Every crusade begins with a cause, and every crusader seeks out his or her own brand of justice. In the case of a man we’ll call Howard, it was a problem with his bathroom vent that occurred when he was only a shareholder. He contacted the board and said that the gas dryer from a laundry room below was venting directly into his bathroom. Within five minutes of someone using the downstairs dryer, the bathroom was a sauna.
It seemed like a serious problem – yet Howard received just one call from the board. The president phoned him to say, “You are the only one complaining about this,” and then let the problem fester.
Days turned into weeks and, finally, Howard felt compelled to report the co-op to the Department of Buildings (DOB). That call ultimately solved the problem, but the visit by the DOB inspector also earned the property a violation.
Did it have to come to that?
The short answer is “no” – but the longer answer is more complex.
Howard’s initial experience with the board created a crusader. “After the dryer incident, I began paying more attention to the board’s activities,” he says. “I came to believe that ours was an entrenched board that was voted in year after year by apathetic shareholders. Our board liked to refer to the co-op members as a ‘family.’ I came to see that this feel-good metaphor was manipulative and had a dark side: the shareholders were clearly considered the children of the family who were to be seen and not heard.”
Howard ran for the board and was elected. Serving for a little over a year now, Howard has been a constant gadfly, poking and prodding, asking questions and demanding answers until everyone is probably sick of him. Yet figures such as Howard play important roles in the running of co-ops and condos. They keep boards on their toes – and, if dealt with properly, they can be a big help to community life.
Out of the Past
When Howard got on the board, he came with an agenda -– and a chip on his shoulder. He felt that the board was lazy, inept, even corrupt, ruled by an iron-fisted president. “In my opinion, the board president ran the board like it was a personal fiefdom and had a great deal of ego invested in it,” says Howard. “The president alone decided what would and what would not get onto a board meeting agenda. Board records were sloppy and incomplete. In my opinion, the board had forgotten, if they ever knew, that their primary purpose was to protect the interests of the shareholders.”
Such thoughts were natural, but, say experts, Howard would have been a more effective member if he had been a little less direct in expressing his opinions. Who wants to have a Moses on the board, constantly hectoring them about what they’re doing wrong? No wonder Howard felt that “from my first day as a board member, I encountered open hostility from management and several board members. The board, following the advice of the managing agent and attorney, made numerous attempts to obstruct any efforts I made on behalf of the shareholders.”
That obstruction was first seen when the newly elected Howard requested past records. “The building was in the midst of an expensive construction project,” says Howard, “and I asked to see the contracts pertinent to the construction. I was informed by the managing agent that, according to the attorney, I, as a board member, had no more rights to review these documents than a shareholder.” The refusal created unnecessary controversy. “To gain access to the board records, I threatened to sue, and I meant it,” recalls Howard. The board backed down.
Once he examined the records, Howard uncovered what he thought was a major scandal: poor work by a contractor and a lack of response by the board. “I discovered that some years earlier a report had been received by the board regarding the $450,000 balcony waterproofing project currently under way. The report stated that the previous $200,000 project to waterproof the balconies five years earlier had been done with improper materials that exacerbated rather than eliminated further leaking.
“When I raised the point at a board meeting, it became clear to me that no board member had ever read the report and that the possibility of a breach of contract claim against the company that used the improper materials had never been considered by the board, the managing agent, or the attorney. I have since learned that a breach of contract claim has a six-year statute of limitation; the original work was performed in 2004 and the report was received in 2009. In other words, had the board bothered to read the report when it was received in 2009, they would have been within the six-year statute of limitation.”
There were more incidents – apparent ignorance kept the co-op from taking part in an energy- and cost-savings program offered by the New York State Energy and Research Development Agency (NYSERDA); possible election irregularities in the counting of votes; anger over a newsletter published by Howard that discussed the NYSERDA program – but it all comes down to the main issue facing the board and its gadfly: do you want to be right, or do you want to get things done?
“It’s all about being able to work together effectively and making informed decisions,” notes attorney Steve Wagner, a partner in Wagner Davis who is not connected to the building. “If you can’t, nothing gets done. You have to find consensus and common ground. Everyone agrees the building should be maintained; how you do it determines what kind of community you’re going to be.”
To do that, Wagner notes, a board critic may want to focus on what’s coming up, not dwell on what came before. Granted, he who forgets the past is destined to repeat it, but he who constantly looks back may end up in a crash. Says Wagner: “If he keeps looking back, he’s going to miss the headlights of the truck that is about to run him over – i.e., he may miss the next major issue the building will have.”
That said, what lessons could a board and an internal critic like Howard take away from these experiences?
Be diplomatic. Being blunt is satisfying but ultimately not rewarding. Here’s the first lesson for new board members with bees in their bonnets: don’t take a holier-than-thou position. You’ll alienate members who may be better employed as your allies.
“When the board is under attack, they take on a siege mentality,” observes attorney Stuart Saft, a partner at Dewey & LeBoeuf. “I’ve been on boards where we’re doing our job for a long time, and then somebody new comes on who doesn’t have the institutional memory of the other members. The first thing they want to do is tell us everything they know about what we should be doing, notwithstanding the fact that we have done this for years.”
“They often get on the board and feel like they have a better way to run it,” agrees Carl Borenstein, an executive at Veritas Property Management, which is not affiliated with the building,
By the same token, board members should not be brusque and offhand with fellow directors and shareholders. When Howard was constantly calling about his dryer, the board president should have handled it differently, professionals note. He may have been irritated by the caller’s complaints, but he should have been more diplomatic – and certainly should have seen that the problem was fixed. It should never have gotten to the point where the DOB was brought in.
Listen, learn, and use psychology. Howard was not humble, and his pronouncements could not have endeared him to his fellow board members. Indeed, experts say that new board members should temper their remarks. The art of politics is seeking consensus and compromise, subtly leading in the desired direction rather than pushing.
“Whenever I go on a new board, I try to listen and learn,” Saft says. “I look to see what’s happening and who’s in charge. I make suggestions as I go along. I pick my fights. Even if you know what you want to achieve, you move the other board members slowly in the direction you want them to go. It’s about group psychology.”
Co-opt your critics. The board, for its part, should have embraced the newcomer’s enthusiasm, rather than fighting it every step of the way. For instance, when the newly elected Howard requested to see past records of the corporation, the board should not have refused. “That makes him think there’s something they don’t want him to see,” says Borenstein. A lawsuit would serve no one’s purposes – both Howard and the co-op would be paying out of pocket – and Howard would have won a right he already had: to examine the co-op’s history.
Borenstein says that one way to silence critics is to assign them to committees that channel their enthusiasm into constructive areas. “Shutting him down is not the right approach. The quickest way to shut someone up is to volunteer them for a job [involving the criticized area]. I would say, you serve on a committee and see what you find. If you try to shut them down totally, that creates more animosity.”
Look at the facts as objectively as you can. Was the board president as powerful as Howard imagined? Saft says probably not and that board gadflies should not ignore facts that may indicate that the board president is not as all-powerful – and the residents not as apathetic – as you may think. After all, in Howard’s case, the critic was elected to the board, reportedly getting almost as many votes as the president. And the system was transparent enough to let him see the vote tallies. “I was impressed by the fact that he was able to get elected to the board,” observes Saft, “because if the president was running it as his personal fiefdom, he would have had the ballots counted so this guy would have lost.”
In the case of the statute of limitations and the contractor, there can be other reasons that a board might not sue a contractor in such a situation besides ignorance of the law, reasons that a competent attorney or managing agent might have explained to the board.
“The problem with bringing a claim on a $200,000 project is, what’s it going to cost to bring the claim?” observes Saft. “How certain is the reviewing engineer that the job was done improperly? Is the contractor judgment-proof at this point? If the contractor has gone out of business, or filed for bankruptcy, or has loads of claims against him, you could wind up spending $75,000 and at the end of the day getting nothing.”
Experts agree that boards and newcomers should remember that a little knowledge could almost be as dangerous as no knowledge. Howard sought out information but brought with it preconceptions that colored his interpretation of the facts. “He’s right in saying that board members have to pay attention, but he’s painting this board really badly, and I’m not sure if the problem was the board or the managing agent,” says Saft. “You need to get good advice. That’s why you hire professionals. Obviously, they had the wrong professionals.”
In the end, experts say that boards should embrace those who seek out knowledge – and follow suit. Most experts agree that if boards rely too heavily on professional advice without having the wisdom to give them perspective, the building could be heading for trouble.
“He is trying to do the right thing,” says Wagner. “He is educating himself. He is doing his homework and asking a lot of good questions.” In fact, board members, new and old, need to remember the adage, often quoted by the late co-op advocate Charles Rappaport: “An informed board is an effective board.”
Habitat, March 2012