maintenance increase & assessment

how many units; how many floors?

10 floors, 10 units

well--looks like the elevator number is correct. a number of years ago our building replaced elevators at a cost of $250K each. the killer for you is that there are so few units and so many floors. you could also suggest an assessment to replenish the reserve fund or suggest leaving it alone and funding major projects (such as the elevator) as you go.

many threads here about the inherent risks in buildings with few units. hopefully, you have a great apartment so its worth it.

The co-op has three choices to raise money:

1. Increase maintenance
2. Assess
3. Borrow

You're going to pay your ~10% share either way. It might have been better to raise the maintenance years ago, to accumulate a reserve fund for elevators, etc., but too late now.

250K - must have been a sweet ride?

Columbia do you think it's safer to buy into a building with 40 or more units or is that still too small to avoid something like this OP is going through now?

as noted above, many, many threads here about this topic. probably want around 100 but there are many variables. OP has a somewhat unusual situation--10 floors, 10 units. when it comes to major capital expenditures, i don't have any direct info but common sense would suggest that more units leads to significant economies of scale.

as to elevator---it seemed like a huge number at the time but we were replacing manual elevators that broke down at least twice a month.

I think we spent $300K+ for a new freight elevator, maybe five years ago.

Remember the Fram Oil filter commercials?

http://www.youtube.com/watch?v=aq3wL8ZXjBU

hehe

But I want to own *and* have a landlord to pay for all that stuff.

My now deceased partner was involved in a moderately large sized conversion in Brooklyn quite a while back. He said one of the biggest PITA about retaining management of the Coop afterward was tenants (who had purchased their units) calling up complaining that their stoves or refrigerators needed to be replaced and expected the "landlord" to do it, just like they had always done in the past.

Columbia -
many thanks for your contributions.
we have already examined some of your options.
We should state, that despite our display name,
we live in Greenwich Village.

Do you have any opinions on mean maintenance per square foot?

Also, our thanks to all other contributors, and hope this thread will benefit us all.

If the new mtc is still below $2,000, I don't think you have anything to worry about.
If the new mtc is between 2,000 and $3,000, depending on where the market goes, what sales prices are like in your building, whether the building looks "spiffy" or dated; you are probably ok, but as I said it depends on the other things.
If the new mtc is above $3,000, unless prices in your building remain above, say, $2 million, you may end up having some issues when it comes time to sell.

Even though it shouldn't matter on some theoretical level, it depends on your location: if you are one of the "in the Village, but ON Broadway" lofts, historically higher maintenance has taken a bigger toll on sales prices. I think the reason is that everyone has things/issues that they can deal with and those they can't, and getting the combination of high mtc AND being on a really busy thoroughfare cuts out a big chunk of the market (especially if you are next door to or above MacDonalds). So, for example, you can see at 710 Broadway the 4th floor having $2,884 mtc and an asking price of $1,795,000 is offering to pay the entire first year of mtc for a new buyer. Personally, I think this is a mistake: people will most likely see it for what it is: a simply sales price adjustment, but it send the message "we think the maintenance is too high". My guess is that they are doing it because they are getting lots of feedback from buyers/brokers saying "the maintenance is too high". but this doesn't solve the problem, instead it calls attention to it. So, if there were someone who DIDN'T think the mtc was too high, seeing this offer might start them thinking "why are they making this offer? Is the mtc too high?".

Unfortunately, it's too hard to say whether it's the mtc increase or the market which has this unit priced back below 2005 levels (the 5th floor traded at $1,970,000.00 6/28/2005, but the mtc was $1,838 back then ). Well, obviously it's some of BOTH, but it's hard to attribute how much of the discount is the whole market and how much is the mtc. But I think if the sales pricing was in the $3 million+ range, the effects of the higher mtc would be less. But in this building, with lower prices and on Broadway, I think there is SOME palpable decrease in value from the "high" mtc.

Oh, as an example of what I was talking about "spiffy" before, sticking with 710 Broadway, the OLR system describes the lobby as:

Lobby Notes:

* No lobby. Just a narrow, low-ceiling snake-like vestibule to the elevator.

For those reading this thread who are not looking at $3MM apartments but are looking at less expensive units in small buildings, let this be another cautionary tale of the risks. Many expenses in small buildings are the same as the expenses of much larger buildings with 10x the number of units. But the costs can't be spread over a lot of people. Roof, elevator, sidewalk vault, scaffold for facade repair...all can be the same for a 20 unit building as a 60+ unit building. Ouch!

And the smaller the building, the more you really need to be involved in its finances and management. Here, how can you not realize a financial crisis was looming that would necessitate serious borrowing, maintenance increases, assessments, or all of the above? It is unlikely the finances fell off a cliff only since the last financial statement was issued or "town hall" was held to go over the past year and the year(s) ahead. Where did the reserve fund money go? Was it never high enough? Were there huge Local Law 11 expenses recently? What capital improvements and major repairs have been on the building's maintenance schedule and remain on the 5-year list? As operating costs have increased, have maintenance increases kept pace? Is there an expiring tax abatement that has been know for years and now it is time to pay the piper because maintenance wasn't raised in a controlled way as the expiration neared over the last years? These are things that should always be known to a coop shareholder in a building of any size, but in a small building it is even more important because the financial ramifications per unit are more serious by factors of many times.

I continue to feel that for people without the kind of financial positions to absord hits of $25K in annual assessments,etc, a small building is not for them.

"Roof, elevator, sidewalk vault, scaffold for facade repair...all can be the same for a 20 unit building as a 60+ unit building."

I think I might take "roof" out of that list, but add in "boiler, water or cooling tower, wages for various things (like porter or super or doorman), lobby".

One thing I've noticed about buyers in small buildings (I don't know why this is, but it seems it always is) is that when they are going to purchase and are told about these issues (like that there will be assessments to finance capital work), they say they have plenty of cash, resources, etc. But as soon as one actually gets announced, all of a sudden everyone turns into a a pauper and wonders why there needs to be an assessment (at the same time that they are buying a country house).

its fun to pony up for a new kitchen; its a drag to pay for a roof you never see.

and why should the guys living in the first floors pay the same portion for the elevator as those living on the top floors? insane!

They don't. Share or PCI allocation is almost always lower for the ground-floor apartment in a line than for those above.

"For those reading this thread who are not looking at $3MM apartments but are looking at less expensive units in small buildings, let this be another cautionary tale of the risks."

Message received loud and clear. There is an allure to boutique dwellings that have real character and appear more neighborly than the cookie-cutter warehouses. Some would pay a premium for such spaces. The trade-offs can be severe in this town.

"They don't. Share or PCI allocation is almost always lower for the ground-floor apartment in a line than for those above."

While that is true, in the particular case of an expensive new elevator the amount less they pay no where near makes up for the lack of utility gained. And to add insult to injury, it works the same way for the new roof!!!!

True too. It'd bother me more (or at all) if I was ground floor in an elevator building.

When a ground floor shareholder pays a share of a new elevator, the shareholder preserves his investment by enhancing the building value overall. It is in his interest that the infrastructure is kept up even if he doesn't use it. If the ground floor finds the assessment per share so offensive for elevators, then live in a walkup. Geesh. It amazes me how people come up with sh-t to knock their noses out of joint about.

Oh, I don't know that it bothers 1st-floor people all that much, if at all. Didn't even arise in that 1st-floor-pros-and-cons thread, IIRC.

Sometimes I get this nasty discreditable inner whine about, e.g., paying for schools I'll never use, but then think better. I was projecting from that.

KW: Well, you can get a "tyranny of the majority" over a number of issues: let's say you're in a building where there are 2 issues at the same time: the elevator goes out and will cost $100,000 to fix, and the new commercial tenant on teh first floor is playing music so loud it really makes the 2nd floor units almost uninhabitable, and it will cost $100,000 to install insulation to fix the problem. Most buildings fix the elevator and screw the second floor. mostly the people on the top floor have no problem telling the second floor they knew they were buying on a second floor when they bought, but expect a leaky roof to be fixed in 1 day, even though "they knew they were living under a 150 year old roof when they bought", or in the case of the elevator "they knew the 90 year old elevator was on it's last legs when they bought, they should have known it wouldn't work much longer and they'd have to walk".