All posts by Cooperatively Yours

News

Silver trial opening statements: ‘Power. Greed. Corruption.’

Elizabeth Williams, New York Law Journal
Elizabeth Williams, New York Law Journal

Yesterday, the jury was seated for Assemblyman Sheldon Silver’s trial and opening statements from both sides were made.

The prosecution presented Silver as a man overcome by power, greed, and corruption. As presented by Assistant U.S. Attorney Carrie Cohen, Silver steered money and favors to people who, in return, hired the law firms Silver recommended. Silver then received kickbacks as referral fees, completing the circle of quid pro quo.

Silver’s defense attorneys, on the other hand, described his conduct as normal and legal.

The case turns on arrangements with two law firms — Weitz & Luxenberg, which specialized in asbestos litigation; and Goldberg & Iryami, tax certiorari lawyers. Jay Arthur Goldberg, the partner at Goldberg & Iryami has for many years represented East River Housing and Hillman, where Silver lives. After Goldberg was named a co-conspirator in the federal indictment, Hillman severed ties with his firm but East River continues to retain his services. (Board president Gary Altman has refused to answer questions about East River’s agreement with Goldberg.)

You can read more about yesterday’s day in court in the New York Times, Politico New York, and the New York Law Journal (free subscription required).

News

Cooperatively Yours announces endorsements for board of directors and house committee

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We have a great slate of candidates this year for the board of directors and house committee —

For board of directors:

KeenanJAMES KEENAN is a native New Yorker and 9-year resident at East River. During his previous stint on the board he advocated for more communication with shareholders and more financial transparency. “I care deeply about the tradition and history of our neighborhood, but we must be willing always to stay open to new ideas that will improve our quality of life and strengthen our financial security.”

SchreierFAITH SCHREIER has been a cooperator for more than 46 years and thinks it’s time for a change. “We need new and caring directors who will trust and listen to shareholders. We have a right to know everything about our expenditures and we should be able to read minutes from board meetings so that decision-making is not all done behind closed doors.”

SwearenginJULIAN SWEARENGIN is an attorney and father with 20 years’ experience at some of the world’s largest banks and law firms. “If elected, I would also work to ensure that your right to basic information is never violated, that the Board’s major decisions are transparently reported to you, and that the Board and the Cooperative are professionally and ethically managed.”

TurnerMIKE TURNER is an accountant and small business owner worried that the current board’s strategy of increasing our debt while reducing flip-tax revenue means a big maintenance increase is right around the corner. “We should be looking at every square foot to maximize our outside revenue and reduce the financial burden on shareholders.”

For house committee:

MarinoMICHAEL MARINO is a development officer at NYU and the founder of Friends of Corlears Hook Park. “In my time working with the park group I have become immensely adept at navigating various city agencies and bringing multiple community groups together.”

PenderTED PENDER is a 13-year cooperator, retired horticulturist, and volunteer gardener throughout the city. “I am interested in improving the amenities for our Seniors (as I will soon become one).”

 

You can read their full candidate statements here.

News

LES is #1

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Did you see this? Time Out New York ranked the best NYC neighborhoods for families, and ours truly came out on top.

Packed with accessible, high-achieving schools, the Lower East Side is home to a tight-knit community of active parents. Many take advantage of housing cooperatives, like Seward Park, Amalgamated and Hillman, for affordable, family-friendly apartments in the area, outfitted with private parks and playgrounds for outdoor fun.

Even nice to see a shout out to Grand Street Coops … but did they forget about us?

Here’s the full article. Scroll down to read other nice things about our neighborhood.

News

Cooperators kept in the dark about true cost of dogsuits

Board president Gary Altman still has not delivered on a promise to give a full accounting of the coop’s legal expenses for dog litigation and the federal discrimination suit settled earlier this year.

Legal fees have skyrocketed for the past four years due to legal action initiated by the coop. Last year, Altman admitted that $575,000 had been spent in the 2013-14 fiscal year on legal expenses related to dog litigation. He said he “expected that our insurance company will reimburse the Corporation for a substantial portion of this amount,” but in February’s board newsletter, that insurance claim was revealed to be only $195,000. Furthermore, these announced expenses predate most of the work relating to the federal lawsuit, which occurred in the 2014-15 fiscal year, and do not include expenses from previous years, when the coop started to incur unusually high legal fees.

Cooperator Tommy Loeb, who raised the question at last year’s annual meeting and has pressed Altman in the months since for an answer, sent another letter yesterday requesting a full accounting of these expenses.

From 2011 through June 30, 2014, “legal and audit” expenses have increased 462%, costing the coop an additional $1.2 million. Legal costs in the 15 months since have not been revealed at all. Furthermore, despite substantial interest from cooperators in a more reasonable pet policy, the board has made no move alter its policy or legal strategy, meaning these legal costs could continue to climb.

Here is the letter sent to Mr. Altman:

Dear Mr. Altman,

I am contacting you regarding my August 10, 2015 letter requesting a full accounting of expenses on the pet litigation. I have enclosed a copy of the letter. When we met at the Coastal Resiliency Planning meeting on September 10 you told me a letter was being prepared by a lawyer to respond to my inquiry and I would receive it shortly.

I have also enclosed a copy of “The Board Room” newsletter of July 2015 where you did not provide accurate financial information based on your previous replies to this question. Is it true that the coop only spent $85,000 on dog litigation as you represented in the letter? I also enclosed a copy of your March 2014 memo where you indicate that the pet litigation will seriously effect coop finances and may result in a maintenance increase.

I would like to remind you that you have an obligation to accurately report and inform the more than 1600 East River Cooperators of the finances of East River Housing.

It has now been 30 days since you said I would get a reply. If I do not receive a reply by November 1 you will leave me no alternative but to contact the New York State Attorney General which I held off doing given your commitment to a reply.

The Attorney General has jurisdiction to guarantee the Cooperative Boards uphold their fiduciary responsibility and honestly report the financial position of the coop. I will ask him to intervene to get us the information we deserve if you continue to withhold this information.

Sincerely,
Tommy Loeb

News

Board amends sublease rules, fees, and penalties

Without a comment period for cooperators or a comprehensive analysis by management, the East River board of directors has approved changes to the coop’s sublease rules, fees, and penalties.

The new bylaws take effect immediately and are meant to “bring in many hundreds of thousands of dollars a year,” according to a memo from the board distributed last week.

Board member Lee Berman.
Board member Lee Berman.
Yet, according to board member Lee Berman, no real financial analysis was presented to the board before the vote to change the bylaws. “No one could say whether the higher fees would push more shareholders to sublet under the table,” Lee told me. “No one could say whether letting shareholders sublet apartments forever would reduce our flip tax revenue. We may get more money in fees next month, which we need, but what about next year and the year after?”

SUBLEASE LIMITS
Old:
Sublease can be for no less than one year.
Sublease must be approved one year a time.
May sublease for only 5 years in a 6-year period.		 New:
Sublease can be for no less than one year.
Sublease must be approved one year a time.
May sublease for an unlimited number of years.
SUBLEASE FEES
Old:
Years 1–3: 50% maintenance
Years 4–5: 100% maintenance		 New:
Years 1–2: 100% maintenance
Years 3–4: 112.5% maintenance
Years 5+ : 125% maintenance
SUBLEASE PENALTIES
Old:
Sublet fee x 2		 New:
Sublet fee x 2.25
plus $250 per day if less than 30 days

Lee continued, “These changes were rushed through without any real analysis. It was all back-of-the-envelope math.”

That math looks something like this: with 57 official sublets at East River with an average monthly maintenance of $750, 1st- and 2nd-year sublet fees would increase $256,500 each year. In the third year, the extra revenue goes up to $320,625. In year 4, the increase is only $64,125; in year 5, $128,250. The sixth year — when a sublet would not be allowed under the old bylaws — the coop could take in an additional $641,250 on those 57 apartments.

Over ten years, the coop would average just under $300,000 in additional revenue each year, or about 1.33% of our 2014 annual budget.

To put that in perspective, the coop would need a 2% increase in maintenance fees (average $15 per apartment per month) to raise the same amount.

So, more revenue each year: so far so good. But the analysis Lee says he would have liked to see is how these fee increases might influence shareholders’ decisions about subletting.

These higher fees make it almost impossible for someone carrying a mortgage to break even on a sublet. A shareholder in that situation might decide to forego the approval process to avoid the fees altogether, letting more unvetted people into the coop.

On the other hand, those who can afford to sublet might now decide to do so indefinitely instead of selling their apartment when their 5-year sublet limit is up. That could decrease flip tax revenue, which our board heavily relies on to cover operating expenses.

Without any analysis of these scenarios, the board’s decision is based on numbers that add up today but might not tomorrow.