Videos

00:00 (A man standing at the podium)
00:00 we can now move on to the handle portion
00:03 of tonight’s meeting our two topics are
00:07 legal representation for your buildings
00:10 contracts what boards need to know as
00:13 well as aging buildings the steps that
00:16 boards should take at this point I will
00:19 introduce Daniel finger an attorney with
00:22 finger and finger a professional
00:24 corporation of White Plains finger and
00:26 finger serves as chief counsel to the
00:29 Bri and the CCAC you all know Daniel he
00:33 has spoken at several of our meetings
00:35 and seminars in the past and he also
00:37 contributes to impact newspaper are
00:40 violent publication Daniel is actually a
00:44 you will address the first issue legal
00:46 representation for your buildings
00:48 contracts what boards and East what
00:51 bores need to know dan is all yours
00:55 (applause)
00:59 good evening everyone this is actually a
01:02 difficult topic for me because people
01:04 study this kind of thing for years in
01:06 law school so it’s it’s tough to
01:08 summarize contracts in five-minute
01:11 speech but I’m just going to go through
01:13 some of the things that I think about
01:14 when I’m drafting a contract for the
01:17 cooperative’s and condominiums that I
01:18 represent highlight some of the issues
01:21 that we go through and then at the end
01:24 if there’s any questions I can address
01:26 that or afterwards and
01:33 the in any event the contract that your
01:40 end or your contractor might give you is
01:43 not really a contract they usually hand
01:45 you a proposal they try to have you sign
01:46 off on it that’s not a contract that
01:49 that’s a proposal signing off on it will
01:52 you know can bind you but you have to be
01:55 very careful because that does not have
01:58 the protections that a normal contract
02:02 would have we for most of our clients
02:05 the cooperation condominiums that we
02:07 represent we draft all their contract
02:10 whenever they’re doing anything from
02:12 construction landscaping snowplow you
02:16 know even property management cleaning
02:18 you know whatever it is any time that
02:20 you’re in a relationship with a vendor
02:23 or third or another party we draft a
02:26 contract the reason in a one-sentence
02:30 nutshell for that is that you want all
02:33 the parties to the contract to have an
02:35 understanding of the purpose of the
02:37 relationship and the parameters of the
02:39 relationship why you know what it is
02:41 that that you as a co-op or condominium
02:45 board expect of the contractor and what
02:47 the contractor expects that that their
02:49 responsibilities are going to be you
02:51 want to have an understanding of that
02:52 and you want to have them raw realized
02:54 in writing so that way there’s any
02:56 confusion you have something to go back
02:58 to and to fall back on and you all know
03:00 what your rights again signing a
03:04 proposal from a vendor is not really
03:06 enough to address that or to give you
03:08 those kinds of protections a lot of
03:13 times when we’re drafting a contract we
03:15 don’t just sit down and just come up
03:17 with some in general we go through the
03:19 specifications for the project the bid
03:22 if there you know and if it’s a going to
03:25 mostly refer to construction issues but
03:30 when you’re dealing with a larger
03:31 project we will often work with the
03:35 engineer or the architect will have when
03:38 they’re when they’re first creating the
03:40 specifications and before it even goes
03:41 out to bid and what we’d like to do in
03:44 those larger projects is we’d like to
03:45 give them a template of the contract for
03:49 a couple reasons before they send the
03:51 bids out so that way number one they can
03:54 look at the contract and they can tell
03:56 us if there’s any issues that raining
03:59 any terms that we’ve put or any issues
04:00 that we’ve raised that either are not
04:03 typical to that particular type of
04:04 project or you know need to be modified
04:07 so it could be a payment terms he’s a
04:10 frequent one sometimes we like to do
04:13 usually we like to do progress payments
04:15 but their situation where that just
04:16 doesn’t apply I had a situation recently
04:19 where the building there was a building
04:21 that was doing a large electrical
04:22 upgrade they were replacing all the fuse
04:24 boxes in the building with circuit
04:26 breaker boxes and the way that the
04:28 payment was going to be structured was
04:30 that the contractor there was a couple
04:32 things he’s gonna have to do in each
04:33 apartment and he would get X dollars a
04:36 certain amount of dollars for each box
04:37 that he replaced and then for some of
04:41 the other stuff and then they did the
04:42 outlets and whatever and everything was
04:44 based on each item that he did he wasn’t
04:47 being he wasn’t charging how early he
04:49 wasn’t getting a flat fee for the whole
04:51 project because the apartments of
04:52 everything so based on the scope that
04:55 was how it was so that was something
04:56 that we found out and talking to the
04:57 engineer they gave us the schedule or
05:00 what they anticipated it would be they
05:01 didn’t know what the exact dollars would
05:02 be but they gave us a general idea and
05:05 then you know we had that prepared so
05:07 when the contractor came they filled in
05:09 their bid the bid pack of bid
05:11 specifications and the contract then was
05:13 able to reflect that there there we had
05:17 you know we have a standard contract
05:19 we’ve draft that we’ve crafted but we’ve
05:23 you know we have we vary it depending on
05:26 the size of the project the nature of
05:28 the project in nature of the type of
05:30 work that’s being performed weather
05:31 would say if it’s landscaping contract
05:34 or management contract it’s you know
05:36 certain things and it’s a different form
05:38 that we use that a construction contract
05:43 the as far as the actual contracts go
05:47 that one backtracking segments the other
05:50 reason why we like to work with the
05:52 engineering the architect in those
05:53 situations as they send out the contract
05:55 with the big mackeage and then the
05:58 contractor knows exactly what he’s
06:00 bidding not just the specifications but
06:03 also the contract runs the payment terms
06:04 the the time frame that is expected to
06:08 complete what the guarantee is that the
06:09 board expects to get on the project and
06:12 various other things so there’s no
06:16 confusion when they when their bid is
06:18 accepted there’s no confusion that they
06:20 were expected to have the project
06:22 completed in you know three months four
06:24 months whatever it is we thought it was
06:25 going to be progress payments or that it
06:27 was going to be you know whatever the
06:28 term is that there’s it limits the
06:30 confusion and there’s frequently still
06:32 some negotiating that goes on but at
06:35 least that you know that helps make that
06:38 process go more efficiently we try not
06:42 to get involved too much in a very
06:46 specific description of the work we
06:48 leave that to the bid specifications the
06:51 specs and the plans of the architect or
06:53 engineer withdraw and we usually
06:56 attached that or if it’s smaller than we
06:58 usually tax the proposal to the contract
07:00 because that usually has those type of
07:02 things if it was at you know if it was
07:04 the circuit breaker type thing that I
07:05 was talking about you know the architect
07:07 would specify exactly which type of
07:09 circuit breaker he wanted to go in each
07:10 apartment what type of outlets you know
07:14 whatever it is the architect or engineer
07:16 usually specify that and we will refer
07:20 back to those specifications if it’s a
07:23 smaller situation where there is no
07:25 architect or engineer then we go back to
07:27 the
07:28 contractors proposal we look at that and
07:30 we use that and will often just refer to
07:32 that proposal in terms of the actual
07:35 work that he’s doing and the board will
07:37 always look over the contract we have we
07:40 send it to them in the managing agent
07:41 first they can look it over let us know
07:44 if there’s anything that that they see
07:45 in there that was not what they expected
07:47 or was not what they you know what they
07:49 thought they were getting they look it
07:51 over in advance there’s any questions we
07:53 deal with it that way everybody is on
07:55 the same page we like the contracted
07:59 what one of the other things that the
08:02 contract has that we like the contractor
08:04 to be aware of is we want to make sure
08:06 he was familiar with all the local
08:07 requirements he knows you know not only
08:11 permitting and other municipal
08:13 requirements but by the board
08:15 departments how you know cleanup of the
08:17 site that he’s got to be fully familiar
08:21 with the plans if all’s the contract
08:24 also usually sets forth any method for
08:29 resolving any discrepancies sometimes
08:31 the contractors see something when he’s
08:33 already doing the word that he doesn’t
08:35 think can be done as the architect had
08:38 specified architect or engineer creates
08:40 set of plans but there you know things
08:42 happen and then in the process of the
08:44 word he might feel that he can’t do it
08:45 the way they’ve specified so we have a
08:48 procedure in the contract that lets him
08:51 know who we supposed to call what’s
08:53 supposed to govern so we all know that
08:54 in whatever situation how things are
08:57 supposed to progress I already do the
09:00 payment terms usually we have we like to
09:03 have progress payments but again that
09:05 doesn’t know it’s not always the case we
09:08 like the architect we also usually
09:10 specify in a number of place in the
09:11 contract we like the architect and
09:13 engineer to stay involved in the project
09:15 their job does not usually
09:17 and the minute that the bid is awarded
09:20 their job is ongoing they need to
09:23 approve the work if a payments being
09:25 issued especially in bigger projects
09:28 where you have an architecture engineer
09:30 they should be involved in sure that
09:33 what the contractors saying he did that
09:36 not only did he actually do it but that
09:37 he did it in accordance with what the
09:39 architect or engineer specifications
09:41 were that he did it with the quality
09:42 that they expected and as their plans
09:45 set forth the contract as I mentioned it
09:52 sets forth the the warranty and
09:54 guarantee term how many years or what
09:56 the provisions of that are the you know
09:59 the board needs to know these things if
10:01 you’re getting a roof you know it could
10:02 be a ten or twenty year warranty other
10:05 things could be short but at least the
10:07 board has to be aware of it because
10:08 those are things they’re paying for they
10:09 need to be aware of what they’re getting
10:11 at the outset there’s any confusion you
10:14 can clear it up then we also have hold
10:17 harmless than occasional visions and
10:20 insurance requirements and I won’t touch
10:21 on that too much I’ll let Jason go into
10:24 that sent us step on his toes but you
10:27 know those are very important things you
10:30 need to make sure that the contractor
10:32 understands that he’s responsible for
10:34 his men and for not only his men but any
10:36 sub contractors that are on the site
10:38 anybody that’s on the property during
10:40 the course of the project he’s
10:43 responsible for them and he’s
10:44 responsible for anything not only the
10:46 happens to them but anybody else that
10:48 happens to be coming through you know
10:51 while the work is happening I mean this
10:53 is just where people live so people are
10:54 you know walking by outside they might
10:56 be walking through inside he has to make
10:58 sure that the site is secure enough and
11:01 safe enough that nobody’s going to get
11:03 hurt whether its own people or whether
11:05 it’s other you know just passers-by or
11:08 residents of the building that happened
11:10 to be there he has to be familiar with
11:14 the local farming process because it’s
11:16 usually the contract or sometimes the
11:18 architect or engineer helps with this
11:19 but it’s usually
11:20 tractor with dense departments even if
11:22 it’s at the owner’s expense they’re the
11:23 ones that actually go out and do it and
11:25 the boards aren’t going to be you know
11:27 local city hall or whatever to get the
11:30 building permits the the contract almost
11:34 always specifies the rules about
11:37 subcontractor some deals boards don’t
11:40 care if there’s a subcontractor and they
11:42 expected some deals they’re hiring a
11:44 particular contractor and they want that
11:45 contract to do the work and they don’t
11:47 want any subcontractors so we like to we
11:50 like to try to make sure the contractor
11:52 understands that if he’s going to get a
11:53 subcontractor yes to get the board’s
11:55 approval first and he’s responsible for
11:57 all those subcontractors and he’s
11:59 responsible for paying them and he’s
12:00 responsible for making sure that when
12:02 the work is done that they release
12:05 whatever lien they have that they get
12:06 paid that they don’t you know to make
12:08 sure if anything happens that they’re
12:10 not going to come back to the coop or
12:12 condo and say I wasn’t paid the other
12:15 thing that we always have in our
12:16 contract that we insist on as best we
12:19 can as a termination provision that
12:20 doesn’t mean that you don’t have to pay
12:22 for work that’s been done but there are
12:24 times that the contract doesn’t always
12:26 go according to plan it could be because
12:27 you don’t like the quality of the work
12:29 the contractors doing it could be
12:31 because you don’t like the time frame
12:32 he’s taking too long that there could be
12:35 a variety of reasons why during the
12:36 course of a project you become unhappy
12:38 with a contractor and you feel it
12:41 necessary to terminate the project and
12:42 we like as best we can to make sure that
12:45 the board has the right to terminate the
12:47 contract even if it without having to
12:49 give a reason you know that’s one of
12:51 those things that sometimes you have to
12:52 negotiate and and give on a little bit
12:55 but as best we can that’s something that
12:57 you know we try to insist on the other
13:01 thing is content as I said contractors
13:03 in writing and similarly we expect and
13:06 it’s in the contract
13:07 any changes have to be in writing so if
13:09 you’re doing a project and you know
13:11 mentioned before things happen sometimes
13:13 you need to make a change for whatever
13:15 the reason is that still has to be in
13:18 writing whether it’s a whether it’s
13:20 amendment to the contract or a change
13:22 order something like that has to be in
13:24 writing if it’s a project where you’re
13:25 doing change orders that’s another
13:27 situation where the architect or
13:29 engineer would have to be involved
13:30 because they have to make sure that the
13:32 change that the contractor is requesting
13:35 will work you know in accordance with
13:37 their plans that it will still be okay
13:39 that it all still goes together so there
13:42 that’s your board relying on for help
13:45 with that so they they need to be
13:46 involved in that so you really need you
13:49 know contractor requests a change order
13:51 at the board and the board has to review
13:54 and make sure they’re okay with it
13:55 making sure they’re okay with how much
13:56 the change order is going to cost the
13:58 architect engineer has to review it for
14:01 that reason a lot of my boards will have
14:04 me double check it and make sure that
14:05 everything looks okay from a legal
14:07 standpoint so we do that as well again
14:12 the contract from a legal standpoint is
14:15 really a lot about expectations about
14:17 knowing from the board side what you’re
14:20 getting into how much you’re going to
14:21 pay having the security of knowing you
14:24 know what project it is that’s being
14:26 done the time frame it’s going to happen
14:29 know that it’s going to be done in and
14:31 in terms of time frame wheel we will a
14:34 lot of times the way I get the time
14:35 frame if it’s not from the engineer or
14:37 the architect is I ask the contractor
14:39 themselves how long they think the
14:40 project should take and if they tell me
14:42 two months I’ll usually put in the
14:44 contract two and a half or three months
14:45 and I give them a cushion so that way
14:48 you know whatever time frame they tell
14:50 me is the longest that they expect it’s
14:52 going to take I usually give them a
14:53 little longer in the contract unless
14:54 there’s some particular reason why the
14:56 board says it has to be done by a
14:58 certain date I usually will give them a
15:00 cushion so that way at the end if
15:02 they’re delaying even further and they
15:05 get to that outside date and the project
15:07 isn’t done then we can go there when you
15:09 say you know look I gave you longer than
15:11 you want it you know and they
15:14 they can’t complain if the board doesn’t
15:15 want to pay that more if they want to
15:17 have some kind of penalty for it that so
15:19 they’re aware of that but it’s again
15:21 it’s all about the expectations and
15:23 about everybody knowing exactly what’s
15:25 expected of them what their role is so
15:29 that at the end of the day the project
15:31 gets done in timely fashion and it gets
15:33 completed as the board wanted within the
15:36 expense that the board was anticipated
15:38 okay thank you
15:41 (applause)
15:48 thank you very much
15:48 when the board of directors of the coop
15:51 condo council was good together this
15:54 rope man they know it in this dress that
15:58 we definitely needed an account from
16:01 both the coop and condo perspective well
16:04 we have V account in Westchester County
16:06 (laughs)
16:07 when it comes to Cohen condos mini
16:09 eisenberg maybe has spoken to several
16:13 money to the Hutts well known in her
16:16 field please welcome Vinnie now I only
16:19 (applause)
16:23 now I only hope I can live up to that introduction
16:25 so from a legal perspective the contract
16:30 is really that spoke rights obligation
16:33 and protection and from an accounting
16:35 perspective it really is about money
16:38 money money which I know is something
16:41 that as boards of directors world fair
16:43 they’re concerned about when I started
16:46 to think about contracts of course
16:48 construction contracts were you know
16:50 more than one of the four fronts of
16:52 I was thinking about but boards enter
16:54 into many many contracts then I think
16:57 need to have the same type of
16:59 consideration as construction contracts
17:01 and I’ll talk a little bit about
17:03 construction contracts but i just want
17:06 to mention some of the other contracts
17:08 that i believe that council really
17:10 should be involved in one is management
17:13 contracts let’s say you’re going to
17:15 change managing agents a lot of managing
17:18 agents have boilerplate contracts but
17:21 for the unsophisticated board what you
17:25 need to realize is that there are a lot
17:27 of variables in those contracts as well
17:29 are you paying a fixed fee are you
17:32 paying fixed fees plus monthly operating
17:34 expenses is there a charge for
17:37 attendance and board meetings is there
17:40 in charge for attendance and union
17:41 meetings so a lot of the attorneys have
17:45 actually developed contracts that go
17:47 beyond the boilerplate that some of the
17:49 management companies have and I believe
17:52 that those contracts should be reviewed
17:54 by council as well before I invited to
17:56 those the other thing would be your
17:58 laundry agreement there are a lot of
18:01 variables and laundry contracts when you
18:03 change laundry companies for example how
18:05 many machines are going to be in
18:07 installed how much is it going to cost
18:09 per cycle what is the vendor going to do
18:14 in terms of rehabilitating the laundry
18:16 room so again these are contracts I
18:19 think that you’ll be entered into with
18:21 consideration and thought and also
18:24 reviewed by council what about a cell
18:27 tower contract in case I know a lot of
18:29 buildings here in Westchester especially
18:31 ones that are up on a higher hill there
18:34 they’ve put cell towers
18:36 the top of their properties what is the
18:39 term of the contract what in renewal
18:41 obligations who’s responsible for
18:44 repairs to the roof in case there’s
18:46 damage so again I think it’s another
18:49 important contract that council should
18:51 be looking at mortgage refinance and
18:54 documents another contract is a contract
18:58 to you know borrow some money perhaps
19:02 have a credit line attached to it and
19:04 you know attorney should obviously be
19:06 intricately involved in the negotiation
19:09 of mortgage refinancing NYSERDA
19:13 contracts many of you may have been done
19:16 been doing in oil to gas conversion you
19:19 may have been getting energy credits
19:21 through NYSERDA or some of the federal
19:23 programs again I think these are things
19:25 that council should be looking at and
19:28 reviewing so that you understand the
19:30 terms what the benchmarking procedures
19:32 are what thresholds you need to be able
19:35 to meet in order to be able to get the
19:38 credits that have been promised to you
19:41 construction management very often what
19:43 happens is when you take on a
19:45 construction project you’re also
19:47 bringing the construction manager on
19:49 site so for example if you’re doing a
19:51 window project and you have 400 units in
19:54 your building and someone needs to be
19:56 doing all the scheduling of the
19:57 replacements and the appointments and
20:00 you know managing the project again so
20:04 really just to bring to mind that there
20:06 are many many contracts that boards
20:08 enter into beyond just construction
20:12 contracts I think Dan brought up a lot
20:15 of very important points about the
20:17 construction contract from an accounting
20:20 perspective on both the CPA and a muscle
20:22 CFE I’m a certified forensic in fraud
20:25 examiner and we rely very very heavily
20:29 on the contracts one of the procedures
20:32 that we do in all of our audit
20:34 engagements is we reconcile
20:37 the payments made by the corporation or
20:40 condominium association to the contracts
20:43 and very often we find that there have
20:46 been over payments there have been
20:48 change orders where certain pieces this
20:51 change orders are actually duplicated in
20:53 second change orders so you know you
20:57 could be spending quite a bit of money
20:59 between you know these energy
21:02 conversions on down in New York City we
21:04 have all the local or 11 projects where
21:07 they doing these your facade projects I
21:09 know up here as well I think it’s very
21:11 important that the financial terms are
21:14 very well understood at the beginning
21:17 one of the important things is retainage
21:20 clauses whereby you get a hold back on
21:23 the project usually it’s about ten
21:26 percent so that you make sure that you
21:29 know the contract has some skin in the
21:31 game and that all the monies are not
21:33 paid out until that punch list is
21:35 finished and again these are all things
21:38 that have an attorney review the
21:41 contract from the very beginning you’ll
21:43 make sure that those provisions are
21:46 taken care of the in terms of
21:51 construction contracts to most of the
21:54 time contractors use what are called AIA
21:56 documents which is the American
21:58 Institute of Architects and there are
22:01 numerous forms of AI 88 contracts most
22:05 of them that you probably will enter
22:06 into or would have called stipulated
22:08 some contracts where x is a flat fee
22:11 plus allowances for certain things like
22:14 working or the
22:16 or of you know feet running feet of a
22:19 certain project and then obviously it
22:22 breaks down the scope of that project
22:24 one of the litigation that we were
22:27 involved in was with a building that
22:29 actually signed an AI a document that
22:32 was a cost plus P contract and basically
22:35 they’re caught their obligation was the
22:38 costs that subcontracted out plus a
22:42 percentage of those subcontracts to the
22:45 general contractor and when we found
22:48 through the course of the project was
22:50 that the fees that were being presented
22:54 by the general contractor as being paid
22:57 to subcontractor or in fact fictitious
23:01 they were fraudulent and the building
23:04 was over being significantly based upon
23:08 the fees that were actually being paid
23:10 to the subcontractors so again you know
23:14 I think it’s very important that an
23:15 attorney be part of that project so you
23:18 understand exactly what type of
23:20 contracts are entering into and what the
23:24 dollars are going to be in terms of
23:27 those you know those contracts should I
23:32 speak about aging buildings now or okay
23:34 okay so the other half of the program
23:38 that I know is going to be what board
23:40 should be aware of in aging facilities
23:43 and while a lot of condos were at one
23:48 point new construction almost all of the
23:52 cooperative housing corporations in New
23:54 York or conversions from rental
23:57 buildings and some of them can be quite
24:00 in an old probably very few of them
24:05 would be you know newer than like maybe
24:06 early 70s and probably most or even
24:09 older than that and what they carry with
24:11 them is
24:12 not just the things you can see but the
24:14 things you can’t see as well so while
24:17 you can see if Assad and you can see the
24:21 things that are visible what you’re not
24:23 able to see is the pipework the
24:27 foundation the steel beams inside the
24:30 terraces we’ve seen quite a number of
24:33 these projects done over the number of
24:36 years that I’ve been doing this which is
24:38 I don’t want to tell you how long but
24:40 you know the things that come up that
24:43 you can’t see with the naked eye so one
24:47 of the things from an accounting
24:49 perspective that we advise boards to do
24:51 is number one whenever you’re
24:54 contemplating a mortgage refinancing you
24:57 should be thinking about what your
24:59 capital projects are going to look like
25:00 during the terms of that mortgage so
25:04 that you can have sufficient equity at
25:06 the time of the refinance in order to be
25:09 able to meet any capital projects that
25:12 you’re planning on during the term of
25:14 that mortgage for those of you who are
25:17 not aware commercial organ sirs
25:19 commercial mortgages are not like if
25:21 they are the end loans on your units
25:24 because you can’t just refinance them
25:27 and well they carry very large
25:29 prepayment penalties so if you have a
25:32 two-million-dollar mortgage engineer
25:34 you’re an ear for of that mortgage and
25:36 all of a sudden you find out that you
25:39 need to do risers in the building and or
25:42 you need to do a massive electrical
25:44 project you can’t just easily refinance
25:48 that mortgage to take out the equity you
25:50 might need in order to be able to do
25:52 that project so when you go to refinance
25:55 you want to think long term that what
25:57 you may need to do in the project in
26:00 building until the time you refinance
26:02 again the other thing would be that most
26:05 banks will allow her credit line at the
26:08 same time that you are refinancing so
26:13 while you may just be paying the feed to
26:15 maintain that line it would be important
26:18 to have a line attached to the mortgage
26:20 so that it’s your rainy day fund in case
26:23 these projects do come up you were not
26:27 aware of them at the time of the
26:28 refinancing but you have the borrowing
26:31 capability to be able to do these large
26:33 infrastructure projects the other things
26:37 that are important is you should always
26:39 keep them you know there are different
26:40 philosophies do we borrow or do we
26:43 assess do we have the people who live
26:45 here now pay for projects that are going
26:48 to benefit future generations or do we
26:51 borrow the money so that those who are
26:53 going to benefit from these project for
26:55 years to come or pain the cost of these
26:58 projects and a lot of it is very
27:00 philosophical in terms of the boards but
27:03 it’s certainly something that needs to
27:05 be thought about and considered and you
27:08 know work with your professionals work
27:10 with your attorneys work with your
27:11 accountants we’re very often brought in
27:14 to work on assessment programs to help
27:17 pay for some of the projects a
27:20 combination of assessments and financing
27:24 how to buildings you know structure
27:27 their budgets to be able to pay for the
27:29 financing or to build up reserve funds
27:32 so that they can start saving the money
27:35 they need to do those capital projects
27:37 so I think the tape away from what
27:41 boards need to do in aging facilities is
27:43 really be aware of the various options
27:46 available to them and the need to plan
27:49 ahead for projects that mean
27:52 beyond the horizon at this moment but to
27:55 make sure that you give consideration to
27:56 those projects when you start looking at
27:58 your capital needs your refinancing some
28:02 things like that thank you very much
28:05 (applause)
28:08 maybe maybe so much great job thanks
28:11 very much when the board again was
28:16 planning this program we decided that we
28:19 needed the perspective of construction
28:22 professionals I’m happy to report that
28:25 tonight we have some very very top notch
28:29 construction professionals our first
28:32 speaker in that scenario will be dr.
28:34 Richard cerulli Richard is a
28:37 construction consultant he is a
28:40 professor of business and economics he
28:43 is the former chair of the facilities
28:46 and construction management program and
28:48 Iona College and nourish shell and he
28:51 also is a frequent contributor to impact
28:54 newspaper online publication please
28:57 welcome dr. Richard cerulli back volta
29:00 (applause)
29:04 Jeff what I want to address tonight is
29:06 the economics of Asian buildings and we
29:09 all know economics is a dismal science
29:12 and by the time I get through with this
29:14 lecture I’m going to convince you it is
29:16 truly a dismal science if it doesn’t put
29:19 you to sleep in the next five minutes
29:20 when we saw talking of economics of an
29:23 aging building there’s two terms that
29:25 should come to mind as an owner one is
29:29 the opportunity costs and the other is
29:32 the production possibility curve the
29:35 opportunity cost in layman’s term is the
29:38 next best alternate and a textbook
29:41 example would be is when you graduate
29:43 high school do you go to college take on
29:46 the debt and give up for years of income
29:48 or do you go to college pick up the debt
29:52 and earn your money over a period of
29:54 time so you’re earning increase your
29:56 earnings so if you were to go to if the
29:59 choice was to go to college the
30:00 opportunity lost was for
30:02 of income and this is a decision that a
30:05 lot of businesses sometimes fail to see
30:08 and in all my years in the industry a
30:11 lot of owners never look at opportunity
30:14 cost so if we take a look at of an Asian
30:17 building there’s a couple of ways you
30:19 could approach it one is the building is
30:21 aging and it needs some type of
30:23 maintenance and preventive maintenance
30:24 so your first option would be to bring
30:28 in a professional and architect and
30:29 someone who does diagnostic testing
30:31 maybe on a semi-annual basis and say
30:35 let’s see what the state of our building
30:36 is and you may spend a very small amount
30:38 of maybe ten fifteen thousand dollars
30:41 depending on the extent of it or you can
30:44 make the option of not doing it it’s not
30:47 broken you know don’t fix it and you
30:50 could wait and defer that and the
30:53 opportunity cost is going to be 10 years
30:55 later you don’t have a minor problem
31:00 with the building you have a failure or
31:02 facade start the failures are getting
31:05 leaking in the system the roofs are
31:06 leaking and then you have to put in a
31:09 tremendous amount of money to fix
31:10 something which could have been of what
31:12 it over time so the opportunity cost
31:14 would be basically do we take a small
31:16 amount of money say $10,000 do some
31:19 diagnostic testing bringing a
31:22 professional architect or engineer and
31:24 actually do some type of capital
31:27 improvement assessment they’re
31:28 relatively very inexpensive and will
31:30 tell you well in advance what needs to
31:32 be done and many times it’s deferred to
31:36 the point of failure and that brings us
31:38 up to the next topic which they call
31:40 production possibility curve in layman’s
31:43 terms it’s basically guns or butter and
31:45 at that particular point in time when
31:47 the building starts to fail and you have
31:50 to start putting money into facades
31:52 roofing or things like that are very
31:54 expensive you’re putting money into a
31:57 facade of every dollar you put into that
31:59 you’re taking money out of revenue and
32:01 you take in money out of architectural
32:04 upgrades which make the building
32:06 architectural aesthetically more
32:08 pleasing so since the money that we’re
32:10 dealing with a spy night you know for
32:12 every dollar you spend for butter it’s
32:15 one
32:15 staller for guns and that’s what really
32:18 happens when we start managing a lot of
32:20 these buildings and I think when we look
32:23 at this we have to look at this very
32:24 carefully and at the old days of just
32:27 calling a rule for in one day and just
32:28 do some quick patching are over because
32:31 technology today roofing systems are
32:34 very complex the chemicals are very
32:36 complex and there’s a number of
32:38 buildings where I went on and somebody
32:40 said well over the last four years all
32:42 we did is we put this we call the rule
32:44 for you put this car on and everything
32:46 was fine but a lot of these different
32:48 cars are very sophisticated materials
32:50 are not compatible and the actual repair
32:54 tar actually accelerated the
32:56 deterioration of the roof so by putting
32:58 you know spending five thousand dollars
33:01 in all the patent spend $300,000 a few
33:04 years later and that’s the opportunity
33:06 cost and that gets back down into the
33:09 production possibility curve there’s a
33:12 finite amount of money how are we going
33:14 to spend it and it also gets into
33:16 accounting which are long-term value
33:18 system present values of money and
33:19 things like that so when we start
33:22 looking at age buildings it’s very
33:24 important to do that for those who do
33:26 work in the city there is local all ten
33:29 eleven which you have to have your
33:31 facades inspected every five years on a
33:33 five-year cycle by an architect or
33:36 engineer the reason why that law came
33:38 about was because in 1980 at Columbia
33:41 University a medical student was walking
33:43 on a sudden point clicking a walk on a
33:45 Sunday morning and a piece of masonry
33:47 hit her on the head and killed her
33:50 needless to say there is an attorney
33:52 here you’ve got your hands full on that
33:54 is pure negligence the city was so
33:57 outraged by this that the building
34:00 owners were not really being good
34:02 stewards of their property they put a
34:04 local law 10-11 program it means every
34:07 five years you have to have an architect
34:09 or engineer come in and save the
34:11 building safe or unsafe and if you fail
34:13 to do it and a brick fit somebody it’s
34:16 not a criminal action at this point is a
34:18 criminal offense and the opportunity
34:20 cost is very high you know maybe 10,000
34:24 for an architect inspection or 10 years
34:26 in prison
34:27 I mean that’s that’s some you know on a
34:30 very extreme case so we look at this we
34:33 I think we have to look at in a very
34:34 practical way in terms of saving money
34:37 so and we look at dealing with the older
34:41 buildings it’s basically cost avoidance
34:43 and trying to do good preventive
34:45 maintenance so in the future you don’t
34:47 have to get stuck paying some tremendous
34:49 expenses that you know you can’t afford
34:51 and since construction costs are very
34:53 expensive you know we like to push it to
34:55 the right next year next year next year
34:57 but when the economy not so much now but
35:00 when the economy starts booming
35:02 construction prices accelerate much
35:04 higher than the CPI because at that
35:07 point those prices could accelerate the
35:09 pending just on supplying to managing
35:12 both sides twenty percent so if you can
35:14 support if you can afford it this year
35:16 are you going to afford it three here’s
35:18 some battle you no matter fifteen
35:20 percent escalation rate so what’s that
35:25 Oh Consumer Price Index I’m sorry I
35:27 talked about the autonomous we’re very
35:29 bored kid so with that we had an
35:34 architect was supposed to be here
35:36 tonight but something came up but yo
35:38 architects you can’t depend on them
35:40 anyway so its support of course any
35:43 architects here summer code so our
35:47 silicon sorta but but anyway what you
35:50 should have a design professional
35:52 architect or engineer who’s well-versed
35:54 in you know building envelopes and agent
35:58 buildings they know what to look for
35:59 they will know how to correct it and now
36:03 if you have to and if the building is
36:05 unsafe you’d much rather catch that the
36:07 very beginning phases before it becomes
36:09 a major problem especially if you’re a
36:11 co-op or a condo and you have to start
36:14 replacing walls over multiple units your
36:17 chance of lawsuit by the tenants are
36:19 even greater so your opportunity cost is
36:21 actually much higher so with that I want
36:24 to turn it over to the next person of us
36:26 a great experience in terms of absolute
36:28 doing diagnostics so I didn’t quite put
36:30 you to sleep yet so I think I’ll exit
36:32 before I do being as an economist okay
36:34 thank you
36:26 (applause)
36:40 baby there’s a job as you can imagine
36:44 someone is well versed as Richard and
36:48 his area comes across outstanding
36:51 professionals daily and monthly basis we
36:54 have one this evening his name is Audrey
36:56 ah no deeper level he is a senior
36:59 consultant with a firm named Metro spec
37:03 building Diagnostics which is based in
37:05 the Bronx Adriano told us this evening
37:09 that he will most definitely be joining
37:11 the bri so even though he’s for rookie
37:14 we are very happy to have him here and
37:17 on this opinion on this topic right now
37:19 it’s all good thank you everyone I’m not
37:20 (applause)
37:27 going to bore you what economics is I
37:28 don’t know the first thing about
37:29 economics Grow Rich thank you for why
37:32 would he go thank you when half the room
37:33 to sleep to make sure everyone’s still
37:35 awake we saw off you still have the
37:37 puffy still out there ok good all right
37:40 so uh oops so essentially i provide
37:46 building diagnostic services so many of
37:48 the facilities you know commercial
37:51 commercial facilities residential
37:53 facilities all over throughout Manhattan
37:55 Bronx Westchester and one of the most
37:59 neglected items that I’ve seen
38:03 throughout every building that I’ve been
38:04 to the well let’s say ninety percent of
38:07 the buildings that I’ve been to is the
38:09 two dirty words that everyone hates to
38:11 use does anybody know what it is
38:15 preventative maintenance nobody likes to
38:19 do preventative maintenance one of the
38:23 in addition to that the most neglected
38:25 part of preventive maintenance is the
38:27 building facade a lot of people don’t
38:30 understand that a facility is a living
38:32 breathing thing and facade get to think
38:34 of it as this skin so the first thing
38:37 that’s going to go is the skin
38:41 a lot of the programs that we have about
38:44 you know when the building first opened
38:46 up when it was new construction never
38:49 has never been updated so it is by quick
38:52 show of hands from the last time you’ve
38:53 seen a preventive maintenance done who’s
38:56 that who has updated it since then I
38:59 don’t think so it happens it happens
39:02 more often than you think happens more
39:04 than you think one of the most highly
39:06 impact items of the facility aside from
39:11 the facade is the HVAC system fire life
39:17 safety which should actually go before
39:19 the HVAC system the allergic will
39:22 distribution which then follows by be
39:24 building envelope by your quick show of
39:28 hands how many people have an active
39:31 preventive maintenance program set up
39:32 with their facilities right now meaning
39:35 it’s proactive you have your building
39:38 engineers or maintenance guys actively
39:40 going and checking no building equipment
39:43 running tests I see a lot of
39:46 head-shaking of sounding and nervous do
39:48 we have a lawyer in there we did okay to
39:53 the most common going back to the
39:56 building facade to the most important
40:00 aspects of the building facade is
40:02 something called a vapor barrier and a
40:04 thermal barrier does anybody know what a
40:07 thermal or a vapor barrier is okay a
40:12 vapor barrier essentially is the
40:15 resistance of moisture coming into the
40:19 structure it doesn’t take much to break
40:21 that that barrier once you do that
40:24 that’s when you start getting old you
40:26 start getting pests start writing a tree
40:29 foundation and you start causing all
40:31 types of damage on the interior
40:33 of the building the thermal barrier is
40:37 is more financially financially geared
40:41 because you’re you’re you’re allowing
40:44 unwanted excuse me that unwanted climate
40:51 from the outside entering the building
40:53 therefore causing you to you know run
40:56 your acs longer run your cooling towers
40:58 over for those who have cooling towers
41:00 we all know how much cooling towers
41:02 close to run so you know those are two
41:05 of the most neglected parts of the of
41:08 the facade a brief study that i’ve done
41:14 on a couple of the facilities is that on
41:17 average an average 15-story building
41:20 will cost with a compromise thermal and
41:25 or vapor barrier will cost you
41:28 approximately twelve thousand dollars a
41:30 year in waste so you’re looking at about
41:34 a thousand you’re looking at about a
41:36 thousand dollars a month shut the window
41:38 how many people have extra money to
41:40 throw out in their budget I don’t one of
41:47 the most current technologies that that
41:51 are out right now that could actually
41:52 aid you in preventing these type of
41:55 deficiencies is is infrared has anyone
41:58 ever had an infrared inspection done you
42:01 have okay you have as well it’s
42:04 excellent there’s not that is probably
42:07 the most underutilized piece of
42:08 technology that’s out right now for
42:12 those who don’t know what infrared is
42:13 it’s essentially measuring heat
42:17 signatures off of different materials
42:20 used in your building so in other words
42:23 if you have a leak somewhere hidden in
42:25 your facade you perform an infrared
42:27 inspection you will be able to see the
42:30 water where it’s originating from where
42:33 it’s winding up and what
42:35 think that that is probably the most
42:40 effective and most cost-effective
42:42 solution to figuring out what
42:45 deficiencies you have rather quickly
42:48 there it’s inexpensive and it will
42:51 identify where your issues are almost
42:54 immediately the average cost of net for
42:59 our inspections is is peanuts compared
43:01 to what the repairs are if you don’t
43:02 catch what you’re looking for an average
43:05 in for inspection depending on the size
43:07 your building is anywhere between 1200
43:11 to 1500 so yes oh absolutely but 220
43:21 word really is what it says oh
43:23 absolutely absolutely nine easy thing
43:26 work back in the 90s you know I haven’t
43:28 had gotten this before back in the
43:29 nineties people refer as anyone seen
43:30 Jurassic Park where they got the guy
43:32 with the dinosaurs comment and their
43:34 lien Fred you can see it like that was a
43:36 much earlier version of that but now you
43:40 can see you know that the accuracy of
43:44 what you’re measuring is down 2.1
43:47 degrees so you can do either qualitative
43:50 inspection or a quantitative inspection
43:53 depending on what you’re looking for so
43:56 yes since the 90s it has become a lot
43:59 more accurate and a lot more widely used
44:01 as a matter of fact it does anyone here
44:03 looking to looking to turn the facility
44:07 to an elite certified building lead
44:09 actually is mandating that infrared
44:13 inspections have to be performed in
44:16 order to receive I’m not mistaken I
44:18 believe hits the lows which is LEED
44:20 certified so if your elite certified
44:22 you’re doing work to your roof or your
44:25 your qualifying for those credits you
44:28 have to do an infrared inspection in
44:30 order to prove that or is doing the work
44:32 has done it
44:33 ordinance to the efficiency standards
44:39 inference also versatile for a lot of
44:41 other things you know mainly it’s it’s
44:43 the facade but also capturing electrical
44:46 hot spots mechanical mechanical issues
44:49 no HVAC equipment fans belts motors and
44:52 so on you know roof damage that’s a big
44:55 one very easy to see roof damage when
44:59 conducting these type of inspections so
45:01 if anyone who has had of any type of
45:05 roofing defense it’s probably a good
45:06 idea to get it done you know it’s quick
45:09 and painless and you’ll be able to even
45:12 go back to your contractor who may have
45:14 recently done the work and go back and
45:17 you know to make sure that whatever he
45:19 has done you know was done the right way
45:21 and you know real know how much a roof
45:23 boss so you know to make sure they do it
45:25 the right way sometimes you take a look
45:27 at it and you may not know you know oh
45:29 let me look okay you know he may just
45:31 painted it and walk the way you don’t
45:33 really know until you know here comes
45:34 the winter in the summer and you have
45:36 you have a waterfall in someone’s living
45:38 room so or a Jacuzzi depending on how to
45:41 use it so at the beginning of this year
45:47 proactively try to seek to incorporate
45:49 this into your facilities pans I found
45:54 it throughout various projects that
45:56 become invaluable especially in aging
45:59 buildings aging buildings they seem to
46:02 benefit the most from it you know a lot
46:04 of people between changing management
46:06 companies different contractors coming
46:08 in the DMV evolving use of of different
46:12 types of materials you don’t really know
46:14 what has happened before you you know
46:17 before you have gotten it before you’ve
46:19 had control of the building so you know
46:22 it is it is definitely a good piece of
46:23 technology to look into that’s all I
46:26 have for today I’m appreciate preciate
46:28 everybody having me here and enjoy your
46:30 night thank you
46:32 (applause)
46:35 and even beyond JCC shawano as I
46:39 mentioned earlier is co-president to let
46:42 our first associates insurance manager
46:45 for our associations Jason will kam wah
46:48 wah program this even by touching on
46:50 both topics from the insurance
46:52 perspective it’s all yours Jason is
46:56 anybody upset with the architect in Sean
46:58 I actually asked Jeff if I could go last
47:00 (laughs)
47:03 as I’m talking about those subjects
47:06 today two things all right I have a
47:09 handout it’s on your tables does anybody
47:12 know the font that I used for the small
47:16 text and the charts 9mon 11 anyone else
47:22 it’s Times New Roman 10 so I have good
47:28 news and bad news the bad news is you
47:32 probably can’t read this because it’s
47:34 too small and I had a lot of information
47:37 to give you the good news is i’m not
47:38 going to read it all for yourself he’ll
47:41 be out of here quicker than you thought
47:42 all right insurance effects obviously
47:46 legal contracts and aging buildings in a
47:51 plethora of way so I put some bullet
47:54 points down you can read them i’m going
47:56 to try to be really brief the first one
47:58 is with respect to legal contracts
48:01 obviously there’s an insurance section
48:04 in every or most legal contracts you
48:07 want to make sure that based on the
48:09 purpose of the contract the job that the
48:12 contract is outlining etc there are
48:14 certain types of insurance that should
48:16 go along with the requirements in the
48:19 job that’s being outlined in the
48:21 contract there there are a number of
48:22 different types of policies you’ve
48:24 probably seen them in contracts before
48:26 that you’re going to require of a
48:28 contract or whether it be a service
48:29 contractor or a construction contractor
48:32 general liability insurance auto
48:35 umbrella workers comp pollution and
48:38 separate set drive I’ve listed the
48:40 policy types and the reasons why you may
48:43 want to have them in examples
48:45 claims that can happen as a result of a
48:48 certain type of contractors worked that
48:50 that particular policy might respond to
48:53 so you know always good to check the the
48:56 insurance clause to make sure that the
48:57 insurance is appropriate to the to the
48:59 work being done there’s usually and
49:02 should be a hold harmless section
49:04 holding the building harmless as well as
49:06 the property manager and the board
49:09 importantly reverse-fold harmlessness
49:13 have started to cut crop up in a lot of
49:15 contracts and and even agreements
49:19 purchase orders you’ll see this with
49:21 snow plowing companies that’s come up in
49:23 the last couple of years where the
49:25 insurance company that’s ensuring the
49:27 snow pawn contractor is telling snow
49:29 upon a contractor you’re not allowed to
49:31 indemnify the building that you’re
49:33 calling for and we want you to get their
49:36 indemnification so that the building the
49:39 condo the coop is actually holding
49:41 harmless and indemnify the snow plowing
49:43 contractor the worst possible thing that
49:46 you can do is sign something with a
49:48 reverse indemnification so be on the
49:50 lookout for those additional insured on
49:52 a primary non-contributory basis with
49:54 waivers subrogation you can ask your
49:56 broker what that is but it’s good to
49:58 have you may want to get the insurance
50:00 policy declaration pages if you’re doing
50:03 a really big expensive project with a
50:05 lot of exposure like people on roofs are
50:07 hanging off the side of a building to
50:09 make sure that the insurance policy
50:10 doesn’t have the exclusions that we’re
50:12 going to talk about it that februari
50:14 meeting which you should come too if
50:15 you’re curious you know what I’m plug
50:17 mark and also notice if the insurance
50:20 policy is going to be cancelled or
50:22 changed or non renewed is a additional
50:25 insured you can have the right to get
50:26 that notice in advance of the
50:29 cancellation or change so that’s kind of
50:32 the insurance related issues with
50:34 respect to legal top legal contracts and
50:36 then on aging buildings from an
50:39 insurance perspective most of you that
50:41 are on boards or managing agents or or
50:45 even lenders are familiar that insurance
50:46 companies come out and inspect buildings
50:48 and then the issue what they call
50:50 recommendations which is kind of a
50:51 misnomer because if you don’t do the
50:54 rocket
50:54 ended things that the insurance company
50:56 wants you to do what happens we’ve
50:59 talked about this before your insurance
51:00 can get canceled or it can get non
51:02 renewed and if you don’t do those things
51:05 and if you’ve got an older building
51:06 sometimes those things can be a lot
51:07 there can be they want the the roof
51:09 repaired or replaced they want sidewalks
51:12 patch driveways patch brick pointing if
51:16 you ignore those things and your
51:19 insurance is non renewed you’re probably
51:21 going to end up paying a lot more money
51:23 for your insurance for the money that
51:24 you save by not doing the projects and
51:27 you may get less coverage with not as
51:29 high-quality accompany so think twice
51:31 before not doing the insurance company’s
51:34 recommendations it’s usually money well
51:37 spent and it’s also money well spent
51:39 because those insurance company
51:40 recommendations for them in particular
51:43 for older buildings are normally things
51:45 that can actually cost you a lot of
51:47 exposure whether it be liability
51:49 exposure or property damage exposure
51:52 such as if you’ve got fuses we talked
51:54 about a contract involving the
51:56 replacement of fuses with circuit
51:57 breakers ileana earlier in the night the
51:59 reason why insurance companies don’t
52:01 like fuses is because they can pause
52:02 fire fighters can burn down your
52:04 building which is an insurance event
52:05 costing millions of dollars that can
52:07 drive your premiums up and it’s also a
52:09 risk to the people that live there and
52:11 hurt people or killed people so I’ve
52:13 listed a whole bunch of examples of
52:15 aging building conditions that can
52:17 result in insurance recommendations and
52:19 if they’re not addressed in result
52:21 insurance claims and that pretty much
52:23 sums it up if you have questions happy
52:25 to speak to you afterwards have a good
52:27 evening thank you
52:28 (applause)
52:31 fury or questions and answers does
52:34 anyone have any questions for our panel
52:37 members seasoned and ready contract you
52:43 have a standard social teenager applause
52:46 no hero property sanitarium don’t know
52:50 dirty kind of property I said hands on
52:54 your way of those two particular I get
52:58 done with those two particular examples
53:00 are no Jack I know we have and give some
53:04 general yet particularly concerned about
53:07 no alcohol on the property because
53:09 somebody gets hurt if they drink beer
53:11 for lunch it gets to be a major problem
53:14 right the question was do we have our
53:18 standard contract any social behavior
53:20 clause we had something I honestly I
53:23 couldn’t tell you without looking at it
53:24 right now you know if it mentions that
53:27 your particular examples of fear or
53:29 whatever but i would say that those
53:32 things are probably covering and i think
53:34 our provision is a little more general
53:35 but it’s kind of a common sense thing
53:40 anyone else a not very on my way that
53:44 Lewis Katz they are there mr. Serling
53:50 this is what I probably one of the
53:53 biggest arguments we had an award is for
53:56 big projects on it was an engineer when
53:58 not some people say it goes too much
54:01 money let’s just throw it out on a
54:04 little penny saver unless you who comes
54:07 in and of course the problem isn’t if
54:09 you just leave it up
54:10 the contractor you’re going to get three
54:11 different bids for three different
54:13 totally types of work so what is the
54:15 percentage I mean four big jobs I you
54:19 know replacing the front steps and
54:21 replacing a roof that you should use an
54:24 engineer is that always a given that you
54:26 should alicious engineer outside outside
54:33 so what the question was a gentleman is
54:37 really how often do you need to use an
54:39 engineer if it will I Inc construction
54:42 Trevor Project see you as an engineer
54:45 well you would have to find an engineer
54:50 or an architect that’s very immersed
54:52 well well versed and cost estimating but
54:55 that’s very important there you know
54:56 every architect by profession has their
54:59 sub specialties so you need someone
55:02 that’s very well versed with
55:04 construction costs and also when they do
55:06 get a project one of the bigger problems
55:09 that as a problem I confront to all the
55:12 time as if a client calls maybe we put
55:14 something out to bid and the bids come
55:16 back and you get a cluster of bids
55:18 around a certain point then you have the
55:20 outlier to hide then you have the low
55:23 bidder what I general would recommend to
55:26 apply knows take those clustered bids
55:28 get to mean median made really don’t
55:32 even entertain the outliers because if
55:34 you have say for argument’s Satan you
55:37 know ten bidders on a job and seven over
55:40 in that cluster that’s the real cost of
55:42 the project and I’ve heard clients you
55:45 know tell me I’ll take the chance of the
55:47 lower bid notes the three hundred
55:49 thousand dollars less 200,000 by i’ll
55:51 gamble for two hundred thousand dollars
55:54 and they never wouldn’t it the bed
55:56 because by the time the job is over they
55:59 usually don’t pick up the scope of work
56:01 and you probably pay more than the
56:02 highest bidder with change lawyers a
56:05 little is the criteria for living
56:07 should use an engineering when you don’t
56:09 need to use one well I think it depends
56:13 on your comfort you’re all covered in
56:16 terms of the scope of the project I mean
56:18 if you’re doing a very complex project a
56:21 very big infrastructure project I’ll
56:24 even go back father if it’s a sizable
56:27 project I would always recommend the
56:30 architect had to scope of work that
56:32 means i think i think i’m answering the
56:34 question of this better now ah if you’re
56:36 going to have a project that sizable you
56:38 don’t really want the contractor
56:42 designing the project if you can’t
56:45 because it’s a conflict of interest
56:47 because a contractor will rightfully so
56:50 contractor is out to make as much money
56:52 as they can and even if they give the
56:54 best service they they’re out that’s
56:56 what it’s all about and so their
56:58 interest is for their own interests
57:01 obviously it’s a business where an
57:03 architect or engineer is really paid to
57:05 be the owner’s representative so if
57:08 you’re doing a project and I think it’s
57:10 I don’t think there’s quite a dollar
57:12 amount but I would probably say that
57:14 it’s the best way to proceed is to have
57:18 an architect or engineer if we should
57:19 have a scope of work well I mean if the
57:22 cynical problem i run into that granted
57:24 that’s very recently was also no no okay
57:27 and was that they put out a contract for
57:31 windows replacement windows and you know
57:34 one bit came at two hundred thousand
57:35 what came in at 60,000 and it was a
57:40 commercial project and they and the
57:42 person at the sixty thousand dollar
57:44 window was a residential built-in
57:46 someone who’d estatehouses not
57:48 commercial buildings they didn’t know if
57:50 it was an aluminum clad building with
57:51 the r-value was that you value was so he
57:55 compared to two he won’t even compare
57:56 apples to apples if they put the sixty
57:59 thousand dollar contract into windows
58:02 would have failed because they would
58:03 have lost in energy and everything else
58:05 so it’s it’s it’s always err on the side
58:08 of hiring an architect or engineer okay
58:11 I just wanted to add more
58:14 that I think one thing to keep in mind
58:16 he said whenever you’re bidding at
58:17 abroad whenever you’re doing a project
58:18 we need to send out bids whether its
58:21 construction or any kind of contract
58:23 type situation where you’re sending out
58:24 bids it’s as you just alluded to you
58:26 need to make sure you’re comparing
58:28 apples to apples so when you get four
58:30 bits three bids whatever it is you need
58:32 to know that you’re comparing the same
58:34 thing if it’s a simpler thing that you
58:36 can come up with the specs and you can
58:38 say that you know here’s what the specs
58:41 are and you want them to bid on that
58:42 fine if it’s something that’s more
58:44 complicated and you know and so you need
58:47 an architect or an engineer to help you
58:49 come up with that set of specs so that
58:51 the contractors can all bid on it and
58:53 then you might need their services to
58:54 help you that evaluate the bids to make
58:56 sure about that then you need an
58:58 architect or engineer I mean in some
59:00 ways if you’re asking the question then
59:02 then you might have your answer you know
59:04 if it’s if you yourselves as a board
59:06 can’t come up with the specifications
59:08 and it’s not really either your job or
59:11 necessarily your training to be able to
59:13 do that although some boards obviously
59:15 have people that are first it can assist
59:17 in that but you know other than that if
59:19 it’s not you know that it’s not a
59:20 nacelle your job so that’s why you have
59:22 professionals like engineers and
59:23 architects that you hire to help you
59:25 create those specs you know obviously
59:27 there’s some situations or it’s simpler
59:29 you know if you’re not dealing with
59:30 construction you might be dealing with
59:32 laundry contract or managing agent
59:34 contract then you don’t obviously you
59:35 don’t need necessarily another
59:37 professional but you know and a basic
59:39 thing you know some kind of basic
59:41 contract you know if it’s painting you
59:42 might be able to come up with your you
59:44 know with your specifications but
59:46 something more complicated if you as a
59:48 board don’t feel comfortable in creating
59:49 the specifications so you know what
59:51 you’re going to be getting then that’s
59:53 when that’s when you need I think I
59:56 would just go one step further in terms
60:00 of not just creating the specifications
60:02 but putting together what’s called an
60:04 RFP which is a request for proposal
60:07 where the same request is going out to
60:10 all the potential bidders so then
60:12 they’re all bidding on exactly the same
60:14 project and then
60:17 the bids are basically tailored so that
60:20 you can compare apples to apples but in
60:22 addition to just the bidding process
60:24 what we find in terms of using
60:27 architects and engineers is that they’re
60:30 also your eyes and ears on the ground so
60:32 that when a requisition is made for
60:35 payment from a contractor most
60:39 architectural requisition zaia
60:42 requisitions require the sign off of
60:45 either an architect or an engineer
60:47 before payment would be made and
60:50 basically they’re certifying that the
60:52 work was done in accordance with the
60:55 specifications and that the dollars that
60:58 have been requisitioned that the word
61:00 was actually performed so I think it’s
61:04 not just in the specification process
61:07 but it’s also in the ongoing supervisory
61:11 process to make sure that the work is
61:13 being performed in accordance with the
61:15 specifications and with the lead and the
61:19 parameters that were laid out Lewis kept
61:22 that question yes the difference between
61:27 an aia me who told me badly written up
61:30 contracts which you prefer your type of
61:33 a contractor that’s handwritten versus
61:35 an AI a contract or which way do you go
61:39 as a co-op I mean I don’t sit back and
61:42 write it I have it out of template on my
61:44 side
61:45 I personally I don’t like the AAA
61:49 contract there’s a lot of things in it i
61:51 don’t like there’s some things in it
61:52 that I do like our contract are
61:54 different templates that we have
61:56 actually we do incorporate a number of
61:59 the provisions from the AIA we’ve taken
62:02 a number of those provisions but we’ve
62:04 also changed them and added them and you
62:07 added things and and you know we’ve
62:10 crafted it in our own way so I it’s I
62:13 can’t say that that’s a blanket I don’t
62:15 like the IAA part of the reason why we
62:17 drafted our own contract is because
62:19 logistically it’s a lot easier there
62:21 otherwise there would be so many changes
62:23 to the IAA it’s not in word form it’s
62:25 not an easy template to use we would be
62:27 making so many changes every time this
62:29 way we’ve done it all in advance we have
62:31 in the floor that we want with all the
62:33 changes that that you know we wanted and
62:35 it’s an easier I think it’s personally
62:38 think its knees here lay out the ia one
62:39 is a lot of short sentences and I don’t
62:42 think is there so the easiest thing to
62:44 look at myself but I mean so I prefer ma
62:47 I prefer mine for that you know for
62:49 those reasons which is not to say that
62:51 there isn’t anything in the yeah that’s
62:53 good there’s a lot of good things and
62:54 I’ve used a lot of them we have time for
62:58 two more as we are near nine okay hang
63:02 on son I’ll be right there I’ll have a
63:07 workout I am walking member bcurtin eyes
63:15 from
63:16 analysts up there the recommendation of
63:24 your future what is it too sharp from an
64:01 accounting standpoint there’s a
64:03 difference between having an
64:06 understanding of what projects are going
64:08 to come on over the next number of years
64:10 in other words knowing that your roof
64:12 has a 20-year warranty in your near 15
64:15 or that you’re looking to do and you
64:18 know an oil to gas conversion or that
64:20 you’re in the fourth year and you have a
64:23 local or eleven project coming up versus
64:26 actually have an engineer doing a what
64:30 we color and placement study once you do
64:33 a replacement study and I’ll let Dan
64:35 speak to the legality of that but for
64:38 those of you who have audited financial
64:41 statements for your properties which I’m
64:43 sure most of you do there is a
64:47 recommendation by the American Institute
64:49 of Certified Public Accountants EIC PA
64:52 that they recommend that coops and
64:56 condos include in their financial
64:58 statements a thorough study or you’re
65:01 supposed to take all of the component
65:03 parts of a building you’re supposed to
65:05 basically scope out their estimated
65:07 useful life their cost of a plate
65:10 and how the entity is going to fund for
65:14 those eventual replacements both the
65:18 legal community and the accountant
65:20 community is very dead set against
65:22 putting those engineering studies in
65:24 financial statements because I think
65:27 that so do the attorneys in New York
65:31 metropolitan area that it leaves the
65:33 corporation of the condominium
65:34 association wide open in that if you did
65:38 anticipate something in someone bought
65:40 on that understanding that you would
65:44 open yourself up to lawsuit we also
65:46 don’t believe from accounting standpoint
65:48 that an engineer of study has any place
65:52 in accounting document so almost all
65:57 buildings i would say Robin ninety-nine
65:59 point nine percent you’ll see language
66:01 on the front page of the audited
66:03 financial statement stating that they
66:05 did not do the syrah study and that
66:09 coops have the ability to borrow or
66:12 assess or defer capital projects as
66:15 required and similar in condominiums so
66:20 the dib there is a big difference
66:22 between having a formalized engineering
66:26 costs replacement study and being aware
66:29 of what your major infrastructure
66:31 projects are and when in fact they may
66:34 need to be done in an approximate value
66:36 of those replacements and just about the
66:43 only thing that I would add is that as
66:45 you said when you do the replacement
66:47 study or the capital study you have to
66:50 start budgeting for it you have to have
66:52 to add it into your budget and you have
66:54 to plan for it and then if it’s
66:56 necessary you have to
66:58 not to do that that work but you know
67:02 that that’s the problem and it’s a
67:04 difference between being aware that
67:06 these things are out there and knowing
67:07 that your roof has a certain warranty
67:09 and then you know as was just mentioned
67:11 at doing a formal engineering study
67:13 where then you have to put it in your
67:15 financials you have to have a fact into
67:17 your budget if it’s factored into your
67:18 budget you have to then start basically
67:20 putting aside the money I mean if you’re
67:22 saying in your budget that that you’re
67:24 budgeting twenty thousand dollars a year
67:26 for for future replacements you have to
67:29 actually be budgeting that and putting
67:30 that somewhere Robbins timer alarm
67:35 energy Asians counselor Warren’s big
67:37 we’re couple points hopefully only the
67:41 microphone i really appreciate them and
67:42 they said it’s a dance set s someone
67:47 who’s managing properties and dealing
67:50 with both their firms and other firms
67:52 other legal firms other kind of person
67:54 account what we found it’s tremendously
67:57 effective because when you patent or an
68:00 ancient building stock that is to do
68:04 some kind of long-term papal state keep
68:07 it a draft form but let the residents
68:11 know because what’s going to happen is
68:12 that lo and behold you’re gonna have to
68:15 replace room in the next two or three
68:17 years you don’t start planning for now
68:19 from financial standpoint and also from
68:21 a public relations standpoint you’re
68:24 going to surprise the heck out of you
68:26 have your your shareholders or your your
68:29 honors so it’s really important to do
68:31 something
68:32 one hundred percent be no water in the
68:34 financials because one things that we
68:37 haven’t mentioned because they’re
68:39 plotting is that your different levels
68:41 of engineering studies here’s a good one
68:43 the Senators bad ones it once you’re
68:45 going to say you need two hundred
68:47 thousand dollars to improve your
68:48 building and the good ones going to say
68:50 ten billion dollars because they’re
68:51 going to be very careful and if you have
68:54 similar buildings you would have a lot
68:57 of trouble explaining that to potential
68:59 purchasers over time thank you Robert
69:04 this concludes our program many many
69:07 thanks to Daniel Jason mehndi wizard
69:11 adriano and all of you for attending
69:14 (applause)
69:18 should be tomorrow condo council and
69:21 again the BR I’s general vanishing bees
69:24 is thursday at six thirty was advancing
69:27 at way