posted Dec 4, 2014, 8:02 PM by Marc Donner
updated Dec 5, 2014, 2:14 PM
Board, supported by its accountant and management staff, has recently completed
its financial projections for year-end 2014 and has adopted an operating budget
pleased to report that 205 West End will finish this year with a small
operating surplus. Thanks to conservative financial management and
diligence, we have completed another year in good shape.
year we conducted a major capital project, the replacement of the roof.
This work started in the summer and will be completed early next spring.
budgeting for 2015 was complicated because our cogeneration equipment, which
produces electricity and steam and saves us over $100,000 annually in energy
costs, broke down earlier this year.
After receiving engineering advice, the board decided that it would be
better to explore replacing the aged equipment rather than invest in extensive
repairs. The board has received proposals for replacements, but these
will not enter service until sometime after the middle of 2015 in the best
case, so we simplified 2015 planning by assuming no cogen at all.
between budgets and projected year-end actual expenditures:
always, many of the cooperative’s expenses are not under the board’s direct
control. 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 2014
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 2014 looks:
Estate Taxes, budgeted for 2014 at a revised $ 4,654,400, are projected to end
the year at $ 4,597,300, 1.2 % under budget. In 2015 we expect to pay
real estate taxes of about $ 4,976,400, an increase of 6.9 % over last year’s
budget, and the major driver of this year’s maintenance increase.
(electric, steam, and cogen gas) was budgeted at a combined cost of $ 1,419,600
for 2014. While final bills are still to be presented, the projected energy
expenditures in these categories are forecast to be approximately $ 1,493,300,
about 5.2 % above budget. This reflects a transfer of spending from cogen
gas to directly purchased electricity. Our projections for next year are
for an aggregate spend of $ 1,394,400, assuming limited price inflation due to
the depressed economy and falling energy prices. This is a decrease of 1.8
% from last year’s budget. This is hard to compare with our 2013 results
and 2014 budget because of the absence of the cogen from our 2015 assumptions.
Although we have submetered the Cooperative, 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
costs: We are budgeting a 15.4 % increase for 2015 at $ 265,300.
Dues will increase relative to 2014 budget of $ 635,400 to $ 649,100, an
increase of about 2.2 %.
Payroll - wages, benefits, workers compensation, and disability insurance –
will be going from $ 1,349,500 in 2014 to $ 1,398,500 in 2015, an increase of
3.6 %. The bulk of this increase is driven by an increase in Workers
Compensation charges imposed by New York State.
and Repairs remain within reasonable expectations. Our anticipated
expenditures in 2014, budgeted at $ 469,500 will be coming in at about $ 449,400,
about 4.3 % below the 2014 budget.
Based on recommendations from our Resident Manager and AKAM, we are
budgeting $ 421,000 for 2015, a decrease of 10.3 %.
and Sewer were budgeted at $ 355,000 for 2014 and are budgeted at $ 324,000 for
2015, a decrease of 8.7 %. Our forecast for 2014 is $ 312,400. This
reduction is the result of Management vigilance in the face of haphazard
metering practices by our water supplier.
Interest and Amortization - This is determined by our mortgage, which we refinanced
in 2014, and is budgeted and forecast at $ 1,406,400.
summary: For 2015, shareholders can expect a
2.40 % maintenance increase (for a total of $ 3.68 per share per month).
with all other New York City cooperatives, given the increases in real estate
tax, labor, and utilities, we are facing a maintenance increase for the year
beginning January 1, 2015. 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 2015. You will see a
credit/debit journal entry on your March statement. From an accounting
standpoint this is treated as an operating assessment, and thus has no impact
start, we have tried to be both prudent in our expenditures and to make full
use of opportunities to contribute to our building’s overall financial health.
This includes reducing costs whenever and wherever possible. 205
West End Avenue remains one of the most conservatively managed 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
entire Board joins me in wishing you and your families a very good holiday
season and a happy, healthy 2015.
- Stuart Sugarman