Relative Income and Expenses

Two more charts to add to Sunday’s rudimentary look at co-op finances. I wanted to look at how the proportion of income and spending segments have changed over time. If inflation were the only driving force in increased expenses, for example, all the lines below would be flat. Where that is not the case, we may consider that there are other factors at work.

RevenueRelative

This is what the change in relative revenue looks like over the past five years. You can see that even though carrying charges have increased absolutely over those five years, they have decreased as a proportion of overall co-op income; that is, they have not increased at the same rate as other sources of income. Resale fees have increased in importance as the real estate market has heated up. Everything else has remained relatively consistent.

ExpensesRelative

Here you’ll see that taxes have fluctuated slightly but stayed around 25% of overall expenses; utilities and fuel costs have noticeably decreased (though before this past winter); maintenance costs and legal fees have both increased relative to other expenses over the past 5 years, but just barely. Everything else has stayed pretty consistent.

A Rudimentary Look at Co-op Finances

The financial reports distributed each year before the annual shareholders’ meetings do give a good skeletal look at co-op finances. And it’s worth having a basic understanding of our income and expenses to gauge the impact of, for example, a very cold winter, on the one hand, and an increase in carrying charges, on the other.

Where do we get our income?

Revenues, 2009-2013
The #1 source of income, by a wide margin, is monthly carrying charges (maintenance). Apartment resale fees (the flip tax) account for another large chunk. Everything else adds up to only a bit more than 13% of revenue.

 

What do we spend our money on?

5yrExpenses

Over half our budget is spent on taxes and utilities. Labor, payroll overhead, and repairs account for another 30%. As delineated in published financials, here’s the full breakdown of expenses over a 5-year period:

Utilities and fuel 27.25%
Real estate taxes 25.73%
Repairs and maintenance 11.67%
Labor 11.51%
Payroll overhead 6.10%
Management 4.70%
Mortgage and other interest 3.94%
Insurance 3.61%
Security guards 3.20%
Legal and audit 1.39%
State and city corporation taxes 0.57%
Senior care 0.19%
Conduit 0.06%
Website 0.05%
Mortgage refinancing costs 0.04%

How has income changed in the past 5 years?

Revenues

Revenue categories have stayed relatively stable, with apartment resale fees fluctuating slightly based on the real estate market. In 2013, flip tax intake jumped 75% over 2012 — $2.3 million — as apartments returned to the recovering market.

How have expenses changed in the past 5 years?

Here we can see a bit more variety from year to year. Taxes have increased  26.7% ($1.27 million) over five years. Fuel costs vary by $1.7 million from low to high, and that does not yet include this past winter’s fuel bill. Other expenses show a consistent trend upward by small margins.

What’s driving expenses?

Primarily, outside forces: taxes, fuel costs, and inflation (though most of the gradual increases above are all greater than inflation in the same period of time). There’s probably a limit to what can be done to keep these expenses down. The co-op management has no control over real estate taxes, fuel costs, or weather. Labor costs should be expected to increase each year, by a reasonable amount. It’s possible that costs of repairs and maintenance could be controlled, or that the jump in legal fees could be mitigated. But, as the chart above shows, any savings in these areas would have a small effect on the overall budget.

What will income look like in the future?

Flip tax income should tend to gradually decline as 1st-time sales decrease and more sales pay lower fees. If the real estate market continues to grow, flip taxes will follow suit, but still at less than the market rate because of the decreasing number of 1st-time sales. Flip tax revenue is likely to decline as a percentage of co-op income over the long run.

Carrying charges and parking fees remain flat unless explicitly raised by the board. Rents are, for the most part, locked in to long-term leases, but a full evaluation of all co-op stores, offices, and communal areas could reveal small opportunities for extra income.

What if taxes increased another $1.25 million in the next five years? What could the co-op do to raise revenues to match? Well, a maintenance increase of about 1.5% each year would cover that increase. Or parking rates could be raised by 38% each year. Laundry rates could triple every year — so that by 2019 a load in the washer plus 30 minutes in the dryer would cost you $26. Any of these methods would raise the same amount of money from shareholders. Which makes the most sense?

There are a lot of details I don’t have access to, and others I’m glossing over. But I hope this helps understand the scale of the co-op’s budget — currently at $23 million — and the kinds of choices available to the board, management, and shareholders.

Open Meeting for Shareholders: Wednesday, April 30

Please join us this Wednesday at 7:00 pm in the community room for an open meeting for all East River shareholders.

Encouraged by the board’s March memo regarding the costly winter and a likely increase in carrying charges, a group of cooperators would like to meet to discuss issues raised in that memo and to draft some questions addressed to the board in order to clarify the reasons for the expected maintenance increase.

All are welcome. We’d like this to be a useful meeting and a benefit to the entire co-op community.

Wednesday, April 30, 2014
7:00 PM
East River Community Room
477 FDR Drive (Bldg. 4)

EDC Report: Ferry Service Boosts Property Values

East River Ferry

The New York Post reported over the weekend that the New York City Economic Development Corporation, which runs the East River Ferry, estimates that ferry service has had a major impact on property values in Brooklyn and Queens.

The service, which launched in 2011, led to a jump in home values within an eighth of a mile of its stops by 8 percent above the normal market rate, according to an analysis by the city Economic Development Corporation.

A preliminary assessment of the East River Ferry is available online. Looking forward to ferry service expansion, one of the five possible new routes includes a stop on Grand Street, at the recently renovated East River Fire Boat House.

Last year, cooperator Joseph Hanania circulated a petition in support of a Grand Street ferry stop, an idea that has also won the support of Assemblyman Sheldon Silver.

Memo: Weather Announcement

TO: All Shareholders
East River Housing, Hillman Housing

FROM: Shulie Wollman

Re: Snow Storm

We continue to monitor the snow predicted for Thursday evening into Friday.

Please be advised we will have a full maintenance crew clearing snow, salting sidewalks, driveways and parking lots. If the snow totals exceed 6”, parking lot gates will remain open to allow access for plows. Our boiler room will be staffed around the clock. If you have any problem, please contact us, but be aware that unless you have an emergency, we do not want to dispatch a staff person to your apartment for an issue that can be attended to at the beginning of next week.

Our numbers are below:

Maintenance: 212-677-5744
Boiler Room: 212-677-2767

Thank you.

Election Results

All three incumbents were re-elected at Monday’s annual meeting — Gary Altman, Larry Goldman, and Rachel Ehrenpreis.

The Q&A was typically spirited. Topics included whether our pet policy violates NYC law (and how much lawsuits are costing us); possible modifications to parking arrangement; and the unfortunate appearance of bed bugs in section A (and whether management is properly alerting adjacent apartments). We’ll try to follow up on these topics after the holidays.

Board and management back off support of cooperative garden

Cooperators who established the garden last year behind building 1 — with the approval of the board of directors and support of management and maintenance staff — have been awaiting word of whether raised beds could be installed this year to improve the quality and safety of the soil for plantings.

Mary Jo Burke, who has helped coordinate communication with gardeners and solicited the soil test done last year, has shared with all gardeners an email exchange she had recently with Shulie Wollman in the management office that showcases the resistence the board and management have shown in contuing support of the garden.


From Mary Jo Burke to Shulie Wollman, 6.13.13

Hi Shulie,
The Board of Directors have not taken action yet on the proposal for raised beds for the community garden. It may be on the agenda for the next meeting.

Because it is almost the middle of June, I am wondering if we can get approval from management to garden this year without the raised beds – same as last year but no fruits or vegetables. Please let me know one way or the other.

Thanks,
Mary Jo Burke


From Shulie to Mary Jo, 6.13.13

I AM SORRY FOR SUCH A LENGHTY RESPONCE

Mary Jo,

The Board of Directors did discuss the community gardens at its last meeting and was about to take action when Jim Keenan who raised the issue casually informed the board that members of the garden committee had done a soil sample and had found some disturbing results including lead in the soil. The Board, worried about the safety of our children and cooperators using the garden, expressed shock and dismay that this was the first they were hearing of this soil test. Jim was asked if he had a copy of the report for management and the Board to see and was asked when the sample was taken. Jim said he did not have the report and didn’t know when it was taken. Your name and Lee’s name were mentioned as people involved in this testing or the people who asked him to raise the funding issue. Members also asked why these test results or even the fact that a soil test was done, which again could affect the health of our children, were never mentioned by Lee when he served on the Board assuming they were taken earlier. Jim said he did not know. Board Members grew very concerned as their first thought was that the soil test was possibly taken recently and any unusual results could be due to the aftereffects of Hurricane Sandy and the East River overflowing, etc.. Jim was asked to get the report to Management as soon as possible and the Board and Management immediately agreed at a cost of thousands of dollars to hire a very reputable testing company to take soil samples from various locations. The safety of our children must always come first so now action could be taken on the garden at that meeting until we verify the conditions of the soil and our children are safe to dig in that soil. Incredibly, when the report was delivered to management it was clear to see that the soil samples were taken last June(2012) and the results, good or bad, were never shared with anyone including the parents of the children using the garden for a period of one year. Further, this testing or any safety concerns were never once mentioned by a then Member on the Board when the Board was asked by that member to allocate money to the Garden Committee this year. If the report showed no potential health issues then why did Jim bring it up to the Board and if it did show potential health issues to our children and cooperators then don’t you think it is almost criminal that the garden committee kept this report to themselves and never shared it with the Board and Management and I assume all or most of the parents. Our results are not back yet and no decision will be made until such test results are known and hopefully show the ground and soil are safe. I am sure you or Lee were told what happened at the last board meeting ( as someone asked Jim to raise the funding issue now that Lee is not serving on the Board and you write that you assume the matter might be coming up before the Board at its next meeting) regarding this safety matter so I am more than surprised that you again are asking about letting our children dig in soil before the testing results are known. Could you imagine the uproar if the Board or Management had taken soil samples a year ago and not shared them with the cooperators whose health and their children’s health could be affected by those results? We all know that would never happen as Management and the Board will and would never ever compromise on the safety of our cooperators.Our environmental and green record and thus our cooperator health record is second to none. But, Management and the Board’s good record still doesn’t explain the possibility of Garden Committee Leaders having certain knowledge and potentially putting our children at risk.

Whoever had such knowledge based on the facts presented to the Board and Management at the last meeting has a lot of soul searching and answers to give to this community. I truly pray that even the slightest concerns about the health and safety of our children were not put second or third behind coop politics, personal ambitions and past and possibly future elections.

Thanks,
Shulie


From Mary Jo to Shulie, 6.18.13.

[Attachment: 2012 soil test results]

Dear Shulie,

Thank you for your response to my email. I would like to let you know happened last summer, from my perspective.

After we were given the go-ahead from the board and management, we held a lottery on Sunday May 20, 2012 to assign the garden plots. After this event, some people asked questions about the condition of the soil. We did not know the answer, so samples were taken and tested by the Environmental Sciences Analytical Center, Department of Earth and Environmental Sciences at Brooklyn College.

When we received the results, I sent an email to the people participating in the garden. I told them about the soil testing, attached the soil test results, and provided links to the Brooklyn College webpage about soil testing. I also included a link about how to read the test result numbers. A notice was also posted to the Cooperatively Yours website.

A common solution to concern about soil is to have raised beds with organic soil. This would allow full participation without any concerns about the soil.

Many people are interested in participating this year and are asking questions about the state of the garden and why nothing has happened this year. I will share your email with them to let them know what is happening.

Thank you very much,
Mary Jo Burke

Meet the Candidates: Monday at 7pm

Monday, March 18
7:00 pm – 8:30 pm

Where? In the Community Room in building 4 (477 FDR Drive)

Questions from cooperators in attendance will be answered by the candidates for the Board of Directors:

Lee Berman
Mary Jo Burke
Ellen Gentilviso
Joseph Hanania
Richard Kenny
Susan Morris
Douglas Morse
Jonathan Reifer
Brian Roces
Neelesh Shah
John Sotomayor
Mike Turner
Richard R. Valcich

Excavation at north courtyard

Just when you thought it was safe to go back in the courtyard …

Dear East River Residents,

As you may have seen, we are digging up the park between Building’s 3 & 4. This is to repair a series of leaks within our return condensate line as it is affecting our overall system efficiency.

Therefore, as a part of the Boiler Room upgrade we will replace these condensate lines, which returns water from the steam lines to the Boiler Room. This work will take a number of weeks, and we have started now in order to complete the project in time for spring planting.

We will continue to keep you updated.

Thank you for your understanding.

Harold Jacob
General Manager