2006-09-01 / Columnists

It's My Turn

By James Gilmartin +Ella Van Zanten +JoAnn Catanese +Maralyn Kaufman

The following It's My Turn column was written by members of the Dayton Beach Park Privatization Committee.

We would like to address a number of inaccuracies represented in two recent articles published in The Wave. The August 18, 2006 article by Patricia Hannan entitled "Dayton Beach Park Meeting Is Short On Answers" states "The procedure for privatization....

requires at least two votes by the shareholders and then a payout of the existing mortgage." It appears as if Dayton Beach Park's current mortgage lender and not have to pre-pay to renegotiate another mortgage. The results of a professional feasibility study will give us definitive information regarding, specifically, what connections, if any, HPD has to our mortgage.

In the August 11, 2006 article by Patricia Hannan entitled, "Dayton Beach Park Board To Address Privatization..." certain Dayton Beach Park residents were interviewed and those individuals made assertions which range from merely misinformed to grossly incorrect. Bruce Jacobs erroneously described as a former president of the Dayton Beach Park Board of Directors, claimed that, upon opting out of the Mitchell-Lama program, residents of Dayton Beach Park would have to take loans to buy their respective "condos." This is completely false. Dayton Beach Park is not a rental complex looking to become a cooperative and it is not a cooperative interested in reconstitution to a condominium complex. Dayton Beach Park is a cooperative and it will remain as such. Therefore, there are no insider prices that residents of Dayton Beach Park would have to pay, upon conversion, to own their co-ops. Dayton Beach Park shareholders already own the shares to their respective co-ops. It is similar to the stock market. For example, if you originally bought Google stock at $50 per share and it's now $300 per share, then the value of your shares have increased and you can sell those same shares for substantially more money. The same is true for Mitchell-Lama cooperatives which privatize: if you originally bought your co-op for $7,000 and, after privatization, it is worth hundreds of thousands of dollars, then your equity has dramatically increased and you can potentially sell those same shares on the open market for huge profits. Again, after privatization, Dayton Beach Park shareholders would not have to spend any additional monies to own their co-ops, because 1) the complex will remain a cooperative and 2) they already own their respective shares.

Unfortunately, the affordable Dayton Beach Park which Mr. Jacobs defends is a thing of the past. Our current mortgage has dictated a 24.5% increase in maintenance in 2003 and a letter, dated June 20, 2006, was circulated to all shareholders from our corporate accountants, Newman, Newman & Kaufman, that a proposed 18% increase in maintenance is on the way in order to cover our operating expenses. That would equal an unprecedented 42.5% increase in maintenance in only three-plus years. For many Dayton Beach Park residents, maintenance costs are fast approaching market rates and those residents who are forced to pay income-based surcharges are already paying market rates to live in so-called "affordable housing."

Having dealt with such maintenance increases, and the threat of more to come, it's understandable why Dayton Beach Park shareholders would cringe when resident and past board president Delores Orr told the Wave, "shareholders investigated privatization about 15 years ago and nixed the idea when they learned their carrying charge (rent) would double." First of all, the "investigation" Ms. Orr spoke of took place 15 years ago. The results of which are antiquated and no longer applicable to the Dayton Beach Park of today. Secondly, how was the issue of privatization investigated? We are not aware of any professional feasibility study conducted at that time to ascertain the desirability of dissolution.

The only way for Dayton Beach Park shareholders to discover whether privatization is feasible and what it would mean to them, specifically, including possible maintenance increases, is for a 51% majority to vote to have a professional feasibility study conducted. Dayton Beach Park must get the written approval of HPD, if the dollar amount for the professional feasibility study exceeds $30,000. Therefore, expenditure of funds would not likely exceed $30,000. The study will be paid for with corporate funds. However, for the sake of perspective, $30,000, divided among 1,144 residents, would amount to approximately $26 per shareholder; a small price to pay to potentially gain so much. Any speculation about maintenance increases prior to such a study is imprudent and fans the flames of fear unnecessarily.

Conversely, what one can do to calm the fiscal concerns of shareholders is discuss numerous proven ways other Boards of Directors have kept maintenance costs down, after privatization, insuring that every resident remain comfortably settled into their respective homes with no fear of displacement. Instituting flip taxes; leasing vacant land and available building space to professionals; selling vacant co-ops; applying for corporate tax abatements; and individual tax exemptions such as Star, senior citizen home and veteran are just a few ways to keep costs down. And, of course, each shareholder would have his/her respective tax return to look forward to and the option to Subsidies such as SCRIE would continue, because it is based on income, not net worth. Even those who are unwilling or unable to remain shareholders after privatization would have the option to sell his/her shares back to the cooperative for the original equity plus the value accrued over time (the value of the co-op within the Mitchell-Lama program, not the free market value of the co-op after privatization), effectively exchanging their occupancy agreement in shares for leases protected by rent stabilization laws. Rent stabilization laws entitle tenant-renters the same services they enjoyed as shareholders including, but not limited to: repairs, maintenance, the furnishing of light, hear, hot and cold water, elevator services, janitorial services, the removal of refuse, and ancillary services such as parking and recreational facilities. What is crucially important to understand is that exorbitant increases are avoidable and no one will be forced to leave their homes, especially not seniors.

Ms. Orr also stated that "people looking to sell and move would make out the best." Undoubtedly, making huge profits which enable many shareholders, for the first time in their lives, to have enough money for a substantial down payment on a house or to have something of value to leave their children and grandchildren would be a true blessing. However, privatization means a better quality of life for those who choose to stay residents of Dayton Beach Park. Current shareholders would inevitably care more about where they live and new shareholders paying large sums of money to live in Dayton Beach Park would care a great deal if only for the simple fact that, for both groups, it affects their pocketbooks in a big way.

Dayton Beach Park is poised for greatness. The Rockaway community is coming up all around us. If shareholders take on the responsibility of improving their own co-ops and the Board of Directors are fiscally responsible and utilize available funds to improve, not only the exterior, but the interior of the buildings (e.g. elevators, hallways, staircases, lobbies), we will go slowly, but surely make our buildings more desirable places to live. And if we go private, the added rewards will be to live as we see fit, free from the rules and regulations of NYC, and the ability to capitalize on a 43-year-old investment which is long overdue.

The decision to go private lies with every Dayton Beach Park shareholder. We ask that shareholders not take that decision lightly, but rather make the effort to investigate this issue fully. Shareholders should: do their own research, consulting independent sources for information; make up their own minds and do not allow the ignorance or intimidation tactics of others to make up their minds for them; and, demand and/or discover proof before they believe. There is too much at stake to proceed in any other way. There is no reason to fear information. Knowledge is power. Seek the truth.

The Dayton Beach Park privatization committee, a group of shareholders unaffiliated with the Board of Directors or Phipps Management, will conduct a seminar-like meeting for Dayton Beach Park shareholders in the near future to clarify and expound upon information which was already distributed via letter and website ( www.privatedaytonbeachpark.com ). A lawyer who specializes in the process of withdrawing from Mitchell-Lama controls will be present to explain the process to shareholders.

All Dayton Beach Park shareholders are welcomed to attend whether you are for privatization, against it or undecided.

However, this meeting will not be a forum for debate or protest; its main purpose is to educate and inform.

The Community Affairs officer at the 100th Precinct will be notified of this meeting. And since this will be a private meeting, the privatization committee reserves the right to deny admittance to anyone; additionally, anyone who attempts to disrupt the proceedings will be asked to leave.

We believe that every Dayton Beach Park shareholder has the right to receive information unhindered and any attempt to interfere with that communication will not be tolerated.

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