Financial statements for fiscal year 2014 were uploaded to the coop’s web server on Tuesday morning, but as of this minute there is still no link to that document from the website’s index page for news, documents, and financial downloads, and no email to cooperators letting us know of the report’s availability.

Understandably, it takes some time to print, bind, and deliver all the physical copies that we need to receive before our annual meeting. But of course the internet doesn’t need printers, binders, or couriers, so why not share this information in time to digest before Monday’s meeting?

I wrote some notes about this year’s financial report on Tuesday, highlighting our skyrocketing legal fees and surprisingly flat utility costs.

It’s too late now to mail in a directed proxy, so if you are supporting Lee Berman, Peter Herb, Heather Hubbs, and Don Mathisen and you have any doubt at all about being able to make it to the annual meeting this Monday, you should sign a general proxy to be sure your vote is counted.

You can still go on Monday, of course — in fact, you can skip the long line at the desk and just go right in to the auditorium. Your proxy will be counted just the same.

Click the image below for your building and return it to the apartment highlighted at the bottom of the form anytime this weekend.

Note: If you attend Monday’s meeting and you do sign in at the front desk your proxy will be invalidated and you must vote with the ballot you receive.

Our audited financial report for 2013-2014 shows another big jump in legal fees, to $723,710 from last year’s already-high $594,791.

For context, legal fees were as low as $128,636 just three years ago. Had they been kept at that level through FY 2012, 2013, and 2014, we would have had an additional $1.25 million to pay down our mortgage or start a meaningful reserve fund.

The legal fees, according to a March 17, 2014 memo from the board, stem from fighting “illegal dogs in violation of our lease”, and presumably, the federal counter-suit our coop was hit with last December. That federal suit is still in discovery; no court date has yet been set.

Other numbers of interest:

• As the board noted in that March memo, our insurance costs have increased even though the coop did not submit any claims from Sandy. After holding steady for years at around $750,000, this year’s insurance bill came in at $1,080,755.
• Contrary to the board’s March memo, fuel costs rose hardly at all, from $4,900,475 to $4,958,485. Remember, high heating costs from the recent harsh winter was cited as the reason for making permanent a temporary fuel surcharge.
• Apartment resale fees, after peaking at $5,426,278 last year, dipped down $900,000 in FY 2014. Last year’s high was likely due to a backlog of apartments waiting for the real estate market to recover; this year may represent a settling of the market. There were 32 first-time sales and 28 second-time sales in the year ending June 30, 2014. (One year prior there were 55 first-time and 26 second-time sales.)

Dear Neighbors,

I know a lot of cooperators at East River are concerned about the lack of transparency here — how little explanation is given for maintenance increases, and how questions asked at our annual meeting are often deflected and ultimately ignored. But the hard truth I learned when I served on the board from 2009 to 2012 is even directors who ask questions are treated as trouble-makers.

Five years ago the co-op faced increased costs and a sharp decrease in flip tax revenue due to the real estate market’s downturn — in fact, for two years in a row the co-op ran a deficit because it spent more money than it earned. I thought we could do more to draw revenue from new sources and cut costs related to large contracts for regular maintenance. So I asked to review some basic records from management: invoices from outside contractors, an up-to-date list of commercial tenants, and parking and storage room lists and waitlists.

These requests were made to management over the course of my first two years on the board, and made more than once — but the records were never produced. I didn’t like being kept in the dark, but I gave our management staff the benefit of the doubt: they were very busy, and they were clearly not in the habit of fetching paperwork for board members.

Still, I persisted. When it came time to vote on a new budget in 2012, I made my request more forcefully. In response, I was told by the president of the board that I was not entitled to any of the records I had requested — no invoices, no contracts, no lists, no commercial leases: nothing.

Of course he was wrong. New York law gives a sitting director an absolute, unqualified right to inspect corporate books and records. Nevertheless, the board approved in April 2012, over my objection, a new policy whereby “all requests for documents and information” — such as mine — would be forwarded to management only at the discretion of the president.

Now I knew I was being kept in the dark deliberately, though to this day I still don’t know why.

I’m running for the board again not because I’m a glutton for punishment, but because I grew up here, I’m raising my own family here, and I don’t believe the status quo is right or prudent — nor do I believe that it is sustainable. By joining with other forward-thinking candidates and cooperators, we can preserve all the things we love about East River while strengthening our financial security and sharing information and ideas with openness and respect.

Let’s come out of the dark — vote for Peter Herb, Heather Hubbs, Don Mathisen, and me, and together we will reaffirm the guiding principles of cooperative living.

Cooperatively yours,

Lee Berman
LeeBermanER@gmail.com

All candidates running for the board of directors at last night’s Meet the Candidates forum agreed that the coop should have a reserve fund for unforeseen expenses and that the community room should be made more available to cooperators. Consensus on these issues marks a stark departure from current policy, setting up a battle for change after shareholders elect four directors in two weeks.

Reserve fund

Building an appropriate reserve fund has been suggested by shareholders at successive annual meetings and championed by past board members, including Lee Berman, who is running again this year to rejoin the board. Typically in coops, reserve funds are used to pay for emergency repairs and large capital improvements in order to save shareholders from disruptive assessments. Despite having aging pipes, roofs, and elevators, East River Coop has no money set aside to help pay for needed upgrades. (When $4.3 million was spent on a new boiler two years ago, the expense was controversially covered by extending the coop’s mortgage.)

Peter Herb, an 8-year board president at his former cooperative home in the West Village, said, “Not having a reserve fund seems to be a foolish way of running things.” He said that an appropriate reserve fund is generally considered to be 10% of operating expenses, or approximately $2.3 million for East River. Tom Skibicki pointed out that “funding the fund is the challenge,” and current director Dov Goldman  — the only incumbent among this year’s candidates — seconded that concern, saying, “the money does need to come from something.” Dov suggested setting aside some money from the 20% flip tax on first-time sales, even though that money is currently needed to fund operating expenses.

Lee Berman told the audience that a reserve fund would need to be built up slowly over time in order to not impact shareholders’ personal budgets. He said that when he previously served on the board he suggested a $2 per room fee that would accrue to create a sufficient safety net, but that creating a reserve fund was not a priority for other directors.

Since at least four of eleven directors will soon have a commitment to building a reserve fund, the board’s priorities may be shifting.

Community room

Another surprising area of unanimity was the issue of community room usage. When asked if the room should be made available to cooperators during times when it is not rented for private functions, all the candidates agreed. “If it’s a community room, it should be used by the community,” said Peter Herb. Don Mathisen said not only should the room be used but it “should be encouraged to be used.”

Use of the community room has also long been a bone of contention for certain shareholders who see it’s large price tag — it can be rented for $350 for any part of a single day — and shabby conditions as a waste of precious real estate.

Lobbies

Other topics did not encourage the same universal agreement. On the question of whether our lobbies should be redesigned, Don Mathisen said, “The lobbies are the entrance to our home, and when I walk into our lobbies now I feel we could make them more warm, more friendly, more homey.” Malkie Malchlis disagreed: “I think our lobbies are beautiful. I would save our money and use our money for things that are more important.” Peter Herb suggested that cooperators would need to be surveyed before knowing whether the expense would be worthwhile. Alan Rick said that improving the aesthetics of the buildings is one of the three biggest challenges he’d like to address. Michele Amar, Dov Goldman, and Tom Skibicki all qualified their support for a redesign with concerns about the cost.

Other questions addressed the role of the house committee, possible security improvements, term limits, and composting. The impending federal lawsuit (the U.S. Attorney is suing East River Coop for discrimination) was raised only by Don Mathisen, who expressed more than once his concern with the ongoing legal costs and potentially devastating penalties if the government prevails. “Personally I’m not in favor of animals or against animals … I’m against wasting money,” he said.

Election will be held at the coop’s annual meeting on Monday, December 8. If you cannot attend the meeting in person, directed proxies (absentee ballots) can be mailed to the coop’s attorney but must be received by 5:00 pm on December 8. General proxies can be signed over to any neighbor, friend, or family member to vote in your place at the annual meeting.

Has anyone seen this flyer, or do you know who put it up?

It reminds me of the many anonymous missives sent around during the 2006 campaign.

A number of points are made here without connecting the dots. If you want to take credit for this and make a more coherent argument, let us know in the comments.