St. George Tower and Grill Development and Finances

Development  

In the late 1970s, the original Hotel St. George was sold off in sections, with the Tower and Grill Buildings sold to developers who renovated them into one apartment building. The development was carried out under the auspices of the Urban Development Corporation (now the Empire State Development Corporation). The proposal had to include space for a health club and to conform with other guidelines of the Urban Development Corporation. The health club, still present and thriving in our building, is a popular neighborhood fixture. It is a self-contained business that operates independently of our co-op corporation and pays us a monthly rent for the use of its space.

In 1984, the building was converted from rental apartments into a co-op. Almost all of the shares owned by the original investor are now owned by residents, although a small number of shares are owned by a local investment group. The number of sub-lets in our building is very small; almost all of the 282 apartments are occupied by resident shareholders.

Our Operating Budget   

A common question asked by shareholders concerns the maintenance fees - what do we spend them on? The maintenance fees pay our operating costs, including payments on the underlying mortgage, real estate taxes, staff payroll, electricity, fuel, administration, insurance, repairs, and so forth. In addition to maintenance fees, the rent payments that we receive from the health club and other commercial income also go toward paying our expenses. Our total operating budget is just under $5 million per year. As you can see, real estate taxes, labor, and mortgage payments represent major portions of our costs. Just as with payments on any type of residence (house, condo, co-op), the real estate tax and interest portion of the mortgage payments are tax-deductible and you can claim a portion of your maintenance fees as a deduction on your annual income tax return.

Like any household, we have to pay monthly bills for the mortgage, taxes, electricity, supplies, and so on, in addition to our other expenses such as administration and payroll. The only way we can do that effectively is to collect the maintenance payments in a timely manner so that money is available to pay bills. This is why it’s important to pay your maintenance on time each month. If we can’t pay bills on time, we incur additional, unnecessary fees.

Our Underlying Mortgage

Another question shareholders often ask concerns our underlying mortgage - what is it, and how is it structured? When the St. George was originally converted to a co-op, the amount borrowed was $11.5 million and the mortgage had a balloon payment plan (a typical approach for this type of real estate). The mortgage was re-financed in 1998 and again in early 2008, each time as a balloon mortgage.

Our Capital Budget  

In addition to money that we use for the operating budget, we have a capital reserve fund. This money may also come from shareholder maintenance payments (if there is a surplus in our operating budget), proceeds from refinancing our underlying mortgage, or, more usually, from special assessments. This money is used for major capital improvements such as replacing an elevator, repairing the roof, and renovating the building façade. Being in a historic district, any renovations or changes to the exterior of our building have to comply with the guidelines of the NYC Landmarks Preservation Commission to preserve its appearance and status. Except in the case of emergencies, these major capital improvements can be foreseen several years in advance. For example, inspection and necessary repairs to the façade are mandated by the city government every five years.

How We Keep You Posted  

At the St. George, the board and the various committees communicate frequently with shareholders via newsletters, our web-site, and annual or semi-annual meetings. This allows all of us to keep abreast of the co-op’s financial planning and of what’s going on in the building. The committees always welcome new volunteer shareholders, especially if you have expertise in particular areas related to governance of our co-op. However, for many committees and ad hoc volunteer groups no particular expertise or experience is necessary, just enthusiasm and a little of your time.