Newsletter #159    Acrobat file    Return to archive    Newsletter #161

 

350 BLEECKER STREET CO-OP NEWSLETTER #160
November 24, 2002

 

BOARD RE-ELECTED

On November 12, 2002 the Annual Meeting of Shareholders took place at Synagogue Darech Amuno at 53 Charles Street. All but 10 shareholders were either at the meeting or voted by proxy. The co-op has 17,222 shares. The votes were:

John Bruno 236
Gregory Colucci 10,910*
Al Del Vecchio 10,576*
Robert Geils 108
Laura Herbert 10,702*
Elizabeth Hochbrueckner 10,910*
Jim Kafadar 10,742*
Susan Kim 10,702*
Mark Lilien 10,702*
Shirley Lomanto 108
Kimberly Minarovich 236
Ken Newman 128
Cynthia Spry 344

*indicates this person was elected.

NEGOTIATING COMMITTEE

The highlight of the meeting occurred during Elizabeth Hochbrueckner's presentation about the litigation. She repeated the board's request for splitting the cost of a neutral professional mediator. Ken Newman said that he would not accept mediation, but that he would negotiate to reach a settlement. He stated that the negotiating committee's members had to acceptable to him. As an example, he stated that he would not accept any board members as negotiating committee members. The committee members are: David Briman (6KL); Josette Greechan (5E); Maryellen Keenan (LA); and Mary Sculley (LJ).

SUMMARY OF ANNUAL MEETING

Attached is an outline summary of the meeting and a graph showing apartment values. If you have any questions or comments about these topics, and missed the meeting, please contact any board member.

OUR STAFF

At this time of year, people ask about the tenure of our staff:

Rifo Otovic, Super, has been working for the co-op since 1989.
Jerry Rawls, Porter and Doorman, has been here since 1963
Armando Sanchez, Doorman, since 1989.
Jasmin Orahovac has been Weekend Doorman since 1993.
Geoff Merrill, Weekend Doorman, started this year.

FOR SALE

 

Prices per Share and Building Value

 

11/12/2002
Annual Meeting of Shareholders - summary outline

I.       Introduction of moderator (Al Del Vecchio, Chairperson) who introduced:

A.     Board members (Gregory Colucci, Al Del Vecchio, Laura Herbert, Elizabeth Hochbrueckner, Jim Kafadar, Susan Kim, and Mark Lilien)
B.     Anthony Collela and Paul Morton of Tudor
C.     Rick Montanye, CPA
D.     Andrew Brucker (attorney, who supervised counting ballots)

II.     Board member reports

A.     Legal update - the history of the 2 garage votes was outlined. Five separate legal actions were discussed.

1.     2 Garage votes

        1999: lost by 3 votes. Ken stated in writing and verbally he'd sue shareholders who voted against him. Open ballot, not secret ballot.

        2000: unanimous vote. Ken stated in writing and verbally he'd sue shareholders who voted against him, but ballots were secret

2.     Garage appeal in federal court

        Done in August
        Answers can take 1 day to 1 year
        $367,000 legal fee may be refunded if co-op wins

3.     $22 million lawsuit by co-op in state court

        conflict of interest: did Ken represent the co-op's interests or his interests?
        Ken had 7 different roles (lawyer for co-op, board president, board member,
        transfer agent, managing agent, commercial space lessee, sponsor)
        Attorney Mitchell Schrage paid retainer + 30% of winnings

4.     Ken's suit to see confidential board minutes (state court)

        Court agreed with co-op that legal strategies remain confidential
        Court denied Ken his legal fees
        Insurance company defended co-op

5.     Ken's lawsuit against Mark and Jim (state court)

6.     Ken's demand that the board sue Mark and Jim (state court)

7.     Repeatedly, board suggested neutral professional mediator

        Note: #5 and #6 are listed on the web site.

B.     Financial

1.     Mortgage: 2 banks fighting each other for our business due to value of building, excellent location, excellent condition
       (new roof, recent boiler, etc.)  Mortgage debt as a percentage of the building's value is declining.

a.     $4.25 million at less than 6% compared to current $3.3 million mortgage at 7.82%. Will save about $66,000/year for
        10 years = $660,000 less refinance costs of about $143,100, of which $66,000 is tax deductible. Net savings = about
        $500,000 = about $960 per week for 10 years.
b.     Includes $3 million credit line.
c.     Co-ops commonly have credit lines since mortgages last for 10 years and a lot can change in 10 years.
d.     Mortgage closing goal: first half of 2003.

2.     Board members lent the co-op $200,000 interest-free, to be paid back upon mortgage closing.

C.     Construction, physical maintenance, and building improvements

1.     Dispute with AM+G waterproofing contractor settled. Co-op now has its roof guarantee and
        the contractor's lien is being lifted.
2.     New intercom board installed. Volume is now fairly loud. Due to the age of the building, adjustment of volume for
        each apartment is not economically practical. If the volume is turned down, then some apartments have trouble hearing.
3.     Mailbox replacement scheduled for January, to minimize holiday disruption. We'll have our old mailboxes in temporary
        lockable frames in the lobby for 1 to 2 weeks. New mailboxes will be more than twice the size of the old ones.
        Design Committee advised on color and physical arrangement.
4.     Elevator maintenance firm will be replaced. Poor service on weekends and weeknights.
        Negotiation with alternative firms now going on.

D.     Shareholder Communication

1.     Monthly newsletters and web site with litigation details
2.     Requested shareholder opinions on important specific issues:

a.     sidewalk planting design as suggested by Design Committee
b.     budget, including legal retainer for $22 million lawsuit against Ken Newman
c.     garage appeal (meeting in October and specific Newsletter asking for opinions in November)
d.     mortgage refinancing, including credit line
e.     mailbox replacement

E.     Safety and security

1.     gas pilot light stoves being phased out (when people move out)
2.     security system rebuilt and then caught

a.     laundry room thief
b.     elevator vandal

3.     board taking bids on emergency lighting for hallways (during power failures)

F.     Sales of apartments - valuation reaches new high, with large number of transactions (11 so far in 2002)
        (see handout with graph)
Year   High $/share
2002   $3,459.46
2001   $2,897.73
2000   $2,650.79
1999   $1,753.73
1998   $1,650.00
5 year rise   +110%

III.   Annual election

 

350 Bleecker Street Apartment Corp
2002 Estimate

 

      October YTD           Estimate
      Unaudited Nov-Dec Full Year   2002   Over/(Under)
           Actual           Estimate           2002             Budget             Budget     
Income                  
Commercial Rent     $ 71,667 $ 54,655 $ 126,322   $ 123,750   $ 2,572
Laundry Income     11,381 2,000 13,381   12,000   1,381
Transfer Fees     89,330 - 89,330   40,000   49,330
Maintenance (B)     867,081 185,598 1,052,679   1,041,587   11,093
Other Income (Sublets, etc.)          10,734      726      11,459        10,600        859
Total Income     $ 1,050,193 $ 242,979 $ 1,293,172   $ 1,227,937   $ 65,235
                   
Expenses:                  
Real Estate Tax     128,193 209,281 337,474   337,256   219
Mortgage Interest & Principal     245,249 48,806 294,054   290,526   3,529
Other Taxes          11,088      -           11,088        3,938        7,150
Total Taxes & Interest     384,530 258,087 642,617   631,719   10,897
                   
Insurance     39,024 11,197 50,221   42,749   7,472
Management Fee     33,908 6,782 40,689   40,689   (0)
Legal Fees (C)     141,887 7,611 149,499   73,000   76,499
Accounting     6,704 1,334 8,038   7,206   832
All Other (security, postage, etc.)          5,871      1,307      7,177        7,840        (663)
Total Administration     227,393 28,230 255,623   171,484   84,140
                   
Labor     187,321 40,548 227,868   235,325   (7,457)
Utilities     88,186 13,800 101,986   115,928   (13,942)
Maintenance & Repairs     36,487 7,301 43,788   46,594   (2,806)
Contingency     - 2,500 2,500   15,000   (12,500)
Construction/Capital Projects (D)          18,785      16,858      35,643        21,858        13,785
                   
Total Expense     942,702 367,324 1,310,026   1,237,908   72,118
                   
Net Operating Income/(Loss)     $ 107,491 $(124,345) $ (16,854)   $ (9,971)   $ (6,883)
                   
Projected Cash @ 12/31/02 (E)         $ 14,307   $ 139,251   $ (124,944)

 

Footnotes:
(B)     Reflects unbudgeted tax abatement credited to shareholders.
(C)     Overage reflects 2001 legal fees billed in 2002 + extra payments for legal fee defense.
(D)     Overage due to sub-meters ($5,358) + carpet invoice ($8,375) paid in 2002 not 2001 as anticipated.
(E)     Projected cash includes $367,467 payment made to Ken Newman for his legal fees.
         $200,000 was a no-interest loan from the board to the co-op.
         Actual cash at the end of October was $138,651. Due to record low interest rates, the board is
         exploring refinancing the mortgage and acquiring a bank credit line.

 

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