STAR Program
NYC Department of Finance
1 Centre Street, Room 373
New York, New York 10007

In the first year, the STAR exemption will only apply to people 65 and over whose incomes are up to $60,000. All other people will receive their exemption beginning July 1, 1999.

Construction

The board voted to fund the entire construction project, after listening to the shareholders at the meeting on December 16. Certain shareholders suggested that parts of the project may be "frills" or may be postponed. Examples suggested included repainting the fire escapes and rebuilding the garage roof. The overwhelming majority of shareholders who spoke at the meeting preferred that the project be done as promptly and completely as possible for these reasons:

a. to curb further deterioration of the building's structure
b. to keep the construction period as short as possible to minimize discomfort
c. to keep the overall cost as low as possible (contractor profit margins on a series of smaller projects are generally higher than 1 large project).

The majority of shareholders speaking at the meeting preferred that the project not be financed via further borrowing. Reasons included the relatively high cost of loan fees and loan-related expenses (which could approach 10% of the total loan, in addition to the interest cost).

Mark Lilien handed out four pages of notes at the shareholders' meeting. However, these notes were not intended as the representation of the Board. If you have any questions or suggestions about the project or the shareholder meeting, please feel free to call any board member.

Assessment

As a result of the discussion, the board voted unanimously to assess all shareholders 53 cents per month for 30 months, starting January 1, 1998. This assessment will raise $273,829.80 which will go towards the project. If the project ends up costing less, the board has the option of ending the assessment before the full 30 months are up. However, if the project costs more, the board may have to take other actions (borrowing, maintenance increase, additional assessment, scaling down the project, reducing other expenses, etc.)

The exact cost is not perfectly predictable because certain physical conditions of the building are not readily and precisely evaluated until construction starts. The bids were written in a "unitary" fashion, so that the price is self-adjusting. For example, the roof underlay decking is assumed to require 20% replacement. If it requires half that, the building will receive a credit from the contractor. If the deck requires 30% replacement, the cost for that element will be higher than the total amount initially budgeted. The additional amount or the credit will be based on the

number of square feet requiring replacement. That amount cannot be known precisely until the layers covering the deck (the black "tar", "tar paper", etc.) are removed.

Construction Project Approvals

The construction project had to be OK'd by Ken Newman, acting as the major Holder of Unsold Shares. Ken pointed out that Article II Section 6 of the Bylaws gives the Holder of Unsold Shares the right to approve or deny capital or major projects of this type as long as Unsold Shares constitute at least 25% of the total shares of the co-op. Since there were 4,744 Unsold Shares on December 16th, this proportion was 27.5% of the 17,222 total shares issued. Ken, on behalf of the Unsold Shares, approved the project.

Unsold Shares are shares owned by investors who do not live in the building. When these apartments are sold to owner-occupants, they lose their designation as "Unsold."

Construction Contract Signed

After evaluating the bids, the board voted to hire M&G Construction. Among the highlights of the construction contract:

The construction contract was negotiated by Mark Lilien, Bob Mishkin, and Ken Newman.

1998 Budget

The board met with Burt Feldman, the co-op's CPA, to help create the budget, which is shown on the attached pages. As a result, the maintenance fee was raised to $4.65 from $4.55, approximately a 2% increase. The bike room rental was raised from $75 annually to $l00.

Mortgages

Interest rates are at fairly low levels. Anyone who wants to refinance a mortgage loan on an apartment may do so without special board approval, provided the loan amount does not rise and the payments are no higher than before.

You may want to join a nonprofit credit union to get an economical loan. Mark Lilien (212 929 4619 or 800 772 7100 ext 245) is a member of 6 credit unions, and would be happy to help you research this topic. He has a list of 12,000+ insured credit unions.

Laundry Room Contract

The laundry room contract with Fowler Route Company was signed. It was negotiated by Mark Lilien and Ken Newman after Mark solicited bids and negotiated with numerous other laundry firms. Among the contract's highlights:

The old equipment was eight 12 pound dryers (50 cents for 15 minutes) and eight 12 pound top loaders ($1.25). The old dryers generally needed 45 to 60 minutes ($1.50 to $2) to complete their task. The new dryers are expected to be faster (30 to 40 minutes, $1.50 to $2), since they are larger.

The laundry was renovated and the new machines installed before the end of February. There were a few days of no laundry service during the renovation and installation work.

Management Contract

A majority of the board, by vote of 5 - 2, including Ken Newman, voted to renew Ken's management contract for another 3 years at the same rate of $49,500 annually.

Preferred Broker Program Ended

A majority of the board voted to end the designation of Betty Fox's agency as the "preferred broker" for the building. Edna Marshall was not present for the vote on this issue. Edna works for Betty Fox.

The principal reasons the majority of the board voted to end the designation was (a) a possible conflict of interest since Edna is a board member and (b) the reason for the program no longer existed.

Pay Your Maintenance Automatically

If you want to pay your monthly fees automatically, they can be deducted from your checking account electronically. You save the cost of a stamp, the time wasted writing a check, and you'll never pay the $50 late fee if your payment is lost in the mail. Just write "Deduct my maintenance automatically" on one of your blank checks, sign it, and slip it under Jim Kafadar's door (6C).

The postal service performance was so poor in late December and early January that numerous maintenance checks were received late. Don't let this happen to you!

Cash Management

George Ong volunteered to help the co-op get an improved interest rate on its cash by opening a money market account, insured by the Securities Investor Protection Corporation, with free checkwriting privileges and a constant $1 net asset value per share. Until now, the co-op averaged around 2% interest on its cash. This method should yield over twice that amount. For example, USA Today each Friday lists money market fund yields. A recent Friday listed yields averaging 5.08% for the 15 biggest funds. George will work with Ken Newman to find the best rate, with the safest protection against risk.

Engineering Legal Issues

The co-op sued Richard Balser, its former engineer, and won, but has never collected any money from the suit. Ken Newman wrote to the engineering license agency (New York State Education Department, Office of Professional Discipline) to see what can be done without having to spend more funds on legal fees. The lawsuit was based on Mr. Balser's lack of performance completing documents needed by the co-op to bid its boiler replacement project.

Health News

Two local hospitals offer free "club memberships." Club members are put on mailing lists inviting them to free or low-cost health screenings, flu shots, health seminars, etc. The St. Vincents club is called "Village Health Club" (212-604-7572). The Beth Israel "Healthy Neighbor" phone number is 212-420-4247. These 2 listings do not constitute any endorsement of these clubs or any particular health care options.

Contracts

If you any shareholder wants to see any of the contracts mentioned in this Newsletter, just ask any board member.

Cash Position (Includes short-term investments)