It’s hard to believe, but just five months ago board president Gary Altman led off the annual report letter by repeating his commitment to not raise maintenance. Yet this month he announced an 11.25% increase, an average of $1000/year, in a memo that failed to fully explain his big about-face.
Even the parts of his memo that make sense run contrary to his recent statements about our finances, obscure the context of our budget deficit, dismiss any responsibility for the situation, and fall short of a long-term solution.
In the end, his explanation for why this increase is necessary raised more questions than it answered. Among the most troubling — since he admits that this year’s increase is not enough to cover rising costs, how large will next year’s increase need to be?
Make no mistake, incumbent board members knew about the coop’s financial situation when they ran for re-election last fall. Emergency repairs on the laundry rooms were almost complete and apartment sales had already cooled, but they used inflated flip tax forecasts to hide the looming budget deficit.
And in the annual report to shareholders, Altman maligned those who saw this coming, including fellow board members, as disruptive, deceptive, and threatening.
We expect an honest, consistent accounting of the coop’s finances from the board. Until we get that we will continue to work for a change in leadership at East River.
Richard J. Ciccarello
Carol and Thomas Grant
Susan and Stephen Levinson
Deborah Mills and
What makes sense — and what does not — about the $1000 maintenance increase
|Makes sense||Does not make sense|
|Running the coop keeps getting more expensive, with “ever increasing real estate taxes, higher union labor costs, higher water rates and insurance.” That’s inevitable. Maintenance has to go up occasionally.||The board should anticipate inflation, not be shocked by it. Yet even this big maintenance increase, the board admits, “does not fully take into account the expected increase in” real estate taxes, insurance costs, union contracts, and water rates. Why not?|
|The current maintenance increase is “not much over 2% a year over the past 5 years” — in other words, not excessive. It’s about what you’d expect if we’d had cost of living increases each year to match inflation (which is exactly what many coops do).||For years, board members running for re-election have congratulated themselves for not raising maintenance and insisted that opposing candidates will. Now they brush off this big increase by saying it’s as if they’d been raising maintenance all along.|
|“Ideally flip tax revenue should not be used to balance the budget as it is an ever changing number.” The flip tax is what’s called extraordinary income — it’s undependable — and should never be counted in a budget the same as ordinary, predictable income.||This board has been relying on flip tax revenue every year to balance the budget and finally got caught. This has to stop. Some baseline level may be anticipated, but counting on a windfall every year to save the day is a recipe for failure.|
|The new sublet policy ”has already resulted in the sale of 2 sublet apartments whose owners did not want to pay the new higher fees upon their yearly renewal. This has brought in $75,000 in flip tax revenue.” It’s true, some new owners with mortgages can’t afford those new fees and may decide to sell instead of sublet.||Original owners with no mortgage, on the other hand, or their heirs, have no incentive to sell when they stop living here. They can make a good profit as landlords even with slightly higher fees. Compare that $75,000 flip tax gain to the $1,500,000 flip tax loss over the same time — the new sublet policy is losing, 20 to 1.|