Pitfalls of HDFC Co-ops, Mayor Mamdani’s Favorite Buildings

I know from personal experience why having tenants take ownership of their buildings isn’t going to work.

At least, it isn’t going to work nearly as well as Mayor Zohran Mamdani thinks.

Three decades ago I bought a condo unit in Brooklyn and soon became the board’s treasurer. I was determined to keep common charges low for our five owners, who were paying about $300 a month.

The first thing I did was stop using the building’s account to order pizza for condo meetings.

When our “house man” — actually his two grown sons — began charging an extra $60 for snow removal on top of their usual $110 a month for taking out the garbage, I let them go. We brought our own trash to the curb, swept up leaves and shoveled after snowfalls.

I had a plumber combine our five individual gas meters (which supplied only stoves and dryers) with the building’s main line, eliminating each unit’s monthly gas bill. Another $100 saved per month.

I moved our account from Citibank, which had a $15 monthly fee, to M&T Bank, which charged nothing. I learned how to replace a thermocouple and bleed radiators, saving $600 and the hassle of hiring a plumber+apprentice on the coldest day of the year.

I installed a smart thermostat and figured out how to fix locks, adjust door closers, repair toilets and patch the roof. Every year I filed an 1120-H, property registration form, prevailing wage affidavit and condo abatement renewal.

Mice invaded some units. Instead of hiring exterminators, I patched the holes behind appliances. No more mice.

Rats nested under our stoop. I killed them one by one, using the same $5 trap, and filled their entrance tunnel with concrete. No more rats.

When the Water Board billed us thousands of dollars based on a fire meter that never had a single drop pass through, I wrote to the borough president and got the city to reverse the charges.

I successfully appealed every $50 recycling summons and one for our exterior lights being off at night. (Who knew that was a violation?)

I replaced our incandescent light bulbs with fluorescents, then found a program that put in LED fixtures for free.

After 15 years of saving money on the small stuff, we had the lowest common charges in the neighborhood. Everything seemed fine.

But we had not accounted for the big-ticket capital expenditures that we now know are inevitable in a 120-year-old row house.

In the mid 1990s, when the facade and stoop needed work, we hired the low bidder for $25,000, but the condo didn’t have the money. I had to ask each owner, including the ground floor’s absentee landlord, to kick in a few thousand bucks.

Fortunately, everyone paid. That wouldn’t be possible in the buildings that Mamdani wants to become tenant-run, where everyone lives paycheck to paycheck and such projects now cost six figures.

We replaced the roof for $8,000, a job that costs several times more today. The roofer used blow torches, which had just been made illegal. Luckily, no one ratted us out.

In 2011 we needed $15,000 for a new boiler. Again we were short. Another assessment. I don’t know how we would have collected $3,000 from owners who didn’t pay, but they all did.

Things got worse. Rainwater started leaking through ceilings, our historic cornice was sagging, and a bunch of scalloped shingles had blown away. Bricks from the rear facade had crumbled into the backyard because an owner left a downspout clogged with leaves for years.

Several contractors looked at the building. It needed more work than we ever imagined: new brownstone for the facade, repointing in the back, reconstructed dormers, a new cornice, and on and on. The cost was $180,000. Each owner had to come up with $35,000.

In a perfect world, an HDFC co-op can handle all of these challenges. Maybe it can refinance its mortgage to pay for major repairs. Maybe some handy residents will contribute sweat equity to save money on exterminators, locksmiths, masons, plumbers, electricians, accountants and lawyers.

Maybe a nerdy shareholder will ensure the building complies with the parapet law, the gas detector law, the facade law, the steam radiator law, the gas piping law, the appliance installation law, the window guards law, the bed bugs law, the smoke and carbon monoxide detector laws and the laws requiring dozens of signs in common areas. Bigger buildings also have to deal with Local Law 97, which caps carbon emissions.

Reality check: The Urban Homesteading Assistance Board estimated in 2023 that 20 percent of New York’s HDFC co-ops were in distress. UHAB is a big fan of HDFC’s, so it was definitely not exaggerating.

“Families in distressed HDFC co-ops are at risk of losing their equity and ownership,” the nonprofit wrote. “If these residents don’t get immediate support, their homes will be in danger of foreclosure.”

In the last round of the city’s Third Party Transfer program, 30 of the 64 troubled properties handed to new owners were HDFCs.

Maintaining a small condo with educated, financially stable residents proved to be far more time-consuming and expensive than I expected. Now imagine a larger, low-income building where some residents are hoarders or Airbnb hosts, or don’t pay their dues, or illegally sublet their units.

A lot can go wrong, and as I will detail in my next column, it often does. Even when everything goes right, the mental and financial toll on building residents is significant.

As economists like to say, there’s no such thing as a free lunch. Or free pizza.