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Stormy Night at East River Housing

by Nancy J. Kramer

It was the most contentious meeting in recent memory, with a huge turnout—standing room only, with a couple of hundred people packed against the wall at the Lipman Auditorium, and every folding chair in the house taken.

The crowd quickly thinned out to about two thirds of original size after 9:00 PM, when balloting and proxy submission ended in the election for new board members (results to be posted Friday, 12/8), and the Question and Answer period began.

This year, for the first time, the ballots will not be counted right after the vote. Following a new rule, the counting of all the votes, including directed proxies, is to begin only Thursday, 12/7 at 5 PM, with the corporation’s attorney first counting the directed proxies and making certain there are no duplications of in-person paper ballots and proxies (one man – two votes). Then the counting of regular ballots will begin, around 6:00 PM, at the Community Room, 477 FDR Drive. Traditionally the owner of the local bicycle shop, Frank Arroyo, is among those invited to count. All candidates or their designated surrogate may attend the counting.

The raucous part of the night was officially begun when the corporation attorney told the crowd that the padlocked ballot boxes would be taken from the auditorium and stored in the management office. A powerful wave of boos emanated in response, which didn’t die down until the attorney assured the audience that he would be accompanying the ballots from the auditorium to the management office; that a new hasp had been put on the space designated for the ballot boxes; and that he had bought a new lock himself that day, would lock the storage place and keep the key himself. He promised to return on Thursday to release accompany the boxes to the community room for the count. This undercurrent air of mistrust, bringing to mind images of sealed trucks ferrying ballots from Dade County to Tallahassee in December of 2000, continued to rule the night.

A few different board members served as MC for the question and answer period and Co-op Manager Harold (Heshy) Jacob also answered many questions when others did not have the information. It appeared that only board members not up for re-election chaired the Q&A session. Following is a rough transcription of the Q&A.

Q: Do children pay the 17% flip tax when they inherit co-op from parents?

A: No—not if they live there—they pay the flip-tax if they sell the apartment. The first sale pays the flip tax, inheritance is not a sale.

Q: Why are we allowed to ask questions only after the balloting? Wouldn’t we be much more informed for our vote if we voted after the Q & A?

A: No Answer. Will assign election committee to look into it for next year. The Election Committee was established following of the contentious vote last year, to look into better ways to conduct elections and came up with the directed proxies as one approach; it will look into more ways of making the system answer the needs of the residents. Shareholders are invited to put their own suggestions in writing and get them to the board of directors. Another reason not to have balloting after the questions is that a “No electioneering” rule governs co-op elections. That issue could be re-visited as well.

Q: Does one person own six apartments??

A: yes.

Q: Who is that

A: Not at liberty to say

At this point things got very wild with lots of screaming and emotional outbursts.

A: That kind of information in the form of motion to divulge that information is not a proper function of the annual meeting.

Q: These apartments were bought for real estate speculation purposes. Many seconds a motion to divulge that information at the meeting then and there. Calling for any person still on the board that voted for this person to buy six apartments should immediately resign, since they were not serving the co-op in their appropriate fiduciary duty.

A: Will have to look at the minutes from six years ago when it occurred, that info not available at that moment. No one can read the minutes from five years ago now

A: (Directed at the Co-op attorney) this matter will be researched and the information told to the shareholders.

Audience calling loudly, demanding to know when and how would it be disseminated

Lawyer says it would be shared with everyone within the week.

Q: Concern with the financial viability of the co-ops. We must address several things:

No more loans; need to raise carrying charges to cover expenses (Mixed reaction from Audience); we cannot sell apartments if not fiscally sound and no transparency in the dealings of the BOD with residents about all of these matters.

A: The BOD is focusing on the finances-thus the 10% increase and the increase on the Parking Spaces, fuel surcharge etc….

Q: Star Credit should come to the Co-op instead of to each resident so that the money would help with finances.

A: Heshy explained that this is very difficult because it must be assessed equally and some senior citizen residents get a different amount from another program etc. Questioner seemed satisfied with Jacob’s answer. Just creatively looking to fill the budget gap.

(These next questions were asked quietly in what appeared to be an effort to get real transparency and fiduciary duties from our BOD that many other co-op BODs have in place.)

Q: What is the Conflict of Interest Policy for BOD?

A: From attorney-There is a Conflict of Interest Policy.

Q: Do the BOD read and sign it annually?

A: No! They will take it under advisement to consider doing that annually.

Q: Is there an Audit Committee?

A: NO

Q: There should be one

A: They will take that under advisement.

Q: Man gave his apt number and said that he had written the BOD asking for info on the six apartment ownership and got no answer.

Q: Why sell the professional offices when we could retain them and always have the rental long term.

A: Can sell it and a one time windfall amount of money for the co-ops. The owner would then keep paying the same commercial rent per square foot as now with the increases applied to them as well just like all other cooperators.

In answer to another question Heshy Jacob gave reasons why someone would want this deal: They will be protected from an attempt by the Co-op as landlord to not renew their lease in future; they have a much more profitable practice to sell with the real estate to sell with it; greater business tax deductions for the professional; and a great value to potential buyers. Implying a win-win for the co-op and the professionals.

Q: Why outside person now living in luxury has the rental storage spaces in building #1? Asked if the owner of the company has any connection to the co-op. Why didn’t the Co-op build the cubbies and maintain that as an income generating facility? Instead at minimum $900 per unit are going to Florida each year…

A: No connection between that business & co-op. BOD members looked into three different companies and took the one that offered the best payment for the space to the co-op and would keep the charges lowest for the residents. The BOD felt that at that time it was expensive for the co-op to undertake the building of the spaces themselves. Their lease is up in 2 years and the BOD will “take it under advisement” when choosing how to best deal with that space.

Q: Board member said all residents on the waiting list for storage spaces got a letter informing them first about the spaces in Building #1, and that these spaces were built seven or eight years ago. This is in fact false and was refuted by a resident who moved in only four and a half years ago and got the notice well after he moved in.

The answer was also challenged by a resident who has been on the waiting list for over 20 years and never got such a letter.

Q: About fire doors not being closed; about guards not questioning people coming in and just buzzing them in; about theft in hallways and from laundry room.

A: Not very satisfying answers except that the solution is expensive and inconvenient to many residents. Solution: Have only one door open and have two security guards on duty on all shifts. It was recommended by the police department to have only one entrance and to fence off the park and not allow coming and going there at all.

Q: Real estate lawyer identified himself as Alex Wolf and a self proclaimed “newbie.”

Allow shareholders to read all the minutes of the BOD meetings. All the co-ops and buildings he knows of do that.

A: Our lawyer says that he works for many co-ops and not all of them do that.

Q: Asks audience who wanted to get the minutes? Who wanted an independent management company? He receives rousing YES from the crowd.

A: The BOD looked into hiring a private management company and it was more expensive than what we now have. Lawyer says he works with buildings that have both.

Something that went unrefuted from Mr. Wolf-Though it got applause at the time: He said that we now pay $3.5 million in salaries and benefits to our employees and what a huge expense that was—that if we had an independent management company they would pay all of those expenses.

(But, of course, that independent management company would pass all of those expenses along to the co-op as part of their charges—we will pay for those expenses either way. Duh??!!)

Q: Statement by VP Valchich that came in one of the response letters from the board that independent bidding on jobs be done for the co-op would cost millions of dollars was challenged by a speaker. (In fact collective bidding had been found to be the most cost effective way of dealing with most major jobs.)

A: Lawyer says that the BOD will “take it under advisement” regarding having the minutes from Board meetings available to residents.

It was not stated – as it should be – that any personal financial and other confidential information about residents and/or prospective buyers can just be redacted from the minutes before making them available to the shareholders.

Q: How many apartments can one resident own? Must they be contiguous? Must they be occupied by the owner? What does a resident do if they find that someone does own more than one apartment—or is breaking co-op rules regarding ownership?

No one seemed certain about the answers to these questions—they will do the research and get back to residents with the answers.

Q: Statement by three candidates for office that they were served with legal papers Tuesday night with “false, unfounded allegations.” They felt it was a scare tactic to get them to withdraw from running and that they were going to file a complaint with the NY Attorney General’s office. The papers were slid under their doors by ER maintenance workers.

A: Allan Wolman said that he in fact had received the papers (in the ER Office) at about 5:00 PM Tuesday and gave them to a porter to deliver them. He gets lots of things for residents and handled it as he would any other mail. One of the candidates said that the maintenance worker delivered it to his wife at 10:20 PM, after knocking on the door, and at the same time delivered one of management’s responses the most recent anonymous leaflet plaguing this election cycle. It was very intimidating.

Q: Suggestion by a resident that There are so many strangers in the building now

with all the construction going on in the buildings the Co-Ops should issue badges with their pictures on them to all construction workers that must be worn by them .

A: taken under advisement as good idea

Q: Doubling of parking fees outrageous—huge applause.

She is retired on fixed income and has a $165 monthly increase this year alone

She says she has been on the waiting list for storage space—never got the “special” letter. She keeps calling the office and is still #26 on the list.

A: Fiduciary duty to raise parking fees to help budget and paving both lots to improve them…

Q: (Sylvia Wilkenfeld): We live in a most caring community and I am outraged by the letter that was signed and mailed to “newer” residents, with nasty remarks about original cooperators as “freeloaders” that were going to bankrupt the co-ops.

She wants to know how the writer got the names of these newbies. Outraged about how and who gave the list—insinuation that no one else had the info except management.

A: VP Valcich got copy of the letter from one speaker —asked audience for copy of the envelope and said that it would be investigated by their attorney as to where the mailing list came from.

Q: (Yori Yanover) Presented self as 30-year resident, not suspected of wishing the oldster to move out (as alleged by a few old-timer speakers). Held BOD responsible for paying up the co-op’s $3 million debt by maximizing the return on our commodities. Yanover suggested the 425 shareholders who own parking spots are the “haves,” eyed jealously by some 1250 neighbors who are the “have nots.” He called their irritation at having to pay $150 a month for parking (half the going local market rate) “chutzpah” and suggested the co-op would do well to hire attendants who will valet-park shareholders’ cars on a first-come first-served basis.

That inspired call was received with both great cheer and much gnashing of teeth.

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