Q In a previous issue of The Cooperator, attorney C. Jaye Berger discusses the matter of allocation of costs by shares for services such as electricity and water, as opposed to person adjusted usage. I do not take issue with her comments, but would like to raise a related issue, one in which the discrepancy is not random, but based on board policy.

In earlier years, before I became a member of the co-op, some shareholders were allowed to install washers and dryers. Presently, this is prohibited (at least as to washers) because the drainage system can not accommodate the flow. (An exception is made, if two units are combined and one kitchen is removed.)

Although I do not challenge the board’s position, I can’t help but wonder if it isn’t unfair to the shareholders who cannot install washers and dryers to share in the extra costs of utilities for those who have this benefit. (In our co-op, this is only water, as we are submetered for electricity.) I admit, the amounts might be small, but there is the issue of fairness. I draw a comparison to the co-op that my parents joined in the 1950’s. Those who elected to install (window) air conditioners at that time were charged an additional maintenance for the extra electric

—Concerned Shareholder

A “In a cooperative housing corporation, all of the shareholders share in the expenses of the cooperative,” says attorney Andrew P. Brucker, with the Manhattan-based law firm of Schechter & Brucker, PC. “Every owner pays their pro-rata portion of the expenses of the cooperative, and this is calculated by determining what percentage of all shares outstanding is owned by each shareholder. The exact determination of maintenance is determinate by preparing a budget prior to the start of each fiscal year. The amount of the anticipated expenses for the next year is then used to calculate how much each shareholder must contribute each month towards these expenses. This contribution is the maintenance paid by the shareholder.

“Many cooperatives also charge extra fees to shareholders. For example, if the cooperative has a parking garage or parking lot, it is common for the cooperative to charge a parking fee. Likewise, if there is a storage room in the basement, it is common for a cooperative to charge the shareholder using the storage facility. Further, it is not unusual for the cooperative to charge a shareholder that has installed a window mounted air-conditioner a fee for the summer months.

“However, charging of such fees and the amount of such fees are totally in the discretion of the board. The ‘business judgment’ rule gives the board wide discretion on corporation matters, and the courts will not interfere with the decision of the board unless it can be shown that the decision was made in bad faith.

“In the inquiry the question is raised as to whether is it ‘unfair’ that shareholders who install washers and dryers do not share in the extra costs of electricity and water paid by the cooperative. Unfortunately, fairness is not always a concept used in cooperative governance. And what is ‘fair’ anyway? We were once told by a shareholder that he should not pay an assessment for a new elevator because he lived on the first floor and never uses the elevator. He claimed it was not fair.

“If the cooperative has a long standing policy of not charging extra to those shareholders, and if the amount that might be charged is de minimis, and if a ‘fair’ amount is not easily ascertainable, then the board may have a very, very strong case when it decides not to surcharge those shareholders with washers and dryers, and it would seem likely that such a decision would withstand any challenge.”