CooperatorNews July 2021

July 2021
COOPERATORNEWS.COM
and protesting them every year, for example? Another costly area is
energy repairs, supply and maintenance, and service contracts. Th ese
should be evaluated every two to three years. Are rates competitive?
Th e same should be done with professional services like auditors, at-
torneys, engineers, and architects. Th ere’s also the minutia—things like
cleaning supplies. What’s cheaper? Mr. Clean versus Fabuloso, for in-
stance. But boards should remember, you generally get what you pay
for—especially with professional services—so don’t try to save a few
NEW YORK
THE CO-OP & CONDO RESOURCE
COOPERATORNEWS
205 Lexington Avenue, NY, NY 10016 • CHANGE SERVICE REQUESTED
Like so many other communities through-
out the United States, New York City remains
segregated in many respects—racially, eco-
nomically, and socially—but even so, the city
has achieved a level of housing integration
despite the systemic forces at work against
it. In many neighborhoods, public housing
stands next to luxury co-op and condo build-
ings; neighbors share streets, parks, shopping
districts, and to some extent even schools.
Th is integration has been fostered by
public policy over many years, and ranges in
scope from the micro (such as ‘80/20’ rental
buildings in which 80 percent of units are
rented at prevailing market rates, with the
remaining 20 percent reserved for lower-in-
come residents) to mid-sized developments
(such as income-restricted and limited-eq-
uity co-ops and rentals built under the city’s
Mitchell-Lama program), to massive, macro-
level projects like Co-op City and Starrett
City, planned and built from the ground up
to create whole new communities meant to
encourage people of varying backgrounds
and means to live together.
So what are the benefi ts of mixed-income
housing? And what challenges arise in com-
munities of diverse means in a city known for
sky-high living costs and warp-speed gentri-
fi cation? And what can we learn from it all
as we move forward in post-pandemic New
York?
A Little Look at the Past
Amid the strong social and political forces
unleashed aft er the end of World War II and
continuing through the civil rights move-
ment, as well as changes in the urban fabric of
America during the 1960s, a number of pro-
grams were initiated to bring more diversity
to the economic face of housing and neigh-
borhoods in New York. Two of the most no-
table initiatives launched to achieve this goal
were the Mitchell-Lama program and the es-
Th e vast majority of co-op and condominium boards are well intentioned and work dili-
gently with their management and accountants to draft and monitor their annual budgets—
and recalibrate them as necessary. Despite their best eff orts to keep costs under control, how-
ever, many communities fi nd that expenses oft en exceed their projections. Even in the absence
of an unforeseen crisis or major repair project, it oft en seems like money is just leaking out of
the system. Th e question is, where does it go—and how can we plug up the leaks when we fi nd
them?
Financial Leakage Defi ned
Avi Zanjirian is a partner at the accounting fi rm of Czarnowski & Beer and works with cli-
ents in New Jersey and New York. According to him, fi nancial leakage is more oft en a result of
inattention than of outright negligence or fraud. To fi nd these blind spots, “we look at it from
an auditor’s perspective,” he says. “You might be paying electric, water usage, and repairs, and
all are within budget. But at the same time, you may not be looking at all the line items regularly
to make sure they’re working effi ciently.” Zanjirian recommends taking a hard look at every
line item in your budget on a year-to-year basis, and assessing whether you’re getting the most
for your money (or even just getting what you’re paying for) from your community’s vendors
and service providers. “Do you have the best vendors, contract terms, etc.?” Zanjirian says. “As
contracts expire, you should be checking this.”
Another factor Zanjirian points out is the popularity of using autopay systems to send out
payment for recurring bills. While the convenience of a ‘set it and forget it’ payment option is
undeniable, it can oft en mean that less close attention is paid to cash outfl ow every month. Th is
is why it’s important to periodically take a close look at your community’s accounts payable,
as well as to conduct an end of year review to determine whether costs went up, and if they
did, why? “It could be because no one negotiated a new contract or a misplaced charge,” says
Zanjirian. “In terms of metered services like electric and water, are meter readings estimates or
actual? Too much stuff is on autopilot.”
He goes on to list other areas that should be scrutinized: “Are we looking at real estate taxes
One year-plus into the largest public
health crisis in a century,
CooperatorNews
spoke to real estate professionals across
the geographic regions we cover to learn
the eff ects that the COVID-19 pandemic
has had on their specifi c areas. What we
found out is that the co-op, condo, and
HOA market has taken several twists and
turns over the past year—and a lot of that
movement depends on where you live. In
fact, even within the same region, the pan-
demic has had varying impacts in luxury
sectors versus middle-market, as well as in
urban centers versus more outlying areas.
A number of tangential factors are playing
into trends and forecasts as well, making
for a patchwork of experience across the
country.
The Bounces
Perhaps unsurprisingly, the biggest dips
in property value and activity were seen
in the second and third quarters of 2020,
when the nation was experiencing its sec-
ond wave of infections and states were in
various levels of lockdown to contain the
outbreaks. Realtors across the country
were unable to show properties in person
for months in many cases, and transac-
tions were further hampered by limits on
travel, gatherings, and long backlogs in the
courts. In many U.S. cities, the civil unrest
following the murder of George Floyd by
Minneapolis police offi cers last year also
had a compounded impact on real estate
in those markets—some of which is still
felt today. Condos and co-ops struggled as
dense urban living and shared spaces lost
some of their appeal when less was known
about COVID-19 contagion and vaccines
were still a pipe dream.
But all that is changing. According to
Garrett Derderian, Director of Market In-
telligence for property fi rm SERHANT.,
the bounce-back is apparent in Manhat-
tan, where during Q3 2020, sales averaged
10.65% below listing prices. Th e average
discount for condos was 11.78%, for co-ops
9.55%, and for townhomes 18.94%. Since
then, discounts have gotten signifi cantly
more shallow. “Currently, we see discounts
hovering around 8%,” says Derderian, “in-
dicating the market is beginning to tighten
Where Does It Go?
Th e Problem of Financial Leakage
BY A. J. SIDRANSKY
How Has COVID
Aff ected the Multifamily
Housing Market?
The Answer: It Depends.
BY DARCEY GERSTEIN
Mixed Income
Communities
Fairness, Equity, &
Neighborliness
BY A. J. SIDRANSKY
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