Their own financial crisis: Co-ops face mounting bills

Residents considering buying new houses

By
Friday, November 7, 2008

The bills are due, and Brown’s two co-ops don’t have the money to pay them. The Brown Association of Cooperative Housing, which manages Finlandia and Watermyn houses, is facing more than $10,000 in property taxes, maintenance and utility bills for both houses before the end of November.

Board members say BACH funds, which hit a low of $52 recently, are currently short about $7000. Residents are struggling to raise money before the end of the month and are considering selling one or both of the houses.

What exactly has caused the financial crisis at the co-ops is a matter of some debate. “The reality is you’re going to get a thousand different answers from a thousand people,” said Ben Biller, a student at Wheaton College and a Finlandia resident. Finlandia is located at the corner of Waterman and Brook streets, and Watermyn is on the corner of Waterman and Governor streets.

“No one’s accountable because no one has records, and that’s why we’re in all this trouble. No one can even look back and see what happened,” Biller added. Several other co-op residents interviewed also pointed to a lack of institutional records as a major source of the problem.

But missing records are not all that’s gotten the co-ops into money trouble. Problems with maintenance and upkeep on the two houses, both of which have required renovations to meet fire code regulations, as well as difficulties in renting out rooms over the summer have slowly bled money from BACH’s accounts.

The situation came to a head when Dan Widrew, BACH treasurer, was late in sending in the property taxes for the first quarter of last year. “What happened with the taxes was just pure stupidity on my part,” Widrew said.

Widrew said he was unaware that after one quarter’s property taxes were submitted late, the entire year became due at once. BACH continued paying taxes quarterly, while fines accrued on the unpaid taxes for the year.

“It didn’t occur to me,” Widrew said. “None of us are accountants or anything. We just show up and someone says, ‘I’ll be the accountant.’ That’s part of the idea of BACH.” Once BACH members became aware of the overdue taxes, they were forced to pay the entire amount at once, draining financial reserves.

The co-ops are now relying on monthly rent to sustain them, a difficult proposition considering that a part of BACH’s mission is to provide low-cost housing and that rent collection can be unreliable at times, residents said.

“We’re not very good at enforcement,” Watermyn resident Max Kennedy ’11 said. “We can’t track people down and get them to pay.”

Widrew said BACH approached Sovereign Bank looking for a loan but was denied because of the current credit crunch. “Sovereign basically told us, ‘Sorry, guys, we’re not giving out any loans unless you can come in with a bucket of gold as collateral,'” Widrew said.

Andrea Gaines ’10, also a Finlandia resident, said BACH is asking former residents for loans and donations to keep the co-ops afloat. Residents also sold items from the basement of Finlandia in an effort to raise funds, but netted under $20.

“We may be possibly selling one of the houses,” said Ashley Aguilar ’10, BACH board member and a resident of Finlandia. “We are realizing that the houses aren’t that sustainable because of maintenance and their age.”

Brendan Reddy-Best, a Watermyn resident, said selling the houses and purchasing more affordable properties is “not a decision yet, but something we have to consider,” adding that BACH is currently in negotiations with realtors. “It would be nice to be able to move to the West Side,” he added.

George McTernan, a fellow Watermyn resident, responded that the first priority is the type of house, not location. “I’m always keeping my eye on houses that come on the market,” McTernan said. “If a 12-bedroom house pops up for $500,000, I go look at it.”

Reddy-Best acknowledged that many students would feel a loss if the co-ops were forced to move away from Brown, and said no decisions had been made yet.

He called selling the houses “a worst case scenario,” but also noted, “we’re preparing to do anything that we have to do.”

“It’s such a mess,” said Johanna Jetton ’10, a resident of Finlandia, shaking her head. “I can’t think about this if I’m going to live here.”

Gaines said Finlandia is “an important place” in Providence. “This community is awesome. This house has a lot of history and a lot of character.”

Regardless of whether the houses are sold, Reddy-Best said, he’s optimistic about the future of BACH. “We’ve got more assets than we’ve ever had before,” he said, citing the fact that BACH owns Watermyn outright and only around $40,000 remains to be paid on Finlandia’s mortgage.

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