A lot of shareholders—ourselves included—have been asking questions about the cost of the planned lobby renovations. Is this really the best use of millions of dollars? How can we be sure this renovation won’t raise our maintenance fees in the future? How is the Board balancing shareholders’ desire for refreshed community spaces with projects that would improve our energy efficiency and lower costs long-term or just generate revenue more directly? We wanted answers, so we spent some time combing through SPC’s financial statements and other Board communications to try and better understand the money aspect of this renovation. We learned a lot!
Key takeaways from what we've learned:
The lobby renovations are being funded by a 2021 mortgage the co-op took out at a historically low interest rate. It will need to be refinanced in 2031, when rates are expected to be higher.
Using most of this loan for discretionary upgrades now increases the risk that we will need to borrow additional funds to address unplanned/unbudgeted critical, infrastructure projects (like energy efficiency projects or repairing our commercial spaces’ roofs).
Maintenance makes up the majority of the co-op’s revenue, so any increase in borrowing or loans creates a direct risk of higher maintenance fees down the line.
Flip tax revenue represents a relatively small portion of the budget, making it unlikely that increased property values from renovations would meaningfully offset future costs.
A pause to reassess what we’re doing is financially prudent: The majority of the lobby renovations project funds are uncommitted / unspent and are currently earning more in short-term investments than the loan’s interest rate.
We don't want to publish additional information about the co-op's finances on a public website, so if you would like to read the full report, please email to [email protected] with your name and unit number, and we will send you the report to read.