NEW YORK, Jan. 26, 2015 /PRNewswire/ -- Matthew Adam Properties, a leading New York property management firm, played a key role in in restoring the financial health of Orloff Towers. Working with the co-op's accountant and board, Matthew Adam helped bail out the co-op. "All was not pretty with the finances of Orloff Towers several years ago as the income constraints of Mitchell-Lama regulations, escalating costs and an overfunded escrow account put the building in a financial crisis," said Ira Meister, president and CEO of Matthew Adam.
Orloff Towers is a 188-unit red-brick building in the Bronx, one of the finest Mitchell-Lama co-ops in New York City. Mitchell-Lama housing was created in 1955 by the state and provides land and property tax and mortgage subsidies to developers to build affordable middle and low-income housing.
Orloff Towers' problem was caused by a confluence of factors, Meister said. Primary was the sharp increase in energy and other operating costs. This was compounded by the Mitchell-Lama requirement that the state approve the annual budget and maintenance increases for properties covered by the law. In conventional co-ops and condominiums, only board approval is required. As a result, while expenses were increasing Orloff Towers was unable to increase rents due to a delay in obtaining state approval of budgets and monthly maintenance increases.
Orloff Towers found itself in a cash-flow bind and needed nearly $100,000 to pay its bills.
The co-op's board considered a special assessment while asking William Rank, CPA, a partner with the accounting firm of Bloom & Streit LLP, to look into the financials. Rank's initial review indicated the property's revenue estimates should have provided sufficient funds to meet expenses.
Rank went deeper and found that the state water/sewer and insurance escrow accounts were overfunded by approximately $180,000. The good news was that the building was not actually running at a deficit. The bad news was that it didn't have enough money to pay current bills.
To meet its obligations, the building borrowed $99,000 and during the time of the loan paid the interest. But the escrowed state funds hadn't been returned when the loan became due.
"This is where Matthew Adam Properties stepped in," Meister said. "Over the years we had developed an excellent relationship with the residents and board of Orloff Towers. We wanted to keep the property afloat and not have the building go into default or require a special assessment, which could have a dramatic impact on the residents, many of whom are on fixed incomes. We knew the integrity of the board and the work of Bill Rank confirmed that belief. What to do?
"Initially we talked to the vendors and, in particular, to the oil company which agreed to spread out the payments allowing the building to continue to get fuel. But the issue of the due loan still existed. We paid off the loan while Orloff Towers waited for the state reimbursement."
"Matthew Adam Properties is proud to be part of the triumvirate to get Orloff Towers out of its financial difficulties," Meister said. "The board acted reasonably, Bill Rank determined the underlying problem and we, at Matthew Adam Properties, were able to provide the funds to give the building time to get on its feet. I'm pleased to say that today Orloff Towers is in good financial shape and still one of the prime Mitchell-Lama properties in New York."
SOURCE Matthew Adam Properties