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Informational Meeting, November 3, 2009

The meeting was recorded and is available for download here (12mb, 1:40:00).

Background:

On August 23, we were notified of an 8% maintenance increase to take effect on September 1.
On October 26, we were notified of a 4% maintenance increase to take effect on December 1.
On October 26, we were also notified of a monthly assessment that would be added to our maintenance.
A meeting was scheduled for November 3, at which the new increases would be discsussed.

The Meeting:

The November 3, 2009 meeting was attended by approximately 170 shareholders.

The purpose of the meeting was to review various aspects of our financial circumstances that have led the board to recommend and approve a maintenance increase and an assessment. Directors Michael Tumminia and Terry Macavery were seated on stage, along with representatives of Greenthal and the Engineer retained to address various building repair issues. Other Directors were seated in the audience. Mr. Tumminia conducted most of the presentation, stepping through approximately 30 well-produced slides which for the most part matched his spoken presentation in bullet format. (The presentation has been requested by SPBuzz and will hopefully be posted here in the near future.) Our new board is to be commended for conducting robust informational meetings that have the aim of sharing the data and rationale that underlie their financial policy.

Board President Michael Tumminia stated that the maintenance increase was done as a two-step plan, with the initial 8% increase announced in August 2009 aimed at "stopping the bleeding" while further details were assessed and planned (at 0:08:30 on the audio). With that in mind, the slide that calculated maintenance increases (slide #24, discussed at 0:48:30 on the audio) was misleading in that it presented only the amount of the second increase. By my calculation (which is based on my apartment configuration), the increases together come to $103.96 per month — representing an overall 17% increase in maintenance, far more than the $54.89 shown on the slide.

Mr. Tumminia called to raise our maintenance every year (at 0:11:15 on the audio):

"The first decision — and I know this issue has been brought up for years — is to raise our maintenance modestly every year, because we will bring in money to the corporation and it will allow us to have additional cashflow and to prepare for the point in time when sales of our apartments went down."

After this, Mr. MacAvery presented a slide which presented what our situation might have been if we had hypothetically had a 3% annual increase since 2002. In this discussion, he stated:

Six million dollars is how much more we would have had on hand, had we not spent it, had we had an increase of 3% per year for those years.

It should be noted that there are many items for which spending is desired in our community. With that in mind, imagining "had we not spent it" is remarkably fanciful. When considering this statement it would also be worth noting that many expenditures made by our Boards have been terribly flawed — the wallpaper in our hallways, laying the tiles in our hallways, and, it seems, the repointing of our buildings in 2002. Building our reserves is a worthwhile aim, but spending by our Boards have historically been problematic.

Many questions were raised pertaining to the repointing work that was done some years ago, and the engineer, warmly introduced as a long-time associate of Frank Durant, fielded those questions. However, these questions were not addressed by the Board: What was the value of the repointing work that was done, how does it relate to the "Local Law 11" work that needs to be done, and if we were not served well by our contractors, (a) do we have any recourse, (b) will we hire the same contractors, and (c) how can we assure that we don't get bilked on the new work?

Shareholder Sam Gerber stood up (at 1:11:00 on the audio) and introduced a "resolution" to be considered at the meeting, by which the maintenance increases which were announced would be deferred until May. He was told by Mr. MacAvery that his resolution was out of order due to the nature of the meeting. Regardless of whether the resolution proposed by Mr. Gerber has any merit, Mr. MacAvery seems to be in error, and the resolution should not have been rejected on those grounds. However, per the information copied below from the SPHC bylaws, it seems the resolution would have been properly rejected due to the fact that fewer shareholders were present than the number required to adopt a resolution.

One question raised pertained to Steve Anderson's "resignation" (at 1:29:00 on the audio). This was affirmed by Mr. Tumminia, who also expressed frustration that word of this had leaked out of the boardroom.

Sections of our bylaws that pertain to "resolutions" introduced at meetings

SECTION 2. Special Meetings. Special meetings of the Stockholders, for any purpose or purposes, may be called at any time by the President and shall be called by the President or Secretary at the request in writing of a majority of the entire Board of Directors, or at the request in writing of 25% of the Stockholders who shall require the Secretary or other Officer of the Corporation to give notice of such meeting. The time, date and place of a special meeting called by the Stockholders shall be set by the Board of Directors, such meeting to be held within forty-five days of the request in writing being received by the Secretary. Written notice of such meeting, setting forth the time and place of the holding of such meeting and the object thereof, shall be mailed or given personally to each Stockholder entitled to vote, at such address as appears on the stock book of the corporation not less than ten nor more than forty days prior to the date of the meeting, but at any meeting at which all Stockholders shall be present, or at which all Stockholders not present have waived notice in writing, notice as above specified shall not be required.

SECTION 3. Quorum. The presence at the meeting of at least one third of the Stockholders of the Corporation entitled to vote shall be necessary to constitute a quorum; but a lesser number may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until the requisite number of Stockholders shall be present.

SECTION 4. Voting. At all meetings of the Stockholders, all questions, the manner of deciding which is not specifically regulated by statute, shall be determined by a vote of the majority of the Stockholders present at the meeting.

So you want to pass a resolution...

Click here to see the section of "The Co-op Bible" that pertains to Shareholder-introduced resolutions.