Matthew Adam Properties

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

The New York City Council has extended by six months the filing date for Phase 1 of compliance with the new gas lines inspection law. Reasons cited for the delay include Covid-19, uncertainty about requirements and lack of outreach by the Department of Buildings.

With the extension, buildings in community board districts 1, 3 and 10 in all five boroughs have until June 30, 2021 to file inspection reports. The previous deadline was Dec. 31, 2020.

The new law, Local Law 152, establishes a timetable for inspection of gas lines and a requirement to notify residents on procedures when a gas leak is suspected.  Inspection of gas lines is required every five years for all multiple dwelling residential buildings in the city. For new buildings, the initial inspection would take place in the tenth year. 

A master plumber must conduct the inspection and is required to submit an inspection report and certification to the building owner within 30 days. Certification from the plumber must be filed with the Department of Buildings and an inspection report must be submitted to the utility company within 90 days. The law requires the inspection of all exposed gas lines from the entry point of gas piping into the building to individual resident units.  Inspections in public spaces, hallways and mechanical and boiler rooms should be conducted with a portable combustible gas detector. Only public spaces that have gas piping or gas utilization equipment are subject to scrutiny.

Failure to comply with the reporting requirements is a major violation and may lead to penalties and civil fines up to $10,000.

Unsafe conditions, gas leaks, non-code compliant installations or illegal connections must be identified in the inspection report.  Regardless of submission timetables, all unsafe or hazardous conditions must be reported immediately to the building’s owner, the utility and the Department of Buildings and be corrected. 

Local Law 152 was passed in the aftermath of a tragic explosion in the East Village several years ago caused by an illegal gas-line connection and focusing public attention on the lack of inspection requirements for these lines. While the city requires periodic inspections of many building systems, including boilers, elevators, water tanks, sprinklers, gas lines were exempt.

Co-op and condo boards should carefully vet companies to perform the inspections. I am concerned that companies have sprung up without the proper experience. This type of contractor abuse surfaced in the first round of inspections for Local Law 10. Many of us who had been through that sequence of events can work with clients to better understand the law and hire qualified companies.  It is important to seek out experienced, licensed companies and not firms born with the new law. 

The new law also requires building owners or boards to provide residents with information describing procedures to take when a gas leak is suspected.  This notice must accompany a lease or lease renewal, be in English and Spanish and be posted in a prominent place in a common area. 

The notice advices residents to quickly open nearby doors and windows and leave the building immediately. They should not attempt to locate the leak, turn on or off any electrical appliances, smoke, light matches or use a house-phone or cellphone within the building.  Residents should call 911 to report the suspected gas leak only after leaving the building and from a safe distance. They are then advised to call the gas service provider, such as Con Ed, whose name and phone number is listed at the bottom of the information form.

The city has established a cycle for the inspections based on community board districts.  The dates are Jan. 1 to Dec. 31 as follows: 2021, Districts 2,5,7,13 and 18; 2022, Districts 4,6,8, 9 and 16; and 2023, Districts 12, 12, 14 15 1st 17. The due dates for the ongoing inspections will be the five-year anniversary of the previous inspection.

Buildings without gas piping systems are required to file a certification stating this. The reporting timetable follows that of the borough dates and must be resubmitted every five years.

With the coronavirus spreading uncontrolled throughout the country and with hospitals nationwide becoming overwhelmed, our current situation is already dire. It’s not hard to imagine that bringing extended families together over the holidays could fuel a truly terrifying increase in infection rates and deaths in the coming weeks.

Given the current state of affairs in New York City and much of the rest of the nation, co-op and condo boards should take aggressive actions to try to stem the spread of the virus in their communities. For example, boards should consider formally discouraging private social gatherings that involve bringing outside family, friends or other guests into the building. The pernicious fact is that the novel coronavirus has a long incubation period, and people can be contagious without showing symptoms or even having any idea that they are infected. Even people who recently tested negative can be unwittingly carrying – and spreading – the disease.

Gov. Andrew M. Cuomo recently ordered that private social gatherings be limited to 10 people. To protect the health of building residents, staff and guests, co-op and condo boards should make sure that the order is strictly enforced. Boards should require that a list of guests, with contact information, be provided to the front desk in advance of any social event.

By Sue Treiman

Hell’s Kitchen resident Christine Berthet has been talking trash for years. Now she’s seeking at least four other garbage gurus – one in each of the remaining boroughs – to turn the talk into tangible action.

If the sidewalks in front of your co-op or condo are starting to look like a landfill as refuse from pandemic-fuelled deliveries piles up, this is your chance to do something about it.

Berthet, cofounder of the nonprofit Chelsea-Hell’s Kitchen Coalition for Pedestrian Safety (CHEKPEDS), needs one building apiece from the Bronx, Brooklyn, Queens and Staten Island to support the Trash Off Sidewalk Space (TOSS) program. The plan aims to transform some parking spaces into bagged garbage drop-off and collection sites that would reduce the refuse on residential sidewalks. Manhattan’s 45th Street between Ninth and Tenth Avenues is poised to start the pilot, potentially freeing its narrow walkways from an increasingly unsightly, unsanitary and untenable problem.

“Garbage is taking more and more sidewalk space, preventing the disabled or people with strollers from getting around piles of trash that can be almost as tall as I am,” Berthet says. “And it’s unsafe.”

CHEKPEDS was already advocating for change last year when the city’s Departments of Sanitation and Transportation appealed for “creative ideas” to help tame the trash. The group’s TOSS response outlined such benefits as fewer sanitation truck stops, lowered gasoline use, reduced air pollution and rat populations, and an overall tidier city. But the group never heard back from the city. “There wasn’t a ‘no’ or a ‘yes’,” Berthet says. “Just nothing.”

Undaunted, activists buttonholed locals and conducted surveys, garnering additional support. “Nobody we talked to was opposed to our plan,” says Chana Widawski, a 45th Street resident who polled residents at an environmental fair.

Then, COVID-19 arrived, worsening an urgent situation by ramping up reliance on home delivery to people confined in their apartments. Trash piles grew skyward and across pavements. “It became overwhelming,” Berthet says, “and it made it impossible for pedestrians to socially distance.”

By the time CHEKPEDS renewed its test-of-concept campaign for the TOSS program, the city was on board. But the positive response was accompanied by a significant caveat. “They didn’t want to do a pilot without including the entire city,” Berthet says. “So our challenge was to find a place in each borough willing to participate.”

TOSS’s proposal calls for designating trash “parking spaces” on the street to house bagged garbage. Participating blocks and buildings can choose from between two options: place bagged garbage in the designated space; or install seven-foot-tall “trash corrals” that hold up to 85 bags and cost about $400 each. Corrals, considered the most desirable approach, are currently in use near Bryant Park in Manhattan. Additionally, the corrals will have rat traps, to avoid becoming a rodent buffet.

“With just one building per borough – or, better yet, a whole block – we’ll be able to test parking spots as a temporary site to help clear street space,” Berthet says. “So if you’re interested, I want to hear from you.”

To learn more, take the CHEKPEDS survey at https://tinyurl.com/residentialtrash, email them at excom@chekpeds.com, or leave a telephone message at (646) 623-2689.

How to Build an Effective Board of Directors

Part I: Know Your Role

Congratulations, you are a new member of the board of directors. Now what? Often directors are thrown into the proverbial hot [board] seat without an understanding of their roles and responsibilities. Misunderstanding the board’s role or directors’ duties produces a dysfunctional board, characterized by micromanagement, director disengagement, rogue directors, or lack of synergy. This article, the first in the board governance series, “How to Build an Effective Board of Directors,” will explore the fundamental role and responsibilities of the board and individual directors.

Directors’ legal duties

Directors’ legal duties and responsibilities are defined by state law and the board’s internal governance documents, including its certificate of incorporation or bylaws. The law recognizes that directors hold a special relationship with the association (and in the case of public charities, with society), and therefore imposes additional duties upon directors called “fiduciary duties.”

The fiduciary duties of nonprofit directors are the duties of care, loyalty, and obedience. Generally, the duty of care refers to the level of attention required of each director to the business of the organization. It requires directors to carry out their duties in good faith and with the care of an ordinarily prudent person in a like position under similar circumstances. The duty of loyalty requires directors to act in the best interests of the organization, and not in their own personal interests. And the duty of obedience requires directors to ensure that the organization operates in furtherance of its mission and in compliance with its governance documents, policies, and all applicable laws and regulations.
Directors may be subject to liability for breach of fiduciary duty for failing to exercise their fiduciary responsibilities.

The role and responsibilities of the board of directors

Under New York law, the board of directors, as a single body comprised of several individuals, is responsible for managing the organization. No single director has the power to take any action on behalf of the organization, unless the board as a whole has given such authority to the director. That happens in several ways.

The board may appoint or elect specific individuals to serve as officers of the board (i.e., president, treasurer, and secretary). Those directors have the authority identified in the governance documents and under applicable law for each office. In addition, the board may appoint directors to serve as committee chairs, and those directors may have specific powers related to the role of the committee. Finally, the board may vote to authorize any director or officer to take any specific action. But unless the board cloaks a director with specific authority, the director is just one limb within a larger body.

To effectively manage the organization, the board must serve three core functions: oversight, strategic planning, and ambassadorship. If the board is not consistently focused on those three things, it is not doing its job.

The board’s oversight role

The role of the board is to oversee the organization in every respect, including its finances, infrastructure, and human capital, all of which are essential resources of the organization. The board must ensure that the organization and its day-to-day managers are appropriately stewarding those resources. To be effective in this role, the board must obtain and review accurate and detailed information about the status of the organization’s resources and develop a plan of action to ensure resource preservation. The board must also ensure that there are clear policies in place by which management/staff is guided, and systems in place for monitoring compliance and accountability.

The board’s oversight role also includes self-regulation. The board must establish rules and procedures to hold itself accountable to the organization. This includes evaluating the board’s structure to ensure alignment with the organization, training directors to understand the board’s role and duties, and identifying areas for improvement. Part V of this board governance series explores the importance of board self-regulation and assessment in greater detail.

The board’s strategic planning role

A significant role of the board is to establish the organization’s mission and vision, and to develop a strategic plan for the organization to accomplish them. A strategic plan charts the future course of the organization and identifies the specific actions that will move the organization forward along that course. Cyclically, the board should be developing a strategic plan for the organization or overseeing the implementation of an existing strategic plan. If the board is doing neither, it is not doing its job effectively.

The board operates effectively when its actions and the organization’s operations are aligned with the specific strategic priorities that the board has established in consultation with management. Without strategic planning, the organization may be stagnated, unproductive or disorganized.

The board’s ambassadorship role

The role of each director on the board is to represent, promote, and advocate for the organization, and to ensure that the organization is reflected in the best possible light. The board’s ambassadorship role occurs largely outside of the boardroom. It requires directors to use their personal resources to raise awareness about and in support of the organization.

But ambassadorship also means that directors understand and realize that what they say and do outside of the boardroom reflects upon the organization. This includes speaking negatively in public about the organization, fellow directors, or specific board decisions. Although directors are just one limb in a larger body, understand that when a limb is infected, the infection may spread and affect the entire body.

The role of the board in day-to-day management

As the board operates from a bird’s-eye vantage point, it is not involved in the day-to-day management of the organization. Rather, the board hires an executive officer to be responsible for day-to-day operations (such as hiring and firing staff and monitoring finances) and implementing the board’s mission, vision, policies, and strategic plan. In comparing the role of the board and that of the executive officer, the board’s role is often analogized with a family vacation. Whereas the board is responsible for determining the destination and the budget for the vacation, the executive officer is responsible for determining the route and the mode of transportation, to arrive at the destination within budget.

Board micromanagement

Although boards should not be involved in day-to-day operations, it happens. One director calls a staff member directly for a copy of a report. Another director pops into the office to say hello, casually making random suggestions. Yet another director emails staff making a number of requests.

Such interference with day-to-day operations, often by rogue directors, can be very disruptive to the organization and can lead to inappropriate micromanagement. Micromanagement occurs when directors assume tasks or make decisions that should be left to the executive officer, management, or employees. This often includes giving direction, instructions, or orders directly to personnel rather than through the appropriate chain of command within the organization.

Incessant board interference in day-to-day operations evokes the fable of the eagle who thought it was a chicken. As the story goes, a chicken farmer found an eagle’s egg and put it with his chickens. The egg hatched and the eagle was raised surrounded by chicken and did as chickens do – it walked around all day, clucking and pecking at the ground. The eagle lived out the rest of its life and died believing it was a chicken, never fulfilling its purpose as an eagle.

Directors who roam the organization’s offices clucking demands at staff and management are like eagles behaving like chickens. Instead, directors are meant to soar high above-ground where they have a full and broad view of the organization, and should not be on the ground micromanaging staff. Indeed, directors should not act independently from the board.

Key takeaways

• To build an effective board, directors must have an accurate understanding of their roles and fiduciary responsibilities and operate within that understanding.
• The primary roles of the board are to (i) oversee the organization’s assets and operations, (ii) strategically plan the actions that lead the organization to operate within and fulfill its mission, and (iii) act in furtherance of the mission of the organization both inside and outside of the boardroom.
• The board should perform its duties from a bird’s-eye view of all of the organization’s operations, and leave the day-to-day operations to the executive officer or management.

For more information contact:

Nancy Durand
ndurand@sbjlaw.com

This article is Part I of V in the Board Governance Series: How to Build An Effective Board of Directors

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.

We are learning new things as the coronavirus pandemic continues its suffocating impact on our lives.

One area that has gained increased focus and importance is contact tracing.

While there have been issues with this both locally and nationwide – finding enough contactors and having infected persons identify those they have been in contact with – we at  Matthew Adam Properties are proactive in this.

Here are some of the steps we follow:

• We keep a ledger containing visitor’s names, who they are visiting and their cell numbers
• This same procedure follows for workmen and vendors coming into the building
• We keep track of the apartments where our staff has been

If residents become sick, we immediately can identify those they have been in their apartment.

We are exploring software that can do the job, while adhering to privacy requirements, thereby eliminating handwritten ledgers.

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

Of the many issues an asset manager deals with, one of the most important is finances. 

While much focus is on the daily, monthly and annual monitoring and reports, often overlooked is the importance of a long-term plan for capital projects.  Though recommended by the American Institute of Certified Public Accountants, many managers and boards give short shrift to this document. Failure to account for upcoming projects and how to finance them can blow a huge hole in a property’s finances and lead to large increases in monthly charges or special assessments.

A diligent manager supported by a strong and experienced accounting staff manages both short and long-term components, keeping a co-op or condominium on sound fiscal footing.

Let’s look at these two areas.  Several areas impact on operational finances.  A leading cause of financial difficulties is poor bookkeeping as we see from properties transferring from other companies. A partner in an accounting firm that works with numerous co-ops and condominiums and who has a good perspective on this told me, “Probably the most important responsibility is making certain the financial records are complete and there is sufficient information for the accountant and the board.” The accountant also said he values asset managers who get the information to him in a timely manner.

Today, most properties use a financial software program.  The accountant warns that with numerous products some management companies, particularly smaller ones, try to save money by buying inferior programs. The building is the loser in these instances. And remember, the software is only as good as the information inputted.

Another vital role is preparation of the annual budget. In some buildings, the board does the initial budget, in others it is the managing agent or the accounting firm, or most often a combination.  But, the accountant says, when the accounting firm reviews the budget it is critical that the managing agent provides accurate historical information on usage of fuel, water, and electricity as well as other expenses, both year-to-date figures as well as past numbers. This is central to projecting expenditures.

Many co-ops and condos take a narrow approach to long-term planning to keep a lid on maintenance or common charges. Failure to maintain an adequate reserve fun, delay preventive maintenance and necessary repairs or doing just the minimum are undermining a property’s fiscal integrity. 

This can be avoided if the board is forward thinking and develops a long-term capital improvement plan. In most cases, this is a five-year program that identifies projects that will be required, prioritizes them and identifies funding sources.

Preparing such a plan requires the coordinated efforts of the property manager, an accountant, the superintendent/resident manager and an engineer. The first step is gathering information about the physical plant and systems. Effective superintendents/resident managers know their building and can pinpoint areas that would require work particularly smaller items that could lead to larger projects unless attended to. The engineer performs a complete inspection of the building including the exterior, the roof, public areas, and mechanical systems. Included is research into available tax incentives and rebate programs.  Some of these have deadlines and others are available on a first-come basis.  Knowledge of these can help in setting project priorities.

Once this information is gathered, costs are estimated and schedules set based on need and spreading out the cost to lessen the impact in any given year. Then, the board can determine a financing plan.

By having all the information, the manager can get a big picture view of what is required and bundle similar projects based on the systems or work involved.  One example would be having work requiring scaffolding done in sequence avoiding the need to have the scaffolding put up for each project at a much greater expense.

By focusing on both the short and long-term financial issues, an asset manager working with the board can keep a co-op or condominium in solid financial shape.