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A $30 Million Assessment in New York City

by Lark Turner

A $30 Million Assessment in New York City: Figure 1
2 Fifth Avenue, courtesy Google Maps

Every co-op owner’s nightmare was realized in New York City in 2011 when a building’s residents took a $30 million assessment for a necessary two-year repair. What’s worse, residents initially thought they’d be shelling out a lot more.

Owners at 2 Fifth Avenue got a shock in 2009 when a bulging row of bricks turned out to be hiding a massive problem — the originally-installed bricks had absorbed water, The New York Times reports. For safety reasons, the whole facade had to be replaced.

The co-op board in place when the problem was discovered, headed up by a real estate executive, was eventually forced out after residents decided the $35-$45 million estimates for the facade were too vague, the mortgage-financing plan wasn’t the right move and the board was not being transparent enough about any of it. They were replaced with a new board with a new plan, including a self-financed (no mortgage) $30.7 million project that ended up costing the 289-unit co-op’s shareholders $125 per share.

Because shares vary widely based on the size of units and sometimes other variables, like a unit’s exposure, it’s difficult to provide an idea of how much that added up to for the average owner at 2 Fifth Avenue. Rest assured — it was a lot. If shares were divided equally among the coop’s owners (they are not), each would have paid a little over $100,000.

Real estate lawyer Steven D. Sladkus told the Times the assessment might be record-breaking.

“It was a mind-boggling number,” he said. “The closest I know of was $8 or $10 million. But with a problem so enormous and so potentially dangerous, you have to bite the bullet and do the assessment, because you sure as hell aren’t going to raise that kind of money by having a bake sale in the lobby. And raising maintenance to cover something that extreme would kill the value of the apartments.”

See other articles related to: new york city, fifth avenue, co-ops, co-op fees, assessments

This article originally published at http://dc.urbanturf.com/articles/blog/a_mammoth_co-op_assessment_in_new_york_city/8618

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