One Hanson Board Jacks Common Charges 17 Percent

Without looking at the operating plan, all of this is speculation, but I'm not entirely surprised. (Though it seems rather underhanded on the part of the developer.)

Most large apartment buildings have both service contracts on systems and resident managers. These are good things and usually save building money. The buyers probably saw "live-in super" on their amenities list, and assumed that was already taken care of. The operating plan would have indicated whether the super's apartment was already accounted for--and it should have been! Paying for it out of maintenance after the fact is sleazy and just a way for the developer to rake in more bucks. Also, if not previously accounted for, it seems like a bit of the old bait and switch. The cost of service contracts is fairly minimal, in the larger scheme of things, but again, if the developer was being above board about estimated costs, it would have been included from the start.

Finally, regarding the lack of condo owners on the board of managers, again, look at the operating plan: it's quite common for the first year or so--or until 50% of units are sold--for the board of managers to be sponsor controlled. All I can say about that is that condo owners should start thinking about how they need to step up to the plate.

Posted by: Minmin at January 29, 2009 9:44 AM

Ooh! Assessments are rarely "random." Coops and condos have operating budgets that should break even every year. Given the fact that at least in recent years, some costs increase every year, it's likely--and actually optimal--that the maintenance costs will increase every year to keep pace with the increased costs. The trick is to hold the cost increases in line, and to keep unit owners/shareholders apprised of increases when they are necessary. So I have no beef with that.

My beef is that I get the sense that the sponsor knew in advance that these costs would be handled that way. Would buyers have come to 1 Hanson Place when they did if the maint was 17% higher than it was when they bought? Maybe.

Jawbreaker's right...as cool as 1 Hanson Place is, the facade law alone (sorry, forget the number) will be expensive for unit owners. The facade has to be checked and certified every six years or so, and believe me, the cost to mobilize scaffolding is NOT cheap!

Posted by: Minmin at January 29, 2009 10:07 AM

tybur6...agreed. Operating costs should be for operating expenses. There should be a plan for capital expenses. Possibly your friend's coop's are resisting getting or increasing an underlying mortgage?

Total bait and switch at Hansen place.

Posted by: Minmin at January 29, 2009 10:27 AM

This year the average increase in coop budgets was on the order of 4%, which seems about right if we look at how prices were this past year. Unfortunately, a lot of coops think it's better NOT to increase maintenance costs, which only makes sense if operating costs also have not increased. THen when the shortfall becomes apparent, the increase is higher than is comfortable.

I would be very wary of projected costs for ANY new conversion/construction, since they only have to project for the first year. THe documents are huge, but if you are someone interested in buying in, really try to consider WHAT might have been left out of this initial budget.

Posted by: Minmin at January 29, 2009 10:40 AM