Tag Archives: feature

Board fills in cooperative garden with concrete

Just in time for Memorial Day weekend, East River maintenance pulled out all the plantings in the cooperative garden behind building 1 and filled in a large section of the garden with a concrete slab.

 

Somehow this gorgeous rose bush survived the slaughter:

The garden was started five years ago with the board’s blessing; East River maintenance assisted in preparing the beds. A year later, the board backed away from their support, but cooperators continued to cultivate the area on their own initiative.

Those cooperators this week were given no warning of the landscaping changes, nor any reason for them. (A member of the maintenance crew pouring concrete told me that the snow plows needed the area for snow removal, though I’ve seen snow from the parking lot plowed onto the grass here for several years without any ill effect to the grass or garden.)

No permit for fence construction — stop work order issued by NYC

If you’re wondering why the new fence on Grand Street has been sitting half-built since it first popped up three weeks ago, the answer can be found on the website for NYC’s Department of Buildings:

It turns out that management neglected to get a building permit. From the DOB website:

REAR OF BUILDING AT GRAND STREET OBSERVED CONSTRUCTION WORK GOING ON TO INSTALL NEW METAL FENCE WITHOUT PERMIT – APPX 9 FT H BY 70 FT TOTAL LENGTH – APPX 70% OF WORK DONE WITHOUT PERMIT

Furthermore, the DOB site states that this property “may be subject to DOB civil penalties upon application for a permit.”

Board president Gary Altman to retire from City Council

Gary Altman (Mark Chiusano/AM New York)
AM New York has the scoop this morning that Gary Altman is retiring from his position as chief legislative counsel to the New York City Council.

Altman has worked for the Council for almost four decades, under many mayors and council presidents. He has been on the East River board of directors almost as long, and now will have even more time to devote to the coop as board president.

Board announces another maintenance increase

The board announced a new maintenance increase today, just two weeks after distributing audited financials showing an even greater deficit for the last fiscal year than previously reported.

This is the second increase in a year.

In addition to monthly maintenance for everyone, rates for parking are going up for the first time in years, as are the fees for storage rooms and bike storage.

The board is also promising to recertify the parking lot — which is a fancy way of saying they will make sure that the cars parked in our lots are the ones that are supposed to be there. They also promise a crackdown on motorcycles and storage units that take up extra space in the parking lots.

The board’s memo today says “It is expected that these increases will raise revenue by around $1.2 million a year.” You can read the whole memo here.

Last year’s deficit clocked in at $2.4 million. That won’t be effected at all by this increase.

This year’s budget expects a deficit of $970,000. The new maintenance increases going into effect May 1 would reduce that deficit by approximately $200,000. That’s a $3.2 million shortfall over two years that the board has no plan to cover.

Just for good measure, the board will impose new penalties on owners with pets who defecate or urinate anywhere on coop property. $250 each time your pooch can’t hold it in from the front door to the curb.

Red flag raised in delay of audited financials

On January 11, general manager Shulie Wollman answered a cooperator’s question about the late distribution of audited financials by saying the report was imminent:

We are hopping to have the audited reporters completed and distributed to all shareholders by the end of January and a financial meeting scheduled for the 2 weeks into February.

A month later, Mr. Wollman had a different expectation:

Although the auditors expected to complete the audit by the end of January, they now have indicated that solely based on their work schedule it will take them longer to complete as tax season has intervened. We have strongly expressed our disappointment that other company obligations and business are keeping them from the completion of our financials on the schedule they previously announced. Because only the auditors can at this point control the completion date, I can only say that hopefully all will be finished this month as they are now claiming is their target time schedule.

We followed up with Marks Paneth, the accounting firm engaged to review East River financials. Here’s what partner Michael Saul had to say:

Please be assured that “tax season commitments” have NOTHING to do with the finalization of the financial statements as we treat EVERY SINGLE CLIENT as the most important client we have.

Rest assured that it is our competence and diligence and desire to get the shareholders fair financials that is holding up the process. The only thing that would diminish the reputation of this firm would be to perform shoddy work. Our firm represents some of the most notable cooperatives in NYC so we are well aware the timing and obligations involved.

He went on to quote Marks Paneth’s engagement letter with the coop:

We will issue a written report upon completion of our audit of the Corporation’s financial statements. Our report will be addressed to the management and board of directors of the Corporation. We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or add an emphasis-of-matter or other-matter paragraph. If our opinion is other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or withdraw from this engagement.

That last bit sounds like a warning — that the auditors might not offer a good opinion of our financials, or might not be getting sufficient information from management to form an opinion at all. Either one could be have disastrous effect on potential buyers’ ability to get mortgages which in turn would push us further into debt.

Mr. Wollman and the board should offer a better explanation for why the financials are so late, and finally take responsibility for the problem themselves.

So how’s the flip tax so far this year?

We looked last week at how the instability of flip tax revenue keeps our coop’s total revenue unstable. This is significant because (a) we have little control over the health of the real estate market, and (b) flip tax revenue represents between 15% and 28% of our total revenue, depending on the year — it’s our second largest revenue line item (next to monthly maintenance, which is by far our largest).

Flip tax is a significant revenue source that we have no control over and which can vary widely from year to year. That’s very important when understanding the coop’s financial picture.

So while the management office is still struggling to produce financials from last year that our auditors will approve, and while the finance committee of our board has yet to produce an operating budget for the current fiscal year, we can already get a pretty good idea of how the year is going by looking at flip tax revenue so far. And the answer right now is: not too good.

Based on public sales records, flip tax revenue through the first half of the fiscal year is near a low point compared to the past five years:

So far, this year’s flip tax revenue is not even keeping pace with last year’s, which was the worst in while. Will the board need to raise maintenance again to make up another deficit?

The good news is that this year’s flip tax revenue is tracking closely the path of 2013 — the blue line above — which had a nice spring bump. This year may yet turn out fine.

That’s the thing about flip tax revenue: you just never know.

Why are coop revenues unstable?

In anticipation of our audited financials being released … someday … I was taking a look at a chart we published in December when the unaudited numbers were distributed just before our annual meeting:

Take a look at that blue line for revenue — why is it so wavy? Our revenue largely comes from maintenance fees, which, until the end of the 2016 fiscal year, hadn’t changed in several years. Most of the rest of the revenue categories are similarly fixed year-to-year: commercial rent, laundry room income, and parking fees. So why the instability?

I took all those stable revenue categories and plotted a line — operational revenue — that looks more predictable:

Compare this stable income to our expenses, which are similarly predictable:

That’s too bad — when you take all our predictable revenue and expenses, it looks like the coop is running a significant deficit every year. Over 13 years, that’s an accumulated deficit of over $46 million.

Now in my old coop — a much smaller building in the west village — that would be the end of the story, and we’d be in big trouble. We did have additional revenue from flip tax, but we did not count that revenue in our operational budget because it was highly unpredictable. Some years it was a windfall that we put away into our reserve fund, but other years it was a big fat zero.

But East River is much larger, and we have apartment sales every year. The flip tax from those sales is considerable — it’s our second largest revenue category — and has been built into our annual expectations, filling in the gap between operational revenue and expenses.

In this chart, I’ve added another revenue line for the flip tax, and the surplus/deficit line has been adjusted to include this additional revenue. (If you were to add these two blue revenue lines together, you would get the original chart at the top of this post.)

Now we can see where the instability of our total arevenue comes from: it directly mirrors the instability of our flip tax revenue. Even more clearly, the wavy line showing our surplus/deficit also rides the flip tax wave.

This dependence on flip tax revenue is not likely to change, it’s baked in to our financial outlook. The only way this coop has ever been in the black is to use that flip tax revenue for operational expenses. In good years we do well, in bad years we don’t, overall it evens out.*

It’s good to keep in mind that the health of the coop is directly related to the health of the real estate market, something we have little to no control over.

*I haven’t included in this analysis the additional $10 million in debt the coop has acquired over the past 13 years. But that’s another story.

LES reacts to executive orders

After spontaneous protests at JFK on Saturday and a large planned rally at Battery Park Sunday, Monday’s Tompkins Square rally was a relatively tame affair — but was still a defiant protest by hundreds of lower east siders in a location of significance to waves of immigrants and various resistance movements.

Speakers included local elected officials — Councilmembers Margaret Chin and Rosie Mendez (who together represent East River Coop); Manhattan Borough President Gale Brewer; Public Advocate Tish James; and District Leaders Carlina Rivera and Anthony Feliciano. Religious leaders from east village churches, synagogues, and mosques also gave moving testimonials to the neighborhood’s history with immigrant communities, refugees, and outsiders.

The Lo-Down posted videos from the rally here:


Someone also shared with me today a post from the beautiful Museum at Eldridge Street housed in the old Eldridge Street Synagogue. It’s a statement of support for immigrants and refugees, as well as reaffirmation of the importance of immigration to the LES: “Our gateway Lower East Side neighborhood — once home to the largest Jewish community in the world — is today a part of a vibrant Chinatown.”

Click for larger image.

Rally in Tompkins Square Park: Monday 6:30 pm

Any way you look at it, it’s been an eventful first week for President Trump, with bombshell executive actions from the Oval Office and unprecedented protests around the country. If you missed last week’s Women’s March, or today’s big rally downtown, or you just can’t get enough, Councilmember Rosie Mendez is promoting a neighborhood rally in Tompkins Square starting at 6:30 pm Monday evening: “Rally Against Hate.”

Community leaders and elected officials will be in attendance. Grand Street residents who oppose the President’s agenda will make ourselves be heard too. If you want to join a contingent of activists from East River, meet at the bus stop on Grand and Columbia at 5:45 — we’ll be taking an M14A bus up to the rally.

If you’re coming on your own, the rally will be in the south end of the Square.

Neighborhood crime rate stays low in 2016

Mayor De Blasio is promoting 2016 statistics showing New York City crime rates at an all-time low. Meanwhile, the Lo-Down this week covered crime on the lower east side — rape and robbery are up in the 7th precinct, covering the East River to Essex and up to Houston.

But NYPD statistics still paint the 7th precinct as one of the safest in NYC:

Precinct-by-precinct crime rates. (Lighter color is lower.)

And, looking closer, most of those crimes happen along high-traffic areas around Essex and Delancey. Our end of Grand Street is relatively free of crime:

Reported crime locations in 2016.