Getting on board with Local Law 11 Back in March 2012 I wrote about the importance of a good condo (or co-op) board, and how its decisions and performance may affect your property’s value or liquidity. Well, it’s now been six years since I joined my building’s board, and the experience of going through our first major set of repairs has affirmed my belief that next to picking the right location and good property, managing it well may be just as important to increase its value. When you purchase a condo, you can control only what happens inside of your unit, yet everything future buyers see, from the exterior and lobby, through a gym and other common areas, and all along the way to your door, is something you can only control via your board. Pick the wrong group to run your building and you end up with poor security, a mismanaged building operation, and most common of all, poor financial health. I am very proud of the way our board has been able to increase budget - for higher staff salaries, healthcare and sick day benefits and paid vacations (none of which were in place when the developer left); for all the necessary upgrades and maintenance to date; and now to fund hundreds of thousands of dollars in Local Law 11 mandated repairs – and still maintain what we believe is one of the highest reserves in the neighborhood. And this with only one single-digit percentage maintenance increase in seven years, where many condos nearby have gone through two or three increases and even assessments to pay for unexpected expenses. Saving every once–wasted penny and investing wisely does the trick if done wisely and consistently. Consider our own experience with Local Law 11. Here is the summary of the law, enforced by the NYC Department of Buildings (DOB), with excerpts taken from DOB’s website. Local Law 11 is “a critical examination of an applicable building’s exterior walls and appurtenances of buildings greater than six stories in height. (...) Such examination shall be conducted and witnessed by or under the direct supervision of a licensed architect or licensed professional engineer by or on behalf of and at the expense of the owner of the building. (...) Such architect or engineer shall submit a written report certifying the results of such examination to the commissioner, clearly documenting the condition of the exterior walls and appurtenances thereof, as either safe, unsafe or safe with a repair and maintenance program. The report shall include a record of all significant deterioration, unsafe conditions and movement observed as well as a statement concerning the water tightness of the exterior surfaces. (...) All unsafe conditions shall be corrected within thirty days of the filing of the critical examination report. (...) Safe condition with a repair and maintenance program - requires repairs or maintenance during the next five years in order to prevent its deterioration during that five year period into an unsafe condition.” This inspection and the resulting repairs must take place every five years. For a typical Astoria or LIC new construction building constructed in the past 10 years, inspection of the exterior could reveal issues with the roof, walls and balconies, and range from necessary waterproofing to replacing whole sections of concrete, stucco or brick, and often ends up costing 30-100 percent more than the initial cost estimates provided by engineers and contractors bidding the jobs (it is not until workers actually go up on the walls that they discover all of the cracks, leak and defective installations. That is why setting aside a large amount of funds outside of the operating accounts (moneys used to operate the building on day-to-day basis) is critical or you may find yourself facing sudden assessments and increases in common charges. It is not unusual for a 5-or 10-year-old, 10-story, 100-unit building to be looking at $500,000-$1,000,000 worth of Local Law 11 repairs. For a condo that collects $600 per month from each apartment, this exceeds total annual maintenance collected and could be difficult to overcome unless it is saved for well in advance. When faced with bills this high, that $40,000 lounge redecoration or waiving of $10,000 in dog fees annually for the past five years quickly start looking irresponsible and even foolish. So, every time you pay your $10 bike storage fee, or $200 to rent out the lounge for private party, know that it is money well spent! David Dynak is a real estate broker at First Pioneer Properties and an LIC resident. He’s lived in Western Queens since 1993. Real Estate BY DAVID DYNAK
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