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2015 Maintenance

posted Dec 4, 2014, 8:02 PM by Marc Donner   [ updated Dec 5, 2014, 2:14 PM ]

Dear Fellow Shareholders:

The Board, supported by its accountant and management staff, has recently completed its financial projections for year-end 2014 and has adopted an operating budget for 2015.

We are 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.

This 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.

Energy 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.

Variances between budgets and projected year-end actual expenditures:

As 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:

  • Real 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.
  • Energy (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.
  • Note:  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 charges.
  • Insurance costs: We are budgeting a 15.4 % increase for 2015 at $ 265,300.
  • LTCA Dues will increase relative to 2014 budget of $ 635,400 to $ 649,100, an increase of about 2.2 %.
  • Staff 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.
  • Maintenance 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 %.
  • Water 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.
  • Mortgage Interest and Amortization - This is determined by our mortgage, which we refinanced in 2014, and is budgeted and forecast at $ 1,406,400.
  • In summary: For 2015, shareholders can expect a 2.40 % maintenance increase (for a total of $ 3.68 per share per month).

Along 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 on maintenance 

From the 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 support.

The entire Board joins me in wishing you and your families a very good holiday season and a happy, healthy 2015.

Sincerely,

Marc Donner, President

Board of Directors

  • Jeffrey Allister
  • Eleanor Applewhaite
  • Abigail Burns
  • Larry Chaifetz
  • Marc Donner
  • Robert Stein
  • Stuart Sugarman
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