News

Is East River starting to show its age?

old pipes

When sewer pipes enter their seventh decade of use, this is what they look like.

A view of the inside of building 4's laundry room.
A view of the inside of building 4’s laundry room.

The question is now, can preventative maintenance in the other three buildings save money in the long run? Or is sitting back and waiting for another sink hole to open up our only real option?

Because if the sewer pipes look like this under building 4, they probably don’t look much different under buildings 1, 2, and 3.

Who’s next?

The strategy at East River for years has been to keep maintenance as low as possible. That’s an admirable goal, keeping this corner of Manhattan livable and affordable for families old and new. The cost of major upgrades and repairs — like the boiler room and local law 11 facade work — has been added to our underlying mortgage through interest-only loans in order to protect current cooperators from higher monthly fees and assessments. (This is a not uncommon strategy.)

Recently it was revealed that the coop is seeking a $5 million line of credit for anticipated repairs and maintenance, so there’s no indication that the current board has any interest in changing course.

The coop also maintains no reserve fund for unanticipated repairs, and has not conducted any study of the costs of future repairs and maintenance. Which means it should not actually be a surprise when the 60-year-old laundry room turns into a money pit.

Earlier this week, management emailed an update to cooperators in building 4 with apologies for the inconvenience, closing with: “This job has been very difficult and very hard to estimate because we did not know what we would find when we started digging.”

You can say that again. And again and again.

News

Memo: Building 4 laundry woes continue

Here’s an update from management on the mess in building 4:

May 11, 2015

TO: EAST RIVER HOUSING COOPERATORS
BUILDING 4
473/475/477 FDR DRIVE
K / L / M – SECTIONS

FROM: HAROLD JACOB, GENERAL MANAGER

RE: DRAIN LINE REPAIR UPDATE

Dear East River Cooperators:

Unfortunately the job is not going as fast as I had wished. We were supposed to start pouring concrete tomorrow and finish it by Wednesday, but we have found another piece of concrete floor cracked, four feet by eight feet.

Therefore, we have to take out that piece of concrete floor, which will be done tomorrow and Wednesday.

I am hoping to pour new concrete on Thursday and Friday. Then we will have to wait for the concrete to dry before we put down new tiles. Only when they dry we will be able to re-connect the washing machines.

I believe that the most optimistic time for the laundry room to be re-open is the weekend of May 22-24.

This job has been very difficult and very hard to estimate because we did not know what we would find when we started digging.

I will continue to keep you updated.

News

Memo: From bad to worse in building 4 laundry room

Earlier this week, the laundry room in building 4 (sections K, L, and M) was closed due to an underground leak. A notice said that cooperators should expect the room to be closed for the week. This afternoon, management sent an email to cooperators in building 4 to say that the work needed is more extensive than originally anticipated:

April 30, 2015

FROM: HAROLD JACOB, GENERAL MANAGER

RE: LAUNDRY ROOM SHUTDOWN UPDATE
WATER SHUTDOWN NEEDED ON 5/5/15

Dear East River Cooperators:

Last week I sent out a memo in which I notified you that the laundry will be closed for one week because the main 15″ drain line was cracked inside and outside the building. When we dug up the line inside the building we found that all six drain lines in the laundry room and in the floor drains were broken.

These lines are connected to the washing machines and the sinks of the apartments above, so we had to dig up the entire laundry room to replace all of them. In the meantime, you can use the laundry rooms in other buildings. The job went from one leak to nine leaks. These pipes are around 60 years old.

Unfortunately, we will not be able to reopen the laundry room for at least another two weeks because after having repaired the pipes we must replace all the sand, pour the concrete and wait for the concrete to dry.

The building will also need a full water shutdown on Tuesday, May 5, from 8:30A.M. to 8:30P.M., because we must empty the drain lines before we replace them.

I am sorry for this major inconvenience but I could have not anticipated what the problem would be until we exposed each of the lines. I want to make sure that we will not have to revisit the issue. Therefore, all the underground lines must be replaced.

Again, I am truly sorry.

If I may add just a bit of editorializing:

A burst pipe is no one’s fault, and it’s not uncommon, in the course of fixing one problem, to uncover more problems that need to be addressed. But to say that no one could have anticipated the nature of the problem is odd when the problem was just identified two paragraphs above: “These pipes are around 60 years old.”

The coop’s annual financial report routinely includes a note by the auditors that East River has not conducted any study of the costs of future repairs and replacements. When asked specifically at last year’s annual meeting about the buildings’ elevators and roofs (which are beyond their expected lifecycle already) and the 60-year-old plumbing, General Manager Harold Jacob answered that he anticipated nothing beyond normal upkeep over the next 10 years.

And early this month we learned that the coop is now seeking a $5 million line of credit for “anticipated repairs and maintenance.”

So what is anticipated? What can’t be anticipated? I can’t keep track, can you?

Maybe a study of the costs of future repairs and replacement isn’t such a bad idea after all.

Update, with photos:

Construction vehicles behind building 4.
Construction vehicles behind building 4.
Laundry room in building 4 is closed.
Laundry room in building 4 is closed.
News

Family fun and park cleanup at Corlears Hook Park — Sunday, 10 to 1

Corlears IMPD May 2015 flyer (1)

This Sunday at Corlears Hook Park, bring the whole family for It’s My Park Day.

There will be games, face-painting, and learning activities for the kids, along with weeding, pruning, and painting for all ages from 10:00 am to 1:00 pm.

The park has been adopted by the new group Friends of Corlears Hook Park, led by cooperators at East River. They have worked with the parks department to fix broken benches and lights, re-mulched the popular dog run, and lobbied our local community board to add traffic safety measures to Cherry Street for pedestrian protection.

Come out to support your neighbors, clean up the park, and just have fun.

News

Altman: dogsuit settlement not final yet

Click image to enlarge.
Click image to enlarge.
After the New York Post reported last month that the U.S. Attorney and East River had reached an $85,000 settlement on the discrimination suit against the coop, cooperator Tommy Loeb wrote to board president Gary Altman to request a full accounting of this lawsuit and other lawsuits filed by the coop against pet owners.

After our annual meeting in December, Mr. Altman admitted that the coop’s legal fees related to dog litigation was $575,000 for the fiscal year ending June 30, 2014.

The line item for “legal & audit” expenses in the coop’s annual report has increased dramatically in the past three years as pet owners have been pursued — an increase of $1.2 million over the 2009-2011 baseline. The board of directors has reported that $195,000 has been recouped from our insurance provider, but the coop’s insurance saw a spike last year of $292,000, possibly in response to increased litigation.

Mr. Altman reported to Mr. Loeb this week that the settlement had not yet been finalized, and so a full accounting could not yet be delivered.

News

How much debt should the coop carry?

In response to the news that East River is seeking to refinance its mortgage with an additional $5 million line of credit, one cooperator has passed along two articles that discuss underlying mortgages and how a coop can appropriately manage its debt burden.

The first is an article written in 2012 — when East River last refinanced and increased its debt from $15 million to $25 million with an interest-only mortgage. Real estate lawyer Pierre Debbas explained why, with low interest rates available, 10-year interest-only refinancing were very popular with coops:

The main reason is that your average shareholder owns their unit for approximately seven years and chances are there will be significant turnaround in units prior to the mortgage maturing.

If the board were to make principal and interest payments, it would result in an increase in maintenance, which would devalue the property and hurt most current shareholders in the building. Only future ones and those current ones who plan on staying in the building for far longer than seven years would benefit from a reduction in principal. Once the underlying mortgage is paid off, maintenance generally decreases significantly.

However, most boards do not desire to ever pay off their underlying mortgage in its entirety and view the mortgage as a way to fund capital improvement projects or replenish the reserve fund.

This seems to be East River’s current philosophy, as the 2012 refinancing funded the boiler conversion and facade refurbishment required by local law 11, and the current increase in debt is for expected repairs and maintenance. It would be interesting, however, to know whether that seven-year average is true for East River or if new cooperators are staying even longer, in which case there could be an argument made for amortization.

The second article specifically addresses whether interest-only mortgages are appropriate for coops. The author repeats some of the pros as the article cited above, that since coops tend to keep rolling over their mortgage, and since property values do, over time, increase, paying down the mortgage is not financially necessary. On the other hand, he also lists some reasons not to use these types of loans:

  • Modest amortization “assures that the debt on your building will not grow over time solely because of refinancing costs.”
  • “Interest-only loans saddle future shareholders with the entire burden of an ever-increasing amount of debt.”
  • “The size of your underlying mortgage as a percentage of your building’s overall value will affect the pricing of any new debt.”
  • Is it fair? “Interest-only loans afford current shareholders all of the benefits of the new funds, as well as the lowest possible monthly payment.”

I should note that this article was written all the way back in 2007, just before the real estate bubble burst. Opinions on the subject may have changed since then. If anyone has other more contemporary sources to cite that may shed some light on East River’s philosophy of increasing debt in order to avoid raising maintenance, please add a link in the comments below or email hello@cooperativelyyours.org.

News

Still no answer about East River’s relationship with Silver’s real estate lawyer

In the wake of Assemblyman Sheldon Silver’s arrest in January, I asked board president Gary Altman to clear the air about East River’s relationship with Arthur Goldberg. Goldberg is a real estate lawyer who for many years has handled East River tax certiorari cases. Goldberg was also named in the federal indictment against Silver as one of the lawyers alleged to send kickbacks to the former speaker.

Given Silver’s long association with East River’s management and directors, I thought it was reasonable to ask that cooperators be assured that no past or present members of East River’s board or management had received referral fees for our business with Goldberg.

I received no answer from Mr. Altman to my February 2 letter. At the beginning of March I sent him the same letter and still received no answer. In fact, I have yet to receive even an acknowledgement of my question being asked. Today I delivered my letter to Mr. Altman for a third time.

To be clear, the Silver indictment in no way implicates East River. But since even the mention of East River in such a high-profile case of alleged fraud naturally raises cooperators’ concerns — not to mention prospective buyers’ misgivings — it seemed natural that the board should have the opportunity to address the elephant in the room. I cannot imagine why Mr. Altman has decided to ignore these reasonable questions.

Here is the original letter:

News

East River Park shoreline clean-up — May 9

sweep-flyer-2015If you enjoy the promenade along East River Park, you’ve undoubtedly seen the garbage that gets caught up in the small coves created along the path. It’s an eyesore — and unavoidable. But you can help clean up the park’s shoreline before summer gets rolling.

On Saturday, May 9, volunteers from NYC to Troy will be working to clean up New York’s riverfronts for the fourth annual Riverkeeper Sweep. To join the nearby effort, meet outside the East River Park Track at East 6th Street at 1:00 pm on 5/9. Cleanup will stretch up to 12th Street and down to Montgomery.

Sweep volunteers should wear sturdy shoes or boots, clothing that they can get dirty, and should bring a hat, sunscreen, a reusable water bottle, and snacks. Please bring work gloves if you have them. Volunteer activities are suitable for elementary-aged children with proper adult supervision.

Questions? Contact Riverkeeper at sweep@riverkeeper.org or site leader John Koblinsky at koblinsky@gmail.com.

News

Corlears Hook ’It’s My Park!‘ Day — Sunday, May 3

corlears signFriends of Corlears Hook Park is a neighborhood group picking up steam over the past year. With spring finally arriving (?!), volunteers will help clean and beautify the park.

Teams will be dispatched throughout the park on various projects that may include:

  • Cleaning and spreading new wood chips in the dog runs
  • Weeding, raking, and bagging leaves throughout the park
  • Bagging trash throughout the park
  • Painting the security barriers at the park entrance
  • Pruning and trimming existing plantings

All are welcome to come help for as much or as little time as they have available.

This is a family-friendly event and the following fun programming will be on site for all to enjoy:

  • Representatives from CityScience will be on hand for kinetic learning activities, building of a human suspension bridge, and short histories of East River bridges.
  • Girl Scout Senior Troop 3015 and Cadette Troop 3016 will be doing “Bubble Science” activities, providing a telescope to look across the river, have a “game station” and a “song spot” for the younger kids.
  • NYC Parks Play Mobile will be on site providing face painting, balloon art, and various games and activities.

If you are interested in helping to organize, please email FriendsofCorlears@gmail.com. Otherwise, please come out to help on May 3rd.