Council of New York Cooperatives & Condominiums
Article Archive
Financial Issues

Publication Date: Spring 1998

Now that the annual meeting season is in full swing, most cooperatives and condominiums have already received their 1997 financial statements. Now is the time to forward these financials to CNYC so that your data can be included in the Comparative Study of 1997 Operating Costs. By studying the various costs of operating a building, this annual analysis provides a framework to help you decide if your own building is operating economically and efficiently. Code numbers are used to identify the participants, preserving the anonymity of individual cooperatives and condominiums.

The Comparative Study breaks down all data on a per-room basis. It looks at assessment and mortgage figures and also shows maintenance costs. It then lists amounts spent per room on wages, fuel, utilities, repairs and maintenance, insurance, management costs, administrative costs, water and sewer fees, property tax and debt service. When possible, elevator maintenance and legal and accounting costs are each listed separately. The Study also presents summary statistics, calculating the averages and medians for each item, and the average portion of total operating budget devoted to each category.

CNYC will close the 1997 Comparative Study in September so as to have it in the hands of members and subscribers for use in preparing their 1999 budgets.

OUR 1997 financial statement is important to Comparative Study. Please forward your annual financial statement and a room count to CNYC before September 15th so that it can be included. When the Study is mailed, those that have contributed will be advised of their code numbers so that they can find their own statistics. Each member building will receive its own copy of the Comparative Study. Additional copies can be purchased from CNYC for $5.

Many cooperatives and condominiums suffer because only a small portion of the units have been sold. Purchasers are frequently unable to resell their apartments, and when they do, it is at a far lower price than a unit in a functioning cooperative.

These "low-sold" buildings also experience difficulty in obtaining financing -- whether it is for the sale or refinancing of units, for an underlying mortgage, or for a loan for capital improvements.
Furthermore, the purchasers often have little say in the running of their buildings, as sponsors perpetuate control through the election of individuals who consistently vote with the sponsor. These circumstances have been perpetuated during the years when the market for cooperatives and condominiums was weak.

With the New York economy strong again, and the climate right for new conversions, CNYC is redoubling its efforts to solve conversion problems, both in existing cooperatives and condominiums and in future conversions. Unfortunately, current conversion law does not clearly obligate the sponsor to continue selling units until the conversion is completed. Legislation has been presented in the Assembly by Ivan Lafayette (A-10040) and in the Senate by Frank Padavan (S-6656) to oblige sponsors to disclose in the offering plan their intention to rent vacant units, or to obtain board permission before they rent these units. There is also legislation pending that will increase the number of insider purchasers required before a building can be converted to cooperative or condominium status.

On Monday, May 18th, CNYC will hold a meeting on Completing the Conversion to enable affected members to propose ways to solve their problems, as well as to organize support for appropriate legislation. If your building is in this situation, please be sure to be represented at this meeting. If you have friends in low-sold cooperatives or condominiums, which may not be CNYC members, please alert them to this opportunity.

The Premier House case discussed in the Autumn 1997 issue of the CNYC Newsletter -- in which a court found that local law permits the City to bring criminal charges for violations in laws designed to protect the building and its residents -- shocked co-ops and condos. Many boards have carefully reviewed their insurance coverage to make sure that the officers and directors policy gives maximum protection.

Lawmakers have also responded to this crisis and legislation has been proposed in the City Council and in Albany to protect volunteer board members from criminal liability when they do no willful wrong and conscientiously meet their responsibilities to their cooperatives or condominiums. CNYC has taken a strong position in support of this legislation and will continue to work for its passage. At present there are several bills pending; as they are consolidated or reconciled, CNYC will contact members with bill numbers so that you can contact your legislators with support.


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