Roosevelt Island Fiscal Year 2009-10 Budget Subject of Tonights RIRA Town Hall Meeting and Tomorrow's RIOC Board of Directors Meeting

Image from RIOC Proposed 2009-2010 Budget

The Roosevelt Island Residents Association (RIRA) will be holding a Town Hall Meeting later tonight to raise questions and discuss the issues on the Agenda for tomorrow's RIOC Board of Directors Meeting. The most significant item on the RIOC Board Agenda is the proposed fiscal year 2009-10 Roosevelt Island budget. RIRA President Frank Farance forwards this message he sent to RIOC President Steve Shane concerning the Town Hall Meeting.

Dear Steve-

As we discussed, RIRA will be sponsoring Town Hall meetings. The next Town Hall meeting will be on Wednesday, January 14, at 8-9:30PM at the Church of the Good Shepherd -- upper floor.

The meeting will be a Q&A session for residents to interact with RIOC Board members and RIOC Staff. The discussion will involve 3 areas:

(1) Discussion of agenda items on the January 15 RIOC Board meeting agenda.

(2) Discussion of results from the December 4 RIOC Board meeting.

(3) Any other topics.

I am expecting some questions on the RIOC budget. I will forward them to you as soon as I receive them so that you can prepare in advance of the meeting.

Again, thank you, your staff, and your directors for participating in the Town Hall meetings.

Mr. Shane is expected to attend tonights RIRA Town Hall Meeting.

The Agenda for tomorrow's RIOC Board Meeting is:

I. Call to Order
II. Roll Call
III. Approval of Minutes
1. December 4, 2008 Board Meeting (Board Action Required)
IV. Old Business
V. New Business
1. Presentation of the Proposed RIOC Budget for Fiscal Year 2009-10
2. Authorization to Enter into Contract for Replacement of the Central Compactor of the AVAC System (Board Action Required)
3. Ratification of Contract for Southpoint Site Clean-up (Board Action Required)
4. Ratification of Change Order for Lighthouse Park Comfort Station (Board Action Required)
5. Ratification of Purchase Orders for Emergency Dismantling of the Sports Park Facade (Board Action Required)
6. Ratification of Fuel Contracts for RIOC Vehicles (Board Action Required)
7. Ratification of Purchase Orders for Employee Uniforms (Board Action Required)
8. Ratification of Change Order for Roof Rehabilitation at 504 Main Street (Board Action Required)
9. Committee Reports
a. Audit Committee
b. Governance/Operations Advisory Committee
c. Real Estate Development Advisory Committee
10. Public Safety Report
11. President’s Report
VI. Adjournment

The proposed RIOC budget for fiscal year 2009-10 is available here. Highlights include (page 2):

1. Revenues: Projected revenues for FY 09-10 when compared to FY 08-09 is down (8%). Income sources which have significant projected decreases are; Tram,
Condo Conversion Fees, and investment income. The Tram projected revenue is 39% less ($1,177,671) due to the anticipated 6 month Tram shutdown. Condo Conversion Fees, which are discussed in detail under "Budget Risks" on page 5, is down 65% ($919,793). Investment income is down 39% ($473,274), with the projected rate -of-return reduced from 3% to 2%.

2. Personal Services (PS):Projected Personal Services as noted above is essentially flat, at a 0% increase. Per the directive from NYS Department of Budget (DOB), a 3% COLA increase and performance bonuses were included in the budget but will not be paid until if or when that State re-negotiates it's collective bargaining agreement with the union. Projected fringe benefits have actually decreased from the FY 08-09 budget due to a decrease in health insurance premiums and last years over estimation of the pension contribution.

3. Other Than Personal Services (OTPS):Projected (OTPS) is reduced by 29%, reflecting in a decrease in expense of ($2,885,420). The three main areas that have the most significant reduction in expense are; Tram (6 months less of management fees and reduced insurance expense), Professional Fees (primarily more engineeringservices in-house) and a more efficient use of repair expenditures.

4. Net Surplus (Cash Flow) Generated (Before Depreciation):Projected Cash Flow Generated increased 85% from $1,383,490 to $2,565,107.

Regarding fees from the Hudson/Related Southtown Riverwalk development, RIOC's proposed 2009-10 budget reveals (Page 5):

1. Southtown 7, 8, and 9:
In 2006, the Southtown developers exersized an option at a cost of $2,000,000 to extend the Construction Commencement Date for all buildings of Southtown 5–9 from no later than December 31, 2010 to December 31, 2012. Management believes that given current market conditions there is a real possibility that the development of Southtown 7, 8, and 9 may not happen, negatively affecting projected cash reserves. Below is the effect on projected cash reserves, if the development of Southtown 7, 8, and 9 were not to go forward. It is management's belief that if Southtown 7, 8, and 9 were to not proceed in the time period, there would be other subsequent development opportunities after the economic downturn cycle reverses its course.

2. Condo Conversion Fees:
Projected condo conversion fee income for ST# 5–9 is derived from 2% of all condo sales up to $750/sq ft., and 3% for the amount of sales above the $750/sq ft. threshold.Average sales prices for ST# 3 & 4 condo sales in 2007 & 2008 were approximately $750/sq ft. Projected condo sales for ST# 5 for 09–10 were projected at an average sales price of $600/sq ft. In addition, only 25% of units were projected to be sold in 2009–2010 resulting in $408,000 in fees income —down from the budgeted 2008–2009 condo fee income of $1,285,793.

3. Southtown 5 & 6 Substantial Completion Payments:
Included in the Budget FY 09-10 are contractural payments relating to the ST#5 & #6 substantial construction completion. The developers have requested possible deferment of payment of said payments due to the slow sales activity of units. The payments in question are secured debt obligations to the Corporation but the timing of these payments may be delayed. The timing of payments in question are listed below:

ST #5 NPV Payment ( 04/09) $6,331,150
ST #6 NPV Payment ( 04/09) $10,184,950
Increase in Ground Rents (from $1.80/sq' to $3.60/sq') $659,369
Public Safety Fees $84,720
$17,260,189