By Sabina Mollot
CompassRock, which was still a startup when it took over the day-to-day operations of Stuyvesant Town/Peter Cooper Village, has recently set its eyes on an even bigger catch.
Last November, the Denver-based management arm of CWCapital became one of eight companies that put out a bid to manage Co-op City in The Bronx, and now it’s considered one of three favorites.
Jeffrey Buss, an attorney for the co-op, which is known as a company as Riverbay Corporation, said the goal is to pick a new management company by the end of this month, although there have already been delays.
First the 15-member co-op board has to make a decision, but even then Wells Fargo, which has a $621.5 million mortgage with the property, still has a say, and HUD (a major guarantor) and the state housing agency are also key players.
Meanwhile, Cleve Taylor, the president of the board, isn’t sold on CompassRock, explaining that he finds the company’s lack of experience – it formed in 2012 — concerning.
“That is one of my chief concerns,” he said. “It appears in our management criteria that with respect to managing Co-op City, they are supposed to have five years of experience. It appears to me on the surface that CompassRock does not meet that criteria. So that is a major concern of mine. My second concern is that CompassRock does not have sufficient experience managing Mitchell-Lama cooperatives in the State of New York. CompassRock’s relationship is mostly landlord-tenant based.”
He added that he thinks Riverbay might even be better off without a third party manager.
“It is my opinion that if a qualified managing agent is not found that Riverbay Corporation should remain a self-managed entity,” said Taylor, “since our managers have more experience than CompassRock, LLC. It’s just a plain fact.” However, he added, bank documents contain language that says there must be a managing agent or general manager.
Co-op City has been searching for a new managing agent since last October, and its last management company, Marion Scott Inc., has been out of the picture since November. Riverbay and MSI are currently in litigation, with the latter having sued in an attempt to get reinstated. The property, meanwhile has accused its former managers of mismanaging money and labor relations with the property and it is now in the midst of hammering out a $6.4 million settlement to be paid to employees by September. As a result, Co-op City’s residents will likely soon be facing a 4.5 percent hike in their monthly carrying charges in order to pay for it.
“They left us in quite a mess with our finances,” said Taylor. The monthly charge increase is currently pending state approval.
Currently, shareholders pay $209 per room, including heat, hot water, power and air conditioning.
Riverbay’s attempt to find a new manager has been chronicled in City News, a sister publication to Town & Village based out of Co-op City, and currently, other finalists for the job include WD Winn (an offshoot of Winn Companies) and First Services Residential. MSI was one of the eight companies to put in a bid and according to Buss, all eight are still being considered.
“It’s taken longer than anybody thought it would, but it’s an important decision,” the attorney added.
Co-op City encompasses 330 acres, 65 building lobbies, 15,372 apartments and there are 58,000 people living in them. It pulls in $200 million in income, which apparently is not enough. “We’re broke,” said Taylor. There are 1,165 employees, including 100 armed police officers. While Taylor said the crime rate is low, apparently, the fact that the officers carry weapons does not dissuade some dog owners from not cleaning up after their pets, according to Buss.
“It makes no difference,” he said. The armed officers, Buss added, just “means we have higher insurance.”
Taylor and Buss both said any new managing company needs to understand that the property must remain affordable.
“Most of our residents stay in place for long periods of time,” said Taylor. “We tend not to move.”
Buss added that upkeep was also a major factor. “Money management is certainly important. Managing personnel is crucial. Managing construction projects is essential. And you have to know how to do that in a way where you can preserve affordable housing.”
He noted that it’s a completely different mission from the one CWCapital had upon its takeover of Stuyvesant Town, which was to get bondholders paid.
“Their goal is to jack up the rents — that’s real estate 101,” said Buss. “We’re real estate 102. Our goal is completely different, because we have the largest naturally occurring retirement community in the country.”
When asked for comment on Co-op City and Taylor’s concerns, CompassRock’s David Sorise, Stuyvesant Town’s general manager’s response was that naturally he thought his company was in fact the right one for the job.
On the issue of experience, he noted that CompassRock’s come a long way since 2012, and now, including ST/PCV, manages 30,000 residential units across the country, most of them in New York. Another large New York property is Riverton.
He also outlined some of the changes implemented since the company’s takeover, which, he said, have helped increase efficiency and improve resident feedback on customer service.
In Stuy Town, among the complex’s 470 employees (not including contractors), 2,500 work orders are put out each week (that’s 130,000 a year). A new system was recently put in place to keep track of each job and find out how long it takes to complete, along with the requests for jobs, with alerts being sent to iPads that are given to employees and notices if follow-up work is needed. The system also allows any needed supplies to be auto-ordered.
“You don’t want to ever tell a resident ‘we don’t have the part,’” said Sorise.
Another administrative change made by CompassRock was the implementation of the Building Management System, which regulates buildings’ heat.
Prior to that when there was a problem a bell outside the impacted building would ring. This, said Sorise, meant “Engineers would have to walk around and listen for bells. Now if the heat goes down we’ll know about it before residents are calling. It gives us some lead time.”
The system, among other things, also can detect leaks and isolate where they are.
“The system allows us to monitor usage and water levels so we can identify a problem before the DEP identified a leak and bills us for the wasted water.”
Sorise, who’s been at Stuy Town for a few years, at first as a consultant, also pointed to the company’s administrative response to Hurricane Sandy.
When the management office was destroyed, the company moved some of its operations to CWCapital’s midtown office, and also flew in a number of employees from Denver, where CompassRock is based. Trucks were also sent from New York to a known supplier in Pennsylvania to get fuel for the property.
“Having a national platform was very helpful because it allowed us to pull resources from across the country to help us after Sandy,” said Sorise.