Workers Paradise Screwed Over Workers?
Fiscal Crisis Could Lead to Layoffs, Residents Getting Slapped with New Fees
Community Needs to Pay $6.25M Worker Settlement
#CoopCity #Riverbay #Lawsuit #Legionnaires
By Michael Horowitz
BRONX, NEW YORK, JANUARY 22- Riverbay president Cleve Taylor, blaming Herbert Freedman and Marion Scott Real Estate, Inc., for Co-op City’s latest crisis, said the community’s board of directors is considering the possibility of imposing a onetime assessment of $128 per room to pay the $6.25-million settlement of the labor case that management’s workers brought against Riverbay in April 2013 and other immediate expenses that must be met over the next five months.
The immediate expenses that must be paid amount to $9 million, Taylor noted. These expenses, the Riverbay president include, in addition to the labor-case settlement, $500,000 for legal expenses in conjunction with the labor case, $1 million to $2 million in costs relating to Co-op City’s recent cases of Legionnaires’ Disease, $300,000 for a litigation and contingency reserve fund, and $1 million for a general reserve fund.
The Riverbay president said that Wells Fargo Bank, which holds Co-op City’s current $621.5-million mortgage, has told Riverbay Corporation representatives that Co-op City can not touch a $45-million reserve fund, set up to pay for specifically designated capital improvements, to pay the expenses that Riverbay now confronts.
Taylor, in a telephone interview, said, “We, as shareholders, are being forced to pay for the mistakes of Marion Scott. It pains me that the community’s shareholders, many of whom are already having trouble paying their monthly carrying charges, are now being forced to pay for 15 years of mismanagement by Herbert Freedman and Marion Scott.”
In addition to the $128-per-room assessment that is being weighed, Taylor noted that the members of the board are also considering an increase in carrying charges of 3 to 4 percent “to rectify the mess that Marion Scott has left for us.”
Taylor noted that the opinions of shareholders on how to proceed in conjunction with the crisis that Co-op City now confronts will be sought at town-hall meetings that will be held in the community in February.
The options, the Riverbay president noted, include suing the Scott firm in conjunction with the $6.25-million settlement of the labor case and suing Scott Trivella, Co-op City’s long-time labor attorney, for malpractice in connection with his advice that it was okay for the Riverbay Corporation to give workers compensating time in lieu of overtime pay.
Informed sources, who wished to remain unidentified, indicated, this week, that both of these possible lawsuits would be difficult to pursue successfully.
Another option for the Riverbay Corporation would be to significantly reduce Co-op City’s corporate expenses --- an option that Taylor thinks would bear little fruit, but Riverbay vice president Daryl Johnson believes could save Co-op City $20 million per year.
Taylor, for his part, stressed, “Even without the need for $9 million within the next five months, it is clear that the Riverbay Corporation cannot continue to operate the way it has been operating. It is unconscionable that Herbert Freedman and Marion Scott depleted our reserve funds to the point that we need to consider drastic measures to meet our immediate expenses and to get by in the years to come. At this point, we have almost no cash on hand to meet contingencies, like the ones we are now facing with reserve funds that are now virtually nonexistent.”
Riverbay president Cleve Taylor said, this week, that a layoff of some of Co-op City’s 1,100 workers has to be considered as one of the options in the desperate fiscal crisis that the community now confronts.
“All options have to be on the table at this point,” Taylor stressed, in a telephone interview on Monday. “The long and the short of it is that we have to increase expenses and/or reduce costs to come up with the $9 million we are going to need over the next five months.”
The Riverbay president noted that within the context of the current crisis, reducing the hours that Co-op City’s employees work and a temporary or permanent layoff of some of Riverbay’s employees have to be considered.
Civic activist Frank Belcher, reflecting on the possibility of laying off Co-op City workers, noted, “I am convinced that we could lay off 10 percent of our workforce without affecting the delivery of services to the shareholders. It has been obvious to me, for years, that we could easily cut the workforce if the Riverbay Corporation changed its culture of corporate waste. We can do more with less if the housing company finally insists on an honest day’s work for an honest day’s pay.”
Belcher added, “Before the board starts considering imposing a $128-per-room assessment, the members of the board need to sharpen their pencils and reduce costs. It’s clear to me, and it should be clear to the members of the board, that laying off workers is a much better option than imposing an onerous assessment that many of the shareholders can’t afford to pay.”
Riverbay vice president Daryl Johnson, saying that it was premature to reflect on a possible layoff of Co-op City’s workers at this time, has repeatedly stated that the estimated $700,000 in overtime pay that Riverbay employees take home on an annual basis could be eliminated or be severely cut without significantly affecting the level of services in the local community.
A possible layoff of workers would be difficult for many shareholders in the community to swallow because of their backgrounds with unions and their support for working people.
However, in the final analysis, laying off workers may be the only reasonable option for shareholders trying to avoid an assessment of $128 per room, which would have to be paid over a five-month period.
