Author Topic: Is there a fixed amount a board can spend without notifying shareholders?  (Read 935 times)

Offline itsit

  • Council Member
  • ******
  • Posts: 350
 Our co-op is on a spending spree lately. The projects are all improvements but they fall primarily into the appearances
category. Our fear is that this is using our reserve fund up and a big costly structural or internal service project will put
us into the assessment category once again. When that happened previously it was 8,000. per apt and some of the
shareholders were outraged and it became v. contentious. We have a fair amount of new tenants who seem to coincide
with these fancier upgrades similar to the group as was in the NYTimes article last year. Its feeling more like a hotel
than a co-op with the endless workers.

 Is there a guideline as to how much the board can spend without letting shareholders know? The last two projects were
in the six figures and we have two more in the works all of which are wants - not needs.

Offline carrefour_ny

  • Council Member
  • ******
  • Posts: 499
I don't know that there is a fixed spending limit, or rule of thumb about such matters, and in fact, how much freedom the board has to make such decisions varies from building to building. Smaller coops tend to insist on consensus-building, while larger ones delegate this to the board; sometimes bylaws specify some of these details as well.

In any case, boards are accountable to the shareholders. So, if shareholders have concerns about the projects that are being undertaken, you certainly have a right to get in touch, express your concerns and ask for clarification on the priorities and financing -- and do so before making assumptions about their agenda. It may very well be the case that they have a good reason for undertaking some of these projects, even the cosmetic ones, that you just don't know. It's also legitimate to ask about financing and assessments.

Those are also questions to be discussed at shareholders meetings.

Offline dollymibella

  • Tourist
  • **
  • Posts: 12
Probably not.  Have you asked to see the meeting minutes?  You should review and get some history about the projects, you shouldn't assume the worst.  Be informed.

Offline Dodger

  • Citizen
  • ****
  • Posts: 98
Have you read your coop's bylaws? That's the first place to go to figure out the relevant rules.

Offline itsit

  • Council Member
  • ******
  • Posts: 350
 There is something doctors call "going fishing" when a patient is getting up in years and are addressing one complaint but could
probably find a few others. It seems to be the same idea in a building that is the age of many JH coops (80-ish yrs old) and that
you can justify almost any improvement as something that could be fixed. Again, could. But what I see here is a presentation
that twists the upgrades into what needs to be done by attaching a want to this supposed need.

Am all for being reasonably informed and try with this board to do so. The current group is more insular and defensive then what
we have had in prior years. Am thinking the priorities of the shareholders should be at least registered in a well run building -
this was my understanding in previous years - and larger items always discussed at the annual meeting before proceeding. Or
call a special meeting if necessary. Sadly for us, other co-ops sound more communal than ours now.
 

Offline Palermo

  • Activist
  • *****
  • Posts: 224
I remember that you posted a similar concern about your building about a year ago.  Have you taken any direct action since?  As others have noted, there absolutely is a set in stone guideline: Your co-op by-laws.  Was the election of the board or its subsequent actions in violation of your by-laws?  If no, then your only recourse is to persuade the majority of shareholders to align with your interests.  Co-ops are one of the last gasps of direct democracy left around here, a very cool privilege, but it bears the responsibility of being gracious if the majority tacks against your priorities.

If I can practically figure out the building you live in, then your fellow shareholders certainly can, so it might be best to try and work these things out discretely rather than airing them out here.  Good luck with everything though!

Offline itsit

  • Council Member
  • ******
  • Posts: 350
  Palermo, you are right, I did post about this last year! One line in a conversation about changes in lawn use in JH. Maybe it
is my misunderstanding about this being a discussion board? I do intend to bring it up at the annual meeting, and
actually have spoken to parties involved. At the same time, I think it is useful to let others know who might be having a
similar issue surface as was the case with the open lawn use vs. kids stay off debate. The needle moved quickly on that
topic and wonder if this is also a fast changing story. Am all for transparency when it comes to using common funds publicly
or a contractual co-op situation. And all that is implemented with the bylaws. Privately, a number of people have spoken
about this unusual spending and feel unease about any type of questioning for fear of reprisals. Maybe seeing this public
discussion helps and will take that chance. Not everyone sees "the very cool privilege" as you do (and me too), with
real confidence in the results.

 Thanks for your good wishes.

Offline am315

  • Citizen
  • ****
  • Posts: 53
Boards have broad leeway when it comes to spending and the building's budget. You didn't say how much they were spending or on what items but the difficult part from a board perspective is what's expensive to one person isn't to another.

That said, the board has a duty to be transparent about it spending and budgeting. The board's plans for the future should be well laid out at the annual meeting. They should be discussing the projects they anticipate and roughly how much they think these will cost. They should have the budget on hand for you to examine and discuss. But since many things can come up between annual meetings many boards communicate their plans in brief memos to the building.

If you feel that the board isn't being communicative enough or transparent enough I would raise the issue with a board member privately first or simply ask to attend the next board meeting and raise it there. It's probably best to start off slowly and by giving them the benefit of the doubt. If you are completely stonewalled and you sense building-wide dismay with the board the bylaws likely allow for unit owners to call a board meeting. (Usually this requires 3/4 of the unit owners, or some majority.)

Spending is one of the toughest issues. And sometimes it's generational. By that I mean, newcomers to the building have certain expectations (likely based on the fact that it cost them a bundle to buy) and more longtime residents may be more conservative because they don't want the maintenance to go or they just think some of the upgrade are unnecessary.

Good luck.







Offline Palermo

  • Activist
  • *****
  • Posts: 224
On another note, our co-op has been in a constant project phase hopping from one major improvement to the next. We
would like a break from this omnipresent urge to change it all up.

I was only suggesting that your neighbors are probably reading this and it might not sit well with them.  Otherwise, I certainly don't mind the discussion and needle moving.

This might be a useful resource too.
http://www1.nyc.gov/nyc-resources/service/1448/co-op-or-condo-complaint

Offline CaptainFlannel

  • Mayor
  • *******
  • Posts: 582
Quote
the difficult part from a board perspective is what's expensive to one person isn't to another.

It may be difficult if the board isn't paying attention to who their fellow shareholders are. I'm a relatively new shareholder in my building (less than four years), and I'm very clear that there are a lot of older residents in my coop. I had grandparents. I know they lived on a fixed income and I understand that an ever increasing maintenance fee would be an issue for long time residents. As it will probably become an issue to me one day too if I'm ever able to actually retire and try live off my savings and social security.

Jackson Heights Life