Bid Deal Renewal of Greenthal Management
contract a 5-month process
STORY AND PHOTO
BY STEPHEN VRATTOS
“I think it’s a great deal for North
Shore Towers”
Thus, determined Board
Treasurer Steve Redlich, who
chaired the committee overseeing
the bidding process for the co-op’s
Management contract, which was
recently renewed with Charles
H. Greenthal & Co., before its
scheduled expiration date later this
year. Despite the unsubstantiated
rumors circulating on various social
media sites, the journey was a well
thought out, painstaking process
undertaken by a team of four Board
Members—Redlich, former Board
President Mario Carmiciano, Fred
Chernow and Bob Ricken.
In lieu of flying blind, diving into
the procedure without any direction,
Redlich posited to the group at
the start, “Are we happy with what
we have now?”
“One thing you learn in business,
as long as you’re pleased with the
direct managing agents, the underlying
management company doesn’t
matter.” In the case of NST, her
“boots on the ground,” the handson
managing team, with direct
oversight of the daily workings of
the complex, are General Manager
Glen Kotowski and Comptroller
Robert Serikstad. It is the guidance
of this tandem which has helped
shape North Shore Towers into one
of the most coveted places to live
among the local real estate “Best
of…” listings, even as other similar
facilities have shown a drop in their
sales.
The second factor in the selection
process was Redlich’s insistence
on eliminating the additional fees
firms charge for managing bids, the
standard of which is 1% the cost of
each contract. “For example, managing
agents would earn $610,000
for overseeing the refinancing of
our mortgage,” Redlich explained.
But without this industry standard,
money-generating carrot as
enticement, how would NST leverage
a favorable deal? Through the
offset revenue accrued from property
sales. As a licensed real estate
agent, Greenthal has an additional
revenue stream from the apartment
sales out of its office in the Arcade,
a tidy sum which has seen dramatic
upswing the past half-dozen years
since its last contract with NST was
negotiated.
Still, Redlich et al were well aware
of the importance of due diligence
in selecting a management firm, and
so, invited three other such to place
bids on a 6-year contract. “What I
found most intriguing was that all
three managing agents asked the
same questions: ‘Are you pleased
with the performance of your core
management team, and if you are,
why are you approaching us?’”
More surprising, two of the teams
didn’t have a General Manager to
post with NST if they were to be
awarded the contract and inquired
as to the availability of Kotowski
and Serikstad in the eventuality
of their placing the winning bid.
The third prospect had no interest
in the real estate side of the equation
and therefore placed them in
an untenable position with the
committee, which would have no
off-setting revenue stream with
which to hold the upper hand
during negotiations.
Given their initial disappointing
foray into prospective bidders
beyond Greenthal and after much
discussion, the general consensus
of the committee was to concentrate
their efforts on retaining the
current management firm, but with
certain stipulations.
1. Eliminate all fees for bids,
contract, project work and refinancing
of the mortgage currently
paid by NST. In 2017 alone, fees
totaled $74,000, from such projects
as Local Law 11, renovations
of outdoor and indoor pools and
aforementioned refinancing
2. Increase the rent from
$50,000 to $75,000 for the
Greenthal Property Sales Office
and place the rental on a sliding
scale, so if sales increase, rental
income will follow suit
3. Grant a 3% management fee
increase the first year; then limit
increases to the CPI (Consumer
Price Index) index not to exceed
3%. However, should inflation
in any year exceed 4%, NST
will grant 50% of the increase
beyond 4%
4. Based on the above
3% increase, Greenthal will
receive a management fee of
$1,194,000, but must commit to
maintaining on its payroll and
related employee expenses 10
Greenthal employees in the NST
Management Office, including
General Manager, comptroller,
closing coordinator, secretary,
receptionist, Human Resource
Manager and 3 accounting
personnel
5. To insure continuity, NST
needed to be assured its core
management team would be fairly
rewarded for their performance
6. Finally, to add more value
by having a representative of
Greenthal participate periodically
in Board Meetings to provide
inside scoop on latest trending
in the real estate market
Redlich reviewed the process to
the assembled shareholders at the
annual meeting Thursday evening,
June 21, delighted to report the full
acceptance of the new terms by
Greenthal and the execution of a
new 6-year contract after the final
approval from the entire Board
the week prior. “Just to reveal how
positive this is,” Redlich said, “if
we compare the actual payment
to Greenthal last year to the first
year of the new contract, there will
be a 4% reduction as a result of
the elimination of bid and project
fees and the increase in rent of the
property sales office.”
Better yet for North Shore
Towers, the contract contains a
stipulation, if the co-op is unhappy
with the managing agent for
any reason, it has the option to
pull out of the agreement with a
60-day prior notification. However,
if Greenthal wishes to end the contract,
they must provide 6 months
prior notification.
“I don’t want people bound to
me by contract if they’re unhappy,
because it leads to negative things,”
Redlich explained. “The nice part,
if NST becomes unhappy, it can
change it.”
Steve Redlich described the process behind the new Management
contract at the Annual Shareholders’ meeting
10 NORTH SHORE TOWERS COURIER ¢ August 2018