I am looking at a building and learned that the co-op is drawing on a line of credit to finance some upgrades.

Is that normal? Why not impose an assessment instead?

It may be paid from the line of credit now, but assessed later (once the work is finished, costs are final and totaled, etc. -- you wouldn't want to over- or under-assess). Using the credit line would probably be necessary anyway as most buildings will spread the assessment over a few years, rather than expecting all shareholders to either have the cash reserves or obtain personal financing for their share.

man , are they screwed

Because it's easier to save the assessments for when they're really necessary (and not as controversial), like when you need a new boiler or elevators, rather than having people complain that "the paint on the walls was just fine" ... yadda yadda yadda.

you can roll the line into the mortgage at some point as well. cheaper to borrow at these rates

A line of credit allows you to draw down only as much as you need. Whereas with a mortgage, you have to agree to a set amount. With property improvements, the amount you need could change unexpectedly, so a line of credit would allow for that.

And as others noted above, you could charge the assessment later based on how much of the credit line was actually used.

It's either assess, or get/use a line of credit, or if the main mortgage is coming up for re-fi soon, wait and add something to that. I don't know how many do each, but going with debt means listening to fewer complaints.

Here's a good article about the issues: http://www.winterandcompany.com/articles/co-op_update_novem.html

My co-op's going to be paying for hallway redecoration and a makes-no-sense roof deck next year. Those'd have to be done again in ten years or so, so should really be assessed for, but I'll bet we add some of the cost to the underlying mortgage when it comes up for re-fi this winter.