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2017 Maintenance

posted Dec 13, 2016, 10:38 AM by 205 West End Avenue Owners Corporation

Dear Fellow Shareholders:

The Board, supported by its accountant and management staff, has recently completed its financial projections for year-end 2016 and has adopted an operating budget for 2017.  We are pleased to report that 205 West End will finish this year with a deficit of less than half a percent.  Thanks to conservative financial management and diligence, we have completed another year in good shape.  Energy budgeting for 2017 is not as certain as it will be next year because we do not yet have sufficient operating experience with our new cogeneration facility.  We have estimated that the cogeneration plant will save the Cooperative a more substantial amount in 2017.

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, water, and sewer charges by the city.  That said, we make every effort to control other costs.  While 2016 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 2016 looks:

  • Real Estate Taxes, budgeted for 2016 at $ 5,154,100, are projected to end the year at $ 5,162,300, 0.2 % over budget.  In 2017 we expect to pay real estate taxes of about $ 5,460,000, an increase of 5.9 % over last year’s budget, and the major driver of this year’s maintenance increase.
  • Energy (electricity and steam) was budgeted at a combined cost of $-1,361,600 for 2016.  While final bills are still to be presented, the projected energy expenditures in these categories are forecast to be approximately $ 1,253,500, about 7.9 % below budget and the major good news in our 2016 finances.  Our new cogeneration system went online in mid-2016 and delivered savings of at least $100,000.  Aggregate energy spending for next year is budgeted at $ 1,197,100, assuming limited price inflation due to the depressed economy and falling energy prices.  The projected decrease of 12.1 % over last year’s budget is speculative, since we do not know how much gas the new cogeneration units will consume nor how much of our steam and electricity requirements it will fulfill.  If we come in close to budget, we will realize overall energy savings of about a quarter of a million dollars next year.

Note:  Each year we remind shareholders that while 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 like the lobby, hallways, elevators, stairways, and garage) 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 - We are budgeting a 2.6 % increase for 2017 at $ 273,000.  Note that the 2016 forecast of $ 262,500 is about 1.4 % below the 2016 budget of $ 266,200.
  • LTCA Dues will increase relative to 2016 budget of $ 663,200 to $ 683,100, an increase of about 3 %.
  • Staff Payroll - wages, benefits, workers compensation, and disability insurance – will be going from $ 1,470,300 in 2016 to $ 1,542,700 in 2017, an increase of 4.9 %.  The bulk of this increase is driven by changes to benefits, driven by contractual obligations.
  • Maintenance and Repairs remain within reasonable expectations.  Our anticipated expenditures in 2016, budgeted at $ 400,000 will be coming in at $-390,400, about 2.4 % below our budget.  Based on recommendations from our Resident Manager and AKAM, we are budgeting $ 392,600 for 2017, a decrease of 1.9 %.
  • Water and Sewer were budgeted at $ 312,000 for 2016 and are budgeted at $-315,500 for 2017, an increase of 1.1 %.  Our forecast for 2016 is $ 309,300, about 0.9 % below budget.
  • Mortgage Interest and Amortization: these are determined by our mortgage, which we refinanced in 2014, and are budgeted and forecast at $ 1,406,400.

In summary: For 2017, shareholders can expect a 2.29 % maintenance increase (for a total of $ 3.87 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, 2017.  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 2017.  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.

On a personal note, an increase in my responsibilities at work has led me, in conversation with the rest of the Board, to assess my ability to sustain my obligations as President and to conclude that the interests of the Cooperative would best be served by my standing down from the role of President.  The Board has accepted my decision and has elected Stuart Sugarman to assume the responsibilities of President commencing on 1 January 2017.  I will continue to serve the Cooperative as a Board member.

The entire Board joins me in wishing you and your families a very good holiday season and a happy, healthy 2017.


Marc Donner, President

Board of Directors

  • Jeffrey Allister

  • Eleanor Applewhaite

  • Abigail Burns

  • Larry Chaifetz

  • Marc Donner

  • Robert Stein

  • Stuart Sugarman