Details of 2009 Budget Announced

The North Shore Towers Board of Directors held an open meeting on Wednesday, December 3 to discuss the cooperative’s 2009 budget, which will include a maintenance increase and assessment.
Board President Bob Ricken began the meeting by explaining how the Board is kept up-to-date on the budget’s status each month.
“At every Board meeting, [Treasurer] Mort [Gitter] and [Controller] Bob [Serikstad] present a financial report to the Board,” Ricken said. “They go over every expenditure and revenue item in order to inform us whether we’re on budget or over budget, etc.”
Ricken also explained that the Towers was able to lock in oil at a cheap rate that meant the coop saved $233,000 in October.
As Treasurer and Finance Committee Chair Mort Gitter began going over the finances, he started by detailing the 2008 operating results. The projected 2000 operating revenues are $41,666,000 and the expenditures $40,957,000, which will result in a projected operating surplus of $709,000.
“We are pretty much on budget for 2008, which is pretty darn good considering the uncertainties we have in the economy and everything else,” Gitter said.
Another area where North Shore Towers had to pay more in 2008 than was budgeted was for power and natural gas. Although $5,091,000 had been budgeted, the projected final cost for the year is $5,760,000.
There were also two areas where the cooperative’s revenue dropped. First of all, it did not make as much off of the transfer fee since there have been fewer apartment sales. Also, the interest income was also down during 2008 because the rate had declined. However, Gitter said “that has not really affected our operations at a significant degree.”
Gitter also spoken briefly about the Country Club’s budget. He said that the revenues were down in 2008, in part because of a decline in the golf membership. Even so, he said the Country Club was “still able to break even for 2008” and that the expanded outside golf membership is expected to help for 2009.
The 2009 budget for the cooperative was then detailed.
“We took a couple of unique approaches in the budget process for 2009,” Gitter said. “It was our intent in arriving at the 2009 budget to impose the minimum financial burden upon our shareholders consistent with maintaining the quality of life that we currently enjoy at North Shore Towers and the necessity of presenting a balanced budget.”
The 2009 budget calls for the operating revenues and expenditures to each be $42,850,000. There will be a three percent maintenance increase for all shareholders that will go into effect on January 1.
“Without the maintenance increase, we cannot balance the budget,” Gitter said.
During his opening remarks, Ricken compared the maintenance increase at North Shore Towers with those of other area cooperatives. Those increases ranged from 3.99 percent to 11 percent.
Gitter said that, in regards to the 2009 budget, there were two items that were “a killer.” First of all, for next year real estate taxes have increased by close to $1.9 million. Gitter explained that this is because Mayor Michael Bloomberg has said there will no longer be the seven percent reduction in the tax rate, which will begin in January, and the assessed value will be going up.
The second area has been with water and sewer charges, which the city has also increased. Because of this, for water and sewer charges an additional $100,000 has been added to next year’s budget.
Approximately $5.1 million has been budgeted for fuel for 2009.
“The bottom line is that even though the numbers of our operating expenses that we have control of are very much under control…our economy is the name of the game,” Gitter said. “We just can’t overcome this hurdle of the City of New York.”
The projected amount that the corporation will have in cash and reserve funds as of December 31, 2009 will be $13,164,000. Gitter said that, although that seems like a lot of funds, more will be needed for capital improvements over the next five years. He said that an additional $10 million will be necessary.
Gitter also explained that shareholders will be subjected to an assessment in order to help fund the capital improvements.
“For 2009, in order that we can get comfortable with our budgetary needs and our capital needs, the Board has concluded that, from the abatement of 40 cents per share that shareholders will receive in June, we are going to assess 30 cents per share to be used to fund capital improvements,” Gitter said.
During the question and answer period, it was asked that the Board elaborate on some of the capital expenditures budgeted for 2009. The largest item is $300,000 for garage ramp replacement. Capital Improvements Committee Chair Herb Cooper explained that the ramp for Building Two needs reconstruction or repair.
Additionally, $250,000 has been budgeted for each of the following items: fire safety contingency, energy conservation contingency, and the water well. The total budgeted amount for these capital expenditures and other expenditures and equipment purchases is $2,185,000.