** Transparency * Competency * Civility **

The following questions need answers. 
 
We had hoped to post the answers to the questions below that were given at the April 1, 2014 meeting about the Local Law 11 exterior work.  Unfortunately, very few comments or questions were allowed from the audience so the questions remain unanswered.
 
The presentations about the exterior work went on for well over an hour.  One item to note, however, is that at the end of the meeting, there was some discussion about building a sidewalk shed in the outdoor parking lot that would not have to cover the entire lot, which is contrary to Marshall Kanter's March 4, 2014 letter.  The engineer, Mr. Basil Taha, asked for more information on this matter.  We hope the board will pursue any actions that will save the co-op money and still meet the needs of the shareholders.
  
If you have additional questions, comments or concerns, please send an email to rta2621@gmail.com.

Questions Needing Answers: (Updated March 2014)

Regarding  the meeting scheduled for April 1, 2014 about the Local Law 11 exterior work:

• The brick work on the outside of the building does not match the existing bricks. Why couldn't it be done to blend in better with the existing brick work? I am concerned that the look of the building will negatively impact our property values. 
• The marble panels on the front of the building have been repaired or changed. However, the slab patterns are going in different directions and do not match the existing marble. What was the cost for changing the marble? Many other panels are broken, so why didn't we do a comprehensive restoration of the entrance-way instead? 
• Given the patchwork look of the exterior, do you think you might get better results in the future if the entire board or the appropriate committee sees and approves materials before they are permanently installed?
• Does the contract say when the Local Law 11 work was expected to be completed?  What was the date?
• Do the contracts include penalties for taking too long to complete the work or for poor quality?
• How much money has been spent on the Local Law 11 project and how much remains to be paid?
• There was a stop work order issued in October 2013 for failure to comply with the site safety plan (click here). What happened, why did this happen, and who paid the $1,600 fine (click here)?
• The letter dated March 4, 2014 from Marshall Kanter (click here) regarding valet parking starts with “It appears inaccurate information is being circulated to residents from at least one board member, so I hope the following facts will clarify the actual state of the Local Law 11 project.” What was the inaccurate information or rumors referenced and did Marshall Kanter discuss them with the board member(s) to be sure he was assessing the situation accurately before sending this letter?
• The March 4, 2014 letter mentioned two options for dealing with Local Law 11 and the outside lot. One was for a bridge to be built over the entire lot for $80,000 to $100,000 and the other was to clear the entire outside lot.  The cost of the valet service was not specified. What is the cost?  The letter said "there are no other viable options".  Why was a sidewalk shed not an option when a sidewalk shed was in the approved site safety plan? (click here)
• Covering an entire parking lot with a shed is unusual. Can you cite the building code that requires us to cover more than the usual 20 feet out from the building?
• Having chosen the option of emptying the outside lot and hiring a valet service, what was the other alternative that was mentioned in the notice of March 4, 2014? For the price we are paying there seems very little for the attendants to do during the day as only very few cars need to be moved.  There seems to be more empty spots during the day than cars that need to be moved.
• The letter said that Marshall and the board considered the best interests of all shareholders and residents and that it would be "unfair, inconvenient and more costly to only those in the outside lot" if they had to make their own arrangements.  This raises several questions:  First, what is the cost for valet parking?  Second, why didn't you tell the shareholders the cost and ask if that’s how they want to spend their maintenance fees? It appears that assuming the project lasts only 3 months, a shareholder who owns 300 shares will pay approximately $200 for a service that is for fewer than 20 cars.
• Is it possible that the parking issue for the 15 - 20  shareholders affected could have been accommodated in a less expensive way? The cost of $30,000 for 3 months seems like a lot of money for cars that could have been parked in available spaces in our garage.
• It appears there are plenty of spaces available inside once people leave for work.  Why didn't the board simply ask if people in the outside lot would be willing to move their cars indoors after people left for work?
• Why does it seem so difficult to communicate with shareholders and get our input?  Some of us would pick free or reduced costs for pool memberships, a fitness center or other amenity over valet parking.
• Has the board set a precedent by offering valet parking?  Does the board intend to offer it again, with the associated costs, the next time building repairs impact the people who have parking places?
• What projects are now being delayed or eliminated because we are paying for valet parking instead?
• What site safety plan was actually approved and are we following that plan now? (click here)
• In the event that a shareholder would like to talk to a board member about a vendor contract, do all the board members have copies of the contracts?
• What can we do differently the next time we have to do Local Law 11 work so that we can control how long the project takes, how much it will cost, and the quality of the work?
• What specific actions has the board approved that will save the co-op money so that we can pay for future Local Law 11 work without borrowing more money?  How does a board of six come to a consensus on issues in the event you are evenly divided on certain issues?  Are any board members making financial decisions without the approval of the majority of the board?

Questions & Answers: (Updated March 2014)

• Why did Danny (Arjan) Smajlaj, our handyman in training, suddenly leave before Christmas? Did he quit or was he fired? The timing is noteworthy. We were told by Alex at the shareholders meeting in November, that Danny was working well with Wellington, he needed 3 months for training and he was doing well. Danny was fired because it came to light that he was indicted on 4 felony charges including criminal possession of a loaded weapon, gang assault, and assault with intent to cause serious injury with a weapon. (Read about the assault here.) (Read details about the criminal charges here.)
• How are the oil-to-gas conversion and Local Law 11 projects being paid for?  If you get financing, will it be available in time to pay the bills that are coming in now?  If you still need funds for the short-term, where will the money come from?  An assessment?  The board reported that we are refinancing the mortgage loan for $7.5 million for a term of 10 years.  The loan will also have a $1 million line of credit and allows us to obtain $1 million in additional unsecured financing if needed.  There was no mention at the meeting about an assessment.
• Did we have financing in place before we signed the contracts for the projects?  The board reported that financing had just been applied for.  Therefore, work on the projects began before we will have received the funds from refinancing our mortgage.  River Terrace should receive the funds by year-end or early in 2014. 
• Did we sign contracts without knowing where the money was coming from? Contracts were signed while the board conducted their review of financing alternatives so, yes, contracts were signed without knowing where the money was coming from.
• Will the capital improvement assessment that shareholders have been paying since January 2013 end in December 2013?  We were told by Steve that the assessment would end in December 2013.  However, the budget letter from the treasurer (click here), dated December 11, 2013 states that the assessment will continue throughout 2014.
• What was our line of credit and what is it on the new loan?  We had a $375,000 line of credit.  Shelley reported that it had never been touched, but Jay later corrected this to say we previously borrowed $100,000 in 2012 and then paid it off.  The circumstances surrounding the need to draw down the line of credit last year were not discussed. The new line of credit is $1 million.
• How much more can we expect to pay in 2014?  While maintenance charges will remain the same, the capital improvement assessment shall continue throughout 2014 and a new fuel surcharge is being implemented. See 2014 budget letter. (click here)
  
• Why did Jovana Simic resign from the board?  Jovana attended the meeting and said she resigned because she found the board to be very unprofessional and disorganized. Continuously, votes taken and decisions that were decided on at board meetings were later changed and reversed outside of the board room.  Jovana could not tolerate being part of a board that conducts business in this manner.
• Will the board fill the open position? The board intends to discuss the selection of another board member at their December 2013 meeting.  The bylaws do not mandate how the board is to select a new member.  One board member suggested that the board offer the position to the person who received the next highest number of votes at the annual shareholders meeting election held last June.  
• Why aren't there any minutes since last October?  If the minutes for the last year had been available, we would have much better knowledge about the costs of the major capital projects.  At the meeting, Steve responded that the minutes for July, August and September are almost ready and should be on the website courtesy of Shelly and back minutes are coming.  Coincidentally, there is an article in the New York Times on 11/17/2013 about the importance of minutes and the expectation that they are available at the building for review by purchasers’ attorneys and by shareholders.  Click here to read a New York Times article titled, “Spending Hours on the Co-op Board Minutes” in the Real Estate section.
• Steve expressed surprise about the Concerned Shareholders of River Terrace and commented that they are hiding behind their anonymity.  Though he admits that the board continues to fall short in the area of communication, he believes every board member is accessible whereupon a shareholder challenged him and strongly explained that among the shareholders there is a real atmosphere of fear in the building and that many people are afraid to speak up because they have experienced, or are afraid of, retribution from the board. 
  
• Regarding savings, when is the board taking up a program to save money?  Gary said the board needs to look long-term into what the overall capital expenditures are and how to replenish the reserve accounts in light of the expenditures. In the nearly 5 months of this board's term so far, the board has fallen short at looking at the current expenditures closely and critically to see where we might save money. One thing that jumped out immediately was that we spend over $300/month for the doorman’s phone, super’s phone and two in the elevators. Another thing that stood out was that in one month the building spent over $800 on photocopying with Garthchester.  Gary questioned why we don’t have our own photocopier which can print copies at pennies a page rather than pay our management company a lot of money every month for photocopying. Cost control needs to be a focus over the next months.
• A shareholder offered: We don’t have a copier? I find that amazing!  Gary confirmed that we don’t have a copy machine and is a really simple area to look at to save a fair amount of money. Another area that Gary mentioned is supplies. The building spends tens of thousands of dollars a year on supplies yet he is not aware that the board or the finance committee has looked at any of those bills to see if we if there are areas where we are overpaying, and where we can reduce our spending. There is also the area of the co-op's many vendors. He suggested that we review our contracts, get some bids to see if we can obtain lower cost/better value contractors for areas such as elevators, boilers, air-conditioning and other areas. He’d like to see the board focus on cost control in these and other areas going forward to reduce spending.
• Are we saving the $73,000/year we were told we would save by not having an assistant superintendent? While we have not replaced the assistant superintendent, Alex commented that we hired Danny, who is a handyman in training.  (Therefore, it appears there has not been an actual reduction in staff.)
• How long will the training take? We heard Wellington is staying another 4 years or so. Alex said Danny is working well with Wellington. [NOTE: Danny has since been fired. See an earlier bullet point for information.] He needs 3 months for training and he is doing well.  Alex also said Wellington may stay 2 to 5 more years. 
• What is the status of apartment 2H, Mitch Hagen's old apartment?  A lot of people have brought up that we’d get a higher sale price for the coop by selling apartment 6H, superintendent Alex Syku’s apartment, and moving the super into 2H.  Alex, who attended the shareholders meeting, responded that he would not switch from 6 to 2. He stated he would pack up and leave if he was asked to switch.
• What is the intention regarding a larger apartment for the superintendent?  Steve responded that we need to work with Alex.  If at some point he turns to the board and says he really needs a bigger apartment, the board will take it up then. 
• Why should I worry about the building having a low reserve account?  A low reserve account devalues each shareholder’s apartment and makes it more difficult to sell an apartment. Potential purchasers and their attorneys when performing their due diligence want to see a large and healthy reserve fund. Reserve funds need to be available for sudden large capital expenditures, as well as to have the funds on hand for planned expensive capital improvement projects. Building and maintaining a healthy reserve balance makes it possible to avoid a large assessment of the shareholders, or to seek additional borrowing. 
• How many shares does it take to hold a Special Meeting of shareholders?  It requires 25% of the total shares, or about 11,450 shares. 
• How many shares does it take to remove a board member(s)?  It requires over 50% of the total shares, or about 22,900 shares.
• Are the RTA board of directors achieving the promises they made when they ran for the board? (Click here) for the candidates’ statements of the current board and judge for yourself.
• Are we renting apartment 2H, Mitch Hagen's old apartment, which could provide the co-op around $2,000/month?  No. 
• Was the apartment listed for $300,000 - $400,000 as previously reported?  No, it was listed for $299,000 and subsequently sold for $272,000. 

[back to top]

Following are communications put out by the board to all shareholders referencing assessments and other references to finances.  These documents reflect the lack of planning to meet the financial needs of the co-op.

 Documents referred to (we all received these under the door or by mail):

1. December 11, 2013, from Norman Maron, Treasurer, re: Budget for 2014: (click here)
   

• The capital improvement assessment of $0.1733 per share/month, begun in 2013, will continue to remain in effect throughout 2014.
• An oil fuel surcharge of $0.1709 per share/month will commence on January 1, 2014. This surcharge will be eliminated once the gas conversion process is completed, which is currently anticipated by the second half of the year.
• The costs to the shareholders of the building's internet service have been absorbed and will now be included in our monthly maintenance charges.

    2.  Nov. 20, 2012, from Thomas Pepper, re: Budget plan for 2013 (click here) :

• Maintenance increase 1%, capital improvement surcharge of $.173333/share/mo. for 12 months, effective Jan 1, 2013. To be used for Local Law 11 and gas conversion. Result: This means RTA is taking in approx. $8K/month, or approx. $96K/year
• RTA established the practice 2 years ago of transferring $1,000 per month from the operating account to the reserve account. For 2013 it will increase from $1,000 to $2,000 per month for capital improvements. Result: This means RTA is committed to putting $24,000 into reserves for the year.

    3.  Annual Report 2012 (click here)

    4.  June 6, 2013 letter from Elefante & Persanis, LLP (click here) : 

• Staff reduction (Assistant Super) will save RTA $73,000 / year.
• Stated plan to sell or rent apartment 2H, Mitch Hagen's old apartment, for $300,000 to $400,000 or $2000/month, respectively.

    5.  June 11, 2013 letter from the board, page 3 (click here) :      

• Capital costs to be in excess of $1 million.
• Stated plan to pay for project outdated, i.e. apartment 2H, Mitch Hagen's old apartment, has not been sold. 
• The board states considering refinancing of the current mortgage with a much lower interest rate.

    6.  July 3, 2013, letter from Garthchester (click here) : 

• NYC co-op abatements, assessment will be imposed equivalent to the abatement for future capital improvements. Consistent with what board has done in the past. This will appear on the Aug. 2013 maintenance bill.

     7. March 4, 2014, letter from Marshall Kanter, Garthchester (click here) : 

• Letter regarding inaccurate information regarding the actual state of the Local Law 11 project.

 Capital projects (and violations):

• Local Law 11 – This work comes every 5 years, so the board knew that this was coming for the last 5 years.
• NYC Department of Buildings, Overview for complaint #2191251 10/23/2013 (click here)
• NYC Department of Buildings, ECB Violation #35032709L 10/23/2013 (click here)
• NYC Department of Buildings, Sidewalk shed application/permit/layout Job #240032059 08/01/2013 (click here)
• Energy conversion - The board knew about this for at least 2 years.

  Finances (an estimation based on the above referenced documents as of Oct. 2013):

• At the end of 2012 our reserve fund had $405,000 [Annual Report 2012, page 2a (click here) ].
• Payment to Mitch Hagen reduced the reserve fund by approx. $110,000 [stated at the June shareholders meeting].  That leaves $295,000 in the reserve fund.
• Addition of tax abatement, $84,917 [Annual Report 2012. Average taken of $83,917 on page 2a and $85,917 on page 3.  (Why are the two different numbers?) (click here) ]. This brings the reserve fund to  $379,917.
• Addition of $96,000 capital assessment payments [Stated in letter from board, Nov., 20 2012 (click here) ]. That brings the reserve fund to  $475,917 (as of Dec. 2013).
• Addition of $24,000 transfer from operating account to reserve fund [stated in letter from board, Nov., 20 2012 (click here) ]. That brings the reserve fund to  $499,917 (as of Dec. 2013).
• This is not enough to cover $1.2 million of projects. We seem to be about $700,000 to $800,000 short.

[back to top]

----> Document created by a group of concerned shareholders <----