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:
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.
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