First the plan may not even be voted on. Ultimately the process of allotment will have to be agreed upon if demand exceed supply.
No one will be assigned a room.
Here are some possible scenarios because nothing is set yet. The rooms having a certain price and usability which will create economic and personal preferences. Obviously some people will just not be interested or it may be outside their price range. There very well may be a period where letters of intent are sent out to see if demand actually exceeds supply. If it does then there is discussion of making preferences by floor so that people get first dibbs on rooms on their floor. This is being considered for everyone's benefit to help keep down elevator traffic and give the most value to the rooms. Among floor members, if there is still more demand than supply, a second system of preference may be adopted like preference to ones ownership interest or a lottery.
The likely outcome is that with 203 apartment and 90+ rooms there will be some decisions that need to be made. However, some people use their 3 Hanover Sq. Apartment as a Pied-A-Terre and some sublet their space and their interest in a room may very well be much less than others. Also some people just won't be interested in a room from personal preferences, some have combined apartments and may only want one and some won't be able to afford it. When these elements are factored in, then it is likely that much less than the 203 apartments will be interested. In any event some fair system among those still interested will have future discussion and shareholder feedback about allotment.
Just reading all these postings for the first time and want to thank Rob G for taking the initiative on creating a forum for open discussion on this issue. To that end…
To maximize value to the building, shouldn't the rooms simply be auctioned off to the highest bidder (with a price floor so that if no one values a storage room at a minimum price determined by the board to be appropriate, the coop can hold the room for sale at a future date when the market's valuation and board's valuation more closely coincide)? I am in favor of the privatization and sale of storage spaces, but I think it is paramount that the sale process be fair and designed to achieve the highest possible value to all of the shareholders of the coop.
I would strongly oppose, and urge others to oppose, any plan that would give preference based on location, or involve a lottery process, that could result in someone being able to purchase a room at a lower price than someone else is willing to pay. A lottery process (or system that gave preference by floor) would ultimately transfer value away from the collective coop and place it with the individual shareholder lucky enough to have won the lottery (and/or be located close to storage space). Any such lucky shareholder could monetize that value by turning around and selling the storage space to any other shareholder who was willing to pay more but who drew unlucky numbers in the lottery (or happened to be located on a floor further away from storage space); and that difference in price would be money that should have gone to the coop but would instead be pocketed by the single lucky shareholder.
I am guessing that most people will not be going to and from their storage space every day, and therefore think having owners of storage on floors other than on the ones on which they live would likely have a negligible impact on elevator traffic. In any event, since there are not storage spaces on every floor, we currently (and under any sale scenario would likely continue to) have users of storage rooms on floors other than their own - and whether a shareholder takes the elevator one floor or 20 floors, they would be using the elevator and having a similar impact on elevator traffic (especially if the one floor movement is toward the lower or upper extremities of the building). Further, if storage is not going to be ownable by, or transferable to, shareholders on floors other than where the storage is located, it is less marketable and thus less valuable (resulting in lower sales prices and profits to the building than if the storage were freely ownable and transferable by shareholders). If storage is to be freely transferable (as it should be in order to maximize value), granting a preferred buying right to someone who does not need the elevator to access their storage space would not prevent that person from turning around and selling their space to someone on another floor willing to pay a higher price (resulting in less revenue to the building and removing whatever benefit may have been expected from an anticipated reduction in elevator usage).
More to the point, I do not see how giving preference by floor results in getting the most value for the storage rooms. If someone on a particular floor values a storage space on that floor more than someone on another floor, then they would presumably bid accordingly. If they are outbid by someone another floor, then presumably they have not valued that space more than the winning bidder. By way of example, I am not sure I understand how it benefits the building from a financial perspective if someone on 20 is able to purchase a storage space on that floor for $15k when someone on floor five would have been willing to pay $30k; and I do not see how a sale to the buyer on floor 20 in that scenario is reconciled with the argument put forth that the sale of storage is a means of more equitable distribution of the space than our current first-come, first-serve system. In fact, that scenario seems to me like a modified continuation of our current situation, where the lucky few are able to obtain storage space that the majority of residents subsidize (currently through maintenance payments borne by all shareholders - and under a sales system where the highest bidder does not prevail, through the lower revenue received by the collective coop shareholders as a result of selling to one shareholder lucky enough (due to lottery or location) to have purchased storage space at a price discounted from what other willing buyers would have paid).
I personally would be in favor of a system that results in the building's sale of the storage space at the highest price any shareholder is willing to pay (subject to a price floor guaranteeing a minimum return to the building). However, any lottery, geographic or other system that deprives a shareholder of the right to acquire a room for which it is willing to pay the highest price seems inherently unfair to all shareholders, and contrary to the stated goal of raising capital for the building. It could lend credence to some of the concerns voiced that this is a "land grab", might increase the risk of litigation (both from scorned highest-priced bidders and from shareholders deprived of the revenue from those bidders) and should be vehemently opposed.
Eli...Wow! Points made... and these are under discussion... nothing is set and I see divergent views within the blog.
I did think about allotment a lot and I am still clinging to fixed pricing.
I agree it would be great to get even more money with an auction and note all your points, but I wanted to maximize the initial interest. Note some think my prices are cheap, some expensive....
I am fearful that all the units will not sell if there is an auction. I had hoped that making them reasonably priced would make interest high and there is something to be said for having them all sold and getting in the income to perform the capital improvements in the next 2 years. Specifically, those who did end up losing common storage and/or could not get a room could see a more tangible renumeration in intercoms, carpeting, etc. I am afraid that with auctions many won't enter and many won't sell and we go through this whole process and the building is still faced with an assessment.... oy!
Also I consider the elevator issue much more weighted than you and can not be so easily discounted. We have few elevators in the building and while people don't go to their units everyday we are talking about 90+ units possibly purchased by perhaps many more people like 150 when you consider spouses and families owning a unit together. If all those people live on a floor other than their storage unit it becomes a lot of trips and many more requests for the service elevator.
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3 comments:
First the plan may not even be voted on. Ultimately the process of allotment will have to be agreed upon if demand exceed supply.
No one will be assigned a room.
Here are some possible scenarios because nothing is set yet. The rooms having a certain price and usability which will create economic and personal preferences. Obviously some people will just not be interested or it may be outside their price range. There very well may be a period where letters of intent are sent out to see if demand actually exceeds supply. If it does then there is discussion of making preferences by floor so that people get first dibbs on rooms on their floor. This is being considered for everyone's benefit to help keep down elevator traffic and give the most value to the rooms. Among floor members, if there is still more demand than supply, a second system of preference may be adopted like preference to ones ownership interest or a lottery.
The likely outcome is that with 203 apartment and 90+ rooms there will be some decisions that need to be made. However, some people use their 3 Hanover Sq. Apartment as a Pied-A-Terre and some sublet their space and their interest in a room may very well be much less than others. Also some people just won't be interested in a room from personal preferences, some have combined apartments and may only want one and some won't be able to afford it. When these elements are factored in, then it is likely that much less than the 203 apartments will be interested. In any event some fair system among those still interested will have future discussion and shareholder feedback about allotment.
Just reading all these postings for the first time and want to thank Rob G for taking the initiative on creating a forum for open discussion on this issue. To that end…
To maximize value to the building, shouldn't the rooms simply be auctioned off to the highest bidder (with a price floor so that if no one values a storage room at a minimum price determined by the board to be appropriate, the coop can hold the room for sale at a future date when the market's valuation and board's valuation more closely coincide)? I am in favor of the privatization and sale of storage spaces, but I think it is paramount that the sale process be fair and designed to achieve the highest possible value to all of the shareholders of the coop.
I would strongly oppose, and urge others to oppose, any plan that would give preference based on location, or involve a lottery process, that could result in someone being able to purchase a room at a lower price than someone else is willing to pay. A lottery process (or system that gave preference by floor) would ultimately transfer value away from the collective coop and place it with the individual shareholder lucky enough to have won the lottery (and/or be located close to storage space). Any such lucky shareholder could monetize that value by turning around and selling the storage space to any other shareholder who was willing to pay more but who drew unlucky numbers in the lottery (or happened to be located on a floor further away from storage space); and that difference in price would be money that should have gone to the coop but would instead be pocketed by the single lucky shareholder.
I am guessing that most people will not be going to and from their storage space every day, and therefore think having owners of storage on floors other than on the ones on which they live would likely have a negligible impact on elevator traffic. In any event, since there are not storage spaces on every floor, we currently (and under any sale scenario would likely continue to) have users of storage rooms on floors other than their own - and whether a shareholder takes the elevator one floor or 20 floors, they would be using the elevator and having a similar impact on elevator traffic (especially if the one floor movement is toward the lower or upper extremities of the building). Further, if storage is not going to be ownable by, or transferable to, shareholders on floors other than where the storage is located, it is less marketable and thus less valuable (resulting in lower sales prices and profits to the building than if the storage were freely ownable and transferable by shareholders). If storage is to be freely transferable (as it should be in order to maximize value), granting a preferred buying right to someone who does not need the elevator to access their storage space would not prevent that person from turning around and selling their space to someone on another floor willing to pay a higher price (resulting in less revenue to the building and removing whatever benefit may have been expected from an anticipated reduction in elevator usage).
More to the point, I do not see how giving preference by floor results in getting the most value for the storage rooms. If someone on a particular floor values a storage space on that floor more than someone on another floor, then they would presumably bid accordingly. If they are outbid by someone another floor, then presumably they have not valued that space more than the winning bidder. By way of example, I am not sure I understand how it benefits the building from a financial perspective if someone on 20 is able to purchase a storage space on that floor for $15k when someone on floor five would have been willing to pay $30k; and I do not see how a sale to the buyer on floor 20 in that scenario is reconciled with the argument put forth that the sale of storage is a means of more equitable distribution of the space than our current first-come, first-serve system. In fact, that scenario seems to me like a modified continuation of our current situation, where the lucky few are able to obtain storage space that the majority of residents subsidize (currently through maintenance payments borne by all shareholders - and under a sales system where the highest bidder does not prevail, through the lower revenue received by the collective coop shareholders as a result of selling to one shareholder lucky enough (due to lottery or location) to have purchased storage space at a price discounted from what other willing buyers would have paid).
I personally would be in favor of a system that results in the building's sale of the storage space at the highest price any shareholder is willing to pay (subject to a price floor guaranteeing a minimum return to the building). However, any lottery, geographic or other system that deprives a shareholder of the right to acquire a room for which it is willing to pay the highest price seems inherently unfair to all shareholders, and contrary to the stated goal of raising capital for the building. It could lend credence to some of the concerns voiced that this is a "land grab", might increase the risk of litigation (both from scorned highest-priced bidders and from shareholders deprived of the revenue from those bidders) and should be vehemently opposed.
Eli
21D
Eli...Wow! Points made... and these are under discussion... nothing is set and I see divergent views within the blog.
I did think about allotment a lot and I am still clinging to fixed pricing.
I agree it would be great to get even more money with an auction and note all your points, but I wanted to maximize the initial interest. Note some think my prices are cheap, some expensive....
I am fearful that all the units will not sell if there is an auction. I had hoped that making them reasonably priced would make interest high and there is something to be said for having them all sold and getting in the income to perform the capital improvements in the next 2 years. Specifically, those who did end up losing common storage and/or could not get a room could see a more tangible renumeration in intercoms, carpeting, etc. I am afraid that with auctions many won't enter and many won't sell and we go through this whole process and the building is still faced with an assessment.... oy!
Also I consider the elevator issue much more weighted than you and can not be so easily discounted. We have few elevators in the building and while people don't go to their units everyday we are talking about 90+ units possibly purchased by perhaps many more people like 150 when you consider spouses and families owning a unit together. If all those people live on a floor other than their storage unit it becomes a lot of trips and many more requests for the service elevator.
But I am open to discussion ....
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