Memo: new intercoms, tall fences, and defense of unlimited sublets from Gary Altman

Board president Gary Altman, who is up for re-election next month, distribute an update about two new initiatives:

  • Lobby intercoms will be reconfigured to permit communication with any kind of phone, including cell phones.
  • 8-foot fences are being fabricated by maintenance staff and will be installed along Grand Street this spring.

Airbnb adIn addition, Mr. Altman again defended the board’s decision over a year ago to allow unlimited sublets. And he praised a new law in New York State that allows authorities to fine Airbnb hosts thousands of dollars. (Ironically, there’s an Airbnb ad on a phone booth on Grand Street that shows East River Coop in the background.)

Full memo below:

TO: All East River Housing Cooperators

FROM: Gary Altman, President
Shulie Wollman, General Manager

RE: Quality of Life Improvements & Thank You to Governor Cuomo for Increasing Our Safety by Signing the Anti Airbnb Advertising Law

We are writing to inform you of some recent actions by the East River Board of Directors in the area of security and quality of life and to thank Governor Andrew Cuomo for signing into law legislation that will prohibit anyone, including cooperators, from even advertising their apartment for rental on short term rental websites like Airbnb.

At its October 31 Board meeting, the Board discussed and approved an agenda item requested early last month by our Secretary John Sotomayor to replace our outdated intercom system with state of the art intercoms usable by every cooperator. The current intercoms work over a copper land line phone network. As cooperators dropped their land lines for cell phones or switched over to services like FIOS or other cable digital phone lines the intercoms were no longer able to connect with their apartment.

The new intercoms will be placed in the main entrance of every building and the estimated total cost for all 4 buildings combined is around $19,400 or about $4,600 a building. The new system will allow every cooperator no matter what type of phone they use to provide the co-op with any number(s) they wish to have programmed into the intercom. When a guest arrives, instead of needing the guards to buzz the visitor in, the intercom will call the cooperator at the provided number and enable the cooperator to buzz a wanted visitor into the building. The guest will still have to then approach the security guard and sign in to the new security books implemented earlier in the summer. These books require not only a signature but also a printed name, apartment to be visited, and proper identification for entry. This was implemented to increase the safety of all cooperators. Any time a cooperator wishes to change the number programmed into the intercom system the office can do so easily after notification.

At its September meeting, the Board voted to install an 8-foot high security fence to enclose our 2 parks along Grand Street. The fence is similar in design to one that cooperators can see across from Fine Fare at the Hillman park. A good number of years ago the Board rejected installing fences along Grand Street because the expected cost from bids from outside companies was going to minimally be in the $300,000 – $400,000 range. We have now been able to reduce the total cost by 80-90% to approximately $45,000 by having our own maintenance staff fabricate and install the fence in house with no outside company involved. Our workers are already working on this project during regular business hours. The entire length of fencing will be fabricated during the fall and winter and be ready for installation in early spring. The new fence will not only beautify our grounds but also add security to our cooperative and give another layer of protection to the entry doors into our buildings from the parks. As the project progresses to completion, much thanks is due to our Maintenance Director Bob Wescott and staff.

The last issue we wanted to report on is the Governor just recently signed a bill that will, upon its effective date and a last ditch legal challenge by Airbnb, impose stiff fines on any person who even advertises an apartment for rent for less than 30 days. Our co-op does not allow subletting for periods of less than one year and any renting of an apartment on these short term rental websites is already illegal under state law. The new law would make even the advertising of an attempted illegal action punishable by fines. This is an especially important security safeguard for all our cooperators for the following reasons.

Last year the Board voted to allow unlimited subletting of apartments in return for a much higher sublet fee paid to the cooperative and to reduce legal fees incurred on behalf of all cooperators by illegal and overstaying legal sublessors. At the time a cooperator could legally sublet their apartment for 10 out of 12 years after the first 2 years of ownership or stock name addition had passed. It was 5 years on, 2 years off and 5 years back on. At times even well meaning stockholder-sublessors could not get the sublessees to leave after the allowed period of time. The co-op at all of our expense was sometimes forced to take legal action against the stockholder to get the holdover removed in compliance with our Bylaws. This was a needless and time consuming expense that after long debate had a solution that the Board by overwhelming vote felt equitable.

Sublets would be allowed for an unlimited number of years so instead of 10 out of 12 years it would become 12 out of 12 years and subsequent years. In return, the sublet fees paid to our co-op would double in the first 3 years to 100% of the monthly maintenance charges and increase in subsequent years up to 125%. In addition, we could continue to recertify every sublet on a yearly basis and not approve the continued sublet rights of any person who violated our Bylaws or disturbed the quality of life of their neighbors. This change was also prompted by the desire to rein in illegal sublessors who didn’t want to face the 2-year off period and instead illegally sublet for as many years as they could get away with it. This evasion was a potential security risk for all cooperators as all legal sublets go through an application, interview and criminal and background check. People do not get to choose which of our rules, regulations and Bylaws they wish to violate. For that reason along with the sublet policy change, we instituted very large monetary penalties for those caught illegally subletting for any period of time. Fines as high as $10,000 – $15,000 have been paid to our co-op’s treasury by caught violators. The safety of all cooperators is Management’s and the Board’s highest priority.

The new sublet policy, while always being open to review as it has been in the past, has resulted in more legal sublets as some offending cooperators are more comfortable paying an increased fee in return for not having the headache and worry that their wrongful actions caused them along with the fear of being caught and paying a large penalty. Some other not wanting to pay the higher fee have moved back to their apartments or sold them at the very high price levels our apartments are worth today. Even some sublessees not wanting to pay the higher rental prices cooperators were now asking to cover the new fees have themselves bought apartments resulting in additional flip tax to our cooperative. Between the saved legal fees, increased sublet fees and new flip tax revenue from departing sublessors, and knowing that more cooperators are safer when the sublessee next door has at least been vetted, the program has to this date been successful. We have seen no evidence that when apartments are now going in the $600,000 to well over $1.3 million range for a single apartment, that anyone is passing up selling just in order to sublet and pay us the very high fee imposed. A sublet fee on a 2-bedroom/balcony apartment of around $12,000-15,000 a year in addition to the base carrying charges no longer leaves great incentive to sublet and supposedly pay legal taxes on the rental.

But one issue still remained, how do we prevent cooperators, in violation of the laws of our city and state, from advertising the use of their apartments to absolute strangers and if they were lucky enough to find a tourist or worse, from actually renting out their apartment for unlawful profit? The NY State Assembly and Senate and now Governor Cuomo have solved this problem for us. Just for placing an ad seeking a renter illegally advertising cooperators would pay the State up to $7,500 for each violation. In 2014 an investigation by the Attorney General found nearly 75% of Airbnb listings in New York City were in violation of the law. We hope that the State will be successful in challenging the Airbnb law suit which only seeks selfish revenue with no regard for our safety. And in actuality Airbnb’s challenge seems to be only about their seeking a clarification that the owner placing the ad and not Airbnb should be responsible for paying the penalty.

We both want to thank the East River Board of Directors and so many concerned cooperators who have written and called the office regarding these and other quality of life issues. We are a cooperative built on the foundation of mutual respect and tolerance towards our neighbors and fellow cooperators. We will continue to make these issues and ideals our top priorities. As such, if any individual apartment felt in any way slighted in any previous communication, it was not intended and apologies are offered. May everyone have a healthy and happy upcoming holiday season.