Paula Chin: Welcome to Inside Track a conversation with New York's leading property management executives. I'm Paula Chin with Habitat Magazine, and my guest today is Robert Ferrara, president of the Ferrara Management Group. It is something no one wants to imagine, but building disasters do happen, and in the worst case, the damage is so severe that shareholders or unit owners are forced to evacuate.
Property managers need to be prepared to respond quickly to emergencies and also help boards deal with the aftermath. You recently faced this challenge with a building in Peekskill. Can you tell us about it?
Robert Ferrara: Hi, Paula. Yes, unfortunately we had a large fire at a property located in Peekskill, New York.
Ultimately 16 unit owners were displaced and had to find relocation for living arrangements for a little over a two year period. It was a rather extensive fire, extensive damage where the building actually had to be knocked down and then rebuilt.
Paula Chin: Wow. I'm a little curious, what was the fire?
Did it start overnight or what happened?
Robert Ferrara: Sure. Unfortunately, I was in bed around 2:30 in the morning when I received a call from a fireman that was responding actually to the fire. Knew that my company had managed the property, was friendly with me, and alerted me that we had a very large multi-alarm fire on our hands.
With that, we ultimately reached out to the property manager, reached out to the board, and started getting resources from my office on scene to work with the residents and ultimately the city officials during the fire. Prior to myself arriving on scene, I worked with notification emails to the insurance carrier, notifying my staff in the office so when they got in the morning, they could be expecting different phone calls that would be coming in regarding it.
So this way they knew how to respond to it. And then ultimately I got on scene, I worked with the chief of the fire department and the city building department. 'cause we had to actually knock the building down to allow them to put the fire out.
Paula Chin: That evening or that morning, I guess, when it happened, can you describe a little bit what happened when you got there, and how the evacuation started? Where did you put people?
Robert Ferrara: Yeah, so the fire had started probably about 10 after 2, 2 15 in the morning. Manager was on scene probably within about 15 minutes. The fire department and emergency services had assisted anybody that hadn't evacuated to get outta the apartment building . Ultimately everybody was out by the time the manager had arrived and the super had arrived. So thankfully they were all safe. There was one person that was injured within the unit where the fire had started, and thankfully their injuries weren't serious or life threatening in any nature.
So they had already been evacuated. At that point since it was a condominium property, we were able to shelter the unit owners in the community room for the time being. We had Red Cross Services and other services that were established through the city and the fire department to help those residents along with the board members.
The unit owners are ultimately responsible to find their own relocation. So we were able to assist them with different people that we know that could potentially help 'em. And again, the Red Cross was very influential with it as well.
Paula Chin: You mentioned insurance, which obviously is a very important factor to deal with, now. Tell me what happened there.
Robert Ferrara: Yeah, so ultimately we make notification to the carrier for the property of the incident, and the unit owners need to also notify their homeowner's policy of the incident. So certain items fall on the unit owner, which includes if they have coverages to be able to relocate somewhere else.
Within the condominium, they're still responsible to pay their carrying charges, even though the property was destroyed that they were in, but they also have now the added burden of having rent or other payments to live somewhere else for the time being during the rebuild. So they have their own insurance coverage for that during that time.
Paula Chin: . So what exactly did you guys have to cover and what did the unit owners have to cover? And what happens? For example, if they didn't have homeowners insurance?
Robert Ferrara: Yeah, that's a great question. So ultimately it, it's not as clear as everybody would like to think, but a simplistic answer would be any personal contents of the unit owner is ultimately their responsibility.
So any betterments and improvements to the unit, again, is ultimately their responsibility. So if someone had a upgraded kitchen or bathroom, any of the differences in the insurance coverage from the original structure built to those better improvements that would fall on the unit owner and their insurance carrier.
The structure of the building, the main common components of the building. The new fire system that was required to be installed based on the current ordinances for fire ratings and other items, all that falls on the insurance company of the condominium.
Paula Chin: How much are we talking about? How big a claim and will you guys essentially be made whole?
Robert Ferrara: Yeah this claim is actually gonna probably be in the four and a half to 5 million range. And everything that we're seeing right now, the association should be made whole at the end of the day, but ultimately it goes to their insurance costs. Their insurance costs obviously increased dramatically on their last renewal.
The insurance, it's a hard market to begin with. Many, unit owners on their own home personal policies are seeing increases. Many people that own vehicles are seeing increases, and it's the same to the condominium and co-op world. The insurance for these properties are increasing, some 20 to 25% since it's a hard market. And when you have a loss of this size, obviously the increase is much more significant.
Paula Chin: So the board will get hit and the individual unit owners will get hit. Well, Let's talk about something I guess more forward thinking. How did you keep in touch with people and did you inform them right away that this was gonna be a two year project?
I imagine communication is very important.
Robert Ferrara: In our industry, communication every day is so important. No matter how much you communicated, sometimes never enough. Given the circumstances of this tragedy. And again, thankfully, nobody was seriously injured, which would only complicate a little bit more if they were, but you're dealing with people's lives, people's homes, and we are committed to keeping them informed as often as we possibly can with any of the major events that come up. What we did is at my recommendation to the board, and they were in full agreement with it, is to hold weekly Zoom meetings every Friday morning, 10 o'clock.
We were holding these meetings and keeping everybody informed in the first couple of weeks as things were progressing. As everything was on track and now we had certain timelines with the reconstruction, with different goals that we needed to get to, we then ultimately ended up moving those meetings out to once a month.
And currently they still are once a month , on Friday mornings, 10 o'clock. We have the majority of the unit owners that were displaced attending. I would say the satisfaction, given the circumstances is very high, they were very receptive to being kept informed.
They've worked with the builder, they've worked with my office. They haven't created issues that would actually slow the process down, which sometimes you do see in these rebuilds where either a unit owner or a shareholder may take certain actions that can actually be detrimental to the process, and slow it down. Everybody here is working together. They appreciate being kept informed. They appreciate having the ability to ask their questions and receive timely responses, and that's been huge to bring us to the point where we are today. We are anticipating getting a certificate of occupancy, probably in the next four to six weeks and start getting these people back to their home.
Paula Chin: Getting back to things that can delay. What kind of things might a unit owner do that, like I said, holds things up?
Robert Ferrara: So certain things, such as if they wanted to change any of the betterments or improvements within their unit, that can create issues with the insurance companies and finalizing the ultimate payments and who's gonna be responsible for those additional costs if there's not an agreement on those costs. So that's one major area that we could face a delay. Other areas that we see delays that are outside of the unit owner's purview, but within the construction company, the builder and the engineering firm is permitting. We need to get permits, they need to have their drawings and other items properly set up.
You need to know the municipality. And then dealing with Con Edison: getting utilities turned back on. If we can't get heat within the building, we can't, start doing the interior repairs of sheet rocking and other items if we haven't established heat. So those are things that created a majority of the delay with the project, but still kept it on track.
We were hoping to have him back by Memorial Day of this year, and ultimately it's looking more like, just after July fourth holiday if all goes well.
Paula Chin: You mentioned that things look like insurance wise the building will be made whole. But during the time this two years, do unit owners have to pay common charges?
And if not, that's a lot of money. And does your insurance cover that or the building's insurance?
Robert Ferrara: Yeah, so the unit owners are responsible to pay their monthly common charges. So that's where it gets difficult for them. And hopefully they do have insurance that will cover some of those items to help take the burden off of them.
So they still are responsible. This is a very large property. This is only one building out of many. It's only 16 units. When you look at the grand scheme of their budget it still would be detrimental if they weren't paying. But ultimately, again, these unit owners are seeing the overall picture and understanding that they have to work as a community, as an association to get through this tragedy and get everybody back into their homes. And many times, believe it or not, we see some people sell their homes because of the stress of the fire. They do not wanna move back in and they will be given a home that will be able to sell rather quickly if that's the choice they wanna make.
Or they'll be able to move back into a home that is gonna be better than it originally was, especially if they've taken on some other ideas or thoughts with how they wanted their home after living there for so long and different improvements they ever wanted to make than now being able to make them.
And actually from that standpoint it's a happy situation for them.
Paula Chin: What would you say the takeaway is for unit owners, well, in this case, and shareholders, and what's the takeaway in terms of what they can expect from their management company?
Robert Ferrara: You know, ultimately I think from the board to the unit owners, you wanna make sure that you do have the proper insurance for either your association or for your home as a unit owner.
And you need to speak with your broker. Many times we do suggest that unit owners put their broker in touch with the broker for the association to make sure they have those proper coverages along the way. The other take is make sure you have working smoke detectors and fire alarms. That was all functioning here and it probably saved lives at the end of the day, because that's what alerted people to the fire was the smoke detectors being activated.
So that's also important. And then I think what people should expect from their management company, is to work together. They have to work together with the management company. The management company has to work together with them, and it's a team approach, the board, the staff of the property, the management company, and the unit owners.
It's ultimately a team approach and trying to work again to bring closure to this event. And if you work together, odds are you're gonna get it done a lot quicker and get yourself back home. So that's always very important.
Paula Chin: I'm glad this condo is almost at the end line. Robert, thank you so much for joining us today.
This was really informative.
Robert Ferrara: Thank you. I appreciate being here.
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