Matthew

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

In the beginning there were co-ops. Then as laws and preferences changed there were some condominiums.  But, co-ops prevailed.  Now, just about all shareholder/owner-occupied buildings in New York are condos. The profusion of condos reflects cultural changes and shines a strong light on the make-up of apartment buyers in New York.

Co-ownership began in Manhattan in the 1880s — there is some discrepancy about which building was first.  It gained momentum in the 1920s as wealthy New Yorkers wanted a sense of exclusivity in where they lived and their neighbors.  After the market fell apart during the depression, co-ops began to reappear in the 1950s.  The peak years were the 1970s and 80s when owners converted scores of rental buildings to co-ownership.  These conversions have just about ceased.

What is the difference between co-ops and condos, and what changed the dynamics?

The primary difference is the form of ownership.  Purchasing a condo is like purchasing a house where the owner takes ownership of the unit and has shared ownership of the common areas with other owners.  In contrast, the co-op buyer does not actually get ownership of the unit, but rather shares in the corporation that owns the building. The number of shares is determined by several factors, primarily the size and floor of the apartment.

In addition, the co-op association has an underlying mortgage on the property, which becomes part of the monthly maintenance fee for the co-op.  There is no underlying mortgage in a condo.  Furthermore, the condo owner pays real estate taxes directly, while the co-op association pays the tax which it collects as part of the maintenance.  The lack of an underlying mortgage and less restrictions on selling usually translates to higher condo prices.

One main factor driving condos is the greater control the owner has of the property. Rules are less stringent. Usually, there is no limit on subletting and less financial information is required to purchase.  This has made condos attractive to foreign buyers who want to hide their assets and can purchase the unit as an investment and sublet it. Most co-ops have rules limiting length of sublets and the amount of times a unit can be sublet.  Often, the sublessee must be approved by the board. 

The fewer financial requirements and the ease of selling is one factor in parents buying an apartment for their son or daughter and possibly keeping it as an investment or pied-a-terre if the child moves.

In a co-op, a prospective buyer must be approved by the board of directors, which according to law can’t discriminate based on race, religion or gender. However, the reason for rejection is not revealed.  In a condo, the association has the right of first refusal if it decides against the buyer, but this path is rarely used and acceptance in a condo is usually automatic.  The less restrictive ability to sell an apartment is another factor in the prevalence of condos today.

A co-op board more carefully analyzes finances, often demanding a greater amount of information, and can require more in down payment.  Many co-ops restrict ownership to use as the primary residence and limit purchases by corporations or LLCs.

This highlights one of the major reasons buyers, particularly families, prefer a co-op.  They argue it provides a layer of security as their neighbors have been more carefully vetted.   In fact, co-ops are usually more family oriented and can have a greater sense of community.

Co-ops are guided by three documents: the proprietary lease that defines the relationship between the shareholder and the corporation and the shareholder’s rights; the bylaws which detail how the building is governed, such as the make-up and election of the board; and the house rules. The condo has, as I mentioned, usually less restrict house rules.

It is estimated that co-ops currently account for 70 percent of the shareholder/owner-occupied apartments in the city, though the split is tightening. Since co-op ownership predominated in the prewar years, people looking for the classic six in such areas as Park Avenue or the Upper West Side are restricted to co-ops. 

Condos today are often in more dynamic neighborhoods and come loaded with amenities such as health clubs, basketball courts, roof-top venues, movie theaters and wine cellars that older co-op buildings lack and cannot accommodate. This has made condos particularly attractive to millennials who want the amenities.

Prospective buyers need to consider their finances, long-term plans, cultural and family issues, type of building and unit desired before deciding on a co-op or condo.

Published in MANN REPORT

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

Life and events are moving so fast it’s hard for us to keep track of all that is happening and what we experienced just a few short weeks and months ago. 

As I write in the beginning of June, peaceful demonstrations are consuming our streets, the Covid-19 virus continues with more people infected and dying daily and New York starting the long journey back to a semblance of normalcy. At times it seems like yesterday when the city came to a sudden halt, and at others it feels like a lifetime.  At this juncture, we have a chance to reflect and think back on how we handled the situation and what we learned from it for the next crisis.

Matthew Adam Properties manages more than 100 properties of varying sizes and types.  Because each building’s character is unique, we let the properties determine their policies in handling the situation. Our job is to provide them with information, guidance, supervision and the materials to function and stay safe during the pandemic.

From the beginning we understood the importance of staying ahead of the curve and figuring out what would be needed. One of the first things we did was to establish rapport with a wide variety of national suppliers so buildings would have the necessary materials to maintain a clean and safe environment.  This included having the proper cleaning supplies in sufficient quantity for the super-charged cleaning of public areas.

We acquired the materials needed to protect the residents of the buildings as well as the employees. Doormen, concierges and handymen were equipped with Personal Protective Equipment (PPE) with masks, gloves and even protective suits. 

In addition, we installed hand sanitizing stations throughout the buildings.

A key factor in working our way through this crisis is communications. Our asset managers are in frequent contact with boards and superintendents to find out their needs and work with them to do the best we can in these trying times. 

Our boards are doing an excellent job of communicating with residents and keeping them informed about changes in  building procedures and operations.  

We instituted in March a weekly newsletter to residents.  These notices have included general protocols for buildings and residents that follow the strictures set forth by Gov. Andrew Como and Mayor Bill de Blasio including guidance on maintaining social distancing and prohibiting non-essential guests. We also discussed  practices if a person needs to be quarantined such as leaving garbage outside the apartment door and notifying staff to pick it up.

We included laundry room protocols and reminders to residents to be considerate of neighbors keeping noise levels down, maintaining social distancing and refraining from having more than two persons in an elevator.

With the mammoth increase in digital purchasing, we have advised residents as a safety precaution to let boxes with non-perishable contents sit for a couple of days in the delivery room before taking them up to their apartment followed by a thorough hand washing. 

We added links to websites identifying places for take-out or delivery, entertainment sites such as Netflix Party where friends can watch and chat about a movie, streaming broadcasts from the Metropolitan Opera, exercise sites as well as those providing  information on cleaning cell phones and other safety measures.

One of the most popular pieces in the newsletters appeared in mid-April about face masks.  We provided tips on using the masks to greatest efficacy such as washing and maintaining them. We provided instructions on making cloth masks. This included directions for sewn masks with or without a sewing machine as well as those that didn’t require sewing. The instructions were accompanied by diagrams showing how to cut and sew the material as well as a list of the materials and tools required.  In essence, a recipe for making masks.

While the virus and its resultant health and safety requirements seem to be relaxing, we are still faced with many unknowns.  

Whatever happens in these uncertain times, we need to be vigilant to maintain the safety procedures that have been instituted until such time as a vaccine is widely distributed or other health measures come along to provide a level of security.   

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

The Matthew Adam Properties team sincerely hopes this newsletter finds you in good health and good spirits.

New York City is opening 40 miles of streets to allow for greater social distancing during the COVID-19 crisis, with a plan to expand to a total of 100 miles. Below you will find the open street locations in Manhattan.  To see open street locations in the other boroughs, please go to https://www1.nyc.gov/html/dot/html/pedestrians/openstreets.shtml

Streets Opened for Social Distancing

Open Streets are available daily, 8 am to 8 pm (unless otherwise noted) for pedestrians and cyclists to use the roadbed of the street while maintaining at least six feet of distance from others. Opening hours may vary by location due to NYPD staffing.

No through traffic permitted while Open Streets are in effect. Vehicle traffic is limited to local deliveries, pick-ups/drop-offs, necessary city service vehicles, utility vehicles and emergency vehicles only. These drivers are advised to be extremely cautious and to drive 5 MPH or slower.

Manhattan Open Streets Locations:

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

In many neighborhoods in New York City, apartment dwellers are taking to their windows each evening at 7 o’clock to applaud and show appreciation to health care workers, first responders, grocery store employees, truck drivers and all the others who are keeping us safe, healthy and fed during these unprecedented times.

Those are just a few things that are keeping us busy. Below you will find links to some additional informative and entertaining websites:

Dinner’s in the Bag

Coronavirus precautions have radically redefined the ways New Yorkers live and do business, but there may be no industry that’s suffering more than our restaurants. Fortunately, helping our friends in the food business requires something we’re already really good at– calling for takeout. Eater NYC has compiled a great list of carryout and delivery options across the five boroughs.

The Show Must Go On!

The Metropolitan Opera has launched “Nightly Met Opera Streams” as all upcoming performances were canceled. All Nightly Met Opera Streams will begin at 7:30pm EDT and will remain available via the homepage of metopera.org for 20 hours.

“Remote” Just Got a New Meaning for Movie Night

Netflix Party is a simple Google Chrome extension that allows users to sync video playing and pausing, and it has a group chat feature. The perfect way to enjoy some of your favorite shows and movies with friends from afar.

Who Needs the Gym?

Work out from home! There are plenty of options to stream different types of workout classes from the comfort of your own home. CBS News has compiled a list of fitness studios that are offering free live-streaming classes to help you stay physically fit and active.

The Enemy in Your Hand

You can glop on all the sanitizer you want, but if your phone is filthy, your hands are too. One of the best things you can do to stay healthy is to keep your smartphone clean. The New York Times has compiled a brief but helpful guide to disinfecting your smartphone.

Protecting Your Mental Health

Here are five simple ways to ease anxiety and care for yourself during this stressful time.

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

Recently, an elderly resident of an Upper East Side co-op became ill and contacted the doorman who called 911.

His efforts didn’t end there.  He then was able to give the responding EMS technicians details of the woman’s pre-existing conditions and medications. The doorman also contacted the woman’s family and physician.

How was he able to do this?  All the information was on file at the building as part of Matthew Adam Properties’ “Voluntary Life Saving Program.”  We instituted this program several years ago as part of our overall Emergency Response Plan.

As the name states, the program is completely voluntary and ensures privacy of information.  The resident is asked to complete a questionnaire asking for the requisite information.  Only the phone number and email address of the resident are put into a computer. The rest of the information is kept off system in a sealed book that only the superintendent has access to. In this way, we have the relevant information without fearing someone will hack in or by error having the information get on the internet.  Having phone numbers and emails available is important in the event we need to quickly notify residents of an emergency or dangerous situation.

The voluntary program is just one of several life-saving, safety and health initiatives we instituted in properties we manage as part of our comprehensive effort to provide for the health and safety of residents of our buildings.  In addition, our procedures help protect the environment, maintain an emergency alert and life-saving system and increase stairway lighting during an emergency.  We customize plans for buildings based on prior experiences and revise them as necessary.

Our overall plan encompasses many programs, such as:

• Our company includes an EMT who advises and guides us in implementing these programs.As far as we know, we are the only management firm with this expertise and programs.
• We maintain a logbook onsite detailing what to do on behalf of seniors, children or even pets on occasion in the event of an emergency. For example, some residents have dialysis or chemotherapy treatments at home. A power failure could be life-threatening. If they provide us with this information, we check in during a power outage and if necessary call 911 to have them taken from the building.
• Several of our properties have purchased defibrillators that are kept in the building’s office.  The staff is trained and retrained in their use to try to stabilize the patient until emergency services respond.  Minutes are vital when someone experiences a heart incident.

We are environmentally conscious and have established our company as a leader in promoting and using green cleaning products in the properties we manage. An important feature of our safety and health initiatives is our “Green Management Program.” The benefits are many. Our use of green, non-toxic products, which have the coveted “Green Seal,” provides for a cleaner world and healthier environment for both residents and staff. To reduce costs, we purchase our supplies in concentrate from a New York City company that specializes in green products and with our bulk buying power actually save money for our buildings. We conduct ongoing training sessions for managers and building staffs to keep them current on the latest products and their use.

Properties managed by Matthew Adam Properties follow the strict requirements for maintenance and operations of green properties established by the LEED certified program, the international standard for green compliance. In addition, we are in full compliance with the mandated safety plans required of all hi-rise residential buildings and in many cases, have gone beyond what is required.

We are dedicated to having the finest health and safety initiatives in the industry and are continuously looking for new programs we can implement.

Published in MANN REPORT

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.

In its basic form, Strategic Management is adapting sound business principles to property management, which is fairly straightforward as most condo and co-op corporations are multi-million businesses. Yet, all too often 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 customized Strategic Management Program that includes financial issues, service, contracts, maintenance, repairs and long-term capital improvements.

Periodically, a 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, there have been significant changes in managing properties. The most significant has been the evolution of technology, which effects so much of what we do today. Strategic Management has allowed us to seamlessly adapt and utilize technology as it gives us a platform to integrate it into our overall systems.

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

Successful corporations continuously seek ways to innovatively 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. Our work was featured in the Real Estate section of the Sunday New York Times.

Speaking of innovation, as part of Matthew Adam Properties’ Green Management Program, we are installing 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 Strategic Management 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 multi-family condominium of East 93^rdStreet — one of the few in Manhattan. It is estimated that geothermal systems are 75 percent more efficient than oil furnaces and 48 more efficient than natural gas, with costs recovered in as little as two to eight years.

Our Green initiatives also include improving lighting in public areas. In fact, we helped design new fixtures to improve efficiency. Successful businesses provide a healthy and safe work environment.  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 to a plan that allows us to adapt to changing times and provide innovative and value-added services for condos and co-ops.

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

Here is a tale of two buildings when the boiler breaks down.

Building one has a low reserve fund that is tied up in non-liquid assets such as mid and long-term CDs.  Building two has a solid reserve fund with the some of the assets in liquid investments.

Building One will have to scrounge around to get funds to pay for the new boiler, such as a special assessment on the apartment owners or using funds from operations until the money can be recouped from a special assessment or some non-liquid assets are available.

Building Two has sufficient funds that are available immediately for the repairs without the need for a special assessment or loan.

What is the reserve fund?

It is money set aside for repairs and improvements to the building, often referred to as capital projects. It should be kept separate from the annual operating funds which provide for the daily operations of the building and determine the amount of the monthly charges to residents.  Buildings that lack a sufficient reserve fund or misuse it to pay for operating expenses can find themselves in a bind when a major repair or improvement project is needed.

It is important to have a sufficient reserve fund as some lenders look at that when considering a mortgage for buyers. Purchasers with solid financials have been refused a mortgage because the building lacked adequate reserves. This was particularly true after the Great Recession of 2008.  A solid reserve fund also broadcasts that the building is well run which helps increase the value of the units. It also permits the board to make improvements to enhance the quality of life for residents.

The amount of the reserve fund depends on several factors including the age and condition of the building.  Newer buildings would most likely need less investment for repairs than older ones.  The recognized way to determine the size of the reserve fund is to prepare a capital budget plan.  This plan usually covers five years.  It is recommended that a professional engineer or architect inspect the building and determine the life span of the various systems and the cost to repair them. Included should be the roof, exterior, elevators, boilers and balconies.  The engineer can then determine the expected cost for the repairs as a guide to funding the reserve fund.  The capital plan should be updated annually to consider any work that has been done and changes in the condition of the buildings systems as well as costs and the balance in the reserve funds.

The next issue is funding the reserve fund.

Various options exist including a special assessment. Another possibility for co-ops, which was used by many buildings as interest rates plummeted to historic lows in recent years, is to refinance the underlying mortgage and direct the freed-up money to the reserve fund.  Some buildings that impose a transfer fee or fee for sublets direct these funds for capital and improvement projects.  Other buildings use a small percentage of the monthly charges to replenish the reserve fund. Whichever method or combination a building chooses, it must stick to its plan and not follow the temptation to use these funds for operating expenses as a way to keep a lid on monthly charges.

The second key component for the reserve fund is investing the money. Many properties work with a financial adviser, but they should follow some basic principles in their investment philosophy.  Most important is being conservative and while it would be wonderful to have significant asset appreciation that approach can often lead to significant losses. The money should be kept in conservative investments even in this period of low interest rates. Boards could look to U.S. or municipal bonds, CDs, or money market funds.  Equally important is having some of the funds in liquid investments so the board can access them quickly when needed.  One approach is to have ladder of investments so funds mature on a regular basis.

With prudent planning and wise investment decisions, co-ops and condos can have the funds available when needed without putting the squeeze on residents.

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

Much has been written over the years about the responsibilities and duties of property managers.

Often overlooked aspects of the job are relations with residents, communications and promoting a sense of community as multi-family buildings are, in effect, small communities. Often, there are conflicts in priorities caused by differing views of various groups, whether aligned by age, life-style or income.

Our goal is to work with the groups and seek a consensus on the best way to address issues and do the best to provide an excellent quality of life for residents and enhance the property’s value.

Over the years, Matthew Adam Properties has gained a reputation for innovative approaches to various issues as well as providing quality management.

We were one of the first to add amenities such as a play area for children and to create a program to provide a healthier environment for residents and workers with the use of “green” no-toxic materials.

Recently, we developed a new procedure for working with residents and the board of directors to design a needed upgrade of a co-op’s public space.

The board and shareholders of an Upper East Side co-op decided it was time to redo the public hallways which had become tired over the years. Initially, working with the board, we followed the usual path of bidding out the project and hiring an interior designer to create the plans. The board would show the design to the owners for their approval. Usually, this would result in numerous suggestions and objections from the shareholders resulting in minor changes.

We wanted to find a better way.

As usually happens, the proposed design initially met with numerous objections. So, we formulated this a new approach to include shareholders in the design process.  Working with the board, we came up with what I think is a much better idea. It could set a precedent for the way buildings work on similar projects in the future.

Updating public areas is important for older buildings in Manhattan. From experience, we know the appearance of a property adds more value than adding amenities such as a health facility.  The aesthetics of a building is what prospective buyers and visitors see immediately and an attractive lobby and hallways create a definite, and if done well, a positive impression.  No one wants to live in a building with dreary, dark hallways, thread-bare carpeting and grimy wallpaper.

Rather than having the decisions made behind closed doors and then presented in a take all or nothing decision, we sought input from the residents.  In doing so, we helped create a greater sense of community in the building and eventually just about everyone bought into the design.

To start, we created comment sheets and distributed them to shareholders asking for their ideas and what they would like based on their experiences and personal preferences.  We received about 70 responses from the shareholders with some terrific ideas that had not be included in the original plans.

Suggestions included using two types of wallpaper, having wood trim on the apartment doors, accenting the columns, accenting the elevator area and having inset carpeting in the heavily trafficked area in front of the elevator so the carpeting could be easily changed when worn.

Many of the ideas were incorporated into our plans.

We then asked the designer to draw up three concepts incorporating ideas suggested by the residents. The plans were put on boards that the residents could review and discuss.  We then distributed another set of forms and ballots asking for comments on the plans and which one they preferred and why. These sheets were coded so there would be no ballot-stuffing. The designer then worked on the favored plan incorporating comments so that a coherent final plan was presented and approved.

This process resulted in a better design than originally planned and pleased just about everyone because they had input and felt to be part of the process. There was minimal additional cost but it was well worth it. We not only have lovely public spaces the residents are proud of, but we also have a greater sense of community.

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

New York City has increased the amount of signage required in multi-family buildings.

With these latest requirements, elevators and common areas may soon look like college bulletin boards filled with students’ postings seeking rides home.

The new requirements include additional signage on procedures to follow in the event of a gas leak, warnings to residents of a possible flooding situation or natural disaster such as occurred during Superstorm Sandy and new Fire Department rules for the location of apartment numbers.

Local Law 153 of 2016 detailing gas leak procedures is an outgrowth of the explosion in March 2015 in a residential/commercial building in the East Village that killed two. The cause of the explosion was an illegal gas-line hook-up.  Another incident involved a gas main in Harlem several years ago that halted traffic on Metro North.  According to press reports, the average age of a gas main in New York City is 56 years.

The new law requires buildings to post signage telling residents and potential tenants what to do in the event of a gas leak.  While the precise wording still has not been release, buildings are required to post a written announcement until the wording is finalized. The signage should instruct the resident to quickly open nearby doors and windows and leave the building immediately and not attempt to locate the leak. Residents should not turn on or off any electrical appliances, light matches or lighters, nor use a house-phone or cell-phone. Once outside, they should to first call 911, and then the gas service provider. The name and the emergency number of the gas service provider should be posted on the notice.  Failure to post the notice is subject to a violation. A copy should be given to all residents and tenants as well as when leases are renewed and new residents move in.

While the focus usually is on leaks in gas mains and lines, some leaks occur in home appliances. It is important that a resident making changing or repairing appliances have the work done by a licensed professional.

We are now in the hurricane system, or as it is called in New York Housing Preservation and Development (HPD) terminology, the Coastal Storm Season for New York City.  During this season, buildings are required to post signage in the event of a coastal storm or similar emergency.  Multi-family buildings where at least unit one is not occupied by the owner are required to post a temporary notice with emergency information in the common area. This notice is to be posted prior to the weather emergency, after a natural disaster or after being informed there will be a utility outage lasting more than 24 hours.  It should include whether the building is in an emergency evacuation zone and if an outage what services are unavailable.

Additional signage is required in flood zones, which can be identified by contacting HPD.

The Fire Department recently instituted rules that require multi-family buildings to place reflective signs on all apartment doors to assist firefighters in identifying the apartment number when conditions make it difficult to see the current set-up.  The law went into effect on March 30 for duplexes and triplexes and will be effective by March 30, 2018 for single-level apartments.

In many fires, smoke and heat force firefighters to crawl though the hallways where they can’t see the apartment number.  The new law is designed to help the firefighters identify apartments even in heavy smoke conditions.

There are specific standards for the apartment number signs.  The new ones must be placed on the door jamb where the hinges are and be no higher than 12 inches from the floor.

The signs must indicate whether the apartment has more than one floor and if there is more than one entrance and identify the primary entrance.

A similarly positioned sign must be placed at stairwells reading “Exit” and signs indicating the direction of apartments must be placed on the hallway walls opposite the stairwells.

Only certain types of materials are permitted including photo-luminescent materials that glow in the dark and other highly reflective materials.

An issue in some buildings is whether the signs would integrate with the color décor in the hallways. The law gives the buildings latitude in this as long as the reflective numbers and information meet requirements.

The local law also requires building staffs to keep a log and annually inspect to see if all signs are intact. The Fire Department can request the logs during an inspection.

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

An annual budget for a co-op or condominium is a lot like an iceberg.

Only the tip of the iceberg can be seen, the bulk of it hidden below the sea. The bulk of a budget, while not exactly hidden, are mandated or essential costs and include salaries, real estate taxes and mortgage (for co-ops) and fuel.  The exact percentage depends on the building.

This heavy load makes it difficult to minimize budget increases and requires tough decisions by boards and property managers.  In effect, boards and managing agents have less leeway in determining a budget than many realize.  Yet, there are areas where with diligent management revenues can be increased and costs can be reduced.  The budget season for most co-ops and condos is past so as the fiscal year begins it is a good time to explore ways to increase revenues and reduce costs for the next budget.

On the revenue side, many buildings have storage and laundry rooms. These contracts should be reviewed periodically with the vendors to see where revenues for the building can be increased.  A review may also disclose areas where the building is not getting all the income it should.  Similarly, any commercial lease should be analyzed to ascertain if the building is collecting all the income it is entitled to.  Are there charge-backs for capital work that were never processed?  It is surprising what can be found in a thorough review of all contracts, not only for the coming fiscal year but into the future.

Another possible income source is cellular towers on the roof.  Boards should also review potential revenue sources such as the so-called “Flip Tax” when units are sold, if the property doesn’t have one.

On the expense side, one good area to explore is energy.  Matthew Adam Properties is a leader in installing LED lighting in public areas which lowers energy costs. LED bulbs also last longer and require less maintenance.

Many of the properties we manage have converted to natural gas from oil. The cost of natural gas is usually lower and can be bought for less from Energy Supply Companies (ESCOs) rather than utilities. ESCOs provide the natural gas, which is distributed either through the Con Edison grid system in Manhattan and the Bronx or other companies in Queens, Brooklyn and Staten Island. With more competition in the marketplace and the increase in ESCOs, it is worthwhile to seek out a good rate and lock it in; summer is usually the best time to get the lowest prices. There are several advantages. The co-op or condo will have a good fix on energy expenses for the upcoming season and can avoid sharp increases. Many unpredictable factors can abruptly affect prices, such as international situations, weather and the commodities market.

Using natural gas and ESCOs can produce considerable savings.  Matthew Adam Properties is not in the energy business, so any savings accrued goes directly to the co-op or condo.

We have installed water heaters for use in the summer months when the boilers are not needed to provide heat.  Using the water heaters, rather than the boilers, saves considerable energy. We also work with different vendors to analyze energy usage and have installed variable controls that can sense the demand for energy and control output to fit demand and provide what is needed.

We are installing tamper-proof heat-control monitors in apartments which provide data to keep apartments from overheating but remaining at a comfortable temperature. Overheating wastes energy. Some of our properties have controls that monitor the need and demand for the HVAC system pumps that operate air conditioning.

Not all buildings can convert to gas.

Some older buildings still use steam heat.  In these buildings, we look to replace the steam traps and make certain the pipes and boilers are properly wrapped so heat is not lost entering building or when the boiler is operating. In fact, we check the insulation on all boilers.

Another area we monitor closely is water use.  By tracking use against historic data, we can determine if water is being lost through leaks. As the city now charges for usage rather than the old system based on frontage, leaks can drain from the budget.

With boards and property managers trying to keep monthly charges as low as possible, it is important that in addition to the major expenses, they look at the tip of the iceberg (budget) to see where additional revenues and savings can be found.