Mark Lilien
350 Bleecker Street Apartment Corp.
350 Bleecker Street #3E
New York, New York 10014

Dear Mark,

Marin and Montanye LLP has been your co-op's CPA firm since January 2000. We serve over 300 other co-ops, too, many with similar issues as yours.

This is a clarification of how the 80/20 rule would apply to 350 Bleecker Street, based on your 2001 budget.

Your total income is budgeted at $1,199,414. Net of expected real estate tax abatements, the total would be $1,151,414. Of that figure, at least 80% must come from shareholders, which is $921,131. That leaves $230,000 which can come from commercial rent, interest, and dividends. Since your interest and dividends are budgeted at $11,600, your commercial rent can rise to $218,400 without breaking the 80/20 rule.

Your commercial rent is currently budgeted at $104,978. The co-op can raise the commerical rent by $113,422 without breaking the 80/20 rule.

Your building has 17,222 shares. The commercial rent increase of $113,422 is $6.59 per share annually. This would reduce the maintenance for a 100-share apartment $659 per year.

Since the garage lease has about 59 years to run, the savings for a 100 share apartment would be $38,881 over 59 years. Of course, with inflation, the savings would be greater, because the co-op's budget will probably have to rise with inflation. As the co-op's budget rises, the 20% dollar limit rises, too. In addition, if the real estate tax abatements are phased out, the commercial income can be raised even higher.

Buildings whose commerical rents might rise to exceed the 80/20 rule can simply adjust the rent downward each year as necessary in accordance with the provisions of a lease. I have never had a co-op following my advice break the 80/20 rule by accident and I have been practicing over twenty years.

Very truly yours,

   /s/ Richard B. Montanye   
Richard B. Montanye, CPA

RM: go

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