Point of view: 'Co-ops never run out of money'

By Stephen J. Budihas

A wise co-op board president once offered that response when I voiced my concern about paying certain charges that were in excess of planned funding. We know that, in essence, there is truth to the statement. Co-op boards always have the authority to raise maintenance fees, assess residents or introduce new charges. But in reality, shouldn’t there be a reasonable end somewhere?

The mayor thinks not. He and those city officials responsible for levying taxes, assessing charges and making demands on co-op owners seem to believe that they are indeed an endless source of income for the city.

• In the past few years we have seen multiple double-digit water and sewage tax increases. The word on the street is that we should prepare for another equally arbitrary and excessive increase this year and perhaps in the coming years, as well.
• The real estate taxes on our cooperative properties continue to be appraised, in part, by using the market value of apartments still occupied by rent-stabilized tenants (who pay far less than the market rate). This puts an unfair burden on co-op owners in the building who must therefore pay higher taxes than if actual rental figures were used.
• Recently the mayor added to his campaign to “green” the city by citing the findings of a report from the Environmental Defense Fund that noted that the sulfur-rich fuel (no. 6) that is used to heat most of our homes introduces too much pollution for the atmosphere and therefore we must stop using it. Certainly we are strongly in favor of reduced fossil-fuel emissions and a cleaner environment. Who would not be! But, current discussions at the city lawmakers’ level suggest that we must convert our home heating systems within a very short period of time, and begin using cleaner fuel. Based on the newness and condition of apparatus currently being used, the time frame may be months in some cases and as many as just a few years in others. “Convert” means removing existing fuel tanks, burners and associated apparatus (all properly installed into our homes years ago, according to the then current guidelines) and install brand new equipment that is capable of burning cleaner (no. 2) fuel oil. Again, we are in favor of this changeover – even though no. 2 fuel oil is more expensive, we may possibly reap some tangible benefit in the long run via increased operational efficiency. At the minimum, conversion will cost all residential buildings around $100,000 to complete. No. 2 fuel oil runs around 30-50 percent more per gallon than the fuel currently in use by our buildings. This, combined with the capital costs involved, means that buildings like my own, an average size d Riverdale co-op, can be hit with a 15 percent increase in cost within the next year or so. So, what to do? Raise the maintenance? Assess our residents? Of course, when we must.

What is missing from the exploding scenario of costs and charges being meted out by the city fathers is that there is indeed a cap to what we can afford. Many of Riverdale’s residents moved here during the decades when they were working and enjoying the rewards of successful careers. They now exist on pensions and other fixed income. The resurgence of young families who have recently chosen to move to Riverdale to enjoy its amenities and raise their families are in the midst of developing their lives and should not be burdened by unfair and inequitable charges, either.

The city needs to take a look at the spiraling costs of living that are been handed down to the residents of our community.

• There needs to be some limit on the cascading water and sewage tax debacle. Creative sources for the city’s income other than co-op owners need to be developed.
• Our properties need to be assessed at their true incomeproducing level, and not on what an appraiser might arbitrarily think ought to be a fair market value.
• And finally, it is urgent that the city considers the conversion from no. 6 fuel oil with respect to all of its unspoken ramifications.

The timeline for compliance needs to be examined and extended as necessary, after consultation with building managers, co-op presidents and indeed, even the (too few) contractors who may be available to do the work.

If it is mandated that we all switch to something new, then some consideration must be paid to easing the financial burden the changes will cause. Tax considerations, rebates, etc., for compliance also need to be included in the mayor’s plan. We have a long history of government providing appropriate incentives for improvements to our real property and this case should be no exception. Since the use of no. 2 fuel is the new mandate, then there needs to be some honest attention paid to the perpetual increase in fuel costs that we all will incur.

Our elected officials need to be spoken to on these issues and they need to listen. Our voices and the preservation of our chosen way of life need to be respected. Contrary to some prevailing thought, each of us can and may run out of money if costs continue to escalate without due consideration of the burden being placed on our residents.

Stephen J. Budihas is the president of the Association of Riverdale Cooperatives and Condominiums.

This is part of the February 4, 2010 online edition of The Riverdale Press.

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