The Cooperator recently hosted the first of what is hoped to be an ongoing series of casual, roundtable-style forums in which co-op and condo presidents from all five boroughs met to discuss issues and concerns of particular interest to shareholders and unit owners. The brainchild of the Federation of New York Housing Cooperatives and Condominiums (FNYHC) and The Cooperator, the roundtable idea was pitched to a cross-section of building presidents ranging in size from fewer than a dozen units to multi-unit high-rise complexes. They were invited to sit down with their colleagues to share experiences, air concerns, trade ideas, and even vent a little.

The discussion forum, according to moderator Albert Pennisi, the FNYHC president, who is also a Manhattan-based real estate attorney, was an attempt to gain a better understanding and "a sense of the issues and challenges facing co-op and condo boards throughout the city and in Nassau and Westchester counties."

Panelists included Albert Wolfson, president of The Tiffany at Westbury, a community of senior citizens in Nassau County and the only condominium represented at the roundtable; Jim Quinn, president of the North Shore Towers, a six-building luxury co-op complex consisting of 1,844 units in Queens; Jerry Reiser, president of Nostrand Gardens, a 350-unit co-op in Brooklyn; Andrea Hirshman, president of 30 Ocean Parkway, a recently-converted 70-unit building in Brooklyn, and Jordi Reyes-Montblanc, president of the Housing Development Fund Council (HDFC) and a low-income cooperative housing development in the Hamilton Heights section of Upper Manhattan.

One issue of importance, which all the presidents were in agreement, is the rising insurance costs affecting their board's bottom lines.

Pennisi noted that the insurance industry is still reeling from the effects of September 11th and the ramifications of terrorism, payouts from mold, and other types of litigation, and these higher premiums are subsequently being passed down to the customer. In some cases, buildings have had their policies cancelled altogether, he said. The presidents were asked what actions their boards have taken to minimize their liability, maximize their coverage, and at the same time, keep costs down.

In the brave new post 9/11 world, some buildings with higher risk or liability saw their rates immediately skyrocket, while others suffered moderate increases.

Wolfson reported that he'd seen his building's total coverage increase from $21,702 to $32,000 in just the past year, with reductions in umbrella coverage by nearly two-thirds and the outright exclusion of mold coverage.

"Needless to say, it was quite a rude awakening," echoed Quinn, a financial consultant, who's been on his board a little less than a year. The building's annual insurance bill of $430,000 quadrupled to $1.6 million - for what was essentially, less substantial coverage. The six-story resort complex, which houses a country club with an 18-hole golf course, arcade, grocery, dry cleaner and other amenities, unfortunately was deemed a higher risk because it is situated in direct flight path to John F. Kennedy Airport, explained Quinn. Also attributed to rising rates is recent federal legislation that requires that terrorism insurance is offered to all commercial buildings and residential multi-family dwellings.

Reiser added that his building's premium increased approximately 214 percent and that only one insurer would agree to cover them. Hirshman said her 70-unit building saw its coverage jump from $39,000 to $46,000 in the past year, which in comparison to other buildings was not too unreasonable, she believes.

Quinn suggested that perhaps cooperatives as a group, and maybe in concert with the FNYHC, can form a bloc or a separate risk pool to gain enough leverage to buy insurance in bulk and reduce their individual premiums. "We really should band together and have strength in numbers."

Financial issues and the city's property tax increase also sparked intense conversation. Participants reviewed how they plan to deal with imminent maintenance increases, special assessments, and the best ways to fund new capital improvements. In January, Mayor Michael R. Bloomberg enacted an 18.5 percent property tax hike to help the city offset what officials estimate may be a $6.4 billion budget deficit by 2004. Board presidents worried that additional tax increases might be on the horizon.

Wolfson said his condo was lucky that they haven't yet had to increase their common charges. Quinn and the others also said that they hadn't raised maintenance fees at their buildings in years. But now they are facing increases of anywhere from six percent to upwards of 15 percent.

"We had this backdrop now that there have been no maintenance increases for 10 years," said Quinn. "But our labor went up five percent, our power and natural gas went up 12 percent, our water and sewer went up six percent, repairs and maintenance went up three percent. So everywhere expenses went up. Everything came into one year. But our saving grace was an underlying mortgage. If we did not have an underlying mortgage to refinance and deal with, we would have had an assessment of 20 percent maintenance. As it turns out we put into place a six percent maintenance increase," said Quinn.

Reiser said his building increased maintenance five percent a year ago amid great public outcry that led to the resignation of the board's president.

"We have cut down on expenses. We needed to manage our expenditures, our vendors. New vendors have been brought in at lower compensation rates. But we know this real estate tax is the kicker. It's going to cost us another five percent right off the bat."

And to top it off, the budget problems still remain and a potential 10 percent across-the-board increase might be needed, Reiser explained.

"We're talking about a 15 percent shortfall. We're able to cut expenses by about $100- to $150,000. We're considering refinancing, and what we've been attempting to do is to cut expenses.

"But we have a group of people who refuse to believe that these are expenses. They refuse to believe that the 18-and-a-half percent is really 18-and-a-half percent. We're having a really, difficult time convincing some of our residents that these are real expenses that have to be met with real income," stated Reiser.

Hirshman told a similar story. She noted that part of their problem reverted back to poor work done by a contractor, and because of that repair work they may need to raise maintenance fees an average of about 10 percent. The building, she added, needs new elevators and water is leaking in the parapet wall, which will require additional repairs. The general consensus was that increases were inevitable, whether they related to the mayor's property taxes, or a special assessment for a capital improvement project. Hirshman told her colleagues that nominal annual maintenance increases might be prudent because a reserve could be built up to account for when emergencies occur and expenses are higher than normal.

Future roundtable meetings are envisioned with board presidents, property managers and other real estate professionals to discuss environmental concerns such as smoking and mold, building security, and issues dealing with assisted living and aging in place. If you are interested in participating in The Cooperator's next roundtable, contact Hannah Fons or Diane Frost at 212-683-5700.