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Catastrophic Collapse Makes Yonkers Co-op Stronger
Frank Lovece in Building Operations on October 30, 2018
Yonkers, Westchester County
Wall Makers: (left to right) property manager Lionel Cole, superintendent Tony Tazi, and PLI president David Amster (photo by Margaret Fox).
When its retaining wall collapsed and sent tons of concrete and dirt tumbling onto nearby Metro North Railroad tracks, the middle-class Hudson Courts co-op in Yonkers was pushed to the brink of foreclosure. To keep the co-op from going under, the board took out a short-term, high-interest "bridge" loan from Brick Capital Group. The loan required a punishing 20-percent assessment on shareholders, but it financed the $2.2 million wall repair and bought the co-op time to find a traditional lender.
Then, after so much trauma, this endangered co-op finally caught a break. The wall repair wound up costing a little more than half of the budgeted $2.2 million, thanks to savvy brainstorming by the engineer, the contractor, and an unlikely source. At one of the open meetings, a shareholder brought up the idea of foregoing conventional poured concrete and instead using riprap, which is a layer of chunks of rock and rubble that is spread on the ground to prevent mudslides and erosion. "Obviously we ran it by licensed professionals to make sure it could work," says property manager Lionel Cole of Prime Locations Inc. While the contractor couldn't use riprap exclusively, the cost of the job came down to $1.2 million.
Once the wall repair was completed in December 2017, the co-op sought refinancing. In March, the National Cooperative Bank (NCB) extended a $6.5 million first mortgage and a $500,000 line of credit to Hudson Courts at 4.57 percent interest. "NCB asked a lot of questions and did a lot of due diligence," says the co-op's attorney, Domenick J. Tammaro, a partner at Spolzino, Smith, Buss & Jacobs. "I had the answers for them, and at the end of the day it didn't make sense not to do it."
Board president Regina Allen adds, "I think they realized we were competent and things had changed."
The co-op repaid Brick Capital for the bridge loan and ended the assessment three months early. The board also refunded one month's assessment to shareholders as a show of good faith. "A lot of people had had to tighten their belts," Cole says. "The assessment was a significant cost to middle-class people."
Private lenders aren't necessarily the solution in every such situation, advises Brick Capital's managing partner Eric C. Roth. "Unfortunately, there are other private lenders out there who are known to lend money with the anticipation they're not going to get it back and who will foreclose on the property," he says. "It's called 'loan to own.' That's why some private lenders get a bad reputation."
"Gleeful" is how Cole describes the current mood at Hudson Courts. "People are happy – they see the work being done," he says, pointing to long-deferred balcony and fire-escape repairs that began in May with money left over from the lowered wall-repair cost. Roof replacement is next. "They see improvements in the building. Sales are high, and property values have increased."
The collapse of the retaining wall didn't kill Hudson Courts. It made the co-op stronger.