I don’t mind The only New York City management company offering 24/7 live Customer Care Mondays.” In that sentiment may lie the intangible secret of the Brevoort www.habitatmag.com FEBruary 2014 HABITAT 13 THE CARBON CHALLENGE By Bill Morris

o one could accuse Michael Bloomberg of going out with a whimper. His dozen-year Ntenure as mayor of New York City ended with a flurry of activity, most notably a last-minute push to approve $12 billion worth of real estate projects, including a $2 billion residential complex on the Brooklyn

waterfront, an office tower at Hudson Yards, and even a massive skating rink in the Bronx. Lost in this blizzard of high-dollar, 11th-hour deals was a snowflake of an announcement with major long-term implications for co-ops and condos in the city. A few days before Christmas, as part of his six- year-old PlaNYC, Bloomberg rolled out the New York City Carbon Challenge, an ambitious effort to get the city’s three million units of multi-family housing to reduce greenhouse gas emissions by as much as 30 percent over the next 10 years. Co-ops and condos are a big part of this mix. Their 400,000 units make up about 16 percent of the city’s multi-family housing. Residential buildings account

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Before the “superstorm” was deemed for more than one-third of the city’s greenhouse gas emissions. over, Castle’s terminals were open This voluntary challenge, begun and our trucks were on the road in 2007 with city government buildings, then expanded to include making deliveries to our customers. universities, hospitals, and large commercial buildings, is being That’s what “Customers Rule” is run in partnership with the New York State Energy Research all about. and Development Authority (NYSERDA). It promotes a variety of proven strategies for reducing energy use – and costs Castle Oil Corporation – including upgrades to heating, 440 Mamaroneck Avenue ventilating, and air-conditioning Harrison, NY 10528 systems; installation of energy- All our customers rely daily on our own www.castle.us efficient lighting and controls; and on-site testing laboratory, a 40 million Carla Romita, improvements to the building’s gallon deep-water terminal, a certified Sr. Vice President (914) 381-6506 in-house service department, and a fleet “envelope,” including its roof, Joseph W. Colonel, of over 90 vehicles. windows, and exterior walls. Sr. Vice President (914) 381-6540 Enter the Managers The Carbon Challenge targets Customers property managers as the link between government agencies Rule, and owners of multi-family residential properties, including Naturally. co-op and condo boards as well as ® owners of rental apartments. So far, ten management companies

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have agreed to participate: Akam Associates, Century Property Management, Charles H. Greenthal Management, Douglas Elliman Property Management, FirstService Residential, Marion Scott Real Estate, Midboro Management, Prestige Management, Rose Associates, and RY Management. After submitting a participation letter to the mayor’s office, the property managers approach the boards or owners of the buildings in their portfolios to determine if they wish to participate. The next step is to inventory each property’s annual Our Properties Tell our story If a co-op can reduce energy costs, everyone

If buIldIngs could speak, you’d hear a As benefits because it chorus of praIse for kaled ManageMent. building owners reduces maintenance starting as a family owned-and-operated business in ourselves, the late 1920s, we’ve been providing a comprehensive we understand payments. range of real estate management services for four the challenges generations, to an ever-growing list of satisfied clients. you face… —Laurie Kerr, architect the properties we manage, including our own, really do tell the story. Listen, and you’ll hear them speak of carbon emissions. Finally, boards our fierce dedication to our clients… our intense will meet with experts from various commitment to the highest standards… and our agencies – including NYSERDA, the unique approach to management. New York City Energy Efficiency Corp., New York City Clean Heat, We know how to to make your property run as and Urban Green Council – as well as smoothly, efficiently and economically as possible. assorted engineers and architects to tailor an emissions-reduction plan for their building. NYSERDA grants will help to defray upfront costs. “The property managers touch every decision-maker, so they’re a natural advocate for this program,” says Jenna Tatum, the city’s Carbon Challenge coordinator. “[This initiative] brings together Please contact Peter Lehr for a complimentary property property managers and the energy assessment, to evaluate the key areas that can impact managers in their companies to the profitability of your building. exchange information and accelerate the learning curve. They need to www.kaled.com • 516.876.4800 • [email protected] understand which technologies are Corporate NyC 7001 Brush Hollow Road 757 Third Avenue right for each building. We’re seeing Westbury, NY 11590 New York, NY 10017 buildings using their energy more

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efficiently, but we know we can to do more.”

Easing a Transition Laurie Kerr, an architect, was the mayor’s deputy director of Energy Efficiency and Green Buildings from 2006 to 2012, and was involved in • Instant Service At The Press Of A Button the rollout of the original PlaNYC in 2007. “If a co-op can reduce energy • Real Time Laundry Room Monitoring costs, everyone benefits because it reduces maintenance payments,” Kerr • New Smart Card Revaluing Options says. “It’s pretty clear that whoever pays for the improvements will reap the benefits. If those are aligned, you have a better prospect for success.” Looking into the future, Kerr sees the residential phase of the Carbon Challenge as a way to smooth the Request Service transition between the mayoral administrations of two very different men – the billionaire Bloomberg, who ReValue Smart Card was criticized for polarizing the city between the rich and everybody else, HercAlert and Bill de Blasio, who campaigned against what he dubbed the “tale of two cities.”

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With great power comes great responsibility – and a big fat headache...

In 1998, financial professional David Pullman – who had already made headlines working with David Bowie to package the singer’s copyrights and music catalog into what he trademarked as “Bowie Bonds” – bought Apartment 7B at 40 West 67th Street, near Central Park. Then he went wild. When should a He ranted, raved, and circulated defamatory fliers about various perceived board kick out a transgressions at the Rosario Candela prewar classic. He pushed the co-op board – and the shareholders – to their limit, and then some. Finally, in a landmark turn, 100 troublemaker? percent of the shareholders voting in a special election, representing 75 percent of And what are the the shares, agreed to kick him out. alternatives? The subsequent lawsuit resulted in the precedent-setting court decision in 40 W. 67th Street v. Pullman, which solidified New York State co-op boards’ nuclear Ioption: eviction for “objectionable” behavior. Combined with a previous, equally By Frank Lovece famous case – Levandusky v. One Fifth Avenue Apt. Corp., which established that courts can’t second-guess co-op boards’ business judgment in most situations – Pullman gave boards control over objectionable behavior that didn’t rise to the level of criminality. It also introduced a new word to the language. Attorneys now routinely warn misbehaving shareholders that they might be Pullmanized. Granted, that is an extreme action. “The morale continued on page 20 >

18 HABITAT february 2014 www.habitatmag.com With great power comes great responsibility – and a big fat headache...

The problem had been going on for two years but had increased dramatically in the last two months. An elderly couple who rented in an Upper East Side co- op was coming apart. The wife was suffering from dementia, and her hapless husband was overwhelmed with the responsibility of caring for her. She fought with him at times, would wander the hallways singing – and to top it off, the Sometimes you have apartment was a mess. Frail himself, the husband couldn’t cope. to sleep with The board was in regular communication with the owner of the apartment – a the enemy “holder of unsold shares” – trying to resolve the issue when matters came to a head. “The wife was singing loudly in the lobby, and she flipped out when the to get staff tried to silence her,” recalls Neil Davidowitz, president of Orsid Realty, the things done. managing agent for the property. “It was awful.” The board is now in the unusual position of forming an alliance with the traditional foe of co-ops: the holder of unsold shares, more commonly referred By Jason CarpenTter to – often incorrectly – as the sponsor. “Sponsors and boards have adverse interests, and therefore there is a lot of natural tension,” explains attorney Bruce Cholst, a partner in Rosen, Livingston & Cholst. “Sponsors typically want one thing and one thing only: short-term profit. So they want to maximize resale and rental value in the short term. That means keeping maintenance and assessments to a minimum whether or not they are going to finance continued on page 24 > marcellus

hall

www.habitatmag.com FEBruary 2014 HABITAT 19 Hankin & Mazel PllC Proud to provide personal legal services to co-ops and < continued from page 18 condos, large and small, for over 20 years. of a small building where Pullman attorneys at law is used, it’s terrible,” says attorney Adam Leitman Bailey, principal at his eponymous law firm. “It’s a bad thing to live in a building where

Mark Hankin and Geoffrey R. Mazel, Partners you’re afraid of being evicted.” And 7 Penn Plaza, Suite 904 • New York, NY 10001 that fear extends to board members, 212-349-1668 • [email protected] who are shareholders themselves. “Today it may be you,” he says metaphorically. “Tomorrow it may be me.” One reason a board might want to avoid a Pullman action is that even after a successful vote to terminate a lease, a co-op still has to file a lawsuit to evict the offending tenant- shareholder. WHAT SETS US APART: One courtroom alternative, says Steven Wagner, a partner at Porzio, Management has been our focus for over 100 years Bromberg & Newman, is “a motion We attract the Best Managers—and they for declaratory judgment and stay with us, sometimes for decades injunction. That’s a supreme court Our Financial Analysts carefully consider action, as opposed to a housing court your budget and investments proceeding, in which a board alleges Our Central Purchasing Power saves you you have a rule prohibiting whatever money on everything from energy to the conduct is, that this shareholder insurance or family occupiers are ignoring it, AS A FULL-SERVICE MANAGEMENT and that in essence the shareholders COMPANY WE ALSO PROVIDE: are challenging the board’s effort to enforce. You’re asking the court to Our Closing Department acts as your declare the validity of the rule, the Corporation’s transfer agent and oversees board’s right to enforce it, and to sales, leasing and refinancing enjoin the tenant-shareholder from Our cutting-edge Local Law Compliance Oversight helps you avoid fines and further similar conduct.” violations So when should a board pull a Our Electronic Statements option makes Pullman? Cases involving hoarders viewing your building’s Financial Reports and others with mental-health issues easier and “greener” that put the rest of the building at Pay Online using credit card or e-check risk are fairly common. But many are less clear-cut. Are there practical alternatives? Or do bad shareholders simply never change? And when push comes to Pullman, what exactly does EST. 1911 a board need to do?

Scan code to visit our Facebook page Managing the Finest Properties facebook.com/DouglasEllimanPropertyManagement Documenting Problems Since 1911 They say, “With great power comes great responsibility.” So what’s the 675 Third Avenue New York, NY 10017 Telephone 212.370.9200 Fax 646.843.2424 most responsible way for a co-op E-mail [email protected] EllimanPM.com board to act when the situation isn’t Scan code to read our Blog DouglasEllimanPropertyManagement.wordpress.com affecting the health or safety of residents? (Pullman is rarely used in condos.) The first step is to establish that

20 HABITAT february 2014 www.habitatmag.com you have continuing, repeated issues with a given shareholder – and Pullman has been invoked in cases of frequent loud music, uncontrollable dogs, obscene behavior, and even a refusal to replace old, loud, excessively vibrating air conditioners – because judges will look askance at a board going nuclear over one-off problems or if negotiation hasn’t been tried. “There has to be documented, long-standing problems that just won’t go away,” says Bruce Levinson, a veteran Manhattan attorney in private practice, “leaving other occupants frustrated and legitimately feeling someone should be cast out.” “Courts don’t like forfeitures,” says John LaGumina of The LaGumina Law Firm. “If you’re taking away someone’s significant asset, courts are going to look a little more closely than with other cases. But if the case is appropriate – and it has to be pretty extreme to be appropriate – you may have no choice.” That’s what’s happening at an 80- unit, five-building co-op complex on the East Side of Manhattan, says a board member who requested anonymity because the issue is active. “It’s a case of multiple instances of bed bugs and either smoke or fire conditions and also Collyer’s,” he says, referring to what the International OCD Foundation calls Collyer Brothers Syndrome and the American Psychiatric Association calls hoarding disorder. A married couple there is “not providing access for purposes of eliminating the bedbugs, and [has] taken bedbug-infested clothing to the laundry room, unprotected, and left [it] there while waiting for washers and dryers,” says the board member. “We have tried to address this with them. Within days of the apartment being cleaned out” under board aegis, “the hoarding started again. They didn’t want any social service agencies coming in. A dozen to two dozen tenant-shareholders have written letters either encouraging or demanding the board take action to www.habitatmag.com FEBruary 2014 HABITAT 21 have them removed for health and safety reasons. Nobody wants to hurt these people or have them sell their apartment at a fire sale or auction, but they have to take responsibility.” Assuming your case is less extreme than that, “You first want to try to enforce the house rules in a civil manner,” says LaGumina. “So informal notice is a good step. If that doesn’t result in any meaningful change, then do a formal written one.”

Upping the Ante You’ve laid the foundation. For the next step, “Somebody who knows the person should try to talk to them” on behalf of the board and We’ll take care of the rest. the other residents, says Wagner. “If they’ve lawyered up, then it’s [the board’s] lawyer to [the shareholder’s] lawyer.” If these steps fail to change the offending behavior, “A lot of boards do a ‘probationary stipulation,’ where typical provisions include giving the tenant-shareholder a second chance,” Bailey says. “This says you agree to behave for two years without problems, and if you continue the disruptive conduct, you’ll be evicted.” All the while, as you’re taking these less drastic alternatives to Pullman, you still must prepare for the worst since playing nice doesn’t always work. “You really have to build up a case,” says Levinson. And it helps to not only follow the proprietary lease to the letter but also exceed it. “You always need to send a notice,” he adds. “Not necessarily a notice to cure, because that might be an act of futility with someone who’s perpetually ignoring directives they receive, but you do have to give notice. You’re going to start the case because that’s the right thing to do. And a lot of judges will ask, ‘What 180 W. 80th Street, Suite 218 • New York, NY 10024 did you tell them?’ And you can say, 212-799-2365 ‘We’ve given notices, we’ve given opportunities, we’ve done this and [email protected] that.’” www.veritasmanagement.com According to LaGumina, boards should gather as much detail as

22 HABITAT february 2014 www.habitatmag.com possible to shore up their case. “Part is to vote whether or not to terminate price below market value” because of of the [standard] proprietary-lease a lease due to undesirable conduct a compressed time frame. provisions is whether the conduct after written notice. Make sure the In fact, that’s the resolution was repeated after notice,” he says. offending person gets a copy of the pending at the East Side co-op. “And the notice has to be specific. notice. It’s like any other special “The couple has gotten a lawyer and Otherwise the court may find it too meeting, and [shareholders] can even we’re negotiating with the lawyer,” ambiguous to enforce.” What kinds of use proxies.” says the board member. “They have details? “It depends on the issue, but While some proprietary leases indicated they don’t want to live in dates, times, witnesses – the more the allow the board alone to vote, he says, the building, they just want to leave, better.” “Most require the shareholders. The and we’re negotiating [such issues as] ones that allow only the board, the a time frame, what happens if they Pullmanizing in Practice courts will look at those cases more don’t sell the apartment, and also Now let’s say that despite your closely. If you have the shareholders’ their continued occupancy. If they’re legitimate best efforts, a Pullman vote, the court will see that just about willing to relocate while they’re action is unavoidable. What then? everyone in the place doesn’t want trying to sell, we’ll give them more Typically, a co-op meeting in which that person living with them.” time without litigation.” the accused has a chance to defend Sometimes, says attorney Marc And what of the famed Pullman himself or herself follows. Schneider, managing partner of himself? Says Bailey – who took him “If the initial notice was detailed Schneider Mitola, an offender on as a client after the dust settled enough and the person repeated at that point will often accept a and represented him in his apartment the conduct, you’ve satisfied the resolution “where they agree to sell sale – “He’s living in California, his predicate notice and due process the apartment, since they’re better business is doing very well, and he’s provision,” says LaGumina. “Now off selling it of their own volition still suing the law firm representing you set up the special meeting. Send than having their [shareholder] rights the cooperative for his legal fees.” a meeting notice, saying the purpose terminated, in which case it can get a Some things never change. n

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www.habitatmag.com FEBruary 2014 HABITAT 23 < continued from page 19 legitimate long-term building needs, and they want cosmetic improvements rather than capital improvements that benefit the building long term. Sponsors want non-restrictive sublet and pet policies because they facilitate resales, whereas boards tend to be more concerned with the long- term quality of life implications of these policies.” When, why – and how – does a board work with this “enemy”?

Complicated Relations The history of bad blood between the two sides dates back to the rental building conversion boom of the 1980s. Sponsors were the building owners who converted to cooperative or condominium status, with units sold to the public. However, in most cases, they would keep a number of apartments and retain majority control of the boards. As a result, they would have the largest say in rules, regulations, and spending for their buildings. According to bylaws and court cases, this control was supposed to be relinquished after five years (or earlier if a certain percentage threshold was reached). By that time, sponsors had frequently resold their units to other investors; hence the name “holder of unsold shares” (which can refer to the sponsor or its successor). But even after the five- year point, some abusive sponsor/ holder behavior did not change. “Sponsors would use building materials and building staff for sponsor apartments. Very often, that could be tens of thousands of dollars,” says Steven Birbach, chairman of Carlton Management. “And it used to happen a lot.” Conversions would get extremely contentious. Once the shareholders gained control of their board, they would enlist a third-party managing agent to analyze the maintenance and building logs – known as forensic accounting – to bill back to the

24 HABITAT february 2014 www.habitatmag.com P             sponsor. Some cases went to court and took years to settle. Even after relinquishing control, sponsors irritated boards because they were largely exempt from building bylaws and rules as a part of the conversion agreement. One of the sponsor exemptions was that - - www.majesticpropertymgt.com they could rent out their units at market rates for an extended time (and sometimes in perpetuity). Boards preferred that all units be owner-occupied, because banks frowned on loaning money to buyers into properties with a large percentage of rentals. This further added to friction between the two parties. Sponsors did not have to get board approval for their renters or buyers. Take, for example, the 72-unit White Plains co-op that has renters and owners living in the same building – although they might just as easily be living in different worlds. The board spent a number of frustrating years dealing with Not all building conditions are visible. two holders of unsold shares. “They Infrared thermography uncovers hidden problems don’t have to answer to anybody, that could threaten your property, including: and they put whoever they like in these apartments,” recalled the board Water penetration under Heat/cooling loss caused secretary when the situation was at roofing membranes by missing insulation its worst. “We have one apartment now where we know at least seven Leaks behind walls Overloaded electrical circuits adult males live.” The board became Blockages in pipes Structural defects aware of their presence only when a fire broke out in that unit and the RAND’s Certified Infrared Thermography Team performs detailed fire department reported six beds in a surveys of interior and exterior conditions, enabling us to devise two-bedroom apartment. The other holder of unsold shares effective repair programs tailored to your building. was equally “horrible,” noted the For information on how infrared thermography can secretary. “He owns the apartment benefit your property, contact RAND at 212.675.8844; above me. People have been there for 15 years, and he hasn’t painted [email protected] or visit randpc.com/infrared. once. He hasn’t fixed the fixtures We’ll show you your building’s true colors. and, because of that, a fixture beneath the sink broke and I woke up at six in the morning to water pouring through my living room ceiling. He reimbursed me for out- of-pocket expenses, but he wouldn’t reimburse the co-op. He said they had insurance that would cover it. He’s not responsible.” www.habitatmag.com FEBruary 2014 HABITAT 25 Academy Mail Box Co., Inc. Academy Intercom Co., Inc. Academy Engravers, LLC Common Ground Yet even the bitterest of rivals Specializing in Apartment House Security Since 1948 must come together when there is a common interest at stake. When Ask how a tenant issue escalates to the point of litigation, for example, the holder Academy ▪ Custom / Standard Mail Boxes will often work with the board to can save you time ▪ Entry Security Intercoms get testimony from shareholders to and money! support his or her case, but may also ▪ Access Control try to get out of paying the legal fees. (718) 539-1000 Engravings “Typically, things go smoothly unless www.academymailbox.com ▪ the sponsor tries to ask for costs in www.academyintercom.com ▪ CCTV www.academyengravers.com addition to testimony,” says attorney 120-10 15th Ave., Queens, NY 11356 Cholst. “But this is the sponsor’s legal battle.” John LaGumina, of The LaGumina AUTHORIZED Law Firm, points to boards that worked with the sponsor – and DEALER Featuring the GT Series, an www.aiphone.com entry security intercom ideal boards that didn’t. In one case, for apartment and office a cooperative had not been paid buildings. Mix and match modular components to maintenance for many months on customize entrance panels or an apartment owned by the sponsor www.auth-florence.com choose ready-made options! because of an underlying dispute between the sponsor and the rental tenant. The board debated bringing

Academy Mailbox Ad_4.5 x 4.75.indd 1 12/15/2011 8:37:28 AM a lawsuit, but the co-op’s manager attempted to establish a relationship Watching over you with the sponsor in hopes of avoiding litigation. for 35 years! “I supported the approach of the property manager,” says LaGumina. “In spite of the breach by the sponsor, costly litigation could result. The cooperative board accepted my advice, although not without some dissent from members who apparently saw my advice as a sign of weakness.” Ultimately, the agent was able to come to an acceptable resolution that involved virtually no legal fees, and the economic benefit far exceeded what a lawsuit would have brought in. There are times, however, when it is impossible to come together. If the sponsor agrees to take a particular case to court and the issue drags on, and the tenant still refuses to comply, the “sponsor may have second thoughts about funding the case,” says Davidowitz, of Orsid, “and might say, ‘The courts are not going to see it our way. I’m not going to waste more money on this.’”

26 HABITAT february 2014 www.habitatmag.com LAUREN & CHASE DESIGN GROUP Consider this scenario, suggested by Robert Tierman, a partner in the law firm of Litwin & Tierman: “You’ve got a free-market tenant who is renting a year at a time, and he’s creating a nuisance so the co-op wants him out. The investor may say, ‘Let him be. He’s only got six months left on his lease and then I won’t renew. I’m not going to waste my time suing someone who’s only got six months left on the lease.’ But the co-op gets tough and serves a notice to cure both on the investor-owner and the subtenant. The landlord will then sue his tenant in landlord-tenant court. If he doesn’t do so, the co-op can default the two of them, which Well-designed interiors are exciting to experience. Let us help you….. Lauren & Chase is your resource for outstanding, full-service design takes time and money, and the chance created specifically for your building. of getting legal fees back is not that Please contact Susan D. Lauren for a complimentary design consultation. great.” A better approach would be to www.lauren-chase.com • 212-799-6633 • [email protected] talk with the nonresident owner and Licensed NCIDQ – certified LEED Green - certified work something out. “The co-op might cut them some slack,” Tierman says. “There is no advantage for the investor to have a disruptive tenant. The investor will probably want to have a good relationship with the co- op, too.”

Consider Compromising An even more extreme situation would be if the case goes to court and the tenant agrees to rectify the issue, but the board still wants to move forward with an eviction. At that point, Davidowitz says, the relationship can become frosty, because the sponsor feels as if it has taken care of its responsibility – and paid the legal fees – but the board wants to push on, costing the sponsor more time, effort, and money. According to Cholst, when the holder isn’t diligently working to solve the tenant problem because of legal costs or other issues, the board must exert pressure. “The board can start eviction proceedings for the sponsor himself – and this may motivate the sponsor to take responsibility even if he doesn’t want to.” If a sponsor owns numerous www.habitatmag.com FEBruary 2014 HABITAT 27 units, his share of a tax assessment ON LIVING WITH A SPONSOR can represent a large sum. The board DON’T BE A STRANGER. Stay in regular communication with the may then have to confront the sponsor owner of the apartment, especially when you’re dealing with an issue for arrears. “It can affect the co-op’s concerning a renter in one of the owner’s units. cash flow,” he adds. “You really need DON’T ALIENATE THE SPONSOR. There’s no point in being tough to lean on the sponsor.” unless you absolutely have to. The sponsor can withhold information While there is no guarantee that a that you may need. judge is going to rule in your favor, sometimes a lawsuit may be the only BE TOUGH WHEN NECESSARY. Don’t be afraid, however, to lean on an recourse. If you’re forced to litigate owner who is in arrears on an apartment. and can afford it, “you don’t have a TRY TO SEE THE SPONSOR’S P.O.V. Understanding the sponsor’s choice,” attorney LaGumina says. problems may help you reach a compromise. “But there are uncertainties in any USE LITIGATION AS THE LAST STEP. Litigation is costly. ’Nuff said. litigation. If you’re stubborn, it could backfire.” In such situations, boards income. If the sponsor doesn’t give they might say they have a better should strive to see matters from that, the filing may be incomplete. idea, and we say, ‘OK.’” the sponsor’s point of view. Is a Melissa Gibbons, the board Gibbons says her board and the compromise possible? Remember: a president of 17 East 96th Street for sponsors have the same goals, so both bad relationship with the sponsor can the past three years, says her board’s sides try to keep the lawyers out of it, lead to unnecessary problems. If the protocol for reaching out to a holder particularly when it comes to tenant sponsor desires, for instance, it can is as simple as an informal phone call problems. She is definite about one withhold information that the co-op suggesting a way of dealing with a point: “If it can’t be [solved by] a needs for a tax certiorari challenge. tenant issue. “They usually get back simple knock on the door, then we’ll The co-op needs to know the rental to us within an hour,” she says. “Now, take the legal route.” n You don’t need to be a Storage room expert You juSt need to call one.

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28 HABITAT february 2014 www.habitatmag.com ABITAT H

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www.habitatmag.com FEBruary 2014 HABITAT 29 Somewhere on Worth Street...

...there’s an ordinary sidewalk...

30 HABITAT february 2014 www.habitatmag.com ...with an underground vault.

The Mother of All Repair Jobs

By Bill Morris/Photographs by Jennifer Wu he structural engineer who drew up the original plans called T it “the biggest and most complicated private vault job in the history of New York City.” What it came down to was this: rebuilding the two-story vault that covered all the underground mechanicals of an early-20th-century, cast-iron building in Tribeca, then waterproofing it and covering it with nearly 300 linear feet of sidewalk. The price tag was a formidable $1.6 million. But money was the least of the obstacles. What this condo’s board did was nothing short of miraculous, and it’s proof that even the most daunting repair job is doable – provided you hire the right people and provided they work together toward a common goal.

www.habitatmag.com FEBruary 2014 HABITAT 31 CAST-IRON MIRACLE: The repair of the two-story vault required opening up and then re-sealing nearly 300 feet of heavily trafficked sidewalk. The Vault Opens undergoing a gut renovation, that was a member of the building’s first The 30-unit condominium the vault was leaking and would board and is now its president. “There building at 73 Worth Street, a former eventually need to be rebuilt. was mention of it in Ellis’s offering industrial loft, was in trouble long To make matters worse, the sponsor plan. By 2007, we were able to see before the sidewalk vault job was declared bankruptcy after several the thing beginning to degrade, and undertaken. For starters, a developer apartments had been sold but before we put in temporary shoring so we who took over the property in 2000 the building was ready for occupancy. could determine what course to made a strange decision. Although To the relief of those buyers, the take.” The board mulled its options. the building has a vast basement and building’s mortgage lender, CB Should it negotiate a settlement with sub-basement, the developer opted Richard Ellis, agreed to take over as the sponsor? Sue the sponsor? Assess to locate its new mechanicals – the sponsor and honor their contracts. unit-owners for the looming vault boilers, water heaters, and fire alarm But a cloud had descended on the job? and sprinkler systems – directly building before the first resident “We threatened to sue [the under the sidewalk. That move meant moved in. sponsor], and that threat was that the vault’s infrastructure and The nine-member board got beneficial,” says Butnick. “It led to a existing pipes and conduits presented to work on day one. “At the first $650,000 settlement.” The board also obvious obstacles. The decision board meeting, we were aware the set the assessment process in motion. was doubly dubious because it was vault needed to be done,” says Joel With that money in hand, the known, even when the building was Butnick, a real estate investor who board hired Rand Engineering &

32 HABITAT february 2014 www.habitatmag.com PODCAST SERIES LEGAL TALK Co-op and condo board members make the crucial decisions that keep their communities going. When there Architecture to draw up specs for the are no easy answers, who do they turn to for advice? two-phase job – phase one would be a A lawyer. 90-foot section on the Church Street 2014 brings a whole set of new board concerns and side of the building; phase two would questions, and Habitat’s Legal Talk podcast tackles them. be a 180-foot section on the Worth In every episode, we present a real-life question from Street side. To pay for the job, each of someone on the front lines of board service and invite two the 40 unit-owners would be required expert attorneys to break it down to the fundamentals. to contribute between $40,000 and RECENT PODCASTS $70,000, based on apartment size. •Whistle-Blowing: What’s Right, What’s Legal And What’s A Stake “The challenge was to figure • Don’t Buy Blind out how it was going to be paid • Washing Out The House Rule for,” says the board’s attorney, • Discrimination And Punishment Andrea Roschelle, a partner at Starr Associates. “During the worst of the Real questions. Practical answers. financial downturn, we found Oritani Legal Talk doesn’t have to be complicated. Bank, and an independent mortgage broker and lawyer named Candee Look for new installments every other Wednesday. Chusid. She killed herself to get this Listen online: www.habitatmag.com/podcasts loan together.” Subscribe in iTunes: http://bit.ly/attorneypodcast

www.habitatmag.com FEBruary 2014 HABITAT 33 It was a self-liquidating schedule and the $2.6 million loan, right subcontractors. secured by the cash flow It required skilled, of the owners’ monthly intelligent, common charges. About experienced people.” one-fifth of the unit- And people who owners opted to pay their can roll with a punch. assessment in a lump James LaTerza sum, while the rest took took over as advantage of the loan, structural engineer accepting the stipulation when the original that they had to pay off engineer left their share before they Rand, and he could sell their apartment knew to expect the or refinance their unexpected. “In mortgage. projects like this,” Bids went out to a he says, “you always dozen contractors, and encounter conditions the board hired Technical you hadn’t foreseen. Construction Services. For instance, there Work soon got under way. were Verizon fiber- The fun was just optic conduits beginning. buried in the outer foundation wall of Trouble in Town the sidewalk vault Phase one of the under Worth Street. project was fairly That’s tough because straightforward, at least the conduits came on paper. There were no in and out of the mechanicals under this foundation, and the section of sidewalk, so condo’s responsible it was a simple matter for any damage to of replacing the vault’s michael them.” corroded cast-iron So LaTerza had

beams and pillars with difonzo to get in touch with steel I-beams, setting a Empire City Subway, metal “cue deck” on top a Verizon subsidiary, of them, pouring and to obtain drawings waterproofing a concrete STEEL SKELETON: Contractors switched out the vault’s of the conduits and slab, and finally pouring the corroded beams and pillars for hardwearing I-beams. specs for protecting sidewalk on top of it. them. That set the work But there was one small problem. schedule back a couple of weeks. Then Hurricane Sandy “A big rift developed between the engineer and the blew through, delaying work again but mercifully sparing contractor,” says Butnick. “After we completed half of the condo from flooding. the job, the engineer wasn’t talking to the contractor. The The next surprise was a massive piece of iron embedded end product was satisfactory, but the condo board had to in cement that had not been detected by the engineer’s make a choice. Since the job was the engineer’s baby, we original borings of the site. The metal had to be cut up, decided to seek a different contractor for phase two. The then removed by a crane, which required permits from the new contractor, Central Construction Management [of city and the temporary closing of busy Worth Street. Other Long Island City], wound up being one of the best in the cranes lowered 20-foot I-beams through tight openings city. This snafu actually led us to a better path. We were between boilers and water heaters and snaking bundles of getting into the very difficult part of the job, working conduit. around the mechanical equipment. It required an organized The condo’s property manager, Paul Brensilber,

34 HABITAT february 2014 www.habitatmag.com president of Jordan Cooper Associates, shepherded the year warranty from Carlisle. “That was not in the original meetings with various businesses and city agencies – plans,” says Butnick, “but, on the recommendation of from Verizon to the Department of Transportation, the the engineer, we decided to do the upgrade. It wasn’t Metropolitan Transit Authority, Con Edison, and the excessively expensive and it made every bit of sense. Now Department of Environmental Protection. He also served nobody will have to worry about that sidewalk for 50, as project manager, the daily liaison among the engineer, maybe 100 years.” the contractor, the residents, the commercial All Sealed Up tenants, and the board. As the holidays “It was very approached, workers on complicated,” Brensilber this Herculean project says. “We had to work in were tending to minor the same space with the punch-list items. Those mechanicals. The logistics who spearheaded it, were mind-boggling.” meanwhile, reflected on “Without Paul the lessons learned. Brensilber on the job seven Says board president days a week, this could Butnick: “Definitely not have happened,” says have your engineer board president Butnick. provide different “The engineer and the options, from the merely contractor needed to adequate to the 50-year consult with someone on job. Decisions should a daily basis. The key to not always be made success was being able to strictly on the basis of bring people together to cost but rather on the work in unison. He’s the long-term benefits to single reason the whole the building. As a board thing came together.” member you have a Another reason is that fiduciary responsibility the friction between the to do what’s best for original engineer and the the property in the long original contractor gave EYE ON COSTS: Tough negotiations helped board term. Another thing way to a smooth working president Butnick pull off the formidable project. – the board must set the relationship between their successors. “We follow the strictest limits on the engineering costs. Those things can direction of the engineer and the architect,” says Michael fly away terribly. They have to be negotiated very, very DiFonzo, president of Central Construction, the contractor carefully, with an absolute ceiling put on these costs, if for phase two. “We over-communicate. It makes for a possible.” better project. If there’s a change order, we like to submit “With sidewalk vaults,” adds LaTerza, the structural shop drawings, using CAD (Computer-Aided Design) engineer, “regular maintenance is critical. If the software, so there won’t be any misunderstandings.” waterproof membrane is compromised, water gets inside After overcoming all these obstacles, the board decided the vault and the steel framing can rust, the concrete will not to cut corners as the job neared completion. DiFonzo spall and crack. It’s just a matter of time before the vault suggested using a liquid, roll-on substance, manufactured fails. Proactive, preventive maintenance is critical to the by Carlisle, to waterproof the structural concrete slabs. life of vaults, and all structures. If there’s a problem, you But rather than the conventional “flood test” to check should respond quickly. The longer you wait, the bigger for leaks, the board opted for the more sophisticated the scope of the repair project.” and expensive “vector mapping,” which uses electrical In the end, maybe the most amazing thing about this currents to pinpoint even the tiniest of leaks. Five small job was that someone involved in it had a good time. “I leakages were discovered and repaired before the sidewalk do a lot of sidewalk vaults, and most of them are kind of slab was poured on top of the membrane. boring,” says DiFonzo, the contractor. “But I loved this For using the vector mapping, the condo received a 20- one. It was an interesting job.” n

www.habitatmag.com FEBruary 2014 HABITAT 35 flip taxes

If You Can’t Beat It, Exempt It By Lisa Prevost

does your co-op have a flip tax That was strange because the that it is higher than five percent of policy wasn’t new – it was instituted the gross sales price? If it does, you in 1984, when the cooperative first should be concerned. Lewis Kobak is. began to allow open-market resales. Kobak, the longtime general Brigham Park’s flip tax, or option- manager of Brigham Park Co-op waiver fee, is an important source Section 4, in Brooklyn, first became of revenue, and its calculation is worried earlier this year about his unique to the property. Basically, co-op’s transfer fee – more commonly it takes the total dollar value of all known as a flip tax – when several the apartments sold in one year and Dshareholders were having trouble divides that by the number of shares selling their apartments. Buyers they represent. Ten percent of that were being turned down for bank number is the dollar-value of the flip financing. tax. Currently, it amounts to $110 per

36 HABITAT february 2014 www.habitatmag.com KOBAK AT HOME: When the rules changed, the than five percent of the lower of the selling price veteran manager didn’t get mad, he found a solution. or appraised value, the loan is a no-go,” explains Jerry Niemeier, an expert in co-op lending who share, and this fee contributes between $100,000 has worked for several major lenders and is and $200,000 per year to Brigham Park’s reserves. currently the vice president of risk management The problem was the Federal National Mortgage for Nationstar Mortgage. Association (FNMA, but commonly abbreviated Why the change? If a loan goes into default and as Fannie Mae). About 18 months ago, the lending the bank has to take over and ultimately resell the agency instituted a new guideline that changes unit, Fannie Mae doesn’t want to get stuck with the terms under which it buys apartment loans the cost of a hefty flip tax, Niemeier says. Co-ops in buildings with flip taxes. Lenders who resell are unusual in lending in that they are always in their loans to Fannie (which then assumes the first-lien position, ahead of the lender. So as it is, risk associated with the loan) followed suit. “The Niemeier adds, if the defaulting borrower does Fannie Mae rules say that if flip taxes are higher not pay his maintenance, the lender will pay the

www.habitatmag.com FEBruary 2014 HABITAT 37 monthly maintenance charges to the co-op so that the loan In buildings where the flip tax exceeded three percent, does not default. Fannie Mae would still back the loan if the lender adjusted While most traditional co-ops don’t exceed the five the mortgage amount to reflect the flip liability, Niemeier percent cut-off in the guidelines, the rules are particularly says. onerous for older co-ops that were developed in the ’50s Under the new rule, lenders aren’t even allowed to offer and ’60s under the federal government’s Section 213 a lower loan amount. program, which financed construction at lower rates to In conversations with loan representatives at Citibank reduce unit costs. Those buildings typically were set and Wells Fargo about how to resolve the problem, up with rules giving the co-op the option to purchase Brucker has been told that co-ops with higher flip taxes apartments back from shareholders. basically have two options if they want to qualify for “When these buildings converted into regular co-ops, we financing. kept the same language for the option to purchase, and we They can officially reduce their flip tax to five percent added a flip tax because these buildings were getting older or less. Or they can formally exempt lenders from having and older,” says attorney Andrew Brucker, a partner at to pay the flip tax in the event of foreclosure or deed in Schechter & Brucker. The “tax” in these cases is essentially lieu. a waiver-of-option fee. “You can go ahead and sell your That’s what Brigham Park did. About a month ago, apartment for fair market value, but just remember, we the board amended the resale policy to exempt lenders waive our option provided you pay us X percent. It’s from the flip tax in situations where they foreclose and sharing.” have to sell an apartment. “For me,” Kobak says, “it was (Some portfolio lenders, which hold onto their loans a no-brainer. The reason we were so quick and ready to rather than resell them, do provide financing for buildings change our policy to exempt the banks is because we have with higher flip taxes, though the terms differ from lender practically no foreclosures. There’s no point in stubbornly to lender. The National Cooperative Bank, for example, fighting it as a matter of principle while we’re holding can often offer financing through its adjustable-rate loan shareholders up from selling apartments.” Kobak, who has products, which it keeps in portfolio, to buildings that are been associated with the building for 48 years, can recall stable financially, according to Janet Cupp, an assistant only six foreclosures in that time. vice president for loan origination.) “We can bang our heads against the wall and fight Before the rule change, Fannie’s flip tax limit was three this as much as we want, but that’s not helping those percent of appraised value, which may sound even more individual shareholders who are trying to sell their restrictive. But that rule actually gave lenders more latitude. apartments,” he says. “We can’t disregard that.” n

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www.habitatmag.com FEBruary 2014 HABITAT 39 ASK THE ATTORNEY | BY Stephen Troup

The Stuff of Nightmares etting bitten? Don’t be shy. It’s time to talk once again about bedbugs, those bloodsuckers from hell that are present in many Ghomeowners’ nightmares. Although complaints about the pests have diminished, Gothamites still deal with outbreaks. Eradication can be a huge expense, and if they spread throughout the building, more than one pest control visit may be required to fully get rid of them.

If we let those bugs move Bite Marks and Other Myths into this building, it’s going to cost us way more than l Bedbugs bite only in the dark. the money we’re currently Although bedbugs tend to be more active at night, they can bite at any time. spending. Until they come l Only dirty, cluttered homes get bedbugs. up with a cure, it’s just Any home can get bedbugs. The pests have been found in the homes of the proactive vigilance. As of wealthy and poor. Unsanitary conditions will not cause bedbugs, but getting this moment, we have no rid of clutter will help to reduce the number of places they can live and hide. bedbugs. – Manhattan co-op board l Bedbugs cannot be seen with the naked eye. president Bedbugs are small but can be seen with the naked eye. A magnifying glass will help. Young bedbugs are about the size of a poppy seed, and mature ones are about the size of an apple seed. l If I see bite marks, I have bedbugs. Other insect bites may resemble those of bedbugs. Presence of live bedbugs or their eggs will confirm an infestation. l If you have bedbugs, you need to get rid of infested clothing and furniture. Clothing can be laundered to get rid of bedbugs. In most cases, furniture can be treated. It should be discarded only if no acceptable treatments can get rid of the pests. Source: “Bed Bugs: Information, Resources, and Management” http://tinyurl.com/bedbugsDOH

40 HABITAT february 2014 www.habitatmag.com The law is clear: landlords are responsible for ridding their rental tenants’ apartments of any infestations. But what about residents living in cooperative apartments or condominiums? What responsibility would a co-op corporation or condo association have in this situation? In the courts’ eyes, there are some key differences between co-ops and condos that could place the financial burden on the individual occupant in certain situations.

Cooperatives: Act Quickly Co-op apartments are governed by proprietary leases, which allow the resident to occupy the apartment under a typical lease and take ownership of stock in the corporation that owns the building. Because these documents are leases, residents will be covered by the warranty of habitability (New York Real Property Law, Section 235- b), which requires rental building owners to maintain the property in a condition fit for human habitation and free of conditions that would endanger the health, life, or safety of the occupants. Therefore, it is the responsibility of the cooperative corporation to exterminate any bedbugs found in a co-op apartment. Some proprietary leases will hold an occupant financially responsible for his or her own apartment and the corporation responsible for any common areas. In 2009, however, the court in the Zayas v. Franklin Plaza case found that even where a proprietary lease places the financial burden of extermination on an individual unit occupant, the corporation will still be fully responsible for a building-wide infestation of bedbugs. The only way in which a corporation could escape paying for the work is if an individual www.habitatmag.com FEBruary 2014 HABITAT 41 owner is the source of the infestation; in that case, the owner could have to pay back any costs the corporation incurs in ridding the The apartment will be inspected building of bedbugs. However, this is difficult to prove. prior to the move-in and then again Residents can even recover attorneys’ fees if they obtain a after the residents’ contents have highly favorable judgment. But shareholders should use caution been moved into the apartment. because many proprietary leases require a plaintiff to reimburse In the event bedbugs are found the corporation for its attorneys’ fees if the claim is denied or ruled after the resident moves into the insubstantial. apartment, the resident is solely responsible for all costs... Condominiums: It’s Up to the Owner – bedbug policy at a 120-unit Residents in condos, unlike those living in co-ops, hold a deed Manhattan building to their individual units. The Frisch v. Bellmarc Mgmt. case in 1993 ruled that the warranty of habitability does not apply to occupants of condominiums, meaning building managers or condo associations cannot be held liable for any uninhabitable or dangerous conditions within the apartment. Thus, the burden of eradicating a bedbug infestation will usually be placed on the individual unit- owner. There are courts, however, that have been willing to place the financial responsibility on the building association when the problem involves common areas and/ or building-wide maintenance issues. For example, in 1997, the court in Pershad v. Parkchester South Condominium held that the repair of water leaks because of faulty drainage pipes was the responsibility of the association, not the individual condo owner. No reported cases have directly dealt with bedbug infestations in condominiums, but the situation would arise under a similar claim that the condo association has neglected its duty to keep the dwelling in good repair under the city housing codes (Sections 27-2005 and 27- 2018). Usually, condominium boards will want to rid their buildings of bedbugs as soon as possible. Most associations do not want word of the problem to get out to prospective purchasers, nor do they want to lower morale among those already living in the building. A consistent extermination plan can rid the property of unwanted pests before any damage is done and should be pursued as soon as possible. Reading the bylaws can help determine who should be responsible for eradication. Most importantly, if an occupant discovers bedbugs, he or she should try to determine immediately whether the problem is building-wide and put the management on notice.

Wrapping Up City officials in New York have already taken major steps to prevent another scourge of bedbugs. The City Council recently enacted a “Notice of Bedbug Infestation History” bill that requires landlords, including those who run a cooperative building, to inform tenants of the bedbug history for the past year. For general complaints, the Department of Health and Mental Hygiene provides a step-by-step enforcement protocol on its website (http:// on.nyc.gov/JHO1ma) for persistent problems. With government officials taking the problem seriously, the most important thing is that residents, owners, and building managers work together to ensure that bedbugs do not spread past the point of easy extermination. n

42 HABITAT february 2014 www.habitatmag.com Case Notes By Richard Siegler and Dale J. Degenshein

Bamboo Invasion ay a board impose fines when homeowners fail to remediate, even though the owners Mclaim they are being prevented from doing so by another owner? That was one question in Tucciarone v. The Hamlet on Olde Oyster Bay Homeowners Association.

The Facts of the Case Joseph and Anita Tucciarone, both in their 70s, owned a home in a gated community known as the Hamlet on Olde Oyster Bay, which is governed by the Olde Oyster Bay Homeowners Association. In another action, pending before a different judge, Jill Fadlon, a neighbor, claimed that the Tucciarones planted an invasive form of bamboo, which had spread to her property and rendered the yard unusable. In this case, the Tucciarones claimed that the HOA’s board improperly imposed fines

www.habitatmag.com FEBruary 2014 HABITAT 43 in connection with the bamboo The court explained that the Tucciarones were barred from driving to infestation. As of June 2013, the board had assessed fines of $14,000 and the couple had paid more than their home, had been denied use of the HOA’s amenities, and faced $8,000. Other than failing to pay the balance of the fines, they were not in escalating charges. Yet, they had no control over whether Fadlon would arrears. The Tucciarones claimed that provide access so that the offending bamboo could be removed. they could not remove the bamboo on Fadlon’s property because she would not permit access. In addition, they tried to settle the action begun The HOA failed to produce to the the board. Nor was there any evidence by Fadlon, but were unable to do court copies of a board resolution of the board’s findings, to justify its so. Although not explicitly stated, it imposing fines, explaining why imposition of fines. appears that whether the couple had the Tucciarones were being fined The court determined that the HOA the ability to access the common and what they could do to avoid relied on arguments made in the areas was also being litigated in the the penalty, or even the notice Fadlon action to justify its imposition Fadlon action. of meeting or the minutes of the of the fines and, when the fines In August 2013, the board adopted meeting at which the resolution was failed to cause the Tucciarones to a resolution that residents who were adopted. The court explained that the act, the HOA “escalated the stakes” in arrears for more than 60 days Tucciarones were barred from driving and imposed “measures affecting the would not be permitted to drive their to their home, had been denied use physical well-being” of the couple. car onto the premises. Further, they of the HOA’s amenities, and faced would be denied access to other escalating charges. Yet, they had no Back in the Driver’s Seat amenities. As to vehicular access, control over whether Fadlon would The Tucciarones had moved for cars could not be parked at or near provide access so that the offending a preliminary injunction. The court the gate house. The entrance to bamboo could be removed. explained that in order to obtain this, the HOA was on the Long Island The court then turned to the HOA’s they had to demonstrate by clear and Expressway and public parking governing documents. They said that convincing evidence a probability was roughly one mile away. The every member had an easement of of success on the merits, irreparable Tucciarones argued that, by not “enjoyment in and to the” property, harm absent a grant of the relief permitting them to drive onto the but that the rights could be suspended sought, and a balancing of the equities property, the board in effect denied if an assessment remained unpaid for in their favor. them access to their home. 30 days and that assessments were to The couple had established that The board responded that the be used “exclusively for the purpose they were likely to succeed on the Tucciarones were only being denied of promoting the recreation, health, merits. As to irreparable harm, they vehicular access to their home. It safety and welfare of the residents... alleged non-economic harm, namely asserted that the point of the no- and in particular for the improvement the inability to drive to their home or car-access provision was to make it and maintenance of properties, use the HOA’s amenities. The court inconvenient for them to get to their services and facilities…” also determined that the Tucciarones home. Moreover, the board conceded Further, the HOA documents set established that the equities balanced the resolution was meant to force out a procedure to be followed: after in their favor in that they would have settlement of the Fadlon action. a determination was made concerning been required to surrender their claims the validity of a complaint, a written in the Fadlon action to avoid the fines A Fined Romance notice of the violation was required to and penalties. The court determined that the issue be sent to the homeowner. Thereafter, Accordingly, the court granted the was whether the fines and penalties if not cured, a second notice was to Tucciarones’ motion for a preliminary were properly imposed. The only be sent, after which a fine would be injunction. In accordance with statute, evidence concerning the fines was imposed. The bylaws also established it required them to post a bond (in letters from the HOA’s counsel to a grievance committee and a the amount of $10,000) and, in the Tucciarones, advising that the grievance procedure if a unit-owner the interim, extended a temporary board would impose fines on an felt wronged. The court noted that stay. The HOA was enjoined from escalating basis if the bamboo were there was no evidence that any of enforcing any resolution regarding the not removed. these procedures were followed by bamboo infestation, levying or seeking

44 HABITAT february 2014 www.habitatmag.com to collect any fine in connection situation. From the decision, it appears From the facts recited in this opinion, with this case, and denying the that the only way for the couple to it appears that the board consciously Tucciarones the use and enjoyment of stop the imposition of the fines and placed the Tucciarones in a no-win all amenities, including the right to penalties, including the denial of car position. Indeed, according to the access the premises with a car. access, was to make a deal with their decision, the board admitted that In making this decision, the court next-door neighbor. We cannot tell “the purpose of the new directive discussed the Business Judgment from this decision whether the couple is [to] obtain remediation, i.e., Rule, noting that it is premised on or the neighbor was being reasonable (if settlement of the Fadlon Action, of the concept that there should be no either of them was), but we are not sure the bamboo infestation.” judicial inquiry into board actions it makes a difference. The way in which An important factor is that the unless the owner can determine that the board chose, apparently, to force a board plainly did not follow its own the action was not taken in good faith, settlement, placed the Tucciarones in an rules. There is no question that it in the exercise of honest judgment, untenable position. had to comply with its governing and in the lawful and legitimate Although the court referred to documents in any treatment of unit- corporate purpose. The court the board’s behavior as possibly owners. In instances such as this, explained that the Business Judgment “unconscionable,” identifying strict compliance is required and Rule does not apply when the actions such activity as an exception to the it is advisable that a board have of a board are “unconscionable.” Business Judgment Rule, it appears – and produce to the court – the Here, the court determined that that the court was actually speaking paperwork to demonstrate it has the board’s conduct may have been about a component of the good faith done precisely that. In this case, the unconscionable. standard imposed by the rule. In other board apparently failed, and this words, it appears that the owners were alone was likely a basis for the relief The Takeaway able to demonstrate that the actions granted. n While this case involves an HOA, taken by the board were in bad faith so Attorneys and not a co-op or a condo, it is that the rule would be inapplicable and For Plaintiffs: Stanley S. Zinner. instructive. The HOA board knowingly the court need not defer to the board’s placed the Tucciarones in a catch-22 determination. For Defendants: Cantor, Epstein &

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www.habitatmag.com FEBruary 2014 HABITAT 45 My Turn Looking Up erving on a board near the point of renegotiation. We are is challenging. fortunate to have a colleague on the board Those challenges who works in the financial world. He has run the gamut, personally contacted several mortgage from ephemeral brokers, and it is likely that he will issues (like negotiate a good deal creating harmony for the new mortgage. out of disharmony Lesson: Make proper among board use of those with special members) to more nuts-and-bolts kinds skills. Sof stuff (like fixing a garage leak). I Board splinter group. should know. I have spent several years There had been a schism coping with a multitude of problems as the within the board in the president of my co-op board. past year. Some members To step back: I have lived in Forest started an “inner circle” Hills – both the neighborhood and the that fought with many building – for many years. My 120-unit members. Lesson: See Queens cooperative, with its mixture of if the board can make retired (about a third), middle-aged (a compromises with such third), and younger (a third) residents, is a a group. Better yet, great place to live. Converted in the 1980s, prevent it from forming the property has had its ups and downs in altogether by having a terms of how it has been run. clear set of goals. I was first elected to the board in 2005 Cogen. A few projects and served four years, after which I stepped that seemed costly down to pay more attention to my actual have been indefinitely (paid) job. For another few years, the board tabled. We looked seemed to progress satisfactorily; but then into cogeneration but in 2013, a controversial assessment – the got nowhere. One of board started assessing the shareholders the board members who before getting quotes for the job, which has technical expertise Ray Ochs meant that there was a mismatch between coordinated some of the Board president, the Forest Hills, what we collected and the actual cost – issues, but it was necessary Forest Hills, Queens followed by a contentious mid-year meeting to speak with each of the led me to run for the board again. I now companies and do a lot more. find myself, after a four-year hiatus, back in We continue to reach out to other co-ops the role of president. who have cogen units. But, for the moment, On my return, I was confronted with a the investment would simply cost too much. number of problems that called for board With any luck, this will change in the action. I drew various lessons from them: future. Lesson: Unless your building is very Garage. Our building has an outdoor large and can commit major resources to garage and an indoor one beneath it. It the project, keep the boilers. has long needed a full repair, which is Contacts. Seek help from everyone, on expensive business. So, it had always the board and elsewhere. Make proper use seemed prudent to undertake patchwork of the management, but also of other co- repairs. We have now completed interviews ops. Even the basic processes involved in for the reconstruction and selected a being a board president – such as setting company. Soon, the garage will leak no agendas or having short meetings – I more. Lesson: Don’t put off a major (and learned only at conferences in my first necessary) capital project. years. Final lesson: Have everyone pitch in Mortgage refi. Our mortgage is finally – delegate! n

46 HABITAT february 2014 www.habitatmag.com Board Talk A Conversation About the Timing of Meetings

Marie I’m a first-time poster. Thanks for reading. to allow participation by teleconference [phone or Skype] We have long-standing board members in our co-op. at their regular time. There’s no good excuse not to, there’s When new shareholders want to run, the president always ample precedent, counsel would have trouble objecting, makes a point of stating that the board meets weekdays, and if the board refuses, THAT becomes your justification during the day. Since our current board includes people and rallying cry for a recall election. who don’t work or are retired, meeting at 10:00 AM on a Thursday is convenient for them. There are issues with the Carl Tait Scheduling a single board meeting at a time current board that many shareholders would like to address that’s convenient for the most members is reasonable, and by getting at least one new member elected to the board at no one would argue with that – so long as the same people our next annual meeting of shareholders. Most of us work aren’t being excluded time after time. And that’s the issue a typical 9-to-5 schedule and would like the board meeting here: it’s a systematic problem. to take place in the evening, after we get back from work. Allowing participation by teleconference is certainly If there is a quorum, are they able to prevent the new a good idea... [but] it doesn’t address the central problem member from joining the meetings simply by holding the in this case. Someone with a conventional job can’t be meeting at a time that is inconvenient? expected to drop everything at work and The language of the proprietary lease hang out on a phone call during the business (below) doesn’t seem very specific on day for an hour or two. this matter. This would be clear-cut if the excluded “Regular meetings of the Board of board member had a disability that prevented Directors shall be held not less than attendance: “We always meet on top of the once every six (6) weeks and may be hill.” “But it’s not wheelchair accessible.” held upon such notice, or without notice, “TOO BAD! Majority rules!” Obviously and at such time and at such place as the board would need to make a reasonable shall, from time to time, be determined accommodation in that case. The present by the Board of Directors.” situation feels very similar. The board is being inflexible on an element of the meeting Liz There is no reason for the current meeting time to be that precludes attendance by most people with jobs. Also, set in stone; if current members are available at 10 AM, it’s hard to see how the board could argue that it would be they are also available at other times. an undue hardship to change the meeting time. After a new member is elected, that member can provide his or her available times to the board. It is the board’s C/CS “No one would argue with that” is another responsibility to agree on a time when all can meet. unsupported assertion that ignores the facts of this case. If the rest of the board will not accommodate a new Every sitting member of this board would argue with that. member’s schedule for some reason, the new board Further, what you [or I] may think “reasonable” or “fair” member should speak with the co-op’s legal counsel, who has no relevance or meaning here. should be able to persuade the board to be accommodating. The wheelchair comparison fails, as you’re now talking I am not a lawyer, but I believe that by excluding a board about a protected class which the law says must be member from meetings, the board would be violating its accommodated. Having a job is not a disability, and no commitment to fiduciary responsibility, and to business consideration is due board members who don’t find the corporate law. meeting time convenient. That’s why I suggested teleconferencing...as a stopgap C/CS Sorry, but scheduling meetings at an inconvenient measure until more considerate and flexible board time is NOT “excluding” a new board member. If six members constitute the majority. Get elected, attend by members like Thursday mornings and one doesn’t, many phone, and you’ll have immediate access to all corporate would think it unfair to force the six to change. records. Then begin work on securing additional seats. n The idea that the board has a “responsibility to agree on a time when all can meet” is unsupported wishful Join our online discussion forum where board members post thinking. The idea that counsel would be able to make the questions and the board director community chimes in with responses. Topics range from mouse-proofing to management – board “accommodating,” or would be interested in doing really, anything, and all things, that boards encounter on a daily so, isn’t much better. basis. Want to participate? In the climate you describe, the notion of passing a by- Go to: www.habitatmag.com/board-talk Some of the responses have been edited for clarity. Opinions laws amendment is simply unrealistic. expressed in Board Talk do not reflect the opinions of Habitat. I’d instead spend my energy getting the board majority www.habitatmag.com FEBruary 2014 HABITAT 47 Marketplace The premier directory of suppliers and professional services to New York’s co-op/condo board directors and building managers.

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48 HABITAT february 2014 www.habitatmag.com Merrill Lynch FDIC Insured Investments for your Co-op/Condo Barton Management...... 212-682-9693 Vintage Real Estate Services Ltd....212-736-3680 Marketplace Reserves. Individual Co-op/Condo Mortgages Specialists in Co-op/Condo/Residential Co-ops/Condos/Mitchell-Lamas and Underlying Cooperative Financing. Financial Management. Contact Georgia Barton: Contact: Avi...... [email protected] Planning. Kevin J. McLaughlin: 212-415-7406 or [email protected] Veritas Property Management...... 212-799-2365 [email protected] www.bartonmanagement.com Co-op & Condo Excellence – Call Carl Borenstein www.fa.ml.com/themclaughlingroup or James Maistre – www.veritasmanagement.com FirstService Residential...... 212-634-8904 Learn how our unparalleled experience, New York RESERVE STUDIES market expertise, proprietary tools and resources, Insurance Kipcon Inc ...... 800-828-4118 York International Agency LLC...... 914-457-1285 value-added services, and passion for service Existing building evaluation, upgrades and Contact Barbara Strauss...... [email protected] excellence can help you realize your vision for your retrofits. Complete design services. Bidding and building while providing an exceptional quality contract administrations. LL 11/84/87 reports and of life for every resident. Contact Dan Wurtzel, remediation design. Capital Assessment Plans/ INTERCOMS & MAILBOXES President, Property Management Reserve Studies. Energy use and efficiency analysis Academy Mailbox Company Inc ...... ………www.fsresidential.com and upgrades. Facades, roofs, garages etc. Est. 1948. Intercoms • Mailboxes • CCTV • www.kipcon.com Access Controls • Engravings H.S.C. Management Corp...... (main) 914-237- www.academymailbox.com 1600 35 Years Professionally managing Co-ops, STORAGE SYSTEMS Condos, and investment properties with Honesty 718 or 212-539-1000 Bargold Storage Systems...... 718-247-7000 LAUNDRY SERVICES and Integrity. Contact Josh Koppel, CPM, direct Fully Enclosed Steel Storage Units. Custom Built 718-414-2073 and Installed. Excellent income producer. Automatic Industries.....Toll Free.1800-THEWASH www.hscmanagement.com Too often we hear “I hate my laundry company.” FREE INSTALLATION. You can learn to “love” your laundry company. Kaled Management Corp...... 516-876-4800 Providing coin & debit card operated laundry rooms WireCrafters...... 800-626-1816 Co-op/Condo/Rental/HOA Property Management Woven Wire and Solid Enclosed Storage Lockers to the Co-op & Condominium community. Contact: Peter Lehr Family owned & operated. delivered and installed. www.automaticindustries.com Ask about our FREE TRIAL OFFER. Newgent Management, LLC ...... 347-707-1010 Expert handling of your real estate headaches! Attention to all co-op/condo issues - LOBBY AND HALLWAY DESIGN maintenance of detailed financial records, WATER COST MANAGEMENT New York Water Management...... 718-686-0400 Art & Interiors...... 516-626-6555 owners’ charges and payments (including online), Real Estate Management Consultants Specializing in Full Scope Lobby and Hallway suggesting “to-do” ideas, tracking and reporting Water & Real Estate tax reductions Design. Versatile Style that can meet any request. maintenance and repairs, etc. Sub-Meter Installations and meter reading Quantum Management Inc...... 914-592-1100 Vantage Group Inc...... 888-860-2990 Property management Specializing in all areas of real estate property Complete Cost Reduction Programs, Alexander Wolf & Company management. Call Tom Bundarin NYC Toll Free ...... 866-316-6672 NYC Bill Correction, TURN WATER METERING TO YOUR ADVANTAGE! or LI (516) 349-0540. Specialists in Co-op/Condo/ RLH Management...... 516-944-3595 AUTOMATIC METER READING SPECIALIST! HOA & Senior Housing Management. 24 hour 35 years experience in Nassau County emergency availability. Managing Co-ops/Condos/Rentals/HOA Contact: John D. Wolf, President Siren Management Corp...... 212-483-0700 WINDOW FILM ALL AREA REALTY SERVICES INC. “Managing to be the future of your real estate” Chutemaster Indoor Environmental. SERVING COOPS & CONDOS IN Specializing in co-op, condo & rental management 800-234-4656 NEW YORK AND LONG ISLAND Contact: Jeff [email protected] www.aarsny.comWC7250_NY HABITAT_COLOR:WC5393D.NY...... 1-866-333-6182 www.sirenmgt.comCOOP MAG AD 9/20/11 3:22 PM Page 1 TENANT STORAGE SOLUTIONS

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www.habitatmag.com FEBruary 2014 HABITAT 49 Stats

rate: 4.48% closing: 11/1/13 “Stats” is a listing of important facts, figures, line of credit: $300K and statistics of concern to the co-op/condo Building Loans world. It is subdivided into “Building Loans,” bank: NCB which represents a sampling of cooperative loan officer: Edward Howe 79 Barrow Street Owners Corp. underlying mortgage refinancing deals; and building rep: Plymouth Management West Village, Manhattan “Management Transitions,” which includes Group a sampling of buildings that hired new 18-unit co-op, 0% unsold shares management firms (takeover dates appear in loan: $250K term: 111 months parentheses). All data, covering the past three Barclay Tenants Corp. months, has been voluntarily submitted, and rate: 5.4% closing: 10/30/13 45 Hillpark Avenue the omission of any professional from this bank: NCB Great Neck, Long Island section is no reflection on his or her business. loan officer: Edward Howe To have your item published in an upcoming 64-unit co-op, 0% unsold shares building rep: Irvine Realty Group issue, call (212) 505-2030 ext.3006, fax loan: $1.9 mil term: 10 years (212) 254-6795, or e-mail: jwu@habitatmag. rate: 4.54% closing: 10/31/13 com. 331 West 84th Owners Corp. bank: NCB Upper West Side, Manhattan loan officer: Edward Howe key: 4-unit co-op, 0% unsold shares BR bedroom maintenance building rep: Einsidler Management B bathroom CC common charge loan: $375K term: 15 years DR dining room RE TAXES real estate rate: 6.02% closing: 10/28/13 Barker Avenue Apartment Corp. EIK eat-in kitchen taxes bank: NCB LR living room 33 Barker Avenue loan officer: Mindy Goldstein SF square feet White Plains, Westchester County OTM on the market building rep: CFA Management 68-unit co-op, 1% unsold shares NA not available at loan: $1.9 mil term: 15 years press time 150 West 87th Street Owners Corp. rate: 5.26% closing: 11/1/13 MTNC monthly Upper West Side, Manhattan line of credit: $300K 39-unit co-op, 33% unsold shares bank: NCB loan: $500K term: 51 months loan officer: Sheldon Gartenstein rate: 4.0% closing: 10/31/13 building rep: Stillman Management Management bank: NCB loan officer: Mindy Goldstein Inverness Housing Corp. building rep: Orsid Realty Corp. 294 Bronxville Road Transitions Bronxville, Westchester County Bard House 48-unit co-op, 6% unsold shares 142-162 Bard Avenue Manhattan loan: $2 mil term: 10 years West Brighton, Staten Island Greenwich Village rate: 4.5% closing: 10/28/13 59-unit co-op, 31% unsold shares West Third Street Apartment Corp. bank: NCB loan: $800K term: 98 months 552 LaGuardia Place loan officer: Sheldon Gartenstein rate: 4.75% closing: 10/31/13 9-unit co-op. Transition to: Veritas building rep: Benchmark Management Management (1/1/14) bank: NCB Services loan officer: Mindy Goldstein West Village building rep: Excel Bradshaw Imperial Sanford Owners Corp. The Abingdon Condo Management 144-30 Sanford Avenue 607 Hudson Street Flushing, Queens 10-unit condo. Transition to: Century 477 Central Park West Owners 118-unit co-op, 5% unsold shares Upper West Side, Manhattan Management Services (12/1/13) loan: $2 mil term: 10 years 29-unit co-op, 97% unsold shares rate: 4.50% closing: 11/1/13 loan: $1 mil term: 72 months line of credit: $500K Brooklyn rate: 4.25% closing: 11/1/13 bank: NCB Carroll Gardens line of credit: $200K loan officer: Edward Howe Sackett & Union Condominium bank: NCB building rep: Mar-Mar Management 291 Union Street loan officer: Sheldon Gartenstein 32-unit condo. Transition to: Metro building rep: Buchbinder & Warren 12 West 96th Street Management Development (9/1/13) Upper West Side, Manhattan Ivanhoe Apartment Owners 69-unit co-op 38 Fourth Avenue Williamsburg loan: $2.1 mil Nyack, Rockland County McCarren Park Mews Condominium rate: 3.25% closing: 9/1/13 45-unit co-op, 2% unsold shares 214 North 11th Street bank: New York Community Bank loan: $1.4 mil term: 10 years 120-unit condo. Transition to: FirstService building rep: Orsid Realty Residential (12/5/13) rate: 4.5% closing: 10/31/13 bank: NCB North & South Lewis Place Owners Long Island loan officer: Mindy Goldstein Corp. building rep: Blue Woods Management 1-8 North Lewis Place, 2-7 South Garden City Group Hamilton Gardens Owners Lewis Place, 2-6 S. Forest Avenue, 1-6 22 Hamilton Place Merrick Road, and 407-422 Merrick 325 East 80th Apartment Corp. Road 107-unit co-op. Transition to: Alexander Upper East Side, Manhattan Wolf & Company (10/1/13) Rockville Centre, Long Island 48-unit co-op, 38% unsold shares 73-unit co-op, 16% unsold shares loan: $1.6 mil term: 10 years loan: $2.4 mil term: 10 years

50 HABITAT february 2014 www.habitatmag.com Stats

rate: 4.4% closing: 11/1/13 ADVERTISER INDEX bank: NCB loan officer: Mindy Goldstein Academy Mail Box ...... 26 building rep: Herbert Slepoy AKAM Associates...... 23 Argo Real Estate...... 24 Hudson Street Owners Corp. 90 Hudson Street Automatic Industries...... 13 Tribeca, Manhattan Bargold Storage Systems ...... 28 36-unit co-op, 0% unsold shares Braverman Greenspun...... Cover 3 loan: $3.35 mil term: 10 years Buchbinder & Warren ...... 24 rate: 4.5% closing: 11/4/13 line of credit: $500K BuildingsNY...... 2 bank: NCB Calray Gas Heat Corp...... 9 loan officer: Mindy Goldstein building rep: Andrews Building Castle Oil...... 15 Corporation Cesarano & Khan, CPAs...... 22 Chutemaster...... 41 The Normandy 140 Riverside Drive Crossword Puzzle, Sponsored by Braverman Greenspun...... 56 Upper West Side, Manhattan Douglas Elliman Property Management...... 20 249-unit co-op FirstService Residential...... 13 loan: $26.15 mil rate: 3.5% closing: 9/17/13 G.S. Dunham...... 5 bank: New York Community Bank Gerard J. Picaso Inc...... 26 building rep: Orsid Realty Habitat Ask the Experts ...... 53 Habitat Board Room...... 29 Habitat Legal Talk...... 33 Habitat Newsletters...... 39 Planner Hankin & Mazel...... 20 Hercules Corporation...... 17 February 1 J-51 tax exemption and Hudson Valley Bank...... 8 abatement program. First Impact Real Estate Management...... 16 day to file applications JMPB Enterprises...... 38 with Department of Kaled Management ...... 16 Housing Preservation and Development’s J-51 office for Kipcon...... 7 the first filing period in 2014. Lauren & Chase Design Group...... 27 Lawrence Properties...... 7 February 12 Lincoln’s Birthday. Majestic Property Management...... 25 Department of Sanitation Mark Greenberg Real Estate...... 41 workers’ holiday. No garbage Midboro Management...... 45 pickup and no street cleaning. NCB...... Cover 2 February 15 New York Water Management ...... 17 Last day for tenants to send Orsid Realty...... 12 back annual window guard Pride Property Management...... 11 notices. Last day for occupants to send back annual lead-based Rand Engineering & Architecture...... 25 paint notices. Rudd Realty...... 1 Time Warner Cable...... Cover 4 February 17 President’s Day. Holiday United Metro Energy...... 21 for Service Employees’ Vantage Group...... 11 International Union (Local Veritas Management...... 22 32BJ) and Department of Wilkin & Guttenplan...... 27 Sanitation workers. No garbage pickup and no street cleaning. Wirecrafters...... 49 Wolf Haldenstein Adler Freeman & Herz...... 33

www.habitatmag.com FEBruary 2014 HABITAT 51 From the Editor | By Tom Soter Absurd Is the Word Her name was Kim and she lived in Forest Hills, New But is it any wonder that they talk? They are reaching York, in a 100-unit cooperative. She was on the board and out, trying to make sense of the situation they find was talking, with great animation, about a shareholder themselves in. Think about it. Being on a board is a who had “disappeared” and mysteriously left his apartment crazy idea. If it were a play it would be by that master of empty. My ears perked up. Was this a story of drama and the absurd, Pirandello (call it Seven Board Members in intrigue, one that would offer new insights into board life? Search of Consensus). In what other multimillion-dollar Kim continued with her story, telling me that the board corporation will you find inexperienced amateurs running was going to seize the apartment in lieu of rent. Kim’s the show? It’s a wonder that co-ops and condos don’t go place was right next door to belly-up every day. the missing resident’s unit, And that brings and images of apartment me back to Kim and expansion danced in her Marta. I didn’t just head. She naturally recused run into them on the herself from any future street. I met them on discussion of the disposition Wednesday, December of the place, and then 4, as they came to successfully bid on the educate themselves at property at auction. the Argo Real Estate Another woman, Marta, “University for Boards,” who is on the board of a 90- one of a series of unit complex in Riverdale, seminars staged by spoke to me just as freely Argo to provide a little about the recent challenges learning for its clients. her co-op encountered. Since there is no formal About four years ago, they training or licensing successfully took on their requirements for boards, former sponsor in court jacques they have to take the over various issues relating initiative and seek out

to the apartments he still beauchamp formal training on their owned. While she was a own. little skimpy on details, the “We try to offer upshot is the board managed them answers,” Mark to wrest ownership of the Feinberg, Argo’s chief units away from the sponsor. This created quite a windfall financial officer, said to me at one point. “We have had for the co-op. There were apparently vacant apartments in a very positive response to our University for Boards,” the package, as well as ones inhabited by disturbed people which is not dissimilar to other seminar programs offered (hoarders) who soon departed. Eventually, the board had by management firms and by the Council of New York a collection of units it could sell. It did – and realized a Cooperatives & Condominiums. windfall that was eventually used for capital projects. The December 4 session, “Approved or Declined,” at A popular catchphrase on TV when I was growing up the Beacon Hotel on the Upper West Side, found dozens back in the Stone Age was, “There are eight million stories of board members gathering for a discussion about the in the naked city. This has been one of them.” Well, it still approval process. “They don’t know what they don’t applies (although I think that eight million figure has to be know,” an Argo manager said to me, sounding very Zen- revised). Co-op and condo board members always have a like. “This is about a little learning.” story to tell, sometimes with a tiny, obvious lesson (“Avoid And, where boards are concerned, a little learning has to conflicts of interest”), other times with a broader message go a long way. Otherwise, you may not be appearing in a (“Taking on the sponsor may help you in your financial Pirandello play at all, but instead find yourself in a not-so- future”). amusing domestic tragedy called Crash and Burn. n

52 HABITAT february 2014 www.habitatmag.com Ask the Experts

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PROPERTY MANAGEMENT What’s Your Question? Get the answers to your most important co-op and condo board questions when you check out Habitat’s online Ask the Experts video series. Learn all the basics of NYC co-op and condo problem-solving, with straight talk and expertise from heavy hitters of leading companies. Peter von Simson Our experts will explain a wide range of co-op- and condo-related challenges NEW BEDFORD MANAGEMENT through succinct and insightful videos, while offering practical solutions and COMING SOON products that can answer almost any question and solve any problem.

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WANT TO JOIN OUR PANEL OF EXPERTS? Please call: Advertising Director Stephen Hanks at 212-505-2030 ext. 3003 or email [email protected] www.habitatmag.com FEBruary 2014 HABITAT 53 Projects Around Town Spotlight on three contractors. Representatives of They crisscross the yard to provide each did on-site walkthroughs with the clear oncoming views of the doors. The 68-12 to 68-44 complex’s superintendent to get the lay courtyard overview camera is mounted Burns Street, Queens of the land. “After review,” Rabinovits on the 68th Ave interior corner, It wasn’t any specific incident that says, “we focused on a vendor we providing a view toward Burns Street. convinced the board that a security liked who had some neighborhood Because the project wasn’t crisis- upgrade was needed. affiliation.” That was Blue Blast Media, driven, there was no precise timetable, It was the landscaping. And the folk whose owner, J.P. Freeley, lives in according to Levine. After getting the rock music. neighboring Kew Gardens. Levine also go-ahead, it was done as quickly as Built in 1920, the 68-12 – 68-44 cites the company’s experience with possible. “Once we had the paperwork Burns Street cooperative in Forest technically challenging projects, given and the deposit set up, it took about two Hills, Queens, comprises five that there were five separate buildings weeks to have J.P. purchase and install connected, six-story brick buildings whose video feeds had to converge in all of the equipment,” he explains. No with a total of 120 units. Residents the superintendent’s office. unanticipated issues cropped up once range from seniors living alone to work had begun. young families. Because the board Levine and the super worked strongly discourages subletting, most closely with Freeley, with the former units are occupied by shareholders. acting as primary board liaison Each building has its own lobby during the installation phase. Blue accessible only with a building- Blast also trained building staff to use specific key, ensuring that you can’t the system, and Freeley made good on use one key to get into each structure. a promise to provide ongoing support. But until recently, that was the extent He continues to field questions and of security at the complex. returns to the complex as needed to Artist’s rendering of co-op security system: 32 The impetus for investing in a cameras and clear views of the entire property. tweak details. closed-circuit television (CCTV) – Maitland McDonagh system wasn’t an immediate problem, The job involved 32 cameras, like an uptick in neighborhood street training, and labor for a total cost of NEIGHBORHOOD crime or vandalism. Nor was it a rash $37,545. One goal was to provide Forest Hills, Queens of thefts. The board, which had just video camera coverage of the property PROJECT spent a significant amount of money on that covered the lobbies, an alley, the Installation of closed-circuit landscaping and other improvements, basements, breezeways, front exterior television (CCTV) system decided that “it would be prudent to doors, sidewalks, and courtyards. The INVESTMENT protect both their assets and [to] create system was designed to record video $14,500 labor and materials a safer environment for the current 24/7 in roughly 30-day cycles, provide $10,000 spec/design/configuration/ residents,” says property manager access to technical support service, and training Mark Levine, vice president of Excel optimize hardware and cabling. It also $13,045 video equipment and Bradshaw Management Group. can be accessed by residents via the hardware internet. Total: $37,545 Sound of Music PARTICIPANTS Board president Eve Rabinovits also Crisscrossing Cameras • Mark Levine, vice president, cites the reopening of nearby Forest The design consists of a single Excel Bradshaw Management Hills Tennis Stadium as a reason for DVR (digital video recorder) capable Group the security upgrade. The 90-year-old of recording activity captured by the • Eve Rabinovits, board president facility, which lost the U.S. Open to a individual cameras. The best placement • J.P. Freeley, owner, Blue Blast newer stadium in 1978, had turned to and focal length configurations Media rock concerts for revenue. But it hadn’t for each camera was taken into FINANCIALS booked any acts since 1997. So when consideration. Various setups are Estimated Market Value: $1,458,000 folk-rockers Mumford & Sons took involved. For instance, the lobby Taxable Value: $645,030 the stage last August, signaling that cameras are mounted on the wall RECENT SALES the stadium would again be alive with to the left of the elevator above the 5/6/2013: $320,000 for a 2BR/1B the sound of music, it “raised concerns abandoned garbage chute and use the 10/5/2012: $227,800 for a 1BR/1B about potential damage related to… garbage chute as a chase way for cable. crowds and foot traffic.” The front-door cameras are mounted Project start date: May 5, 2013 The board solicited bids on security about 10 feet from the ground near the Project completion date: May 20, 2013 camera design and installation from interior corners of the entrance yard.

54 HABITAT february 2014 www.habitatmag.com Recent Sales Spotlight on 1 Northside Piers No. 20J Williamsburg, Brooklyn 2BR/2B condo. A luxury unit with unobstructed, 20th- floor views of Manhattan and Brooklyn. Located on the waterfront, it features floor-to-ceiling windows, hardwood floors, and a private terrace. Open kitchen features Sub-Zero, Thermador and Bosch appliances, quartzite countertops, and glass backsplashes. The master bedroom has a walk-in closet, en-suite master bath a with Kohler soaking tub, separate stall shower, and double sinks. Building amenities include: outdoor THE SALES SKINNY deck, fitness centers, sauna, hot tub, indoor pool, the ASK: $1,390,000 yoga studio, resident’s lounge, playroom, 24-hour the GET: $1,390,000 concierge, storage, and parking. the WAIT: 2 weeks 1,064 sq. ft. Mtnc: $955. MOST RECENT SALES DEALMAKER • $1,525,000 for a 2BR/2B Ari Goldstein, MNS • $1,435,000 for a 2BR/2B • $930,000 for a 1BR/1B

15 Broad Street No. 2812 Financial District, Manhattan 2BR/2B condo. This unit features oversized windows, beautiful views of lower Manhattan, 11-foot ceilings, maple hardwood flooring, Bosch washer/ dryer, chef’s kitchen adorned with premium stainless appliances, and Starck-designed lighting. It also includes sleek baths finished in 16”-honed Thassos marble with a Duravit soaking tub and Hansgrohe shower fixtures. Amenities include doorman and concierge; dry cleaning, laundry and housekeeping services; swimming and reflecting pools; a fully equipped fitness center; yoga/ ballet room; basketball and squash courts; bowling 130 Barrow Street alley; business center; sports lounge; recreation and No. 417 children’s rooms; and a large roof terrace with city West Village, Manhattan views. Prime location offers many subway options and 1BR/1B condo. Duplex with high ceilings, river area conveniences. 1,407 sq. ft. Mtnc: $1,200. views, and immense storage room. DEALMAKER DEALMAKER Selling Agency: Kurt Bauccio with Douglas Elliman, Ariel Fran Kaback, Coldwell Banker Bellmarc West Cohen Team THE SALES SKINNY THE SALES SKINNY the the ASK: $999,000 ASK: $1,555,000 the the GET: $1.1M GET: $1,555,000 the the WAIT: 1 week WAIT: 67 days MOST RECENT SALES MOST RECENT SALES • $1,875,000 for a 2BR/2B • $1,945,000 for a 2BR/2B • $1,325,000 for a 1.5BR/1.5B • $1,925,000 for a 1BR/2B • $1,750,000 for a 3BR/2B

www.habitatmag.com FEBruary 2014 HABITAT 55 Line-Up for Yesterday Sponsored by This month’s crossword may feature the single toughest clue we’ve ever offered – and also the most obvious. You’ll know it when you see it, but don’t fret too much, try relaxing with a poem by Ogden Nash. Crossword by Myles Mellor

Across 1 234 5 67 8 9

1. The first condo in 10 NYC and a famous south of France 11 12 13 14 15 beach 16 17 18 6. "Law and Order" star who recently 19 20 21 22 sold his co-op 10. You do this to 23 get a genie 24 25 26 27 11. He believed that a bad democracy is 28 29 30

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