With the meet the candidates forum coming up on Monday night, some questions come to mind that the incumbents should really be asked to answer. Here’s a big one:
Last month it was announced that the board had approved — with no input from shareholders and nothing but back-of-the-envelope analysis — a new sublease policy. The new policy raises fees slightly, from 100% of your maintenance to 150%, in exchange for allowing you to sublet your apartment forever. The board memo announcing the changes heralded “hundreds of thousands of dollars a year” that would come from the increased fees — though, more tellingly, the 2015-16 budget, approved after the new sublease fees were enacted, anticipates only $20,000 in additional revenue.
So do these numbers really add up? What’s behind the new policy?
Board candidate Mike Turner ran the numbers, and it doesn’t look good for the coop. Mike writes:
Extending the number of years allowed for sublets will reduce the number of first-sale apartments. That will cause a corresponding reduction in flip-tax revenue, which currently accounts for 20% of our annual income. Nudging even one prospective seller to become a permanent landlord would cost the co-op $140,000 in one year for a first-sale 2-bedroom apartment. It would take this one sublet apartment 13 years to generate that lost resale revenue through sublet fees, AND an ADDITIONAL 11 years for this sublet apartment to pay off the interest incurred on that $140,000 debt. In other words, it would take 24 years before we start to see a profit on this one apartment.
Check that out: 24 years before the coop makes a dime on those new fees. All the while the shareholder — now landlord — is earning an income from their apartment.
So who exactly was this new policy enacted for? For those few new landlords, not for the rest of us who will spend the next 24 years subsidizing their rental property.
Clip the question above and drop it in the hat Monday night — let’s see what sort of excuse incumbents Ellen Gentilviso, John Sotomayor, and Richard Kenny come up with.