Co-ops within the Time of Covid

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Co-ops in the Time of Covid

Of the hundreds of thousands of New Yorkers who left the city in the first few months of the pandemic, there are some Lori Levine van Arsdale won't miss.

"One that I said directly, if we never meet again, everything would be fine," Ms. Levine van Arsdale, the chairman of a five-unit cooperative near Gramercy Park, told a departing neighbor – one in three, which last year sold in their small, self-managed building.

In the haze of a nearly full calendar year with the virus, one of the most overlooked aspects of living amid Covid is how it is reshaping one of the city's most enduring vertical villages, the Cooperative.

In large and small co-operatives, where time limits are rare and lifers often set the rules, the sudden departure of a few residents can have an overwhelming impact on governance, longstanding politics, and even the atmosphere of a building. And while the virus may not have caused the tremor, residents almost certainly accelerated the change.

"Covid really brought a lot of things to the surface," said Christopher Totaro, a Warburg Realty agent and board member of the cooperative. "It's like splinters that fester."

Cooperative housing, a corporate structure in which residents own shares in the property, is often viewed as a cheaper way to own home in New York, partly because the buildings are generally older and have more restrictions than condominiums, with the rules set by the shareholders will.

Estimates vary based on the diversity and corporate structure of the cooperatives, but there are more than 7,100 cooperatives across the city, according to commercial broker Ariel Property Advisors. and many are entering a busy season of board meetings postponed by Covid. Their votes could determine whether an increase in maintenance or other fees is required; when a wave of new pandemic pups can remain; whether funding rules should be relaxed to improve sales; if subletting should be allowed; when parents can co-sign or pay an adult child's down payment and countless other quirks of shared home ownership in a collapsing market.

The types of problems cooperatives face across the city can vary widely, from half-empty, white-gloved buildings on the Upper West Side, where many shareholders have retired to vacation homes, to limited-income sightseeing in Brooklyn and the Bronx, where some buildings' financial reserves are almost exhausted.

Here are some of the changes that are taking place beyond the socially distant lobbies of residents and construction workers on site.

The recent sale of three of the five apartments in Gramercy Park Brownstone by Ms. Levine van Arsdale completely changed the atmosphere in the building.

"I've been here for 15 years and people have only been nice to each other since February or March," said Levine van Arsdale, who runs Flying Television, a talent booking company. Since the majority of the units have changed hands in recent months, there was also the opportunity to revise the building's statutes, which previously only had three people on the board. Now every unit has an equal say.

Cheryl Brinkman, a longtime digital design shareholder, said there was "bad blood" among former residents, also because not everyone did their fair share, from filing routine papers to shoveling snow.

The latest arrival, Lilia Levine, an interior designer and first-time buyer who closed a two-bedroom apartment in Clinton Hill, Brooklyn in July after renting for several years, believes the new mix of owners will be more collaborative.

"There is a very strong presence of women in the workplace," Ms. Levine said in the building. Every apartment has a woman who works in a managerial position or who owns her own business. "Nobody feels too stuffy or entitled," she said.

Relationships are being tested in cooperatives across the city, however, as sellers adjust to price pressures that started before Covid and worsened by the virus, said Steven Sladkus, partner at law firm Schwartz, Sladkus, Reich, Greenberg, Atlas.

"Some people are trying to get out of the co-op at bargain prices, and that makes the boards apoplectic," because they fear the deals will hurt other owners' resale value. (In most cooperative sales, the board of directors may decline an offer for reasons that are not always clear to potential buyers.)

Many co-operatives also face lost income from commercial downstairs tenants, such as restaurants and retail stores whose rents have fallen behind, said Michael Tortorici, executive vice president of Ariel Property Advisors, a commercial real estate company.

Around 1,136 cooperatives across the city, or around 16 percent, recently had a commercial tenant, according to analysis of the public records. Some of these buildings, primarily in Manhattan and Brooklyn, may have to charge residents a temporary monthly fee or permanent increase in upkeep to cover lost funds. High fees can be a big problem for both senior fixed income residents and sellers trying to survive in a crowded market.

Sales have also been high in parts of Queens, but shareholders there may have very different pricing concerns.

Regina T. Rice, the chairman of a 135-unit cooperative in Rego Park, said there were 18 sales in the past two and a half years, more than in the past 10 years. The main reason, even before Covid, was the rapid rise in property values, stimulated by buyers from other parts of the city looking for relative affordability, which encouraged shareholders to sell and cash out. A two-bedroom apartment that would have been listed for $ 200,000 three years ago could now sell for around $ 275,000, a 37.5 percent jump. (Two-bedroom Manhattan cooperatives sold for an average of $ 1,245,000 last quarter, according to Jonathan Miller, a real estate appraiser.)

The prices have been staggering for longtime owners like Ms. Rice, a former information technology consultant who arrived 24 years ago when units sold for about an eighth of their current value.

"There are a lot of people walking up and down, but for the same reason I think it's promising," she said, noting that apartments don't stay empty for long, with an influx of recent East Asian buyers and a number of newcomers out of state, including people from Texas and Florida.

Soaring house values ​​could encourage shareholders to vote with their wallets at the next board meeting. They plan to renovate the hallways and pay for other capital improvements. It is possible that the board could also vote in favor of lowering the down payment required by buyers from 30 percent to 20 or 25 percent of the sale price, which would make it easier for first-time buyers to qualify.

Across all price brackets, many boards are under pressure to liberalize their policies to respond with loose rules to changing shareholder demographics and condominium competition, said Melissa Leifer, an agent at Keller Williams, NYC.

Just last year a customer from California had to fly to New York for a co-op board interview, with no guarantee of acceptance. Now, she said, the need for zoom and other video conferencing during the spring lockdown has softened many buildings' guidelines for face-to-face interviews.

Changing the status quo is often controversial in cooperatives, but one crisis after another has smoothed out utter hostility, said Emanuela Lupu, a partner at law firms Smith, Buss and Jacobs.

"The courts are as good as inaccessible at this point," she said due to the backlog of cases, so that the shareholders in dispute were somewhat subdued. "The pandemic has just rested everyone – people are just less obnoxious."

Thousands of porters, supers, and other building workers kept the co-operatives safe during the worst days of the pandemic, and now they are pushing for change.

"We are an association of mostly black and brown workers who live in color communities and have obviously experienced inequalities in this pandemic," said Kyle Bragg, president of 32BJ SEIU, a multi-tier building services union with more than 175,000 members. The group said 138 of its members had died of Covid, many from the New York area.

"It was a fear that didn't quite go away," said Julio Davila, who lives at a large Mitchell-lama cooperative for middle-income residents in Brooklyn Heights, where he saw his balloon with workload.

With the explosion in online shopping since March, employees could process 100 parcels in just a few hours, three times as many as before.

But it was also worth it – in April he comforted an elderly resident who fell into her apartment and helped convince her to go to the hospital at a dangerous time in the city. "It's like taking care of one of my aunts," he said. "She told me I owe her a dance."

Ardist Brown Jr., a concierge at an Upper West Side luxury co-op known as Butch, tested positive for Covid in March and had severe fatigue and other symptoms. Within three weeks he said he was back at work. "I felt like I was returning to a war zone."

At the height of the virus in the spring, he estimates that at least half of residents left for other homes, and now the percentage of residents absent is closer to 40 percent. Those who stayed, some of them seniors who did not have regular access to home health aids due to Covid restrictions, relied more on Mr. Brown. From April to July, he said he would collect extra boxes of groceries from a friend who works for a nonprofit and distribute them to some residents.

"If Butch hadn't done this for some shareholders, they would have gone without and they couldn't be here today," said Yelena Sverdlova, a senior property manager who oversees the building. There are cooperatives all over the city, including in affluent areas where at least some elderly residents have no families or local support.

"I did it because it was the right thing," he said. "I slept well at night."

Mr Bragg said the union is already envisaging changes to its contract that could put pressure on risk payments for its members. "I definitely hope that the industry will not forget this moment when we negotiate the next contract in April 2022."

The cooperative residents who have stayed in the city are far more numerous than those who left it, and they are often the ones who have the most to lose in an economic downturn.

Across the city there are around 1,300 Housing Development Fund Corporation co-operatives, low-income buildings that were mostly remodeled in the 1970s and 1980s when the city was in dire straits and many of the buildings were abandoned.

Many tenants bought their rental units from the city for a small fee, rejuvenated the buildings, and have stayed for decades. Two-thirds of the buildings say they have high numbers of seniors, said Rania Dalloul, a staff member on the Urban Homesteading Assistance Board, an advocacy group for low- and middle-income housing.

Now some of these cooperatives are facing an economic crisis that has not been seen since their inception, Ms. Dalloul said. "That feels like a real threat to their survival."

David Calvert, 67, is an original H.D.F.C. Shareholder who sat in his Manhattan Valley building until 1983 when he bought his apartment for $ 250. Now units in the building can be sold for more than $ 300,000. Around half of the residents of the 10-unit walk-up are original residents.

It has always been difficult to keep the building updated on various expenses – in fact, this was the first year that every resident regularly paid for their maintenance in full.

"We have all come here, either homeless or completely under-inhabited," he said of the original shareholders. "You care about your neighbors so much that there is a lot of tolerance."

While their building remains on a solid financial footing, some H.D.F. C.s fluctuates in financial need. In some cases, long-time residents have felt financial pressure to sell and move to cheaper cities. Critics say they have been temporarily replaced by wealthier buyers who meet the income criteria on paper but have access to more cash from families or reserves than many former residents.

Some buildings facing foreclosure could potentially be transferred to a developer and converted back into rental stabilized homes, depriving shareholders of their ownership interests and years of equity.

Even so, Mr. Calvert sees flashes of resilience that revitalized his building and cooperatives like this one in the 1980s.

"So many of us are not thinking of leaving the city, but rather redoubling our efforts to make it a great place," he said. "But it is being built block by block, people for people, and that's our formula."

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