This is the first part of a mold educational program on
this developing topic. Look forward to the next installment
on what the board and staff should be doing.
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Al Pennisi
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From the President’s Desk
By Albert F. Pennisi, Pennisi Daniels Norelli, LLP
In recent years, it has become obvious to me, both as an
attorney and President of the Federation of New York Housing
Cooperatives and Condominiums, that the fiscal stability
of housing developments in the cooperative and condominium
community, relies heavily on the vagaries of court decisions
and legislative initiatives.
This is why the Federation, in its second installment of
our satellite seminar series, is presenting “How Legal
Decisions and Legislation Impact the Cooperative and Condominium
Community” on Wednesday, October 23, 2002. The seminar
will be held at the Roosevelt Hotel, 45th Street and Madison
Avenue from 6-9 PM. We are pleased to have put together
an expert panel that includes: Stanley Dreyer, senior partner
of the law firm, Gallet Dreyer & Berkey LLP; Terry Lewis,
Vice-President of Cooperative Development, National Cooperative
Bank; Joel Miller, Esq. and Martha E. Stark, Commissioner
of New York City’s Department of Finance. I will serve
as moderator.
A recent, precedent setting court decision involving a
sponsor’s obligation to sell its shares in a cooperative
building has raised more questions than delivered answers.
Stanley Dreyer’s law firm represented the shareholders
in 11 West 232 Owners Corp v. Jennifer Realty. In a unanimous
decision, the New York State Court of Appeals ruled that
cooperative shareholders can sue sponsors if they refuse
to sell their apartments within a reasonable period of time
after conversion from rental to cooperative status.
This issue is one wherein the Court of Appeals sent the
case back to the lower court to decide the sponsor’s
responsibility to create a “fully viable cooperative.”
This case received a great deal of press and Mr. Dreyer’s
insights into the judge’s ruling and how it will ultimately
affect cooperatives and condominiums are well worth hearing.
The National Cooperative Bank (“NCB”) was created
in 1978 to address the financial needs of cooperative housing.
NCB has provided more than $6 billion in financing creating
thousands of homeownership opportunities as well as retail
businesses, affordable assisted living facilities, quality
healthcare institutions, cultural centers and more. NCB
vice-president Terry Lewis, joins our panel with information
on advantageous cooperative financing.
Joel Miller is an attorney whose practice has emphasized
cooperative and condominium law for 35 years. His perspective
on current legal trends and his interpretation of recent
legislation will be of interest.
Martha E. Stark, Mayor Bloomberg’s new Department of
Finance (“DOF”) Commissioner has been invited
to round out the panel. Every board president and treasurer
is all too familiar with this city agency. It is the DOF
that calculates and collects real estate taxes. For as long
as I can remember the cooperative and condominium community
has been protesting the tax inequity between Class 1 and
Class 2 property tax assessments. Class 1, residential homes
with 3 or less units, is assessed at 8% of full market value
whereas Class 2, any other residential property (including
cooperatives and condominiums), is assessed at 45%, the
same rate as commercial and industrial properties.
This interpretation by government that co-ops and condos
are businesses rather than people’s homes gave us the
80/20 tax problems of recent years. The 80/20 rule of Section
216 of the Internal Revenue Code requires that a cooperative
derive 80% of its revenue from tenant stockholders. No problem.
Except certain situations have risen that threaten the 80/20
balance. For example, when cooperatives take over occupied
apartments from a defaulting sponsor, the rent from these
units can exceed 20% of the cooperative's revenue thus jeopardizing
their tax status.
This rule also applies to commercial rental income. For
those co-ops and condos facing similar situations you’ll
be glad to know that Joel Miller, one of the panelists,
is a published author and expert on this topic.
We sincerely thank our sponsors National Cooperative Bank,
1st Rochdale Cooperative NYC, Bargold Storage Systems, The
Cooperator, and The Whitmore Group for their support. Due
to their generosity we can offer this seminar and a delicious
buffet dinner at no cost to our members. Council of New
York Cooperatives and Coordinating Council of Cooperatives
members pay only $30 and non-affiliated attendees pay $50.
The membership application is on the facing page of this
newsletter.
We look forward to your participation and your input. If
there is a topic you would like to submit for consideration
for the next seminar please call me at 718-760-7540 or email
at info@fnyhc.coop.
By the way, next year is the Federation’s 50th anniversary.
We are anxious to hear your suggestions for possible commemorative
events. Please call or email me or Executive Director Gregory
J. Carlson at the contact information listed above.
Important News for Buildings With Stores
The New York City Council voted for a bill in August that
requires merchants to install fire sprinklers in basements
and other storage spaces that hold flammable products. Mayor
Michael Bloomberg has favored this measure and is expected
to sign it.
The bill was introduced with the support of fire officials.
The City Council’s Committee on Housing and Buildings
conducted hearings in response to an explosion that occurred
in June 2001 at a Queens hardware store where flammables
and combustibles were being stored. The store had no sprinkler
system in the basement to help contain the fire and, as
a result, three firefighters died.
According to the New York City Department of Buildings,
this bill will help to create a safe environment in all
mercantile occupancies. The DOB has the power to issue violations
for absent or non-compliant sprinkler systems. In addition,
it will check new buildings for sprinklers during the plan
examination review process.
The bill specifically mandates that every merchant install
automatic fire sprinklers in existing spaces in a basement,
cellar or other below grade location where the Fire Commissioner
permits the storage of flammable or combustible mixtures.
The law takes effect immediately upon its enactment but
allows existing merchants until April 30, 2004 to become
compliant.
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FORMULATING A COMPREHENSIVE SECURITY
PLAN
By Mary Ann Rothman, Executive Director
Council of NY Cooperatives
The events of September 11, 2001 and subsequent federal
efforts to improve homeland security have prompted an uneasy
new awareness of dangers that may occur. People are seeking
ways to protect themselves and their families, and to keep
their homes safe. Boards of Directors of housing cooperatives
and condominiums in New York City are particularly mindful
of this and the membership organizations that represent
this community are cognizant of their responsibility to
provide guidance to their members.
To this end, I and Greg Carlson, executive director of
the Federation, were pleased to have attended a number of
excellent programs offered this past spring by three industry
organizations, the New York Association of Realty Managers
(NYARM), the Real Estate Board of New York (REBNY), and
the Associated Builders and Owners of Greater New York (ABO). The
NYARM seminar dealt with crisis preparedness and management,
the REBNY presentation was conducted by the NYPD and dealt
with recognizing and reporting suspicious behavior, false
documents and bombs, and the ABO program offered guidelines
for building security.
No one can be expected to have all the answers or to successfully
prevent a terrorist strike. A prudent policy need not deal
with extremes, but rather help your cooperative or condominium
establish, communicate and enforce reasonable safety and
security policies and procedures. Today’s enhanced
receptivity to safety and security gives boards the opportunity
to collect more information about building residents, to
enforce security precautions, and even to offer drills on
how to proceed if the building must be evacuated.
Following are a few concrete recommendations that we consider
appropriate policies and procedures for a cooperative or
condominium board to implement to help residents prepare
and cope with a difficult situation.
HELPING RESIDENTS PREPARE FOR THE UNEXPECTED
High profile buildings, or those with well-known residents,
might reasonably fear targeted terrorist activities. Buildings
adjacent to noted landmarks also have reason for extra vigilance.
And, as evidenced by an explosion last spring, buildings
where hazardous materials are used or stored can experience
problems from within. But virtually every building can benefit
from a realistic review of security procedures.
We can also prepare for situations brought on by nature
or the environment that may make it necessary to evacuate
the building or area. You may need to implement an evacuation
plan in the event of severe weather conditions (storm, tornado,
hurricane, heat wave, etc.), because of hazards produced
by utility failure (water, telecommunications, etc.), by
a system failure in the building (gas leak, boiler breakdown
spreading fumes, etc.), upon receipt of a suspicious package
(don’t touch it, don’t shake it, don’t sniff
it, don’t kick it…DO notify the police at once),
or a terrorist threat which the police deem credible.
REEXAMINE AND ENFORCE EXISTING SAFETY POLICIES
A security team consisting of management, staff and board
or committee members is often the best qualified to perform
this review, as they are most familiar with the building.
However, if past policies have been lax or if there is a
particular reason for concern, your cooperative or condominium
can engage the help of a professional to survey the building
and provide recommendations about day-to-day safety.
FIRE SAFETY PLAN
Every building in New York City is required by law to have
a fire safety plan. This plan is prominently posted and
is sent to every apartment annually in either October (fire
safety month) or January. It indicates egresses from the
building to use in the event of a fire or other emergency.
The security team should include the fire safety plan in
its review to make certain that it is clear, concise and
easy to understand and, that it covers all contingencies.
Communication will be vital to handling emergencies. Residents
should be advised of exactly how an emergency situation
will be communicated to them, and what they will be expected
to do. Building employees must be totally familiar with
their roles. If told by police, management or other authorities
to do so, their responsibility will be to alert all residents
and advise them whether they are safer inside their homes
or if they must evacuate to a place of greater safety. Calm,
clear instructions will reassure building residents and
practice will help everyone know what they are to do. (In
an effort to support this initiative, Local 32B-32J of the
Building Service Employees International Union is adding
to its fall 2002 educational offerings a class in security,
tailored specifically for workers in New York City buildings.
All information must be clearly presented in writing and
must be carefully given to each new resident. If your
building is fireproof, residents should be reminded that
they are generally safest remaining inside their apartment
during a fire, unless the fire is very near their own unit.
If they must leave their apartment, they should ensure that
all family members are safely out and should remember to
take their keys, a cell phone and a prepared box of important
information and medications (see below).
KEEPING TRACK OF RESIDENTS AND ANY SPECIAL NEEDS
Without a functioning intercom system, staff may not be
able to reach all apartments. Without a list of apartment
residents, including information about those who depend
on oxygen, electric life support equipment, or those who
require help maneuvering down many flights of stairs, staff
will not be able to verify that all families are safe or
to help rescue workers target those most in immediate need
of help.
Staff should be prepared to meet police or firefighters
in the lobby with building plans, a list of residents, and
apartment keys. In case of a fire, be prepared to provide
firefighters with verified information regarding the floor
and apartment number of the fire, if anyone is still in
the apartment, whether anyone in the apartment is disabled
or uses oxygen, and whether the door is open. Indicate the
nearest staircase and provide the keys for the apartment
so that police or fire fighters will not have to break
down the door.
There must be a protocol in place to ensure that everyone
is safely out of the building. Once out on the street,
residents should know not to stand around. Since the building
is in danger they must continue walking until they are at
a safe distance. Provision should be made for residents
to go to a pre-arranged assembly point or to call in to
a contact number so that all residents may be accounted
for. Cards should be distributed to residents giving these
contact numbers and a summary of evacuation procedures.
PERSONAL PREPAREDNESS
Encourage residents to keep on hand a supply of bottled
drinking water, flashlights and portable radios, each with
a supply of fresh batteries. These may prove very useful
in an emergency if residents must evacuate the building
or “shelter in place.” A Red Cross representative
suggested that every family maintain a small Family Emergency
Supply Kit containing necessary medications for family members,
extra pairs of glasses, and copies of important documents
such as birth certificates and insurance cards.
Also encourage each family, particularly those with children
old enough to travel on their own, to plan, discuss and
practice a family emergency plan, including a procedure
for contacting one another to make sure that everyone is
safe if an emergency occurs (i.e. everyone call Dad’s
cell phone or Grandma’s house once they’re safe.)
No one wants to think of losing their home to a fire or
catastrophe, but with foresight and advance planning it
is possible to mitigate tragic results.
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FNYHC PRESENTS:
HOW RECENT LEGAL DECISIONS AND LEGISLATION IMPACT THE COOPERATIVE
AND CONDOMINIUM COMMUNITY
WEDNESDAY, OCTOBER 23, 2002
6-9 pm
ROOSEVELT HOTEL
(45th Street & Madison Avenue)
Panelists:
Stanley Dreyer, Gallet Dreyer & Berkey LLP
(represented the cooperative corporation and certain shareholders
in the recent 11 West 232nd Owners Corp v. Jennifer Realty
Co. case)
Terry Lewis, National Cooperative Bank
Joel E. Miller, Co-op/condo attorney
Martha E. Stark, Commissioner of New York City’s
Department of Finance
Moderator:
Albert F. Pennisi, Pennisi Daniels & Norelli,
LLP
FNYHC Members FREE! Complete Buffet Dinner Included With
Fee
CNYC & CCC Member
$30 Reservations are Requested
Non-affiliated attendees $50
FNYHCC THANKS OUR SPONSORS
NATIONAL COOPERATIVE BANK
1ST ROCHDALE COOPERATIVE NYC
BARGOLD STORAGE SYSTEMS
THE COOPERATO
Register Online Here
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FIRE SAFETY TIPS
Install and Maintain Smoke Detectors
Smoke detectors warn you of fire in time to let you escape.
Install them on every level of your home and outside of
each sleeping area. Follow the manufacturer's directions,
and test once a week. Replace batteries twice a year, or
when the detector chirps to signal that the battery is dead.
Don't ever take the battery out for other uses!
· Plan and Practice Your Escape
If fire breaks out in your home, get out fast. With your
family, plan two ways out of every room. Fire escape routes
should not include elevators, as they might take you right
to the fire. Choose a meeting place outside where everyone
should gather. Once you are out, stay out! Have the whole
family practice the escape plan at least twice a year.
· Space Heaters Need Space
Keep portable space heaters at least 3 feet from paper,
curtains, furniture, clothing, bedding, or anything else
that can burn. Never leave heaters on when you leave home
or go to bed, and keep children and pets well away from
them.
· Be Careful Cooking
Keep cooking areas clear of combustibles, and don't leave
cooking unattended. Keep your pot's handles turned inward
so children won't knock or pull them over the edge of the
stove. If grease catches fire, carefully slide a lid over
the pan to smother the flames, then turn off the burner.
· A Match is a Tool for Adults
In the hands of a child, matches or lighters are extremely
dangerous. Store them up high where kids can't reach them,
preferably in a locked cabinet. And teach your children
from the start that matches and lighters are tools for adults,
not toys for kids. If children find matches, they should
tell an adult immediately.
· Use Electricity Safely
If an appliance smokes or begins to smell unusual, unplug
it immediately and have it repaired. Check all your electrical
cords and extension cords and replace any that are cracked
or frayed. Don't overload them or run them under rugs. Remember
that fuses and circuit breakers protect you from fire: don't
tamper with the fuse box or use fuses of an improper size.
· Cool a Burn
If someone gets burned, immediately place the wound in cool
water for 10 to 15 minutes to ease the pain. Do not use
butter on a burn, as this could prolong the heat and further
damage the skin. If a burn blisters or chars, see a doctor
immediately.
· Stop, Drop, And Roll
Everyone should know this rule: if your clothes catch fire,
don't run! Stop where you are, drop to the ground, and roll
over and over to smother the flames. Cover your face with
your hands to protect your face and lungs.
· Crawl Low Under Smoke
If you encounter smoke using your primary exit, use your
alternate route instead. If you must exit through smoke,
clean air will be several inches off the floor. Get down
on your hands and knees, and crawl to the nearest safe exit.
