October 2020

By Ira Meister President and CEO – Matthew Adam Properties, Inc.

The foundation of Matthew Adam Properties’ management efforts is a philosophy and practice we call “strategic management.”

It is a disciplined approach to property management and one that has proven very successful over the years. I believe it would be helpful to boards of both condos and co-ops to learn about strategic management and see if they can adopt elements for their properties. This approach is particularly effective as we work our way through the pandemic.

In its basic form, strategic management is adapting sound business principles to property management, which is straightforward as most condo and co-op corporations are multimillion-dollar businesses. All too often, however, this is overlooked, and emotion and lack of discipline become the guiding forces in the operation of a property.

Our goal with strategic management is to listen to the policy preferences of the board and maintain discipline as we implement them with excellent management and innovative thinking.

How does strategic management work?

When we are retained, we immediately evaluate a property to identify its strengths and weaknesses. We then create a program that includes financial issues, service, contracts, maintenance, repairs and long-term capital improvements.

Periodically, the board and our asset manager review the target objectives and evaluate our success in meeting them. This reduces unwanted surprises and takes into account short- and long-term requirements. It is a planned approach rather than the usual Band-Aid cure. When objectives are not met, we analyze the situation and develop alternative methods.

Since we initiated strategic management more than two decades ago, managing properties has changed significantly. The most significant change has been the evolution of technology, which affects so much of what we do today.

Another change has been the emphasis not only on managing a property effectively but on increasing the value of the property and the individual units. Strategic management plays a role, as it provides premium management and services, which are essential. But it goes further. It indicates to prospective buyers that the building is managed efficiently and like a business. The financial records we maintain are up-to-date and accurately reflect the property’s financial condition.

Successful corporations continuously seek ways to innovative and improve their product. For us, it means seeking improvements to provide additional amenities and services for residents. I’m proud that Matthew Adam Properties was a leader in creating unused space as a playroom for children. We did this more than a decade ago at York River House on Manhattan’s East Side using in-house staff to reduce costs.

Speaking of innovation, as part of Matthew Adam Properties’ Green Management Program, we installed water recovery systems in participating properties. The run-off water is saved and used to water plants and trees. Not only does this contribute to saving water, but it also has the economic impact of reducing the city’s continuously escalating water tax, which is now based on usage rather than frontage. In its more sophisticated application, the water can be recycled for use in toilets and HVAC systems.

Our participation in the “green revolution” is a natural outgrowth of our program in seeking innovative ways to maximize resources and provide efficient and effective means to manage a property.

For example, a geothermal well was installed in a multifamily condominium of East 93rd Street — one of the few in Manhattan. It is estimated that geothermal systems are 75% more efficient than oil furnaces and 48% more efficient than natural gas, with costs recovered in as little as two to eight years.

Green initiatives also include improving lighting in public areas — we helped design new fixtures to improve efficiency. Successful businesses provide a healthy and safe work environment, and we encourage the use of non-toxic cleaning products, which are less expensive and more effective.

Strategic management initially provided a path to improving management services. It has evolved over the years into a plan that allows us to adapt to changing times and provide innovative and value-added services for condos and co-ops.

Originally Posted on MannPublications.com

By Alex Zafran

For many co-op and condo boards, the scariest thing about Halloween this year isn’t going to be the ghosts or the ghouls. It’s the fact that by Oct. 31 they must, for the first time, post the letter grade that ranks their building’s energy efficiency.

After nearly two years of preparation, New York City’s Local Law 95 is becoming a reality. Under this law, every building above 25,000 square feet, including housing cooperatives and condominiums, will be required to display its energy-efficiency grade. The grade will be based on a building’s Energy Star score, which is derived from energy data submitted in the annual benchmarking report. A score of 90 will merit a letter grade of A and indicate that the building’s energy efficiency is in the top 10% of similar buildings nationwide. The letter and percentage grading system is as follows: A (85-100); B (70-84); C (55-69); D (1-54); F is for failure to report; and N is for buildings not required to comply.

Here is a list of the most frequently asked questions from co-op and condo boards, management firms and real-estate professionals.

How do I know if my building needs to comply with Local Law 95?

Buildings that are required to comply can be found on the NYC Benchmarking Law Covered Buildings List for Calendar Year 2019.

Where do I find my letter grade, and when do I have to post it?

Letter grades are accessible through the DOB NOW Public Portal. Grades must be downloaded, printed, and placed in a conspicuous location near each public entrance no later than Oct. 31, 2020, and no later than Oct. 31 every year thereafter. Buildings with 20 or fewer units will not receive a letter grade.

What happens if I don’t post the grade?

Failure to post before the deadline will result in a Department of Buildings violation and an annual penalty of $1,250.

How long does the grade remain in effect?

Grades will remain fixed for 12 months. They will be updated each year based on the annual filing of the building’s Local Law 84 benchmarking report.

What can I do to improve my building’s grade?

Three things. First, ensure that your Local Law 84 compliance has accurate figures for square footage, number of units and bedrooms. These small details should not be underestimated, as they are the key drivers of your grade. Before you commit to capital improvements, ensure that all submitted data is accurate.
Second, consider heating needs. If more than 80% of your building’s total energy consumption is related to heating, you may want to explore the causes as well as potential measures to manage and reduce heating.
And third, conduct an energy audit. Under Local Law 87, buildings are required to undertake an energy audit every 10 years. If you have recently completed this audit, consult the engineering firm that prepared the results for you. If you have not performed an audit for a while, it is wise to do so now.

If my residential building has commercial space(s), will they be factored into my grade?

Yes. Energy grades are representative of the entire building, including tenant usage (over which the board and management have no control) and commercial spaces.

How are amenity spaces handled?

Buildings with large amenity spaces that have high energy usage may receive lower grades.

What grades will most buildings receive?

Approximately three quarters of all buildings are expected to receive Cs and Ds in their first year of compliance. That’s no accident. Local Law 95 was intentionally designed to spur corrective action from boards and managers who fear the repercussions of a poor grade.

Alex Zafran is a senior consultant and business development lead at Aurora Energy Advisors. He can be reached at azafran@aeadvisorsllc.com.

By Ira Meister President and CEO – Matthew Adam Properties, Inc.

It’s the end of small steps and big talk in New York City’s efforts to fight climate change.

The passage of the Climate Mobilization Act and its stringent carbon emission requirements makes for a transformational change. The law, known as Local Law 97 for its most comprehensive regulations, comprises 11 pieces of legislation and establishes strict limits for city buildings larger than 25,000 square feet. That includes most condos and co-ops. The mandated goal is to reduce overall carbon emissions citywide by 40 percent in 2030 and 80 percent in 2050, with initial compliance due by 2024.

It is estimated that the limits set for 2024-29 will require approximately 20 percent of buildings to reduce emissions while approximately 75 percent will need further reductions to comply for 2030-34.

While discussion has focused on the overall goals of the program, let’s look at the impact on individual co-ops and condos. It is difficult to make generalized statements as there is “no one-size-fits-all or universal upgrade solution” according to Darren Johnson, senior account manager, of Bright Power, a provider of energy and water management services.  He says variables include construction materials, the number of commercial tenants and previous investment in energy-saving equipment by the property and residents.

Johnson calls the new laws “transformational” requiring efforts by the entire building and the individual shareholders or unit-owners to comply. The majority of energy consumption in residential properties comes from individual units.

Let’s look at the overall requirements of the laws. The amount of carbon emissions permitted per square foot depends on which of 10 classifications a building falls. Failure to comply can be costly. Properties exceeding the limit are subject to civil penalties based on the difference between the limit and the reported building emissions with a $268 fine for every ton over the limit.  Additional penalties can be assessed for false or inaccurate reporting. An annual report must be prepared by a registered design professional to show the calculated limit as well as the carbon emissions for the previous year.  There are some different rules for buildings with rent-regulated tenants.

The city now requires annual benchmarking of energy use. This information can be used in determining energy usage and where reductions can be made.

“The most important and immediate thing building owners and developers can do is incorporate carbon emissions in their planning,” said Jeffrey Perlman, president and founder of Bright Power. “Those undertaking major renovations should at least meet the 2030 emissions targets.”

How should a building approach this? The first step is hiring an energy company to analyze current usage and help the building develop short and long-term plans. As I have previously warned, beware of working with a start-up company that formed solely to assist with compliance for the new laws.  

Energy consumption in areas controlled by the building such as public spaces, HVAC and mechanical systems should be analyzed for possible reductions. Many properties have converted to gas from oil, which has reduced carbon emissions. With the city phasing out the use of oil, this would be an area to explore for buildings that haven’t converted.

The type of building plays a large role with age less a determinant than materials. Newer buildings, with more glass require more energy, particularly for cooling. Older brick buildings tend to have more insulation. Yet, poorly insulated windows can increase consumption. New, insulated windows are one consideration, though sealing the gaps around windows often can provide almost as much benefit. Window air conditioners are a big source if energy waste in winter and should be well sealed and covered. Appliances also factor in. Replacing old equipment with newer energy-savings models (ENERGY STAR® rated) should be considered.

While the new regulations are an excellent step toward fighting climate change, they do come with burdens for buildings. There is the cost factor, though failure to comply can be equally as costly. Over time, with proper planning and execution, a building and the residents can save money on their energy use and possibly long-term defray the cost of the upgrades.

The changes required take planning and time and the current timeframe and less stringent initial limits give many buildings space to work with professionals to develop plans. The first limits go into effect in only five years and its10 years until about three-quarters of buildings must make some changes. Buildings can’t procrastinate. As the deadlines approach, prices and costs will increase and buildings may face more expensive and less effective solutions.

Since the coronavirus pandemic engulfed us earlier this year, we at Matthew Adam Properties have taken a conservative approach to keeping our residents, visitors and staffs safe. We have been active as we seek creative measures, such as keeping a tracing log of visitors, but the focus of our efforts has been diligently following guidelines. This is not a time to seek shortcuts

We require masks for all employees and strictly follow social distancing.

Our doormen and concierges wear gloves and have face shields as added protection for them and others. The desks have protective shields.  Hand sanitizing stations are set up throughout public areas and our staffs continually clean public areas using high-quality materials.  When possible, we adhere to our policy of using non-toxic materials.

Elevators are cleaned on a schedule and we recommend limiting occupancy to no more than three persons.  Almost everyone adheres to these requirements as New Yorkers have distinguished themselves in understanding that when we protect others, we protect ourselves.