And I Thought Co-Ops Were Supposed To Be Cheaper Than Condos

That’s what brokers will tell you till they’re blue in the face.  But when you have repeated maintenance hikes and assessments due to an incompetent board, I think it eventually evens out.

An example of this gross corruption and incompetence can be seen in the way the board at Parkway Village of Kew Gardens Hills Queens handled their asbestos issue.

Asbestos. A $2.4 million heating bill. Neighbor fighting neighbor. An onerous mortgage, inflated maintenance, emergency assessments, shareholder mutiny and, finally, a federal investigation into possible criminal misconduct. And just when the co-op appeared to have weathered the worst, it was hit with the ongoing fallout of the credit crisis.

This is a story about a “perfect storm” that nearly capsized a co-op in Queens. If you think your co-op or condo is immune, you might want to think again. What happened to Parkway Village could happen to you.

The complex — 109 low-rise brick buildings sprinkled across 37 leafy acres in Kew Gardens Hills — was built in 1947 as rental housing for workers at the fledgling United Nations. Asbestos was a common insulator then. Not until 1976 did the International Agency for Research on Cancer classify it as a human carcinogen. And asbestos encased miles of the complex’s underground heating pipes. Additionally, all 109 buildings in Parkway Village were serviced by a single boiler. When the complex converted to co-op in 1982, the 35-year-old boiler was replaced, but asbestos-laden lines remained.

Soon, the aging pipes began leaking steam so badly that the soil in parts of the complex was hot in mid-winter. High heating bills caused by these leaks kept the monthly maintenance fees rising. Disgruntled shareholders turned annual meetings into shouting matches.

Then in 1998, beleaguered board members made a catastrophic blunder: They signed a 25-year, $20 million self-liquidating mortgage with J.P. Morgan Chase Bank, at eight percent interest. If they chose to refinance, the co-op would have to come up with a $5 million prepayment penalty.

“That mortgage was a trap,” says James Samson, an attorney and partner in Samson Fink & Dubow, who was hired by the board in March 2008 to refinance the mortgage and develop an asbestos-removal plan. “Any board that takes out a mortgage for longer than 10 years should be sued for malpractice. These long-term mortgages don’t work because you can’t see what capital improvements you’re going to need down the road.”

 Keep reading for more gory details….

And here’s what people who have lived there or who’ve been thinking of looking there have to say. 

So much for co-ops being cost effective, and more stable than condos.

About crackheadclyde

First off, I'm totally *not* a crackhead. In fact, I what you would call very straight laced. And I'm an introvert. I chose this user name because I've noticed that when some people disagree with you or if they don't have answers when you question why some things are the way they are, they'll resort to name calling. In my case, I was told that I was on crack. This came about when we were discussing real estate. Hence my posts so far have been about real estate. But going forward I'll post about whatever is on my mind.
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1 Response to And I Thought Co-Ops Were Supposed To Be Cheaper Than Condos

  1. Leonard Jones says:

    Oh shit, I love this! Chrysotile asbestos (The kind used in America, excluding navy
    ships and shipyards) is as benign as cotton candy! Some coworkers and I were
    doing a demo at a paper mill and a buddy handed me small brick of a white fibrous
    substance and asked me if I knew what it was. I answered yes and took the brick
    and snorted it like it was cocaine!

    The guy nearly crapped his pants! This is like the global warming hoax, the ADA
    act, the Unruh Act, the Exxon Valdez spill and about a hundred other gifts the
    Democrats gave to the trial lawyers lobby! 40 years after asbestos was banned,
    ads still run urging people to join class action suits for Mesothelioma. Exxon was
    still being sued decades after the spill. Two guys with dust masks, scrapers and
    brushed could do the job. The rules require clean rooms, SCBA, etc to deal with
    asbestos remediation. What takes 50k to accomplish will cost MILLIONS!

    I hope the liberal dorks in these Coops appreciate the irony!

    “He sniffed the reeking buns of Angels and acted like it was cocaine:”

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