Co-op housing faces crisis

by Mark Connor

Ever since moves were made to merge five separate West Bank neighborhood housing co-ops into one entity known as Riverside Homes in 1999, ostensibly for a refinancing project that would allow a number of residents to purchase their homes, there has been conflict. Now, after two years of bickering with the West Bank Community Development Corporation (WBCDC) and other entities involved with the project, representatives of the five co-ops are sorting through apparent deception and maltreatment while mounting a legal defense after being declared in default by the very entity that is supposed to help develop the community.
“The leased co-ops have been declared in default,” says WBCDC Director Tim Mungavan. “The bottom line issue is that the income doesn't cover expenses. We have no budget that describes an income that covers the expenses, and that's the responsibility of the co-ops to present to the CDC and for the CDC to review . . . They haven't done that, so the default is our next step to try to deal with the financial needs of the project,” he said.
Representatives of the five co-ops, however, have presented alternative budgets. The issue, as far as they are concerned, is whether the expenses presented by the WBCDC, particularly those financing the continued contract with West Bank Mutual Management Company (WBMMC) as property manager, are warranted. They say maintenance and repairs, when they are made, consist of little work and shoddy materials. Also, a number of residents have complained of disrespectful treatment from WBMMC, including failure to respond to requests for necessary repairs, as well as entries into homes for non-emergency repairs without providing legally required notification. Such
complaints have existed since the attempted merger, and the same representatives within the co-ops also insist they have never received full disclosure from the WBCDC of financial activities.
The five co-ops whose uncertain merger has kept them in a state of limbo over the last two years are West Bank Homes, Union Homes, Watch Cat Co-op, Sherlock Homes, and River Bluff Homes. The Riverside Homes Limited Partnership established a joint board with a representative from each of the five co-ops. After the joint board rejected a number of budget proposals from the WBCDC between October 2000 and February 2001, they attempted to ameliorate the dispute. A letter in early March was sent to the WBCDC by the joint board, which includes Nancy Plath of Riverside Homes, Carol Duffy of West Bank Homes, Amanda Rondeau of Union homes, Joan Scully of Sherlock Homes, and Stephanie Beigbeder, who recently moved from Watchcat to Sherlock Homes because her income grew to in excess of what residents are allowed to earn while living in the former. The letter asserted that the rejected proposals contained “inconsistent figures, proposal to proposal, plus the additional fees [such as consulting and incentive fees], operating expenses and line items.” The letter also explained a number of proposals they wished to make to the WBCDC, requesting, “please add this joint board issue to your March 26th meeting agenda. We would appreciate the opportunity to begin a new communication, board to board, at this time.” In spite of these efforts an agreement between Riverside Homes and the WBCDC could not be reached at a meeting in mid-April, and on April 30 the WBCDC declared them in default.
At this point the issue appears to be headed for court. The co-ops have 15 days from the day the notice was received to reply. Tim Mungavan said he believes they received the notice on May 4, while a co-op source said it was received on May 3. Regardless of the exact day, co-op members have retained an attorney and if the matter is not resolved in the next couple of weeks a significant court battle may occur.
“In this particular model [that Riverside Homes has rejected],” says Riverbluff Secretary Nancy Plath, “we would have [government subsidized housing] programs like Section 8 and Section 42 offering profit to the developers of over 2 million dollars just on fees alone. And then when you talk about our management company, they're controlling the flow of information, the flow of the dynamics of who's involved with the board . . . They're also making enormous salaries, and our expenses are going up instead of down even though we've been forced to merge to one management company.” There was no way to approve any budget that was offered to the co-ops, she said.
As representatives of the five co-ops dig their heals in while strategizing with their lawyers, it remains to be seen what will happen between them and the WBCDC, which does not seem prepared to compromise.