Breakfast With a Board Member
Paul Backalenick has been the president at 24-42 Bennett Avenue, a 56-unit cooperative in the Hudson Heights section of Manhattan, for three years. Replacing an autocratic, unpopular chief executive, Backalenick brought an easy-going style to his role, seeking out consensus, not confrontation. He has had great success in changing the tone of the talk – and in actually accomplishing something: a major capital improvement project involving the roof. Backalenick sat down over breakfast with Habitat’s editorial director, Tom Soter, to talk about life at 24-42 Bennett Avenue.
You’ve been on three boards: a condo in Boston, a co-op on East 25th Street in Manhattan, and now a co-op on the Upper West Side. In two out of the three, you became president. You like to have, as you put it to me, “knowledge and control.” Yet there is a time to control and a time to collaborate. Tell us about how you decide to do which.
If I did everything, I couldn’t handle it all. I’m a big believer in delegation. I do a lot, but I can’t do it all. Let me give you an example. We had a minor tax problem. We actually overpaid one year and tried to apply the overpayment the following year. So it was very minor, but we have a very detail-oriented guy on the board, he’s terrific, and he was concerned about this issue, so I said, “Sydney, you handle it.” I just delegated it to him. And he ran with it, and he’s still firing letters back and forth to the tax assessor, filing notices and so forth. It was finally adjudicated, and we got some sort of small refund.
You recently began repair work on your building, and you imposed a 14 percent maintenance increase. Why?
We had a serious problem with our roof: we’ve got apartments complaining of water streaming into them, there are beds getting soaked at night, just horrible things; plaster falling down, bricks getting loose on the outside, a lot of risk, a lot of danger. An engineer told us, “The walls could collapse; it could destroy your building. You have to fix it.” We didn’t have the money in the bank – it’s over half a million dollars we had to raise – so we went and got a loan, which wasn’t easy to get because we already had a mortgage on the property. This second mortgage was for $750,000, and $750,000 translated into monthly payments that amounted to nine percent more than we had been paying on our maintenance.
So did you have to sell that to the shareholders?
I had to explain it to them, more than once. And I tried very hard to – others would be able to say whether I did a good job of it or not, but I thought that if I could lead people along in understanding how the process evolved… We had other costs as well. I have an MBA, and I’m fairly financially oriented. I pay attention to the financial statements, see where the expenses are going. The price of heating oil is going up, for instance. That just has to drive a maintenance increase ultimately. You can’t cut back elsewhere. What are you going to do, cut out the lights? You have these expenses, and if one component gets bigger, it’s going to ripple down to the maintenance.
When dealing with issues that arise, when are you rigid and when are you flexible?
Most of the time you have to be flexible. We’ve got a situation right now where an elderly tenant keeps overflowing her bathtub. She doesn’t recognize that the water has risen to the top. It’s happened several times. And the apartment below, the resident has been complaining that something’s got to be done, he can’t stand it another minute, what can the building do to prevent this from happening in the future? Well, there’s a rigid way of responding to that, which is to get the attorney involved and to start a legal process with letters and essentially, threats. But there’s the more flexible way of handling it, which is always my first choice and which is what I did in this case, which was to say, Let the parties talk to each other. Let’s see if they can work it out. Let’s use the property manager as an intermediary, and try to referee this thing. It’s an elderly person who has a housekeeper and she needs to check more carefully.
In other cases, it’s good to be inflexible. Like pet policy. The board members felt we needed to be very specific in how we defined the rules; otherwise it’s too much discretion in terms of someone turns up with a big dog and we seem arbitrary. It’s easier to point to a rule, to say here’s the rule. Then you can point to a rule instead of being the hard guy setting the limit out of your arbitrary opinion.
What circumstances would you have to face to step down?
I don’t think I would willingly leave the board. It’s not only giving up power, it’s giving up information. No matter how much you communicate, you really don’t know what’s going on behind the scenes if you’re not a board member. So, I would miss that. I wouldn’t willingly leave it.
Habitat, October 2011