L E H A V R E N E W S 3 JULY PRESIDENT’S REPORT: BY STANLEY R. GREENBERG, CPA WWW.QUEENSCOURIER.COM | JULY 2013 | LEHAVRE COURIER 3 The following is a reprint of a memorandum that was distributed to all shareholders of Le Havre in regards to the Annual Shareholder Meeting that was held on the deck of Pool #2 on June 19, 2013. I am publishing this in my column to ensure that all shareholders have an excerpt from the meeting. The meeting was attended by approximately 100 shareholders and the following topics were addressed: Budget: President Stanley Greenberg advised the shareholders of the fi xed expenses in the budget that have increased this year: • Water increased 5.60% • Insurance 25% (due to Super Storm sandy and other storms) • Real estate taxes: 9% • Union labor increases: 2.7% Our increase of 1.9% for the new budget year is far below the NYC price index of 5.9% for 2013 and below the projected NYC price index increase of 2.6% for the coming year. The co-op accountant / auditor, Carl Cesarano, spoke on this matter and stated that the above items, which make up 82% of budget, are fi xed and that the board has no control over them. The remaining 18% of the budget (which the board has control over) shows a reduction in running costs. Capital Reserve: Questions were asked on why we need the ongoing capital assessment each month. Mr. Greenberg stated that it is necessary to keep this assessment in place to build up a reserve fund, so that funds are available for future major capital improvements, such as replacing the cement work and drainage under all of the buildings which could cost upwards of one million dollars. Mr. Cesarano stated that lenders such as Fannie Mae and Freddie Mac require 10% of the yearly maintenance budgeted to be in a reserve fund. Not having a reserve could affect the sales and borrowing power of shareholders. Gas Conversion Project: Mr. Greenberg spoke about the gas conversion project and mentioned that there would be no fi nancial impact to the shareholders. Con Ed is bringing the piping to the curbside at no cost to the co-op. The capital improvement work (outfi tting the boiler rooms with duel fuel burners and trenching into the buildings) will be paid off with the savings that the co-op will achieve each year from using gas instead of oil. He further mentioned that after 3 – 4 years, when the capital work has been paid off, the co-op will then get the full benefi t of the savings in fuel. After the fi rst 5 years of fi rm gas, the co-op will have the option of using duel fuel (gas or oil) depending on the cost. There will be no additional insurance cost or liability to the co-op. We believe that all of the burner replacement work will be done before the next heating season begins so there will be no loss of heat to the apartments. There is no way of knowing at this time when Con Edison will actually turn the gas on in each building and until then the boilers will run on oil. Mr. De Rosa spoke on the mechanics of the gas conversion project and stated that so many buildings all around the city have gas installed and have had no safety issues. He also mentioned that there will be less noise from the gas burners than from the present oil burners. He explained how the piping will be run into the buildings and also stated that, with the new effi cient burners, we would save money, even if we never switched to gas so it is a no brainer. He mentioned that the cost of gas is currently approximately 60% less than oil. Even if Le Havre did not do the conversion work, the Le Havre residents would be affected by the Con Edison pipe work as Cryder House, Cryder Point and the Towers are all converting to gas so the pipes have to come down 162nd Street and Powells Cove Blvd. He mentioned that Con Edison moves very quickly so this project is not expected to go on for a long time. He further advised that the down time for the boilers will be from 12:00 midnight until 4:00PM the next day, similar to what happens when the boilers are being cleaned or serviced. Mr. Affatato also spoke about the gas conversion project and mentioned that the board had thoroughly discussed this for nine months and had agreed that it should be done. He stated that an engineer (Ralph Germain) was hired to do specs and bids were sought from 5 contractors. Resales: LeHavre apartment sales were discussed by Mr. Greenberg and Mr. Geoffrey Mazel (co-op attorney). It was stated that the board had published suggested pricing guidelines for the sale of apartments that represent an average sale price. This was a business decision made because shareholders at Le Havre were unable to refi nance their apartments and avail of lower interest rates. The equity in their apartments was being affected by the comparable sales prices which had been in a downward spiral. If you are planning on selling your apartment, please contact the office for the suggested published pricing guidelines. Board of Directors Terms: A question was addressed about the fact that there hasn’t been a board election since 2010. Mr. Greenberg stated that this was due to the fact that shareholders do not come out to vote, even though we give them the option of voting in the clubhouse prior to the election and also voting at the school on the night of the election. If at least 51% of the shareholders do not vote, there cannot be an election as there is not a quorum. Mr. Bergen also spoke on this matter and indicated that board members spend a lot of their time on co-op business and he feels it is every shareholders responsibility to come out and vote. It is up to the shareholders to make an election happen. Building Captains: Mr. Greenberg stated that he will be discussing with the captains, at their next meeting, how best to disseminate information to the shareholders in their building, in addition to the information that is sent out by memo and in the monthly newsletter. Clean up of SuperStorm Debris: The clean up was addressed by Mr. Greenberg and Mr. Mazel. They advised that the work was fully permitted by the Dept. of Environmental Conservation and was a legitimate clean up organized by the Army Corp of Engineers and funded by FEMA. Shareholders were very pleased to have this work done and there were no fi nes / violations for any work performed nor have there been any fi nes in the past years. Financial: The 11 months through May 31, 2013 (budgeted versus actual) showed revenues $14,290,088 (90.94%) of the budgeted amount and total expenses $13,317,288 (89.00%) of the budgeted amount as reported by our accountants. Once again I would like to thank everyone for their continued support. VICE PRESIDENT UPDATE Shareholders, I am writing to further for their capital investment, and also should be fully signed off by the NYC advise you on the very important gas/ fi nance the $2.3 million of our cost. Department of Buildings and be duel fuel conversion project on behalf They then decided to hit us with a capable of duel fuel based on market of all the Board of Directors. This construction management fee that if we conditions. The initial saving without process was nine months in the making. agreed to, well, shame on us. Hess: over $2 million. At current oil/ You were given two updates. Why that That is when my mechanical gas prices, we are looking at a $500,000 happened is a testament to your Board’s contracting/engineering experience annual fuel bill savings utilizing gas business savvy. and Mike Derosa’s boiler/ plumbing over fi ve years. That’s an additional Con Ed needed a commitment by experience came into play. Mr. Young, $2.5 million in savings. We must see May so they could commit the millions freshly retired, and with plenty of time, this through over the next year; we have in their capital budget to run a mile went into a number crunching spree the right team in place to do just that. of 8” gas main through Whitestone to based on our superb fi nancial position, Much maintenance will be casually LeHavre, then a distribution system to thanks to Mr. Greenberg. It turns out ongoing over the next several weeks, each property line of all 32 buildings. we did not need Hess. We did not need including concrete walk ways, tree That commitment was a signed contract to lock into gas at this time, per Con pruning and other safety maintenance with an outside licensed plumber for all Ed’s advice. We did not need fi nancing issues around our wonderful property. 32 buildings. Hess, our oil supplier, from Hess at 6%. Your full Board was Have a healthy & save summer was in the negotiations all the way. totally on board! When the fi nal hour came, Hess wanted Shareholders, this was not an easy an immediate fi ve year gas lock in, deal. Yes we will remain on oil for Sincerely, required by Con Ed to basically pay 2013/2014. By spring of 2014 we Thomas Affatato, V.P.
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