Good news!

 

At the time of the December 12^th maintenance letter the Co-op was faced with a property tax increase that the Board thought was unreasonable.  We appealed the assessment vigorously and recently received the welcome news that the city had agreed to a change that reduces our property taxes for 2012 by almost $210,000.

 

This enables the board to reduce the previously announced maintenance increase by three cents per share.  The net result is that the maintenance increase for the balance of 2012 will be 3.31% instead of the previously announced 4.49%.  Thus for the rest of 2012 the monthly maintenance per share will be $3.44 instead of $3.47.

 

Rather than incur the expense to calculate and credit a rebate of the excess collected in January, we are incorporating that into the remaining eleven months of 2012.

December 12, 2011

Dear Fellow Shareholders:

             

The Board, supported by its accountant and management staff, has recently completed its financial projections for year-end 2011 and has adopted an operating budget for 2012.

 

We are pleased to report that 205 West End will finish this year with a small operating deficit of about 0.7%.  Thanks to conservative financial management and some luck, we have finished another year in good shape.

 

While the 2011 year saw no major capital projects, it saw two key steps in preparation for the future.  First of all, in 2011 we refinanced the Co-op’s underlying mortgage, securing a 4.2% interest rate for the next ten years and reducing the building’s monthly interest expense while at the same time providing an infusion of capital for necessary projects.  In addition, we started preparing to modernize the building’s fifty-year-old elevator system, a project that we expect to implement in 2012.

 

Variances between budgets and projected year-end actual expenditures

 

As you know, most of the cooperative’s expenses are not easily controlled by the board.  Labor costs are set by union contracts, insurance rates are dictated by carriers, energy prices by the market, and taxes by the city.  That said, we make every effort to control other costs.  While 2011 final numbers still have to be confirmed, and will be audited by our accountant and reviewed by you at the time of our annual shareholders’ meeting in the spring, here is how 2011 looks:

 

Real Estate Taxes, budgeted for 2011 at $3,885,900, are projected to end the year 2.74% over budget at $3,992,300.  In 2012 we expect to pay real estate taxes of $4,529,300, an increase of 16.56%.  This is the fourth year in a row that our maintenance increase has been dominated by the increase in property tax.

 

Energy (electric, steam, and cogen gas), were budgeted at a combined cost of $1,470,000 for 2011.  While final bills are still to be presented, the projected energy expenditures in these categories are forecast to be approximately $1,470,400, almost exactly what we budgeted.  Our projections for next year are for an aggregate cost of $1,507,900, assuming approximately flat consumption as well as little price inflation due to the depressed economy.  These expenses are paid through the Condo and we, the Co-op, are responsible for only about 90% of them, while the garage and the professional units pick up the rest.  As we have noted in our last four annual reports, the 2012 budget continues to reflect the savings from producing a significant portion of our electricity and steam needs from our cogeneration plant.

 

Note:  Although we have submetered the co-operative, the budget for the condominium must reflect the entire electrical payments to our suppliers so that our bills get budgeted, paid, and booked properly.  Due to submetering, only about 35% of the building’s electrical consumption (that which services the common areas) is applied to our maintenance calculations.  The remaining 65% of our electrical usage is paid directly by tenants and shareholders according to measured consumption, and does not affect maintenance charges.

 

Insurance costs for 2011 were budgeted at $206,900.  We are budgeting a 3.48% decrease for 2012 at $199,700.  Note that the 2011 forecast of $194,700 is well below the 2011 budget.

 

LTCA Dues will be increased relative to 2011 actual payments of $597,100 to $625,900, an increase of 4.82%.

             

Staff Payroll - wages, benefits, workers compensation, and disability insurance – will be going from $1,258,300 in 2011 to $1,314,000 in 2012, a 4.4% increase mandated by our union contractual obligations.

 

Maintenance and Repairs remain within reasonable expectations.  Our anticipated expenditures in 2011, budgeted at $506,000 will be coming in at $641,600, a substantial overrun driven by a number of extraordinary items this year, including the backflow preventer valves that we were required to install.  Based on recommendations from our Resident Manager and AKAM, we are budgeting $494,000, a decrease of 2.4%, for 2012.  One reason that we are able to reduce this item for 2012 is that the elevator modernization project supersedes the regular maintenance for the elevators.  Since it’s virtually impossible to separate the ongoing maintenance from the major project work, we eliminate the regular maintenance from the operating budget and include it in the project budget during the time that the work is under way.

 

Water and Sewer was budgeted at $352,300 for 2011 and is budgeted at $341,700, for 2012, a slight reduction of 3%.  This is because in 2011 management discovered a substantial systematic error by the city and got it corrected.  This resulted in a substantial one-time reduction for 2011, now forecast at $317,900.  Our 2012 budget is much higher than the 2011 forecast, reflecting the fact that the city is again raising water rates in 2012.

 

Mortgage Interest and Amortization In 2011 we refinanced the Co-op’s underlying mortgage, locking in an interest rate of 4.2% for the next ten years.  This reduces our overall principal and interest expenditure by about 13.5%.  The magnitude of this saving helps to partially mitigate the substantial increase in property taxes expected in 2012.

 

In summary: For 2012, shareholders can expect a 4.49 % maintenance increase (for a total of $3.47 per share per month).

 

Along with all other New York City cooperatives, given the increases in real estate tax, labor, utilities, and other costs, we are facing a maintenance increase for the year beginning January 1, 2012.  As in previous years, we will be recouping some of the increased operating costs by holding back the NYC real estate tax rebate due most shareholders in the first quarter of 2012.  You will see a credit/debit journal entry on your March statement.  From an accounting standpoint this is treated as an operating assessment, and will allow us to hold the maintenance increase to 4.49%.

 

From the start, we have tried to be both prudent in our expenditures and, whenever possible, to make full use of opportunities that would contribute to our building’s overall financial health.  This includes lowering costs whenever possible.  205 West End Avenue remains one of the most financially competitive buildings in the Lincoln Towers complex, measured by maintenance increases, maintenance per share, general balance sheet, and capital improvement measures.

 

We appreciate your confidence and ongoing feedback and the entire Board joins me in wishing you and your families a very good holiday season and a happy, healthy New Year.

 

Sincerely,

 

 

 

 

 

Marc Donner, President

Save the date!  Shareholder Information Meeting

11 October 2011 7PM in the Community Room

On Tuesday 11 October 2011 we will conduct one of our periodic Shareholder Information meetings down in the Community Room.  The meeting will commence at 7PM and is booked for an hour.  Board members will present updates on various topics of interest to shareholders and we will, as usual, conclude the meeting with Q&A.

 

New Taxi Light

You have probably noticed that we have installed new Taxi lights.  One is mounted at the western end of the marquee over the front of the building.  The other is mounted on a pole at the western end of the driveway.  Both display the flashing illuminated word “TAXI.”  The person on the door will turn the light on at your request, so please feel free to ask for it when you need a cab.

 

By the way, one of the options that we have included in the elevator renovation RFP is the inclusion of a Taxi button in the elevator so that you can turn on the Taxi light yourself as you descend in the elevator.  This is a feature that you have asked for over the years and that we will provide, if the cost is acceptable.

 

Painting Apartment Doors

In view of the accumulated wear and tear, the Board has decided to have the apartment doors repainted.  The building has contracted with an excellent contractor and the painting will commence in October.  Watch for communications from management about the schedule for your particular floor.

Elevator Interior Committee – Call for Volunteers

As we have forecast in a number of recent communications to the community, 205 is preparing to renovate the elevators.  We have asked an elevator consultant to prepare a draft for a request for proposals (RFP) that will be sent to major contractors for bids.

The largest part of work that must be done will be invisible to most of us.  Some involves modernizing the control systems and will produce improvements in reliability, performance, and efficiency.  The bulk of the remainder involves updating various components to bring them into compliance with current Federal and State safety and accessibility regulations.

Because some of the required upgrades affect the doors and operation of the cabs, and because the control panels will be replaced as part of the electronic system upgrade, we have budgeted for a refit of the interior of the cabs.

Today, we are organizing a committee of volunteer shareholders to work with the subcontractor who will be working on the cab refresh to evaluate options for wall, ceiling, and floor surfaces, lighting choices, and finish choices for the control panels.  If you would like to contribute some of your time to this effort by joining this committee, please send an email including a summary of your specific interests, qualifications, and relevant experience, to directors@205westend.com.

Abandoned Bicycles

There are a significant number of unlabeled bicycles in the bike room.  We believe that some of these bicycles do not belong there.  The management office will soon be attaching warning tags to the unidentified bicycles.  After the warning tags have been in place for a decent interval, we will remove any remaining interlopers and dispose of them.

Please make sure that any bicycle that you have placed in the bike room is assigned to a slot that you rent and that it is properly labeled.  The management office can answer all questions you have about slots you are renting and where to find them.

Verizon FIOS installation

As we discussed at the annual shareholder meeting on May 12, Verizon has opted to exercise their statutory right to install FIOS in our building.  Our managing agent has worked with them to ensure that their work meets all of our safety and security requirements and that Verizon will be responsible to rectify any damage done during the installation process.

We are told that the work will begin within a week and that Verizon will begin offering FIOS service in the building sometime this summer.

RCN contract

As also discussed in the annual shareholder meeting, our current RCN contract expires in 2012.  The contract requires that the co-op do two things to qualify residents for a discounted rate.  The first is that we guarantee a minimum number of customers to RCN.  And the second is that we collect the fees for basic cable service from RCN customers through the monthly maintenance bill.

We do not believe, in the presence of aggressive competition from Time Warner and Verizon, that we can reasonably guarantee RCN the number of subscribers that they require.  In addition, the discount is not worth the cost that the co-op has incurred from managing the billings.  As a result the board has decided not to pursue renewal of the contract.

RCN fees increase

We have been informed by RCN in a letter dated May 6th that the monthly rate for those residents receiving basic cable from RCN will be increasing from the current total $34.63 to a new total of $36.92, inclusive of taxes and fees.  This is a 6.6% increase and will take effect in the June maintenance bill for affected shareholders.

Taxi Light

We have installed a new taxi light at the western corner of the front canopy.  We are monitoring it for effectiveness.  When you need a cab please feel free to ask the front desk to turn it on for you.

Shareholder meeting question

At the shareholder information meeting on January 10^th a number of shareholders argued passionately that the Board should change our policy and allow entry to the building via the rear parking lot at the east corner of the property.  After listening to these arguments the board agreed to investigate the practical issues involved in permitting such access and report back to the community.

Since the meeting the managing agent, under the board’s direction, has conducted a thorough investigation of this concept, including holding meetings with LTCA Security and with representatives of our neighboring building as well as soliciting design proposals and construction bids from specialist firms that might implement specific security improvements recommended to enable access to the building by this particular back door.

Safety and Security issues

There are two problems associated with permitting access via this back door – safety and security.  After a discussion with LTCA Security we concluded that it would probably be possible to address the security concerns by constructing an automatic gate across the driveway to the east parking lot.  In order for the gate to be effective it would have to extend across 185’s lawn all the way to their exterior wall, something to which they might well not agree, given the unsightliness of the proposed gate.

Beyond the security challenges, however, the pathway from the gate to the back door is not easily observed by existing security and safety staff and has an inclined section that is expected to be hazardous in bad weather.  Rendering this section adequately safe would require an increase in the building’s staffing level, something that is not justified by the small increase in convenience for the residents who might choose to use it.

As a consequence the board has decided that because the cost is too high, the risk is too high, and the benefit is too low, we will not pursue the proposal further.  Entrance and exit via the rear door to the east parking lot remains forbidden.  We know that a number of residents commonly ignore the ban and exit via the parking lot door and we are considering increasing enforcement of the ban.

Election of Board Members

All seven current directors are seeking new terms. Shareholders are encouraged to submit their nominees to run for a board position.

Job Description

The board manages and supervises the finances and activities of the Cooperative. In doing so, it has focused on reducing our costs without sacrificing service and on protecting and enhancing shareholder value.

The Board usually meets on the first Monday of each month to address matters that require immediate attention as well as longer-term strategic issues.  Individual board members also work with shareholder committees (Community Room, Energy, Interview, Gym, and Landscaping), liaison with LTCA, supervise ongoing activities, and take on projects.

On average, members devote about 12 hours a month, plus the regular monthly meeting.

Who Should Serve?

Current directors have backgrounds in general management, law, technology, finance, engineering, and communications.  Having these or other equally relevant and complementary skills is important, as is the ability to work together collegially as a team.

Availability is important.  Issues can and do evolve that must to be resolved promptly.  Having the time for and commitment to Board responsibilities is necessary.

The board should be representative of the community.  Commitment to the welfare of 205 West End and its residents is essential.

What are the rewards of board membership?

Board members play an important role in the management of what is, for each shareholder, one of the most important assets. They also take a leadership role in a community of nearly 1000 people, who rely on us for thorough attention to issues and prudent judgment.

To put your name before the shareholders:

Submit a single page that includes a brief biography plus a statement describing what motivates you to join and what you can contribute.  Include a photograph.  It will be included with proxy materials.  Bring your page to the management office or email it to management@205westend.com by April 22^nd.

As you know, a couple of years ago a water main break on 70^th Street opposite the western entrance to our driveway undermined the paving of both the street and our driveway.  Last year New York City repaired the damaged pavement along 70^th Street.  This year is the driveway’s turn.  After careful study, the board has authorized a driveway restoration project that will start about the beginning of April.

The work will last about three or four weeks, during which time the driveway will be inaccessible.  The building will, at its expense, relocate all of the cars with outside spots to the garage for the duration of the project, as was done the last time the driveway was redone about a decade ago.

Pedestrian access to the building will not be interrupted.  Deliveries and other vehicular transactions will be redirected to the East parking lot for the duration of the construction.

Section 4 of the House rules reads, in part:

 

“An appointment must be scheduled at least one week in advance with the Management Office for any move-in, or move-out or with the superintendent for delivery of a piece (or pieces) of large furniture. This is necessary since our building has only one elevator car designated for these purposes on each side of the building.”

Recently it has come to the board’s attention that some residents have become careless in their planning of deliveries.  A small but increasing minority of residents has provided inadequate notice of major deliveries, sometimes as little as 30 minutes.  While the staff attempts to be accommodating, this practice is disruptive and creates extraordinary costs that are borne by the entire Co-op.

In future management will reject major deliveries proposed without adequate notice.  Please be considerate to your fellow residents and to our staff and notify the management office or the resident superintendant at least 24 to 48 hours before a major delivery.

Questions about the “clear hallways” policy

At the recent information meeting in the Community Room on January 10^th several participants raised the issue of the building’s enforcement of the “clear hallways” policy.

Several said that during inclement weather the building should accommodate residents who wish to leave wet umbrellas or boots or even strollers with muddy wheels out in the hallways to dry, arguing that the current prohibition in the House Rules was unreasonable in its preference of the cleanliness of the hallways over the cleanliness of the apartments.

House rule 5J (House Rules) states:

“Halls and stairways must be kept free of obstruction.  Articles such as the following:  bicycles, baby carriages, tricycles, shopping carts, packaging cases, open umbrellas, refuse, doormats, shoes etc. may not be left in the hallways.”

There was considerable confusion at the meeting about the purpose of this rule.  This rule is based on government safety regulations.  The purpose is to ensure that in case of fire or other crisis requiring evacuation that the route between your apartment door and the emergency stairways is never blocked by obstacles that might prevent you from making a speedy and safe exit.

This is a safety rule, not a hygiene rule.  Please keep the hallways clear.  Building staff will remove objects left in the hallways.  If you see objects left in the hallways please call the front desk immediately.  Please also notify the management office (managingagent@205westend.com).

December 7, 2010

Dear Fellow Shareholders:     

The Board, supported by its accountant and management staff, has recently completed its financial projections for year-end 2010 and has adopted an operating budget for 2011.

We are pleased to report that 205 West End will finish this year with a small operating surplus.  Thanks to conservative financial management and some luck, we have finished another year in good shape.

The 2010 year provided a breathing space from major capital projects in the building.  We did implement three minor capital projects: the new proximity fob access control system that we deployed in the fall that now enhances security for residents, the refurbishment of the community room, and the redesign of the landscaping under the front canopy.  None of these projects required any extraordinary funding.

The board is now considering its next five-year capital plan and investigating funding options.

Variances between budgets and projected year-end actual expenditures

As you know, the board does not control most of the cooperative’s expenses.  Labor costs are set by union contracts, insurance rates are dictated by carriers, energy prices by the market, and taxes by the city.  That said, we make every effort to control other costs.  While 2010 final numbers still have to be confirmed, and will be audited by our accountant and reviewed by you at the time of our annual shareholders’ meeting in the spring, here is how 2011 looks:

Real Estate Taxes, budgeted for 2010 at $3,765,200, are projected to end the year 2.9% under budget at $3,654,500.  In 2011 we expect to pay real estate taxes of $3,885,900, an increase of 3.2% over the 2010 budget.

Energy (electric, steam, and cogen gas), were budgeted at a combined cost of $1,420,000 for 2010.  While final bills are still to be presented, the projected energy expenditures in these categories are forecast to be approximately $1,398,900.  Our projections for next year are for an aggregate cost of $1,470,000 an increase of 3.5%, assuming approximately level consumption as well as flat prices due to the depressed economy.

Note:  Although we have submetered the co-operative, the budget for the condominium reflects the total electrical expenditure so that our bills get budgeted, paid, and booked properly.  Due to submetering, only about 35% of the building’s electrical consumption, that which serves the common areas, is applied to our maintenance calculations.  The remaining 65% of our electrical usage is paid directly by tenants and shareholders according to measured consumption, and does not affect maintenance charges.

Insurance costs for 2010 were budgeted at $216,800, and will end this year at $202,800.  For 2011, we are forecasting a decrease of about 4.6% and are budgeting $206,900.

LTCA Dues will increase from the 2010 budget of $569,700 to $597,000, an increase of 4.8%.

Staff Payroll - wages, benefits, workers compensation, and disability insurance – will be going from a budgeted $1,142,200 in 2010 to $1,258,300 in 2011, an increase of 10.2% mandated by our union contractual obligations.

Maintenance and Repairs remain within reasonable expectations.  Our expenditures in 2010 are coming in at about $510,000, somewhat over our 2010 budget of $489,000.  Our experts, the Resident Manager and AKAM recommend that we budget a 3.5% increase, to $506,000 for 2011.

Water and Sewer will be increasing 5% from a 2010 budget of $335,500 to a 2011 budgeted number of $352,300 representing our expectations that the city will hike rates again.  The city has been ramping up these charges for the last several years and we expect that trend to continue in 2011.

Mortgage Interest and Amortization on our primary and secondary mortgages will remain constant from 2010 to 2011 at a combined $1,308,700.  Our current mortgages will have to be refinanced by July of 2012.  Because rates are extraordinarily low right now we are evaluating our refinancing options, which might result in a favorable change in 2011.

As in previous years, we will be recouping some of the increased operating costs by holding back the NYC real estate tax rebate due most shareholders in the first quarter of 2011.  You will see a credit/debit journal entry on your March statement.  From an accounting standpoint this is treated as an operating assessment, and will allow us to reduce the maintenance increase.

Along with all other New York City cooperatives, given the increases in NYC real estate tax, labor, utilities, and other costs, we are facing a maintenance increase for the year beginning January 1, 2011. 

Accordingly: For 2011, shareholders can expect a 2.78% maintenance increase, to a total of $3.32 per share per month.

From the start, we have tried to be both prudent in our expenditures and, whenever possible, to make full use of opportunities that would contribute to our building’s overall financial health.  This includes lowering costs whenever possible.  205 West End Avenue remains one of the most financially competitive buildings in the Lincoln Towers complex, measured by maintenance increases, maintenance per share, general balance sheet, and capital improvement measures.

We appreciate your confidence and ongoing feedback and the entire Board joins me in wishing you and your families a very good holiday season and a happy, healthy New Year.