Tag Archives: feature

Truman Club under fire for violating campaign finance laws

Last week the NY Post ran a story about the Truman Democratic Club violating campaign finance laws for years:

The Lower East Side political club that for years served as the home base for disgraced former Assembly Speaker Sheldon Silver has failed to publicly disclose its finances, as required by law, for nearly two decades, an activist charges.

Full disclosure: that “activist” is me. First I noticed that neither the Truman Club nor its two candidates for Democratic District Leader, Karen Blatt and Jacob Goldman, had registered campaign committees with the state board of elections. Then, by searching for payments other campaigns have made to the Truman Club over the years, I found close to $100,000 in contributions to Truman that the club has never disclosed. That’s just the tip of the iceberg, because most donors — individuals and corporations — are not required to report their own contributions.

All of this information comes straight from the board of elections database of contributions, which is searchable online.

In contrast, Caroline Laskow and Lee Berman, who are challenging Blatt and Goldman, registered their campaign committee earlier this year and filed their first disclosure report on time.

The Post article appeared last Sunday; on Monday, Blatt registered “Committee to Re-elect Blatt”. This is the second time she’s running for office, but only the first time she’s registered with the state. Her first financial disclosure is due in one week.

Silver’s “enforcer and gatekeeper” still working Grand Street

Meanwhile, NY1 ran a report on Sheldon Silver’s appeal to the Supreme Court, making a sideline to report on Silver’s continued influence on Grand Street in the form of his “enforcer and gatekeeper” and former chief of staff, Judy Rapfogel, who is actively campaigning for the Truman Club’s District Leader candidates, Blatt and Goldman.

Blatt, in a statement to NY1, welcomed Rapfogel’s involvement, calling her “an asset that any campaign would want to have on their side.”

Blatt appointed by Silver to patronage job

Finally, a newspaper in Albany revealed what Blatt herself has not: her current job. Blatt’s online bio does not disclose her current occupation; neither does a color flyer distributed to voters in Seward. Turns out she is co-executive director of a state agency called the Legislative Task Force on Demographic Research and Appointment (LATFOR). LATFOR is essentially responsible for redistricting in New York State, though that authority was shifted to an independent commission following a constitutional amendment passed by voter referendum in 2014.

Critics contend that the agency is now toothless and just “a place for patronage”. The report notes, “LATFOR had faced criticism for drawing district lines that favor the candidates of majority Assembly Democrats and Senate Republicans.” Blatt’s position was made on appointment by Assembly Democrats, who at that time were still controlled by Sheldon Silver.

Sheldon Silver will try for Supreme acquittal

More interesting twists in the case of disgraced former Assemblyman Sheldon Silver:

Instead of waiting for federal prosecutors to retry his corruption case with revised jury instructions, his lawyers are attempting to get a hearing before the U.S. Supreme Court for an outright acquittal.

Silver’s original convictions were thrown out last month because of a subsequent Supreme Court decision that overturned the corruption conviction of Virginia Governor Bob McDonnell. Silver is hoping to get the same friendly reception by the D.C. Nine.

U.S. Attorney Joon Kim wants to prosecute Silver again, but now has to wait for the Supreme Court to decide whether to hear the case.

M14A bus gets another hearing with community board Tuesday

M14A

The community board transportation committee Tuesday will get an update from State Senator Squadron’s office on increasing the frequency of M14A buses.

Tuesday, July 11 at 6:45pm
Downtown Art, 1st Floor Theater
70 East 4th Street

It’s happened to all of us: waiting 30 minutes or more for the M14A at Union Square while watching bus after bus after bus marked M14D pick up passengers. The MTA says there’s a 3-to-1 ratio. The question is, why the disparity?

Two years ago cooperator Joseph Hanania started a petition to bring attention to the problem. He made two suggestions: increase the number of M14A buses, and let the M14D continue down the FDR access road to Grand, then turn and use the two stops for the M21 on its way to its normal end of route under the Williamsburg Bridge.

The MTA then reviewed ridership and decided that the frequency of buses was consistent with the count of riders. Advocates like Hanania said those counts were flawed because of how many people at Union Square just give up on getting an M14A and hop on the M14D instead.

Now Hanania says State Senator Squadron may have gotten the MTA to review its counting method  to take into consideration M14D riders who get off the bus and continue to walk to Grand Street. And so the issue is back before the community board’s transportation committee on Tuesday.

Update: No new counting methodology was introduced by the MTA this week. In fact, the MTA continues to insist that the ratio of M14D to M14A is appropriate.

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.