Report From RIRA President on Eastwood Electricity Submetering, RIOC Budget, PS/IS 217, Public Purpose Funds and Red Bus

2/8 RIRA Town Hall Meeting with RIRA President Farance & RIOC Directors Kalkin and Shinozaki

RIRA President Frank Farance sends the following report to Roosevelt Island residents. This message was also published as the RIRA column in the 2/21/09 Main Street WIRE (PDF File). Mr. Farance addresses issues on the proposed Eastwood/Roosevelt Landings Submetering, RIOC Budget Analysis, PS/IS 217, Public Purpose Funds and the Red Bus.

1. Temporary relief for Roosevelt Landings (Eastwood) residents on submetering. Two weeks ago, Roosevelt Landings residents filled the RIRA Common Council meeting and requested RIRA to take action. I thank Assemblymen Kellner and his staff, RIRA Housing Committee Co-Chairs Lynn Strong-Shinozaki and Joyce Mincheff, Roosevelt Landings Residents Association Chair Joyce Mincheff, and fellow RL Common Councilers Helen Chrivas and Russell Fields. On Friday, February 6, Lynn and I visited Urban American offices to deliver a clear message: (1) the issue isn't submetering per se, but raising housing costs, (2) a typical 2-bedroom apartment uses approximately $500 in energy costs, yet the subsidy is only $100-$200 which makes this, effectively, and increase in housing costs, (3) Rand Engineering did a study at Island House (similar construction as RL) and estimated only 10% energy reduction for submetering, (4) heaters need to have thermostats (who would manually adjust your heat for energy efficiency while you sleep?), and most importantly (5) the residents of Roosevelt Island, not just Eastwood, will not stand for these unconscionable increases. Hopefully, temporary stay ordered by the PSC will evolve into a permanent solution.

2. RIOC Budget Analysis Committee. The committee includes Matthew Katz (former RIRA President), Steve Marcus (former RIRA President), Geof Kerr (RIRA Auditor), Margie Smith (Chair of RIRA Government Relations Committee) and is co-chaired by myself and Russell Fields (RIRA Treasurer). As a reminder, RIOC doesn't want to do financial planning for more than 5 years, they're spending is large ($72 million in capital improvements over the next 5 years), and their cash balance will be low (in relative terms) for supporting the maintenance of the Island through 2068 — we might run out of money in 10 to 20 years. We have met twice with RIOC. We have not yet received the financial information we requested, such as Excel spreadsheets (to explore the basis for decision-making), database dump, and other supporting documents. I've attached E-mail correspondence. RIOC President Steve Shane says: (1) RIOC expects to spend about $5-8 million annually on capital improvements, (2) Island maintenance averages about $3-4 million a year and there is no need for more details because we can't predict when a piece of infrastructure will break, (3) if there is some extraordinary confluence of maintenance costs, we'll ask the City and State for financial help. Honestly, that's not a financial plan — that's flying by the seat of your pants and wishful thinking for City and State funding. It is clear that we won't have the $72 million to spend next time it in the next 10, 15, or 25 years. It is possible to plan better but RIOC chooses not to (RIOC Board member Michael Shinozaki agrees). If you look at all the financial disasters in our present economy and their causes, such as Optimistic Planning for Sunny Days and Short-Range Myopia Because The Disaster Will Strike After I'm Gone, you'll find them right here on Roosevelt Island. What to do? I spoke with Assemblymen Kellner's office and they suggested: (1) asking RIOC board members to insist upon a longer perspective before approving the current budget (directors: you have a fiduciary responsibility!), (2) contacting the State Comptrollers office, the Governor's budget office, and/or the Inspector General.

3. PS/IS 217 Principal to Address RIRA Common Council. Mandana Beckman is planning on addressing the March 4 RIRA Common Council meeting. We look forward to productive collaboration between PS/IS 217 and RIRA.

4. Public Purpose Grants. We received 8 grant applications. Steve Marcus is heading the RIRA subcommittee to review the applications. RIRA expects to make recommendations to RIOC on March 4 and RIOC has this agenda item on its March 26 board meeting.

5. Red bus service still poor. As many of us point out, having a GPS or a bus stop status sign doesn't make the buses run better. For example, on Tuesday night, the bus arrives at Good Shepherd at 7:43 PM (later than what the GPS system reports), which is just enough time to miss the 7:45 tram, which adds another 15 minutes to travel time. When we arrive at the tram, there are three buses (see picture): the 7:45 tram is unloading into the first bus, the second bus will wait another 15 minutes, and our bus will wait 30 minutes. Translated: two buses are sitting idle not servicing other riders on the Island, thus we wait a long while for buses. The GPS system doesn't help, only RIOC management can help (but continues to refuse).

Also, below are Mr. Farance's remarks made to the RIOC Board during the Town Hall portion of the 2/19 RIOC Board of Directors meeting concerning RIOC's financial and budgetary process.

Hello, I'm Frank Farance, President of RIRA

Today, I'd like to express several concerns about financial matters about RIOC.

RIRA has strong concerns about the financial viability of RIOC and we've formed a subcommittee to provide this kind of analysis. So far our concerns are not yet resolved. We have requested information, including spreadsheets, supporting financial data, etc., which RIOC said it will provide, yet we have not yet received the information in a timely manner. Continually, we see a lack of appropriate methodology. For example, RIOC refuses to commit to long-term financial planning for capital projects ... RIOC's methodology is "we're spending about $3-4 million, who can predict when a pipe will break, so why plan?". Based upon that reasoning, the profession of actuaries would not exist. Likewise, DHCR wouldn't be asking for 10-20 year budgets from Mitchell-Lama buildings, which include similar kinds of infrastructure with the same kind of risk -- who can tell exactly which year a 15-year elevator will break, but it is properly budgeted in a long term plan. If this kind of planning is mandated for DHCR, why does RIOC pretend such planning is impossible?

Today, RIOC announced a $20 million budgetary mistake. Could this be a direct result of RIOC's lack of financial methodology? RIOC CFO Steve Chironis says that your budget is comprise of a dozen of individual files -- not a single linked file. This kind of methodology would not pass an Excel 101 class and would not pass muster for any financial office. Had RIOC been more cooperative on sharing data in appropriate financial data formats (not PDF), these kinds of mistakes might have been identified a week after the budget had been released, not a month and a half later. What other mistakes exist? Again, RIOC still has not provided the financial information in a timely manner.

So now RIOC is off by 50% in its cash projections. Your spending $72 million in the next 5-year cycle, you'll be left with $19 million in the bank. What happens in 20 to 25 years when you have to spent $72 million again ... and again in the 20 to 25 years after that?

If you look at all the financial disasters in our present economy and their causes, such as Optimistic Planning for Sunny Days and Short-Range Myopia Because The Disaster Will Strike After I'm Gone, you'll find them right here on Roosevelt Island.

Remember, RIOC staff **chooses** not to use accepted financial planning methodology and rationalizes this by saying "the State of New York does not require it". Directors, how do you square this with your fiduciary responsibility. New York State, why do you find this acceptable?

Assemblymen Kellner's office has two suggestions:

Suggestion #1: Asking RIOC board members to insist upon informing yourself with longer perspective before approving the current budget.

Suggestion #2: Contacting the State Comptrollers office, the Governor's budget office, and/or the Inspector General.

Today, I hope the RIOC board members immediately act upon suggestion #1. And I hope RIOC immediately provides RIRA with the financial information.

Thank you.

The web cast of the Board of Directors meeting is available here, but the Town Hall portion of the evening is not web cast.