March 18, 2021
To the Morningside Heights Housing Corporation Board of Directors:
We write to you as shareholders seeking a better understanding of our Corporation’s arrangement with First Service and of the cost overruns and other additional costs associated with the grounds and balcony projects.
We have numerous concerns and questions regarding the competency of First Service in its provision of services to our community. As such we would like to understand such things as:
1. the nature of all the services First Service is obligated to perform,
2. the standard of care required in performing such services,
3. the financial arrangement with First Service including any base, incentive or other fees
4. the expiration date of the contract with First Service, and
5. the rights of the Corporation to terminate the contract with First Service.
The only way we can understand these matters and more fully grasp the nature of the relationship with First Service is to receive a copy of the management agreement with First Service, any amendments or addendums thereto and all agreements of any kind between the Corporation and First Service or any of its affiliates (“First Service Documents”). Pursuant to our rights under the law, as owners of the Corporation with a desire to evaluate and improve management company services, we request a copy of all First Service Documents, both physical and electronic copies. The attached articles articulate the legal basis of this request and the supporting case law. The projects relating to our grounds and our balconies have taken considerably longer than planned.
We also understand because of the significant and unplanned overlap between the projects, a project manager was hired to coordinate the 2 very large projects.
As owners we would like to understand the additional costs to our Corporation on account of the delays. These costs include all extra monies paid to any contractor involved in these projects including any penalty amounts, delay fees, overtime amounts, incentive amounts and amounts paid in any manner on account of the delays. These costs also include all amounts paid to the project manager hired to coordinate and oversee the 2 projects.
The only way to understand all of these costs would be for us to review all the contracts ( including any supplements or amendments) with all contractors in any way involved in these projects including the coordination and oversight of these projects. We also need to understand if First Service or any affiliate of First Service is performing any services and/or collecting any extra fees on account of these projects.
Pursuant to our rights under the law, in order to evaluate the impact of these extra project costs on the financial condition of our Corporation and to evaluate the performance of the Board in managing the financial affairs of our Corporation, we request a copy of all contracts described in the prior paragraph and any agreements with First Service relating to these projects, both hard and electronic copies as well as all Change Orders and the costs associated therewith.
We also request a summary by the Board of the following:
1. the original planned cost for the grounds project;
2. the expected final cost for the grounds project;
3. the original planned cost for the balcony project for Buildings 5 and 6;
4. the expected final cost for the balcony project for Buildings 5 and 6; and
5. to the extent 2 exceeds 1 and /or 4 exceeds 3, the source of funds to pay the extra amount for these projects.
We request this information because we are very concerned about the possible material depletion of reserves and/or further increases to our maintenance payments. There is no legal or practical reason to treat these documents as confidential since sharing them with shareholders will not in any way result in harm to the Corporation. We are not a business with confidentiality needs on account of competing with other businesses. Rather we are a cooperative community with the members of the community seeking transparency about our financial affairs so that we the owners can help protect the wellbeing of our Corporation and community. Thank you in advance for fulfilling your legal duties and for being transparent with shareholders by sharing the documents and information requested in this letter.