Excel in NYC Coop Budgeting
Navigating Rising Costs
As the school year has kicked off and the holiday season approaches, co-op shareholders and condo owners in NYC are bracing for the annual increase in their monthly fees. This financial challenge is particularly daunting in an economy marked by high inflation and stagnant salaries. In the midst of these economic concerns, the coop and condo boards must also grapple with vendors and service contracts that annually hike their fees.
Understanding the coop budget
Co-ops and condos are typically run with no profits. During the annual budgeting process, the coop board estimates all the costs for the next year and passes them on to the owners via maintenance, and common charges for condos. To put it plainly, if your dues increase by 5 percent, it should be only because the building’s expenses have also risen by 5 percent.
Consider this scenario: Vendor X raises fees by 3% each year, Vendor Y by 7%, and Vendor Z by 10%. While these individual increases may seem modest, they add up significantly over time. Our suggestion is that boards should scrutinize their agreements with insurance carriers, service contractors, and laundry companies annually to secure favorable deals.
Today, we're witnessing substantial increases in insurance policy premiums, some even in the double digits and occasionally as high as 50%! The challenge often lies in coop boards' struggles to obtain crucial information, especially regarding contracts initiated long before their tenure.
The crux of the issue often stems from complacency. Boards frequently hear that costs are "fixed" and unalterable. While utilities, insurance and elevator service contracts are required, how much coop boards agree to use or pay for these required services can often be reduced.
Why settle for the status quo when there is an opportunity for substantial savings? Take for instance, a client of ours that we helped reduce how much water they used. Despite being informed that their water costs were average, the board chose to excel. With our guidance, they approved, and we implemented innovative solutions, resulting in a remarkable 49% reduction in water expenses.
Consider this cost breakdown of New York City coop buildings, data provided by The Folson Group:
Annual Water & Sewer Costs in NYC (per unit per year)
| Cost Type | Cost Amount |
|---|---|
| High | $1,088 |
| Low | $324 |
| Average | $595 |
Why pay $1,088 when you could potentially pay just $324 for the same service?
At The Folson Group, we have thoughtfully analyzed private building costs over the years. Empowered by a wealth of data and expertise, we provide practical techniques that reduce the various service costs. Whether you aspire to optimize your water expenses or seek an additional perspective on insurance premiums, our ESG consulting services are meticulously designed to support co-op and condo boards in their journey towards long-term cost efficiency.
Need help with reducing your greenhouse gas emissions to avoid LL97 fines for your building, a second opinion on your insurance premiums or any other building costs? The Folson Group provides ESG consulting services to assist co-op and condo boards in minimizing their building’s operating costs. Set up a strategy call with us.