Newsletter #152    Acrobat file    Return to archive    Newsletter #154

350 BLEECKER STREET CO-OP NEWSLETTER #153
May 31, 2002

The board met on April 11, April 30, May 7 and May 28. Among the issues discussed:

NEW BOARD MEMBER

The board unanimously elected Greg Colucci (apartment 4C, 212 647 9117) to fill the vacant seat. Greg's e-mail address is joshgrc@aol.com.

MITCHELL SCHRAGE

The board hired Mitchell Schrage, an attorney, to assist the co-op in legal action against Ken Newman in state court and arbitration. For additional information about Mitchell Schrage, see his web site, http://www.mrsnylaw.com. Mitchell's retainer is $15,000 plus 30% of what he collects from Ken Newman. None of the activities Mitchell is working on can result in Ken collecting legal fees from the co-op, should Ken prevail. Unfortunately, due to the nature of Mitchell's probable actions, the details cannot be outlined in the Newsletter at this time.

AUDITED FINANCIAL REPORT FOR 2001

Marin and Montanye finished their audit and certified the statement. It was posted on the co-op's web site (http://www.350bleecker.com/policy/finance.html) on May 26, a few days after the audit was completed. Because it is 15 pages long, it is not attached to this Newsletter. If you'd like a copy, and do not have access to the Internet, please ask any board member to give you a copy.

A major reason for the audit's delay pertained to a bank account Ken Newman controlled that still had over $5,000 of the co-op's money at the end of April 2002. The CPA firm reported that when they requested extra copies of the bank statements from Ken, he could not make them available promptly. A board member called Chase, informed them of the problem, and Chase faxed the missing statements within 24 hours.

Ken used the Chase account when he was the managing agent of the co-op. His contract expired January 31, 2001, but he kept the account under his control after that.

BIKE ROOM

Do you want to get on the waiting list for the bike room? If so, please inform Paul Morton at Tudor (212 557 3600 extension 337 or e-mail him at paulm@tudorrealty.com.) Due to the space shortage, a maximum of 1 spot may be kept on the waiting list. The waiting list is for shareholders only. In other words, if a shareholder has 2 bicycles, only 1 may be on the waiting list.

PAYMENT OF LEGAL FEE JUDGMENT

Newsletter #152 reported that Judge Lynch awarded the sponsor (Ken Newman) $344,516.18. This is the same judge who ruled against the co-op in the garage case itself. Ken wanted to keep the sponsor (himself) exempt from paying his share of the legal fees, but the judge disagreed. In other words, since the sponsor owns about 23% of the co-op's shares, the sponsor will be liable for about 23% of the judgment.

Ken raised his request, and the judge complied. So the amount awarded was raised to $366,908.20. The co-op paid Ken on May 10, 2002.

BORROWING

To minimize the co-op's costs, the seven members of the board lent the co-op $200,000 interest-free, on a temporary basis. By making the payment to Ken as quickly as possible, the co-op avoided paying him further interest and additional legal fees. His attorney made it clear that any additional efforts spent trying to collect would be charged to the co-op.

Among the reasons the board did not immediately borrow the money from the bank:

MORTGAGE REFINANCING

The 7.82% underlying mortgage, as of December 31, 2001, is for approximately $3,356,628. A mortgage broker consulted by the board offered to "lock-in" an interest rate of 6.75% (or possibly less) for a 10-year mortgage closing at the end of this year. The lower interest rate could save the co-op several hundred thousand dollars over the course of the 10-year period. The board is considering several alternatives, such as:

BORROWING ALTERNATIVES

The lowest cost borrowing method may involve avoiding banks. Shareholders may lend all or part of the funds. Bank savings accounts are generally paying 3% interest or less. Banks generally lend money to co-ops for 6% to 7.5%. Splitting the difference would allow the co-op to reduce its cost of borrowing.

GARAGE CASE APPEAL HEARING

Although our attorneys were told informally that the hearing would be in June, the exact date remains unknown. The original judge in the case will not hear the appeal.

FINANCIALS THROUGH MARCH

The last page of this Newsletter has the estimate made at the end of April, based on the figures through March 2002. These figures do not include the payment of the legal fees to the sponsor (Ken Newman) or the temporary interest-free loan made to the co-op by the board members, since those actions occurred in May.

FOR SALE

There are 3 apartments for sale that are not already in contract. They are:

1D  Studio     $298,000  contact: Armanda Squadrilli, broker 646 824 8379
1M  1 bedroom  $390,000  contact Andrew Markowitz, broker    212 350 2279
4L  1 bedroom  $385,000  contact Maryellen Keenan, owner     212 647 0770

350 Bleecker Street Apartment
2002 Estimate

Footnotes:

(A) Transfer fees projection raised to reflect stronger market than anticipated.
(B) Reflects unbudgeted tax abatement credited to shareholders.
(C) Overage reflects 2001 legal feed billed in 2002 + extra payments for legal fee defense.
(D) Overage reflects planned payment of $25,000 for the 2001 water bill currently in dispute.
(E) Overage due to sub-meter ($5,358) + carpet invoice ($8,375) paid in 2002 not 2001 as anticipated.

Newsletter #152    Acrobat file    Return to archive    Newsletter #154